05-02-2025 
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Tether’s profits took a significant hit in the first quarter of 2025, but the market-leading stablecoin issuer has a surefire plan to squeeze some retail suckers and get back in the black.
- Tether’s tale of the Q1 tape
- Tether’s not-an-auditor fined (again)
- Tether has Twenty-One reasons to smile
- Mimicking Michael for fun and profit
- USDT on Tron still the King of Krime Koins
- Stablecoins fueling high-risk activity
On May 1, Tether issued the latest quarterly attestation of the reserves backing its dollar-denominated USDT stablecoin. As of March 31, $143.7 billion worth of USDT was circulating in the wild, while Tether’s assets totaled $149.3 billion, giving the company $5.6 billion in what it calls ‘equity.’
However, that equity stood at $7.1 billion as of December 31, 2024, and while Tether claimed an operating profit of “over $1 billion,” the attestation’s ‘financial result’ was a mere $852 million. Either way, it’s a far cry from the $3.4 billion quarterly profit/result it averaged last year.
This is the first attestation since Tether relocated its headquarters from the British Virgin Islands to El Salvador. As a result, the attestation no longer includes details from Tether’s non-stablecoin units (commitment to openness and transparency notwithstanding).
As for the makeup of its reserves, Tether now boasts $98.5 billion in U.S. Treasury bills—allegedly custodied by Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX)—up from $94.5 billion at the end of 2024. Throw in the $15 billion in overnight reverse repurchase agreements and $6.5 billion in money market funds and Tether’s ‘total T-bill exposure’ is around $120 billion.
Tether’s less liquid reserve assets include $7.7 billion in BTC tokens (-$200 million from Q4), $6.7 billion in ‘precious metals’ (+$1.4 billion) and nearly $4.5 billion in ‘other investments’ (+$500 million). Actual cash on hand was just $64.3 million, down from $108.8 million at the end of last year, and representing a mere 0.04% of its total reserves.
Tether’s controversial ‘secured loans’ continue to climb, rising $600 million from Q4 to $8.8 billion. It’s been over two years since Tether pledged to eliminate these loans from its balance sheet when the total outstanding stood at only $6.1 billion.
Tether previously claimed that the loans weren’t a big deal since the company’s ‘equity’ exceeded the loans’ value. However, according to the Q1 equity stat, this argument no longer applies, meaning a healthy chunk of the loans is once again backing issued USDT.
Tether’s ‘dividend distributions’ totaled $2.35 billion in Q1—on par with previous quarters—much of which appears to have gone to Tether’s burgeoning non-crypto investments (more on this later).
Tether’s non-auditor fined for non-attention to detail
As always, Tether’s attestations are conducted by BDO Italia, the Italian unit of the BDO professional services network. As always, BDO Italia was granted only a single-day snapshot of Tether’s books, meaning it has no way of knowing what those books looked like on any day before March 31 or any day after. (Given historical precedent, this matters.) Tether has yet to submit its books to a proper audit, although it keeps feigning interest in doing so.
Fun fact: in February, BDO Italia was fined €250,000 ($282,768) by CONSOB, Italy’s securities regulator, for the “serious violation” of six International Standards of Auditing principles in auditing the financial statements of The Rock Trading (TRT), a defunct Italian crypto exchange.
TRT collapsed in February 2023, leading to €66 million ($74 million) worth of losses for its former customers. CONSOB said BDO Italia made “significant errors” in “understanding [TRT] and the concept in which it operates.”
This marked the sixth time in the last four years that CONSOB has penalized BDO Italia, including a €570,000 ($644,781) penalty in 2021 for (among other things) “shortcomings in the methods of determining the risk profile of money laundering and terrorist financing of customers.”
Just something to keep in mind the next time you hear Tether CEO Paolo Ardoino crowing about transparency and all and then ask yourself who’s watching the watchmen.
Twenty-One reasons to steer clear
Getting back to Tether’s investments outside the ‘crypto’ space, Tether recently boosted its stake in Italian football club Juventus to 10.12% of the issued share capital, up from its previous 8.2%, giving Tether a 6.18% share of voting rights.
