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Did Tether invest the excess $3.2 billion reserve from the third quarter and the $1 billion profit?

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Did Tether invest the excess $3.2 billion reserve from the third quarter and the $1 billion profit?

The stablecoin issuer Tether has released an attestation opinion signed by the accounting firm BDO, showing that its assets once again surpass liabilities, with reserves exceeding $3.2 billion. The incoming CEO, Paolo Ardoino, shared on X as customary, revealing that Tether's cash and cash equivalents have reached a historical high, with profits of around $1 billion.

Tether's Third Quarter Excess Reserves Reach $32 Billion

Stablecoin issuer Tether announced the issuance of the audit opinion for the third quarter of 2023 by BDO, one of the world's top five accounting firms. You can find the audit opinion here.

As of September 30, 2023, Tether's total assets amounted to $86,384,653,832, total liabilities were $83,176,997,409, with liabilities related to digital token issuance at $83,153,363,663. The assets exceeded the liabilities. The difference between assets and liabilities, which would typically be listed as shareholder equity on a traditional balance sheet, is referred to by Tether as the Shareholder Capital Cushion, amounting to approximately $32 billion.

Of the assets, 85.7% are held in the form of cash, cash equivalents, and short-term deposits, with the share of secured bonds reduced to 5.98%, decreasing by $330 million. Tether previously announced its intention to reduce this holding to zero by the end of 2023.

Tether also holds $16.6 billion worth of Bitcoin and $31.5 billion worth of precious metals, namely gold.

$20 Billion Secured Loans as Excess Reserves?

Although the proportion of secured bonds has decreased to $51 billion this quarter, surprisingly, $20 billion of this amount is included in the excess reserve.

According to the announcement, as of the end of September, Tether held an excess reserve of $32 billion, with $20 billion of secured loans forming part of the US dollar reserve. By the end of October, the excess reserves had climbed to $43 billion, with $9 billion of this being secured loans. Tether stated that their goal is to utilize the company's excess reserves and undistributed profits to reduce and ultimately eliminate the exposure of secured loans in the reserves.

Tether Continues to Invest in Bitcoin Mining

Tether continues to invest in sustainable energy, Bitcoin mining, data, and P2P technology. Investments in these areas reached $670 million in the third quarter of 2023, totaling $810 million since the beginning of the year.

However, Tether clarified that these investments are not considered part of the reserves supporting the issued tokens.

Decrease in Excess Reserves from the Previous Quarter, Where Are the Profits?

As the incoming CEO Paolo Ardoino shared Tether's issued audit opinion on Twitter as usual, this time, the third-quarter earnings were not disclosed. It was only revealed that Tether's cash and cash equivalents reached a historical high, with earnings of approximately $1 billion.

However, based on previous reports, Tether's excess reserves in the second quarter reached $33 billion, but in the third quarter, the excess reserves were only $32 billion, leaving people curious about where the profits have gone. Could it be that they were invested elsewhere?