Deltec Accused of Giving Alameda ‘Secret’ USDT Credit Line

By Mark Hunter

1 day agoMon Feb 19 2024 09:05:34

Deltec-Accused-of-Giving-Alameda-‘Secret’-USDT-Credit-Line

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  • Recent revelations from a Florida lawsuit have unveiled deeper connections involving Sam Bankman-Fried, his hedge fund Alameda Research, and Deltec Bank
  • The lawsuit alleges misconduct, including misappropriation of funds and Tether market manipulation
  • Critics link Tether’s ballooning market cap during the last bull market to alleged misconduct highlighted in the lawsuit

Recent revelations from a Florida lawsuit have shed light on deeper connections involving cryptocurrency entrepreneur Sam Bankman-Fried, his hedge fund Alameda Research, and the Bahamian bank Deltec. The lawsuit, first reported by Bloomberg, alleges misconduct on the part of Bankman-Fried and his companies, including the misappropriation of customer funds and the manipulation of the Tether stablecoin’s market. Deltec and Tether have denied any wrongdoing, while Tether critics have pointed to it as a reason for the ballooning Tether market cap during the last bull market.

Did Alameda Pump Tether Price?

Bloomberg didn’t report who has filed the lawsuit, suggesting that it is a federal rather than civil action, but the most important element is the cavalcade of text messages, declarations, and other evidence that suggest a complex web of connections involving Bankman-Fried, his hedge fund Alameda Research, and Deltec has been uncovered. 

The lawsuit alleges that Alameda Research played a pivotal role in fueling the growth of the Tether stablecoin USDT, leveraging a secret short-term line of credit from Deltec. This arrangement, worth billions of dollars, is said to have contributed to the misappropriation of customer funds and the manipulation of the cryptocurrency market, given that Tether’s involvement in the alleged scheme is central to the accusations.

Tether is not named as a defendant in the proceedings, but skepticism surrounding its total assets, which reportedly stand at $97 billion against $91.6 billion in liabilities as of December, has long persisted in the cryptocurrency community.

Deltec and Tether Deny Wrongdoing

Both Deltec and Tether deny any knowledge of misconduct or wrongdoing; Desiree Moore, a lawyer for Deltec, emphasized that the bank and its chairman, Jean Chalopin, were unaware of any impropriety until it was made public through the lawsuit. Similarly, Stuart Hoegner, a lawyer for Tether, has not commented on the allegations.

The lawsuit further alleges that Deltec prioritized Bankman-Fried’s withdrawals over those of other customers during the cryptocurrency market crash, exacerbating concerns about fair treatment and transparency.

Depending on how the proceedings unfold, there is a danger that Tether’s reputation could be damaged as much as Deltec’s, which would be a concern to the company after its multi-year battle to improve its image.