What Is Tether? The Company Behind the World's Largest Stablecoin

Tether the Company: Who They Are

Tether Limited was founded in 2014, initially under the name Realcoin. The company is now registered in El Salvador, having previously operated from the British Virgin Islands. It is owned by iFinex Inc., the parent company of the Bitfinex cryptocurrency exchange — meaning Tether and Bitfinex share ownership, a connection that has been both practically useful (Bitfinex provides distribution infrastructure) and occasionally controversial (it creates questions about conflicts of interest).

Despite its central importance to the global crypto economy, Tether operates with relatively little public visibility. The company does not have a major physical presence in any financial centre, does not have listed shares, and until recently gave few public interviews. This opacity has fed the suspicions of critics while doing nothing to slow USDT's adoption — the token's utility has driven adoption regardless of who issues it or how transparent the issuer is.

How Tether Makes Money

Tether's business model is exceptionally simple and extraordinarily profitable. The company takes in dollars from institutions and exchanges that want USDT tokens, then invests those dollars primarily in US Treasury bills (which yield approximately 4-5% annually at current rates). The interest on the reserves — which now exceed $100 billion — flows to Tether as profit. Tether does not pay any yield to USDT holders.

In 2024, Tether reportedly generated approximately $13 billion in profit — more profit per employee than any other company in the world relative to its headcount. With a small team and minimal operational costs, the business of holding US Treasury bills against a $155 billion reserve base is extraordinarily lucrative. This profitability is itself a form of reassurance about reserve quality: Tether has strong financial incentives to maintain the operations and the peg, and has the resources to do so.

The Reserves: What Backs Each USDT

Each USDT in circulation is backed by approximately one dollar's worth of assets held by Tether. The composition of those assets as of recent quarterly attestations: approximately 80-85% in US Treasury bills and cash equivalents, with smaller amounts in secured loans (primarily to institutional borrowers), precious metals (primarily Bitcoin), corporate bonds, and other assets.

The Treasury-bill-heavy composition is a significant improvement from earlier years, when Tether held more commercial paper and less liquid assets. Critics continue to highlight that Tether's attestations are not full audits, and that secured loans — which Tether continues to hold in small amounts — are not liquid assets in the way Treasury bills are. The broad picture is of an organisation that has moved toward a more conservative reserve structure over time, which is a positive trend regardless of the remaining transparency concerns.

The Controversies You Should Know About

Tether has several legitimate controversies in its history that any serious USDT user should be aware of. The 2021 CFTC fine of $41 million established that Tether's reserves were not always fully backed between 2016 and 2019 — the company said USDT was 100% backed by dollars when it was not always. This is not alleged; Tether paid the fine.

Tether has also faced questions about its relationship with Bitfinex — including a 2019 New York Attorney General investigation that found Tether had lent $900 million from its reserves to cover losses at Bitfinex following a hack. Tether disclosed this after initial concealment, paid an $18.5 million settlement, and agreed to quarterly transparency reports.

What the controversies establish is that Tether has not always been as transparent as claimed, and that its independence from Bitfinex is not complete. What they do not establish is that USDT itself has failed or that current reserves are inadequate — the peg has held through everything, including periods when these controversies were at their most acute.

The Track Record: What Tether Has Delivered

Despite the controversies, Tether's operational track record is strong. USDT has maintained its $1.00 peg through Bitcoin's 80% crash in 2022, the Terra/Luna collapse, multiple major exchange failures including FTX, the SVB banking crisis that briefly depegged USDC, and years of regulatory pressure. During stress events when crypto markets fell sharply and other stablecoins wobbled, USDT has consistently traded at or very close to $1.00.

Tether has processed redemptions in the billions of dollars without difficulty during market stress events — the practical test of whether reserves are real. In May 2022, following the Terra collapse, Tether processed approximately $10 billion in redemptions within days without the peg breaking or redemptions being delayed. This is the strongest practical evidence of reserve adequacy available.

What This Means for Everyday USDT Users

For most everyday USDT users — remittance senders, P2P traders, freelancers receiving payments — the practical risk from Tether's structure is low. You receive USDT, convert it to local currency within hours or days, and the exposure window is short. A hypothetical Tether crisis that took weeks to resolve would still allow rapid conversion before significant disruption.

For users holding large USDT balances over extended periods, the risk calculus is different. Diversifying large holdings across USDT and USDC, or converting to local currency more promptly, reduces concentration risk. No financial instrument is entirely without risk, and USDT is no exception — but for the use case of moving money quickly across borders, it remains the most practical option available.