Thread by @Cryptadamist

🧵1/Ω
#Tether's claims of $1.5 bn profit in 2023-Q1 means they must be investment geniuses.

Assume that every asset category is as they claim it was on 2023-03-31: $68.8 bn investments, $480 mm cash). If the cash equivs are 100% short dated t-bils their income would be $1.15 bn

🧵2/Ω
This is even if you assume they rushed out and bought $14 bn worth of treasuries on the first day of the quarter to get them from $39bn to $53bn, which they didn't. They didn't even have $68bn TOTAL at the start of the quarter.

🧵3/Ω
In fact at the start of the quarter (and for much of the rest of it) they had closer to $50bn in interest earning securities.

Meaning in the real world, they should have earned around $1 billion.

🧵4/Ω
That leaves the rest of their portfolio - the part that started at $12bn & ended at $12.5 billion - to make up $350-500 million.

Earning $350 million in one quarter on a $12 billion principal means you are earning roughly 12%.

$500 mm? ~20%.

🧵5/Ω
The interest income numbers were calculated using the fed's daily published 4 week treasury bill rate. And this is the most charitable explanation.

Something smells.

🧵6/Ω
Now sure, you could note that gold is up ~8% for the quarter and silver is up ~4%, which would yield APYs a bit above 4x those numbers. But Tether has allegedly had this gold for a while.

Maybe they timed the market perfectly?

🧵7/Ω
Does Paolo Sardino strike you as an investment genius who can time markets perfectly?

Or maybe, just maybe, is it the case that Tether bought bitcoins, then manipulated the price upwards to get these profits?

🧵8/Ω
It is also interesting to do a side by side comparison of Tether's assets at the end of 2022-Q4 and 2023-Q1 and see what they ungrouped.

- Corporate Bonds & Precious Metals turned out to be almost all gold.
- Other Investments turned out to be mostly bitcoin.

🧵9/Ω
"Secured loans" actually went DOWN ~$500mm. So either someone paid them back or... the loans went bad and Tether seized the collateral.

What kind of collateral do you think people who borrow $USDT from #Tether put up?

Here's a hint:

🧵10/Ω
What if #Tether had made fiat loans that went bad in 2023-Q4? I know that sounds absurd given that it was such a prosperous, uneventful quarter in crypto, but bear with me.

🧵11/Ω
This all adds up to a scenario where, if we take #Tether at their word (lol) they are holding quite a lot of $USDT's backing in highly speculative, risky investments in godl, bitcoins, and sketchy loans.

What happens if those investments go bad?

🧵12/Ω
I'll just leave this here...

🧵13/Ω
And also this, which I will note is kind of remarkable wording given that I was unaware Tether had such a focus to double down on.