Was Tether at the center of Sam Bankman-Fried’s empire?

Of all the companies in the cryptocurrency industry, the demise of Sam Bankman-Fried (SBF) cryptocurrency exchange FTX was the most likely to bring down stablecoin Tether (USDT). Tether has always had close ties to the former SBF empire. In fact, the vast majority of all transactions FTX processed involved USDT.

Apparently FTX was hacked last week. the $600+ millions taken were used a short USDT. Within hours, the crypto industry arch enemy Avraham Eisenberg also shortened the leash with the same thesis: FTX Collapse Would Unpeg Stablecoin.

These bets were not unfounded. Protos has led the public disclosures about the close relationship between Tether and FTX. Our investigation Tether Papers revealed that Alameda was from Tether the second longest client and received over $36 billion worth of Tether directly from Tether Ltd.

Tether distribution from its inception until November 2021, when the Tether Papers were published.

However, despite losing a few cents during the initial panic amid the FTX crash, Tether has held its own. the token remains the third largest crypto asset in the world behind bitcoin and ether with a market capitalization of $65 billion.

Tether’s ability to maintain its $1 peg is impressive. So far, it has weathered the bankruptcy of its second largest client plus two multi-hundred million dollar bets on his demise. Still, the links between SBF and Tether are worth examining.

SBF founded FTX the same day Tether begins a billion dollar fundraiser

A little-known date from Tether’s history is May 8, 2019. On that day, Bitfinex, Tether’s sister exchange that shared executives with the firm, published its LEO whitepaper. Bitfinex’s LEO token offering sought to raise $1 billion and ultimately allowed the Tether exchange to receive a bailout from Block One and other LEO investors.

Interestingly, SBF founded FTX that same day.

Read more: Is the LEO token manipulating the Tether balance sheet?

The strange connections continue. Most of the big crypto exchanges prefer proprietary stablecoins. To list just a few examples, Gemini preferred GUSD, Binance preferred BUSD, and Coinbase preferred USDC.

However, FTX never issued its own stablecoin. For some reason, unlike other major crypto exchanges, FTX simply preferred tie. The vast majority of transactions on FTX used USDT.

Lots of money from Block One and EOS

Tether has a close relationship with EOS through its initial sponsor, Block One, due to Tether’s sister exchange Bitfinex. block one money bought Bitfinex LEO tokens.

Block One and EOS co-founder Brock Pierce also co-founded Noble Bank, one of Tether’s banking partners.

Other Brock Pierce partnerships include Noble Bank CEO John Betts, whom he met from a failed attempt to acquire the first major Bitcoin exchange, Mt. Gox. BitMEX Research bound Puerto Rico-based Noble Bank as a probable Tether banking partner, citing aggregate data from the financial system. Any uncertainty about this is because Puerto Rico is a growing hotspot for digital asset businesses.

a brief Biography by Brock Pierce in a press release from October last year mentions him as a co-founder of EOS Alliance and Block One. In it, he denies having been a director or officer of Tether even though he had claimed to be one of the main founders. Later, he unbelievably claimed that he transferred his multi-million dollar Tether stake for zero consideration.

Block One gained notoriety for its curious year-long EOS token offering. President Integra Dr. John Griffin He directed an investigation into the alleged multi-million dollar EOS token sale. Integra found suspicious exchange accounts that were buying a large amount of EOS in their token sale.

  • Their initial coin offering (ICO) lasted for over a year.
  • These shady wallets had enough time to sell the EOS they bought at the ICO for ether (ETH), and then use that ETH to buy more EOS from the ICO.
  • This recycling activity created the false impression that buyers were spending billions of dollars to acquire EOS.

In reality, Griffin’s article suggested that the authentic, unrecycled amount of ICO purchases for EOS was only a few hundred million dollars, a small fraction of the frequently advertised $4 billion for EOS. Worse still, advertising claims about EOS “success” in raising “billions” of dollars induced demand from misled investors who believed that EOS was more popular than it actually was.

Bitfinexed Crypto Researcher alleged that through these recycling mechanisms, the Tether/Bitfinex-backed Block One effectively gave EOS a $500 million ransom. Other investor demand reclaimed that Block One and its former chief strategy officer, Brock Pierce, conspired to conduct an illegal sale of securities and artificially inflated the price of EOS during its year-long token sale.

The lawsuit also alleged that EOS was not as decentralized as investors were led to believe, citing Brock Pierce’s later admission that a Chinese oligarchy controlled its blockchain.

The Securities and Exchange Commission (SEC) validated some of these concerns by charging Block One with the realization of an initial offer of coins not registered.

Alameda Research OTC Manager Coins Tether

In May 2021, Alameda’s head of OTC research, Ryan Salame accepted to have extensive experience coining Tether. “I have minted/redeemed USDT on an institutional scale for over 3 years with multiple desks! … Keep in mind that the process has always been smooth.”

the ethereum address involved in this minting continued to move USDT between Bitfinex and FTX. The most recent transactions occurred on November 1, 2022.

final notes

FTX, Alameda, and Tether have always been intertwined. Today Tether denies that the demise of FTX poses a risk to USDT. However, Tether executives have not always told the truth. New York Attorney General has documented a series of lies told.

SBF too accepted to hide the truth about Alameda’s operations by opening certain bank accounts. In fact, SBF admitted that it omitted crypto activities altogether when describing Alameda, selecting the generic name “Alameda Research” to prevent certain banks from hesitating to serve the crypto industry.

Deltec Bank – with which Tether established a banking relationship in 2018 – released a statement denying any exposure to FTX. According to Deltec, FTX did not own any of the bank’s assets and Deltec Bank also did not trade in any assets in FTX.

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