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Alameda Held 47% of Minted Tether Supply, Claims Coinbase Boss

2 mins
Updated by Geraint Price
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In Brief

  • Alameda held almost $40 billion of the Tether minted between 2014 and 2021, Conor Grogan estimated, using the latest public wallet information.
  • The trading firm provided FTX customers key liquidity before both companies filed for bankruptcy following a leak of Alameda's balance sheet.
  • Former Alameda Research CEO Caroline Ellison is expected to testify that Sam Bankman-Fried misused FTX customer assets to fund lavish spending.
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Coinbase’s head of product and business operations, Conor Grogan, estimated that Alameda Research (Alameda) minted $39.5 billion in USDT (Tether) before its bankruptcy. At its peak, Alameda’s Tether made up about half of its assets under management.

Former Alameda executive Sam Trabucco said Alameda was one of a few companies that was able to restore Tether’s $1 peg through minting and redemptions. The FTX-affiliated hedge fund redeemed $4 billion in USDT after the collapse of the algorithmic stablecoin TerraUSD.

Alameda and Cumberland Enabled USDT Arbitrage

USDT is a stablecoin that relies on active arbitrage to keep its value at $1. Traders can increase its value by selling other coins like Bitcoin in exchange for Tether.

Read more: How to Buy USDT in Three Easy Steps – A Beginner’s Guide

Cumberland and Alameda, both firms that profit from the spreads between bid and ask prices, received billions in Tether to improve liquidity for traders. Alameda supplied crucial liquidity for FTX customers until both companies filed for bankruptcy in 2022. 

Protos estimates that Alameda received $36.7 billion of all the USDT Tether issued at between 2014 and 2021. Grogan’s later estimates include balances in public wallet addresses, addresses in court filings, and information from the FTX bankruptcy estate.

Alameda Tether minted, Caroline Ellison Alameda, Conor Grogan Alameda Wallet Balances
Alameda USDT wallets | Source: X (Twitter)

FTX and Alameda filed for bankruptcy after reports surfaced that Alameda’s balance sheet held a large proportion of FTT tokens. FTX lacked liquidity to meet the ensuing withdrawal demand and tried to raise funds from external investors.

On Nov. 11, 2022, the exchange filed for bankruptcy and appointed insolvency expert John Ray to oversee the remuneration of customers. Prosecutors charged former FTX CEO, Sam Bankman-Fried, with conspiracy to commit money laundering, fraud, and campaign finance crimes.

Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell

Former Alameda CEO Caroline Ellison to Testify

Bankman-Fried’s criminal trial commenced at a Manhattan Federal court a week ago. After the court selected its jury, prosecutors and defense made opening statements and heard a testimony from FTX co-founder Gary Wang.

According to Wang, FTX’s code had a loophole that enabled Alameda to borrow FTX customer money. Bankman-Fried then allegedly used the loans, backed by Alameda’s FTT tokens, to fund his and other executives’ lavish lifestyles.

Caroline Ellison, Alameda’s former CEO, is expected to take the stand in New York later on Tuesday. Like Wang, Ellison was a member of Bankman-Fried’s inner circle of trusted lieutenants who is expected to reveal more details on the complicated relationship between FTX and Alameda.

Bankman-Fried’s defense is expected to portray Ellison as Bankman-Fried’s disgruntled ex-lover who ignored their client’s instructions to hedge Alameda against a crypto downturn. Her indifference, Bankman-Fried’s lawyer Mark Cohen previously argued, could have “offset” the severity of FTX’s collapse.

Do you have something to say about the Tether that was minted for Alameda, Caroline Ellison’s testimony against Sam Bankman-Fried, or anything else? Please write to us or join the discussion on our Telegram channel. You can also catch us on TikTokFacebook, or X (Twitter).

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...