Yes, and every exchange has 'money market' which means the cash reserves that hold user's deposits. Most exchanges use a simple database to hold these balances

Yes, and every exchange has 'money market' which means the cash reserves that hold user's deposits. Most exchanges use a simple database to hold these balances and there's no way to audit them. Every exchange can 'print' money in their database if they want. Tether is better because it offers some transparency into this side of the market.