Cryptocurrency Tether has long been one of the largest mysteries in the space. Often used as a hedge against USD value by cryptocurrency traders, Tether has regularly come under question by many investors for whether or not the company has enough cash reserves to back the number of tokens issued. The so called "stable coin" has enjoyed a significant amount of volatility for a cryptocurrency that is always supposed to be pegged to the US Dollar on a 1:1 ratio plummeting as low as $0.84 on October 15th 2018.  

A recent report by Bloomberg may indicate that Tether indeed does have the cash backing they claim. Several bank statements spanning 4 months have indicate a balance of $2.2B in Tether's Puerto Rican Noble Bank account on Jan 31st, which coincides with the 2.195 billion Tether tokens in circulation at that time. The balances also match for September and October 2017 according to the report.  

Tether has had a historically turbulent relationship with auditors, having terminated a relationship with independent auditor Friedman LLP before the company could complete any verification back in January of 2018. A preliminary report indicated Tether had $442.9 Million in reserves as of September 2017, commensurate with the amount of  tokens the company had issued then.

While this is more information that was previously available to investors, some questions about the funds still remain. Tether is closely tied to exchange Bitfinex, so concerns of price manipulation exists. Additionally, the records Bloomberg examined failed to indicate from where the funds originated or where they are currently. The general councel for Tether, Stuart Hoegner, declined to comment on the balances.  

If it were to come to light that Tether did not have the cash on hand that they claim it could be disastrous for the cryptocurrency space. Many exchanges use Tether as a base pair, and hold reserves in the cryptocurrency since they have difficulty finding and retaining banking partners. If investors were to lose confidence altogether it could create a bank run situation where demand to redeem for fiat outpaces the supply on hand, causing a further decline in value. It has also been speculated upon that Tether manipulation caused the massive run up on bitcoin last year, which has led to an ongoing investigation by the US Justice Department.

It remains to be seen whether Tether will escape further controversy, but they have recently made attempts at further transparency. In an official statement on November 1st, the company disclosed it holds $1.8 Billion in Deltec Bank.

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