USDR Stablecoin Crisis and SBF's Alleged Actions Amid Crypto Market Developments
Summary:
The USDR stablecoin fell from its dollar tether on October 11, leading to panic selling, with one trader notably losing his entire investment. The crisis unfolded amid criminal trial revelations from star witness Caroline Ellison involving former Alameda Research CEO Sam "SBF" Bankman-Fried. She claimed he bribed Chinese officials to unlock frozen funds, considered selling FTX equity to the Saudi crown prince, and ordered deletions of compromising messages. The European Securities and Markets Authority (ESMA), meanwhile, reported that DeFi currently poses no significant risk to financial stability, but still requires monitoring.
The USDR stablecoin divorced from its dollar parity on October 11, following over 10 million stablecoin redemption requests by users. Although fully backed, the bulk of its assets were tied in non-liquid, tokenized real estate assets. This caused the coin's price to drop to 53 cents. The situation was devastating for both the USDR team and its holders, with one trader apparently having a particularly bad day by exchanging 131,350 USDR for zero US dollar coin (USDC) amid the panic selling, resulting in a total investment wipeout.
In the midst of USDR's detachment from the dollar, a trader accidentally exchanged 131,350 USDR for zero USDC in a panic sell-off. This fact came out during the criminal trial of Sam "SBF" Bankman-Fried, where star witness Caroline Ellison claimed the former FTX CEO considered selling FTX shares to the Saudi crown prince. She also claimed that he tried to use identities associated with Thai sex workers and attempted to bribe Chinese officials to unlock frozen funds.
Former Alameda Research CEO Ellison, who has been romantically linked with SBF, testified that he paid a bribe of millions of dollars to Chinese officials in order to unlock funds frozen in local Chinese exchange platforms. A sum of a billion dollars was said to be locked in China, and the bribe to unlock it reportedly was $150 million. The money in question belonged to Alameda Research and was held up on crypto exchanges, Huobi and OKX, after a 2021 anti-money laundering case by Chinese authorities.
Ellison then claimed that prior to bribing officials, they tried to hire a local Chinese lawyer for negotiations. She also said that Bankman-Fried instructed FTX staff, including her, to delete all associated message exchanges in the Signal app. She revealed he resorted to usages of wallets in other people's names, linked to Thai sex workers after unsuccessful attempts with lawyers.
Meanwhile, in its October 11 report, the European Securities and Markets Authority (ESMA) stated that Decentralized Finance (DeFi) does not currently pose a significant risk to financial stability, however, it requires monitoring. DeFi, the ESMA opined, is yet to make a significant impact due to its minor size and lack of correlation to other financial markets. Investor DeFi exposure is comparatively tiny, and ESMA noted risks to investor protection that might escalate into systemic risks if DeFi's role expands or if it becomes entwined with conventional markets.
Additionally, Ellison's testimony in court on October 11, part of SBF's criminal trial, revealed that SBF contemplated inviting Saudi Crown Prince Mohammed bin Salman to invest in FTX to raise equity. The revelations emerged during discussions on investment hedging strategies for 2022. Ellison's testimony showed noted discussions about the potential investment from the Saudi Crown Prince in an online journal named "Things Sam is Freaking Out About.
Published At
10/12/2023 8:04:36 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.