On April 30, Tether announced that it had boosted its stake in South American agribusiness Adecoagro to 70%. The move followed last month’s tender offer that priced the company’s shares at $12.41, a one-third premium to its price at the time.
After Tether announced the results of its tender offer, Bank of America analysts downgraded the stock to ‘underperform,’ citing “Tether’s core business volatility.” Adecoagro, which has ‘sustainable production’ operations in Argentina, Brazil and Uruguay, saw its share price swiftly tumble from nearly $12 to $9 as other analysts echoed BoA’s concerns.
However, Tether’s boldest investment yet puts it on more familiar footing. Last week, Tether was named majority owner of Twenty-One Capital Inc, a new firm established to mimic the ‘proxy BTC ownership’ success of Strategy (NASDAQ: MSTR), the Michael Saylor-led outfit formerly known as MicroStrategy.
Along with the Bitfinex digital asset exchange (Tether’s equally controversial sister company), Twenty-One also boasts the involvement of SoftBank Group and Cantor Equity Partners (CEP), a special purpose acquisition company (SPAC) led by Brandon Lutnick, son of Cantor founder Howard Lutnick. Brandon, a former intern at Tether’s Swiss offices, assumed Cantor’s CEO role after his father left to become Donald Trump’s Commerce secretary.
Basically, Twenty-One plans to allocate 42,000 BTC tokens—worth $3.9 billion at the time of launch—to fund its ‘treasury,’ then allow investors to buy shares in Twenty-One and reap the bountiful rewards as BTC’s fiat price rises inexorably to the stratosphere. (Ahem.) In other words, it’s BTC investing for people who don’t want to open a digital exchange account, buy shares in an ETF or muck around with digital wallets and private keys.
Tether will commit nearly $1.6 billion worth of BTC (plus an additional $462 million in ‘interim funding’) to the project, with SoftBank ($891 million) and Bitfinex ($594 million) anteing up the rest. (For the record, Softbank’s BTC contribution is listed as ‘Tether on Behalf of SoftBank’). In exchange, Tether gets a 51.7% share of voting rights, with Bitfinex controlling 19.3% and SoftBank claiming the remaining 29%.
Twenty-One plans to add additional BTC over time “in a shareholder friendly manner wherever possible.” Currently, the plan is to raise $385 million via convertible bonds and $200 million via a private equity placement. Whether they’ll ultimately take on billions of dollars in debt à la Saylor to keep buying BTC remains unclear.
Twenty-One’s CEO will be none other than Jack Mallers, the perpetually adolescent founder/CEO of digital payments firm Strike, which played a key role in the failed bid to bring BTC/USDT-based payments to El Salvador.
Michael Saylor as your role model? What could possibly go wrong?
Weirdly, a Twenty-One pitch deck surfaced with the title Project Mystery Investor Presentation, despite it bearing a date of April 23, the same day that word of the project first broke. The deck cites Strategy as blazing the trail Twenty-One intends to follow, strongly implying that Twenty-One will enjoy the same share price inflation that Saylor’s company has enjoyed since he embarked on his ‘BTC treasury’ campaign a few years ago.
The problem is, investors who’ve bought Strategy shares are often paying a ridiculous premium for the ‘convenience’ Saylor’s company offers. In the immediate aftermath of Trump’s election victory last November, Strategy was trading at nearly 3.5x the value of the BTC in its treasury. While that multiple has since fallen to around 2x, that’s still a ridiculous premium to pay for not learning how to work a digital wallet.
It’s even more ridiculous considering Strategy’s fine print warns investors that their shares don’t give them any “ownership interest” in the company’s BTC. Investors would also be at the back of the creditor queue if something were to go seriously awry. You know, like Saylor being charged with fraud (for the third time) and the company going tits-up.
(For the record, this is one of the best explanations of the road Saylor has steered the Strategy bus down. Woe to any passengers who climb on board at this stage because they’re just exit liquidity for everyone who got in earlier.)Investors who buy into Twenty-One via Cantor’s CEP SPAC will ‘own’ a whopping 2.9% of the entity’s BTC but get zero voting rights. Predictably, CEP shares were trading around $10.60 on April 22 but have since risen to over $50, an embarrassingly high multiple of its initial supply of BTC.
