© Reuters.
The ongoing trial of Sam Bankman-Fried, the co-founder of FTX, has brought to light the intricate relationship between his trading firm Alameda Research, and , a prominent stablecoin issuer. From 2020 to 2022, Alameda was Tether’s largest non-exchange customer, receiving around $40 billion in USDT tokens directly from Tether. This amount represents approximately 20% of all USDT tokens ever issued.
During the trial, questions arose about the source of Alameda’s funds for the stablecoin issuance. Paolo Ardoino, the incoming CEO of Tether, clarified that Alameda wired dollars to Tether in exchange for cryptocurrency. However, details regarding how Alameda used these holdings remain undisclosed.
Contrary to claims that FTX and Alameda operated independently, former co-CEO Caroline Ellison testified during Bankman-Fried’s trial that Alameda borrowed nearly $13 billion in customer assets from FTX by June 2022.
Despite allegations of fraudulent operations against FTX, no charges related to these holdings have been filed against any executives from either company. As FTX started to face financial difficulties, Arduino emphasized that Tether did not have any exposure to FTX or Alameda.
Alameda received an estimated $39.6 billion in USD tokens from Tether’s treasury wallet, accounting for about 47% of the $84 billion USD currently in circulation. To mint or redeem USDT, FTX transferred funds via its own accounts at Deltec Bank or a US-based correspondent bank.
Alameda’s large-scale minting of USDT may have been driven by an attempt to exploit arbitrage opportunities on various exchanges. This process was confirmed by Sam Trabucco, Alameda’s former co-CEO. The banking networks established by Signature Bank (OTC:) and Silvergate Bank, which were popular solutions used by Tether and other crypto firms, collapsed earlier this year.
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