Tether is likely to have the money, or most of. It may not (have) always be(en) as liquid as stated and/or possibly needed.
The problem the cryptocurrency community had with them was really more about their use of the tools of the enemy (treasury notes! horror!) rather than cold hard cash.
This is not correct. The problems people have are (1) lack of transparency/audits, and (2) putting the money in high risk bets like commercial paper and crypto, essentially leveraging the entire crypto sector.
Confidence in Tether would skyrocket if they were audited and found to be solvent and had 100% treasury notes. Ihis "tools of the enemy" hyperbole is childish - they literally have "USD" in the ticker symbol.
I’ve said it before on here but I think the commercial paper on their books is just the balance of a loan of Tether with the interest payable in USD and the principle payable either in USD or USDT.
Essentially what they did was create an unregulated private bank and issue a counterfeit digital USD.
The problem the cryptocurrency community had with them was really more about their use of the tools of the enemy (treasury notes! horror!) rather than cold hard cash.