Thread by @Cryptadamist

#TetherIsInsolvent, part 2. this is a followup to analysis @patio11 (link) and i did independently showing #Tether must be insolvent based on Tether's stated financials due to the crypto selloff. But this time... it's about foreign exchange rates. kalzumeus.com/2022/05/20/tet…

On May 19th #Tether announced that it had reduced its commercial paper reserves by $4.3B between 2021-12-31 and 2022-03-31 and that they had reduced their paper another 20% ($4B) since that March 31 "attestation" was done. Here's their press release:
tether.to/en/assurance-o…

@ZekeFaux did some (maybe pulitzer-worthy) reporting for Bloomberg in Oct '21 where he reported he could not find anyone at a major bank who had sold tether any paper, and further that he had seen documents stating that at least some % of tether's paper was from Chinese companies

Set aside for a moment that a triple A rating from a chinese ratings agency doesn't carry triple A amounts of water in London and New York. Also assume #Tether did not own #Evergrande paper, which is what they claim. It makes no difference. They got killed on the forex.

@ZekeFaux's reporting gives us strong reason to believe that Tether's paper wasn't denominated in USD, as it is extremely difficult to buy $20B of corp. debt w/out any the people who buy and sell debt noticing. $20B moves markets. it's literally a debt trader's job to notice.

between Mar. 31st and May 19th #Tether told us they sold $4.3B in commercial paper, most likely denominated in other currencies and most likely in $CNY. let's look at the exchange rate history for CNY/USD:

if that commercial paper was indeed Chinese and #Tether sold it around the time of their May 19th announcement of the sale tether lost somewhere in the neighborhood of 6% on the transaction just on conversion to $USD.

A2 rated paper (which tether claims to hold; see image) currently pays < 2%/yr, and that's AFTER the fed hike. To make that 6% back they would have to hold that paper for years and years (and experience no defaults) just to break even.

6% of $4.3B is $258M. #Tether only claims a total net equity value of $162M (assets minus liabilities). check out @patio11's post linked above or my tweet thread from June 2nd for deets... or just look at their own accounting.

https://twitter.com/Cryptadamist/status/1532523622174281729

remember: this is the most optimistic scenario for #Tether's commercial paper, and it is in addition to losses @patio11 explained they must have had from the crypto selloff. (those losses on crypto assets, it should be noted, can only have grown in recent weeks)

separately there is the issue of Tether having lent at least 10 figures to #Celsius. @Bitfinexed and others have done good reporting on this. while Celsius hasn't gone tits up yet, there is reason to believe it could do so... and quite soon.

At that point tether would take another $1B+ or more dollar loss against $162M in stated equity as of March 31st.

You can do the math here; when billions meet millions the billions always win.

One final thought: if tether really had put its $72B of assets where its statements have claimed - i.e. into US Treasuries and safe commercial paper - it should have earned a hell of a lot more than $162M in interest payments. 1% of $72B is $720M... in other words, "mad sus"

One more really important thing: #Tether still holds a metric fuck ton of commercial paper, almost certainly not in USD. And if it's not USD, it doesn't matter. Euro vs. USD also got rekt. JPY vs. USD? Rekt. etc.

And if #Tether holds Russian commercial paper... the exchange rate is irrelevant, they can't redeem it for $USD at any price if they ever want to touch the global banking system again.

for people who are reading this thread without knowing that #CelsiusNetwork, one of #Tether's creditors i mentioned above, happened to blow up a few minutes after i posted this thread:

https://twitter.com/jjtho/status/1536168560673824769

***UPDATE***: here's an analysis i wrote on saturday about what i thought could happen in #cryptocollapse that twitter allows

#CElsius puts us at step 5 of 7 in my "worst case scenario" playbook. it's all happening as i feared.

$BTC $ETH

https://twitter.com/Cryptadamist/status/1536212317821706241

UPDATE: Tether is starting to depeg for real now. someone is trying to dump lots of tether onto retail bagholder for actual fiat. Checked @whale_alert and i see #Bitfinex just moved $83M tethers.
@BennettTomlin @ben_mckenzie @ahcastor @Bitfinexed @davidgerard @CasPiancey

for anyone who is unaware, #Bitfinex and #Tether are run by the same small group of con artists. link is @ZekeFaux's excellent reporting for Bloomberg way back in Oct. 2021

Bitfinex moving money means con artists are probably trying to get $ out.

bloomberg.com/news/features/…