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Coinbase director accuses Alameda of minting $38B USDT for arbitrage profit



Conor Grogan, a director at Coinbase, has drawn attention to on-chain data that reveals significant Tether (USDT) mints, which Alameda Research, reportedly led by Sam Bankman-Fried, ordered in 2021.

According to the blockchain data highlighted by Conor Grogan, Alameda Research acquired over $38 billion worth of Tether (USDT) tokens in 2021, even though they lacked sufficient funds. In 2021, the total value of USDT created exceeded the value of Alameda’s assets, even during the peak of the bull run in the broader cryptocurrency market.

In early 2021, Sam Trabucco, the former co-CEO of Alameda, shared his perspective on the widespread reports of substantial USDT issuances by Tether and provided valuable insights into how Alameda exploited arbitrage opportunities related to the fluctuating value of USDT concerning various trading pairs across different exchanges.


Trabucco stated that the premium at which USDT traded for over $1 often experienced volatility. This volatility stemmed from the slightly lower basis points in Bitcoin-to-USDT trades compared to Bitcoin-to-USD trades.

“And note, these are the best markets to use to determine where USDT is trading — the combo of BTC/USDT and BTC/USD markets, e.g., are WAY more liquid than any exchange’s USDT/USD market, so the prices from these (even though it’s a two-leg trade) matter way more.”

According to Trabucco, the premium for USD Coin was more stable because other US dollar stablecoins did not have the minting and redemption process present for USDT.

Many firms can generate and exchange USDT, leading the majority of market participants to acquire and exchange USDT on the open market rather than directly from Tether’s reserve.

“And when USDT gets above $1? A sophisticated firm like Alameda with great setups on all the exchanges and bots to execute more than one leg at a time is gonna want to sell! And we do — a LOT.”

SBF Seeks Examination of FTX Lawyers in $200M Alameda Loans

In another news, Sam Bankman-Fried’s legal team seeks  to investigate the alleged role of FTX lawyers in approving a $200 million loan from Alameda, which Gary Wang requested.

In the lead-up to the eagerly awaited trial, a court ruling on October 1 temporarily prevented Bankman-Fried from assigning responsibility to FTX legal counsel who were reportedly  engaged in devising and authorizing loans between Alameda and FTX. Judge Lewis Kaplan issued the ruling, prohibiting Bankman-Fried’s legal team from mentioning FTX lawyers without first obtaining permission from the court.

After the prosecution initially cross-examined former FTX co-founder Gary Wang on October 9, the defense is currently requesting approval to interrogate Wang regarding the alleged participation of FTX legal advisors in arranging loans granted to FTX by Alameda.

Crypto Journalist Ana Paula Pereira has been covering Bankman-Fried’s trial in New York. According to her report from the Federal District Court in Manhattan, the defense is portraying Bankman-Fried as a young entrepreneur who made mistakes while managing the rapid growth of FTX and Alameda.


Read also: EU considers tighter regulations for large-scale AI models

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