FTX, Alameda Tried to Sell USDT for Profit: Report

FTX, the digital asset trading platform founded by disgraced crypto entrepreneur Sam Bankman-Fried, also known as SBF in the crypto sector, along with its sister trading firm, Alameda Research, have been accused of trying to sell Tether (USDT) for profit. 

As reported earlier by TheCoinRise, the bankrupt trading platform has discarded the plans of restarting its operations and is now more focused on paying the creditors, who recently sued Sullivan and Cromwell (S&C), the law firm responsible for overseeing the bankruptcy proceedings of FTX.

FTX Tried to Sell USDT

As reported by Bloomberg, FTX and Alameda were named in a lawsuit that stated that the two firms collaborated and used a Bahamas-based lender, Deltec Bank & Trust Ltd., to secretly create and sell Tether (USDT) stablecoins as part of a profit-making scam.

The lawsuit was filed in a Florida court and quoted Caroline Ellison, the former CEO of Alameda Research and SBF’s ex-girlfriend, as explaining how the scheme was supposed to work. 

Alameda Created Tether

According to the lawsuit, Alameda created USDT on credit through the unofficial Deltec Line of Credit. Moreover, FTX, under SBF’s directions, sold these created tokens for a significant profit. Notably, this transaction was executed without the need to fund the acquisition by depositing U.S. dollars into Tether’s Deltec account.”

Misappropriating Customer Funds

The legal action additionally alleges that Deltec played a role in assisting Bankman-Fried in the misappropriation of customer funds. This was purportedly achieved through facilitating transfers between accounts associated with FTX and Alameda Research.

On the other hand, Venable LLP, the law firm representing Deltec, has maintained that it did not know anything about the actions of the bankrupt digital asset firm founded by Bankman-Fried. 

“The new allegations rely heavily on unsubstantiated statements by individuals who we understand are settling their lawsuits with plaintiffs in exchange for providing the information,” said Desiree Moore, a lawyer for Deltec at Venable LLP in Chicago.

Additionally, Tether was not named in the lawsuit, as the defendant and the lawyers for the victims turned over 7,000 pages of social media platform Telegram chats as evidence.

Selling Subsidiaries

FTX has been selling a lot of its assets in order to repay the creditors and recently sold a 8% stake it had in a valued artificial intelligence startup named Anthropic. The AI firm received a $500 million investment from Bankman-Fried, which is currently behind bars over fraud charges.

The firm also decided to sell Digital Custody Inc. (DCI), a subsidiary that the firm acquired for $10 million between 2021 and 2022, for just $500,000.