Alameda sparks controversy by minting $40 bln of USDT
- The manner in which transactions between Alameda Research and FTX were executed is dubious.
- Adding to the intrigue is the fact that Tether has never undergone an independent audit.
Alameda Research, a major player in the cryptocurrency space, has come under scrutiny for its creation of $40 billion worth of Tether’s [USDT] stablecoin. This massive issuance represents approximately 47% of Tether’s current circulating supply, raising questions about the transparency of these transactions.
The revelation came to light through on-chain data and was further substantiated by Conor Grogan, Director of Coinbase. Initial estimates by Protoss pegged the figure at around $36.7 billion, but Conor’s findings, including additional wallet discoveries, pushed the number even higher.
Onchain data shows that Alameda was responsible for minting $39.55B of USDT, a number that is 47% of Tether's circulating supply today
A previous report by Protoss estimated the number at around $36.7B; I was able to update these figures with additional wallets I found pic.twitter.com/fYBvGAYlFd
— Conor (@jconorgrogan) October 9, 2023
What’s concerning is the manner in which these transactions between Alameda Research and FTX, its sister company, were executed. They reportedly used customer deposits to offset their losses and engage in trading activities. Such practices have drawn criticism, particularly given Alameda’s questionable reputation in the industry.
Adding to the intrigue is the fact that Tether, despite being a widely used stablecoin, has never undergone an independent audit. This lack of transparency has long been a point of contention in the cryptocurrency community.
Reports raise concerns about transparency
Conor Grogan pointed out that assessing redemptions in this context is challenging due to Tether’s off-chain coordination of burns. Unlike traditional cryptocurrencies that employ deposit addresses, Tether relies on direct fund transfers to its treasury. This makes it harder to track the movement of funds.
One significant observation was that Alameda generated more USDT than the total assets under its management during the peak of the cryptocurrency market. This raises eyebrows and prompts further questions about the nature of these transactions and their impact on the broader cryptocurrency ecosystem.
The timing of this revelation coincides with the ongoing fraud trial of Sam Bankman-Fried, the founder of FTX. Charges related to fraudulent activities await him.
Another twist in the Tether saga was its decision to quietly resume lending its USDT stablecoins. This move comes a year after Tether ceased offering secure loans. The rationale behind this decision is to safeguard long-standing customers from liquidity shortages or the need to sell assets at unfavorable rates.
Tether’s foray into the AI space is yet another development that has raised eyebrows within the cryptocurrency community. Recent reports revealed that Tether had taken an undisclosed stake in the German-based crypto miner Northern Data Group. This strategic move hints at Tether’s ambition to diversify its holdings beyond the realm of stablecoins.
Interestingly, the total supply of Tether USDT stablecoins sitting on exchanges has reached a multi-month high. This suggests increased buying power among cryptocurrency traders, potentially influenced by Tether’s strategic decisions and market dynamics.