Ever wonder how Tether, the largest stablecoin issuer, makes money? Is it transaction fees or a criminal conspiracy?
Tether is back in the news after the Wall Street Journal reported hedge funds are betting against it. Now many people are wondering how Tether makes money in the first place.
Tether claims on its website that it charges the greater of 0.1% or $1000 per withdrawal or 0.1% per deposit. But is that all Tether is doing to earn money?
The company issues tokens in exchange for deposits. But since the tokens are supposed to match the amount of reserves, it doesn’t leave much room for profit.
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While it is still unclear what is happening behind the scenes, some have speculated that Tether is engaged in illegal, or at the least unethical, activity.
A researcher and blogger by the name of Bitfinex’ed claims that Tether lacks a “legitimate business model,” and makes its money from “fraud.”
It is notable that Tether and its partner organization Bitfinex have both been fined for fraud. As well, Tether is under investigation for bank fraud by the US Department of Justice.
Without a closer look at Tether’s books, it’s hard to say for sure how the company makes money. That information will likely become public knowledge eventually through lawsuits and criminal investigations by the government.
