Tether, the wholly owned division of iFinex Inc. that offers the USDT stablecoin, has published its reserve holdings for the first time and it holds only 3.87% in cash to back its cryptocurrency.

The Block reported today that Tether held 76% of its reserves in cash and cash equivalents and other short-term deposits and commercial paper as of the end of March. Commercial paper made up a 65% share, fiduciary deposits formed 24% of the category, reverse repo notes 3.6%, Treasury bills at about 3%. Cash then comes in at 3.87%.

The remaining backup to USDT consists of secure loans at 12.55%, corporate bonds, funds and precious metals at 9.96%, and other investments including digital tokens at 1.64%.

Tether and iFinex made headlines in 2018 after the U.S. Department of Justice launched an investigation into whether Tether/USDT had actual funds to back up its stablecoin. Stablecoins are meant to be fully backed up by funds that match their distribution. In the case of Tether, it was previously claimed to be pegged to the U.S. dollar, with U.S. dollars held in reserve to back its value.

Bitfinex, also a subsidiary by iFinex admitted in April 2019 after being sued by the New York Attorney General’s office that it had borrowed funds from Tether to cover an $850 million loss, which was noted at the time to mean that “the so-called stablecoin is no longer 100% backed by U.S. dollars.” That case was finally settled for $18.5 million.

That figure is now only 3.87%, even though the company was previously in trouble for its not being 100%.

The company is spinning its version of the news. Tether General Counsel Stuart Hoegner told The Block that it is “misleading to focus exclusively on cash” within the cash and cash equivalents category. “Readers should not confuse items not in ‘actual cash’ with a lack of liquidity,” he said.

Tether did, as Forbes noted, switch from claiming to be one-to-one backed with U.S. dollar reserves in March 2019 to being 100% backed by “reserve,” so in that regard the odd mix of assets does not go against its publicly stated claims. That said, a stablecoin is meant to be stable and linked to cash. Given that Tether is essentially gambling with a $42 billion reserve — the rough current count of issued USDT — the situation raises questions and concerns.

Image: Tether