Prediction as of 3/15/2019 JST:
- Bitfinex is insolvent, for the Bitcoin economy's usual quixotic definition of insolvent.
- This happened as a result of collateralizing Tether with BTC and other cryptocurrencies during the run-up.
- Bitfinex / Tether treat whether Bitfinex held the collateral or Tether held the collateral as a material distinction, but that's ridiculous due to common control. The important fact: in 2018, ground truth diverged from "There is $1 in a bank account for every tether outstanding" to "There is $1 in a bank account and/or $1 worth of Bitcoin at prevailing prices available to Bitfinex for every tether outstanding."
- This makes Tether synthetically long Bitcoin, via a receivable from Bitfinex. Bitfinex took the newly issued Tether and then, since this accounting shellgame appears to balance its books and leave it with surplus Bitcoin, either sold or lent the Bitcoin to short sellers during the run-up.
- If Bitfinex simply sold the Bitcoin, they're doing relatively well for themselve