New Details Surface About How FTX Profited From Tether’s USDT

New Details Surface About How FTX Profited From Tether’s USDT
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Deltec Bank & Trust, a prominent financial institution in the Bahamas, faces legal action that accuses it of enabling FTX and its subsidiaries to benefit from Tether (USDT).

Allegedly, Sam Bankman-Fried’s Alameda Research boosted Tether’s growth through a clandestine credit line from Deltec.

How FTX Profited From Tether

A new lawsuit claims that Sam Bankman-Fried set up accounts at Deltec in 2018 to streamline access to Tether. During the crypto market rally between 2020 and 2021, the defunct crypto company reportedly minted billions of USDT. Allegedly, Alameda Research received these stablecoin tokens before payment, leveraging arbitrage opportunities for profits.

“Alameda could create USDT on credit through the unofficial Deltec Line of Credit and sell that USDT for a gain before having to fund the purchase by depositing US Dollars in Tether’s Deltec account,” Caroline Ellison, the former CEO of Alameda Research, reportedly

The lawsuit also suggested that Deltec aided in FTX’s broader fund misappropriation. The bank purportedly received deposits from FTX customers and transferred them to Alameda, granting exemptions from certain regulations and prioritizing Alameda’s withdrawals during the crypto market downturn.

Deltec representatives said neither the bank nor its chairman, Jean Chalopin, were aware of any wrongdoing. Tether is not a defendant in this case. The stablecoin issuer has consistently maintained that Alameda Research always paid for the USDT tokens with US dollars.

FTX Creditors Sue Lawyers

On the other hand, FTX creditors have initiated legal action against Sullivan and Cromwell, LLP (S&C), alleging its complicity in the events leading to the crypto exchange’s failure. The law firm is currently overseeing FTX’s bankruptcy proceedings

S&C is accused of actively participating in FTX Group’s fraudulent activities, which allegedly involved multibillion-dollar schemes, resulting in substantial fees of $8.5 million. The creditors asserted that S&C was cognizant of and supported the crypto exchange in its deceptive practices.

“S&C’s representation of FTX was expansive and included regulatory matters, mergers & acquisitions, bankruptcy litigation, personal representation of FTX Insider Defendants, representation on both sides of various deals with other entities, and most recently in the administration of the FTX bankruptcy proceedings,” the filing reads.

The relationship between FTX and S&C was facilitated by Ryne Miller, formerly a partner at S&C, who assumed the role of general counsel at FTX Group in August 2021. Miller allegedly directed numerous cases from FTX to his former employer, with the lawsuit citing at least 20 instances.

FTX creditors now seek damages for civil conspiracy, fraud, and aiding fiduciary breaches.