Alameda's $38B Tether Trades in 2021 Exceeded Its Assets, Says Coinbase Director
Summary:
Coinbase Director Conor Grogan analyzes blockchain data to reveal that Alameda Research has exchanged more than $38 billion in Tether (USDT) tokens in 2021 without equivalent assets under management. Grogan suggests these redemptions could be connected to FTX's orders from Alameda's tokens which were largely carried out during the Terra Luna algorithmic stablecoin collapse. The discussion also covers former Alameda co-CEO Sam Trabucco's insider insights on Tether's significant USDT mints and how Alameda capitalized on arbitrage opportunities.
Conor Grogan, Director at Coinbase, by analyzing blockchain data, has observed that Alameda Research has exchanged more than $38 billion worth Tether (USDT) tokens in 2021, even though it did not have matching assets under control. The onchain information implies that Alameda was in charge of producing $39.55B of USDT, 47% of the current circulating supply of Tether.
Grogan reported that the total worth of USDT produced exceeded the total assets held by Alameda at the peak of the cryptocurrency market's boom in 2021. Further, Grogan hinted that FTX's request for USDT redemptions could have been drawn from Alameda's tokens, summing to 3.9 billion USDT. Most of these redemptions were executed during the breakdown of the Terra Luna algorithmic stablecoin.
Sam Trabucco, ex-co-CEO of Alameda in January 2021, voiced his opinions on reports of massive USDT mints by Tether and discussed how Alameda capitalized on arbitrage chances linked to the worth of USDT through numerous trading pairs on different exchanges.
Notably, the price at which USDT compares to $1 is usually unstable as Bitcoin to USDT trades often displayed a slight shortfall in basis points when juxtaposed to BTC/US dollar trades. Trabucco noted that other US dollar stablecoins like USD Coin (USDC) possessed a less volatile premium due to the creation and redemption process involved for USDT. Since only certain companies have the capacity to create and redeem USDT, most market members buy and trade USDT from markets rather than directly from Tether’s treasury.
Interestingly, Trabucco added that Alameda could "safely make large wagers" due to its capability to do USDT creations and redemptions when required. He labeled this as a “win-win” circumstance for both the trading firm and the stability of USDT's dollar peg.
Therefore, Alameda generated income by capitalizing on the arbitrage premium through its ability to create USDT tokens. Bankman-Fried also contributed to the discussion in 2021, stating that Alameda actively replaced USDT for US dollars.
Cointelegraph has contacted Tether to verify the volume of USDT tokens that were produced at Alameda's request.
Published At
10/10/2023 9:40:09 AM
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