Given Tether’s Q1 profit decline, it appears as if the company was seeking a way to use its Cantor contacts to tap U.S. investors/suckers for cash, without having to go through the process of being properly vetted by U.S. regulators (even the neutered ones currently kowtowing to the crypto bro in the White House).
USDT on Tron still the crime coin di tutti crime coins
Following a recent New York Times profile, Ardoino publicly bristled at the paper of record reminding everyone of USDT’s role as a global’ crime coin.’ Ardoino told CNBC that the Times “has their facts wrong and they should study more.”
However, a new crypto crime report from compliance/investigative firm Bitrace found that USDT played a major role in stablecoin inflows to ‘high-risk’ addresses. These addresses—defined as “used by illicit entities … to receive, transfer or store stablecoins” on the Ethereum and Tron blockchains—received $649 billion in 2024, up from $574.7 billion in 2023 and from $302.5 billion in 2022. (The full report is available for download here.)
The high-risk share of all stablecoin transaction volume fell slightly from 5.94% in 2023 to 5.14% last year. However, that 2024 figure is still dramatically higher than the 2.8% in 2022 and 1.63% in 2021, so maybe hold your applause until we’re done recapping here.
Previous Bitrace reports showed USDT on Tron accounting for the vast majority of high-risk inflows and 2024 was no exception. While USDT on Ethereum showed a modest uptick in high-risk inflows from 2023 to 2024, it remains a small fraction of the USDT on Tron figure. (And just in time, here’s a picture of Ardoino and Tron founder Justin Sun hanging at the crypto confab in Dubai!)
By comparison, Circle’s USDC stablecoin continues to account for a tiny sliver of the overall high-risk inflows, with a modest boost in USDC on Ethereum activity last year (but only back up to 2022 levels).
Bitrace links the heavier illicit activity on Tron to the fact that the network is less congested than Ethereum, making Tron transaction fees smaller and settlements quicker. Last year’s modest bump in Ethereum-based high-risk activity is apparently the result of Tron raising its fee structure, meaning crooks and terrorists are apparently as cost-conscious as the rest of us.
Who’s doing what illegally
As for what constitutes ‘high-risk’ activity, business addresses associated with illicit and gray-market transactions received inflows totaling $278 billion last year, up from $245.5 billion in 2023. Both figures represent dramatic boosts from 2022, which saw just $70.3 billion in illicit in-flows. Bitrace attributes much of this recent surge to entities such as the Huione darknet marketplace, the Amazon (NASDAQ: AMZN) of pig butchering and other scams.
Not so coincidentally, stablecoin-related fraud surged in 2024, its $52.5 billion in inflows dwarfing the $12.9 billion in 2023. Bitrace cautioned that this might not reflect the full depth of the fraudulent problem, in part due to victims’ unwillingness to report being victimized. Binance and OKX dramatically outpaced rival exchanges in the amount of stablecoins withdrawn by fraud victims.
Online gambling platforms accounted for nearly $218 billion in in-flows last year, up from $185 billion in 2023. Here, USDC finally punched above its weight, its share rising from 5.2% in 2023 to 13.4% last year.
Stablecoin-based money laundering fell from $118 billion in 2023 to $86.3 billion last year, about the same as 2022’s total. Bitrace couldn’t account for the decline, except to suggest that regulators and law enforcement agencies are getting better at tracking this type of criminality.
Tether loves promoting its newfound willingness to freeze USDT addresses when law enforcement ‘requests’ them to do so, despite having refused to do so for years prior to this change of heart. Accordingly, the dollar value of stablecoins frozen last year by both Tether and Circle hit $1.3 billion, nearly $1 billion more than frozen in the previous two years.
However, the stablecoin inflow to those frozen addresses prior to freezing was nearly $13 billion last year, suggesting that Tether and Circle are really only great at closing the barn door long after the criminal cows have bolted.
A more positive stat came via the dramatic drop in stablecoin inflows to addresses sanctioned by government authorities like the Treasury Department’s Office of Foreign Assets Control (OFAC). Just $160 million flowed into these addresses last year compared with $11.2 billion in 2023, which Bitrace attributes to OFAC sanctioning Russia’s Garantex exchange and shutting down the Hydra darknet marketplace.
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