The thing that makes me suspicious of Tether is that I can't see how they earn a profit if they maintain 100% reserves. The front end deal looks great from their perspective - you give them $1 and they give you an electronic token that they print at a very low cost, say $0.0001, to cover the development and operating cost of creating the Tether market. Who wouldn't want that deal?
But what happens if they keep 100% reserves? I think the money they hold only counts as reserves if it is held as liquid, zero risk investments. That should earn only about 1 or 2 % right now. After you figure in inflation and the cost of operating the markets, Tether must be operating at a loss.
Something tells me that they didn't accumulate $1B while they were expecting a loss. So where does the profit come from?
I don't understand their business model at all professor, and like you, its always bothered me. If we can't see how they are making their profits, if we can't deduce it from simple logic, then that can't be a good thing. I mean, I know there are people who are vastly brighter than me, but I've not heard a definite answer on this matter.