I think it is fractionally reserved with bitfenix's btc deposits. A while back you could see their master address, which hundreds of millions of USD worth of btc.
It's not fractionally reserved. Fractionally reserved banking implies that only a fraction of the reserve is in liquid cash (And that the remainder exists as independently audited, but not immediately liquid investments, backed by an insurance policy.)
Tether has never been independently audited, whatever non-liquid reserves/investments they have are not backed by an insurance policy. It is not a fractional reserve. It's a con artist's idea of "Hey, I can just open a bank, take 80% of the deposit money, do 'things' with it, and claim I am running a fractional reserve."
