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.