Out of all the companies in the crypto industry, the demise of Sam Bankman-Fried\u2019s (SBF) crypto exchange FTX was the most likely to pull stablecoin Tether (USDT) down with it. Tether has always maintained close links with SBF\u2019s former empire. Indeed, the vast majority of all transactions that FTX processed involved USDT.\u00a0<\/p>\n
FTX was seemingly hacked last week. The $600+<\/a> million taken was used <\/a>to short<\/a> USDT. Within hours, the crypto industry\u2019s arch-nemesis<\/a> Avraham Eisenberg also shorted tether with the same thesis: the collapse of FTX would de-peg the stablecoin<\/strong>.<\/p>\n These bets were not unfounded. Protos has led public disclosures regarding the close relationship between Tether and FTX. Our Tether Papers investigation<\/a> revealed that Alameda was Tether\u2019s second-largest<\/a> customer and received over $36 billion worth of Tether directly from Tether Ltd.<\/p>\n Yet despite dropping by a few pennies during the initial panic amid FTX\u2019s collapse, Tether has held its peg. The token remains<\/a> the world\u2019s third-largest crypto asset behind bitcoin and ether with a $65 billion market cap.<\/p>\n Tether\u2019s ability to hold its $1 peg is impressive. So far, it has withstood the bankruptcy of its once-second-largest customer<\/strong> plus two multi-hundred million dollar bets on its demise. Still, it\u2019s worth examining the ties between SBF and Tether.<\/p>\n A little-known date from Tether\u2019s history is May 8, 2019. On that day, Bitfinex, Tether\u2019s sister exchange that shared executives with the firm, published its LEO whitepaper. Bitfinex\u2019s LEO token offering sought to raise $1 billion and ultimately allowed Tether\u2019s exchange to receive a bailout from Block One and other LEO investors.<\/p>\n Interestingly, SBF founded FTX on that same day<\/strong>.<\/p>\n Read more: Is LEO token manipulating Tether\u2019s balance sheet?<\/a><\/em><\/p>\n Uncanny connections continue. Most large crypto exchanges prefer proprietary stablecoins. To list just a few examples, Gemini preferred GUSD, Binance preferred BUSD, and Coinbase preferred USDC.<\/p>\n However, FTX never issued its own stablecoin. For some reason, unlike other major crypto exchanges, FTX simply preferred <\/strong>tether. <\/strong>The overwhelming majority of transactions on FTX used USDT.<\/p>\n Tether has a close relationship with EOS through its early backer, Block One, due to Tether\u2019s sister exchange, Bitfinex. Block One money purchased<\/a> LEO tokens from Bitfinex.\u00a0<\/p>\n Block One and EOS\u2019s co-founder, Brock Pierce, also co-founded Noble Bank, one of Tether\u2019s banking partners.<\/p>\n Brock Pierce\u2019s other associations include<\/a> Noble Bank\u2019s CEO John Betts, whom he knew from a failed attempt to acquire Bitcoin\u2019s first major exchange, Mt. Gox. BitMEX Research pegged<\/a> the Puerto Rico-based Noble Bank as a likely banking partner for Tether<\/strong>, citing aggregate financial system data. Any uncertainty on this stems from Puerto Rico being a growing hotspot for digital asset businesses.<\/p>\n A brief bio<\/a> of Brock Pierce in a press release from October last year lists him as a co-founder of EOS Alliance and Block One. In it, he denies that he was ever a director or officer for Tether even though he had claimed to be a principal founder. Later, he incredibly claimed he transferred his stake out of the multi-billion-dollar Tether for zero consideration.<\/p>\n Block One gained notoriety from its curious, year-long offering of EOS tokens. Integra President Dr. John Griffin led<\/a> an investigation into EOS\u2019 allegedly multi-billion-dollar token sale. Integra found suspicious exchange accounts that were buying a lot of EOS in its token sale.<\/p>\n In reality, Griffin\u2019s paper suggested that the non-recycled, authentic amount of ICO purchases for EOS was just a few hundred million dollars \u23e4 a small fraction of EOS\u2019 oft-heralded $4 billion. Worse, the advertising claims about EOS \u201csucceeding\u201d at raising \u201cbillions\u201d of dollars induced demand from duped investors<\/strong> who believed EOS was more popular than it really was.<\/p>\n Crypto investigator Bitfinexed alleged<\/a> that through these recycling mechanisms, the Tether\/Bitfinex-backed Block One effectively gave EOS a $500 million bailout. Another investor lawsuit claimed<\/a> that Block One and its former Chief Strategy Officer, Brock Pierce, conspired to conduct an illegal securities sale and artificially inflated EOS\u2019 price during its year-long token sale.<\/p>\n The lawsuit also alleged that EOS was not as decentralized as investors were led to believe, citing Brock Pierce\u2019s later admission that a Chinese oligarchy controlled its blockchain<\/strong>.<\/p>\n The Securities and Exchange Commission (SEC) validated some of these concerns by charging<\/a> Block One with conducting an unregistered initial coin offering.<\/p>\n In May 2021, Alameda Research Head of OTC Ryan Salame admitted<\/a> to having extensive experience minting Tether. \u201cI\u2019ve been minting\/redeeming USDT on an institutional scale for over 3 years with multiple desks! \u2026 Note the process has always been smooth.\u201d<\/p>\n The Ethereum address<\/a> involved in this minting continued to move USDT between Bitfinex and FTX. The most recent transactions occurred on November 1, 2022.<\/p>\n FTX, Alameda, and Tether have always been intertwined. Nowadays, Tether denies<\/a> that FTX\u2019s demise poses a risk to USDT. However, Tether executives have not always told the truth. The New York Attorney General has documented<\/a> a series of lies told.<\/p>\n SBF also admitted<\/a> to withholding the truth about Alameda\u2019s operations when opening certain bank accounts. Indeed, SBF admitted that he omitted crypto activities entirely when describing Alameda, and selected the generic name \u201cAlameda Research\u201d to avoid certain banks\u2019 hesitation to serve the crypto industry.<\/p>\n Deltec Bank \u2013 with which Tether established<\/a> a banking relationship in 2018 \u2013 released<\/a> a statement denying any exposure to FTX. According to Deltec, FTX did not hold any of the bank\u2019s assets and neither did Deltec Bank trade any assets on FTX.<\/p>\n For more informed news, follow us on <\/em>Twitter<\/em><\/a> and <\/em>Google News<\/em><\/a> or listen to our investigative podcast <\/em>Innovated: Blockchain City<\/em><\/a>.<\/em><\/p>\n<\/div>\n![\"\"](\"https:\/\/i0.wp.com\/protos.com\/wp-content\/uploads\/2022\/11\/Screenshot-2021-11-10-at-17.51.14.webp?resize=795%2C575&ssl=1\")
SBF founded FTX same day Tether begins billion dollar fundraise<\/h2>\n
Lots of money from Block One and EOS<\/h2>\n
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Alameda Research\u2019s OTC manager mints Tether<\/strong><\/h2>\n
Final notes<\/strong><\/h2>\n