One of the most amusing elements of the last six months worth of crypto and bank scandals has been Paolo Ardoino, one of the founders of Tether, putting out a series of tweets:
In the past five years, Tether has been forced out of the US, so you can't blame them for gloating at the goings on in America.
In 2021, they were fined $41 million for "misleading claims" that they were backed by dollars when a portion of their assets were non-dollar assets, and were banned from doing business in New York state.
A lot of American banks and exchanges voluntarily stopped using Tether/doing business with Tether as a precaution - they could sense the way the SEC and other US regulators were going.
So where does Tether bank? They have $1.8bn in Deltec Bank in the Bahamas. They also use the commercial services of that bank to buy other assets like US Treasury bills, commercial paper, euro-denominated bonds and so on.
If you wanted to redeem Tethers for cash, the cash payments would go through that bank.
Tether did try and open US bank accounts using fake papers, but got closed down.
The most ironic thing of all is that private banks in the Bahamas are run very conservatively on a fee model. They don't offer free-banking and then gamble on interest rate spreads to make a profit. They charge fees for everything - high fees - and their customers cough up.
The reason for the fee-based model of banking, is because that allows them to make profits regardless of what's happening with interest rates. They know the Bahamas govt cannot and will not bail them out if things go south. So they organise themselves accordingly.