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‘Crypto Sleuths’ Query Alameda Research’s Tether Transactions

FTX founder Sam Bankman-Fried’s criminal trial has reignited another mystery.

As Bloomberg News reported Monday (Oct. 30), “crypto sleuths” are examining the relationship between FTX’s sister company Alameda Research and stablecoin issuer Tether.

According to the report, Alameda was Tether’s biggest non-exchange customer between 2020 and 2022, with blockchain data showing it got almost $40 billion in transfers of its stablecoin USDT from the company — or about one-fifth of all USDT tokens ever issued. 

This massive amount, Bloomberg said, has raised questions about how Alameda could afford to issue the stablecoin, as well as speculation that Alameda might have used other means to help fund the purchases, like its bets on startups or dealings with lenders.

The report notes that Tether’s incoming chief executive, Paolo Ardoino, seemed to address the issue in a recent social media post, saying Alameda fund wired dollars to Tether in exchange for the cryptocurrency. However, it’s not clear how Alameda sought to use those holdings.

“This was one major on-ramp, maybe the major on-ramp” for traders seeking access to USDT, said Jonathan Reiter, CEO of blockchain analytics firm ChainArgos. “It is certainly peculiar that FTX, which is now alleged to have run an essentially fraudulent exchange, still somehow managed to intermediate tens of billions in one-way flow from USD into USDT.”

Neither Bankman-Fried or any other Alameda executives have been charged with anything connected to Alameda’s USDT holdings, and the company’s relationship has not been explored in detail at Bankman-Fried’s trial, Bloomberg said. Ardoino has said Tether had no exposure to FTX or Alameda.

The news came the same day that Bankman-Fried took the stand to undergo cross-examination by prosecutors in his fraud trial.

In court last week, the one-time crypto wunderkind testified that he was “very surprised” to learn that Alameda Research owed $8 billion to FTX, telling the court he learned of the debt in October 2022, just weeks before FTX declared bankruptcy.

However, Bankman-Fried’s former colleagues have testified he was aware of the hole going back to at least June of last year.

In addition, Bankman-Fried told the court that his biggest mistake was not having a dedicated risk management team and a chief risk manager at FTX, but maintained that the large sums of money FTX spent on investments and marketing was money it was permitted to spend, not misappropriated customer funds.