Alameda Research Minted Over $39 Billion USDT, Amounting to Nearly Half of Tether’s Circulating Supply

A recent disclosure by Conor Grogan, Director at Coinbase, unveiled a noteworthy involvement of Alameda Research in the minting of Tether (USDT) tokens. Through meticulous on-chain data analysis, it was found that Alameda was responsible for minting a massive $39.55 billion of USDT. This figure represents roughly 47% of Tether’s circulating supply as of October 10, 2023. A prior report by Protoss had estimated the minting at around $36.7 billion, however, Grogan managed to update these figures by identifying additional wallets associated with the minting process.

Alameda’s Asset Management and USDT Minting

It was further revealed that the amount of minted USDT exceeded Alameda’s assets under management (AUM) at the pinnacle of the cryptocurrency market. This data was obtained from information submitted by Sam Bankman-Fried (SBF) to Forbes for their annual World’s Billionaires publication. The revelation implies a significant role played by Alameda in the USDT market, contributing vastly to the stablecoin’s circulating supply.

Redemptions and Offchain Coordination

The process of accurately determining redemptions remains challenging due to Tether’s offchain coordination of burns. Unlike other platforms, Tether lacks deposit addresses; hence entities send funds directly to the treasury for redemptions. Grogan speculated that assuming all USDT redemptions from FTX were from Alameda, they would have redeemed $3.9 billion USDT, with the majority transpiring over two days in May during an event termed the Luna implosion.

Public Reactions and Further Inquiries

The public’s reaction to these findings was mixed, with some individuals inquiring about the veracity of the corresponding deposits to Tether’s bank account against the minted USDT. Others questioned the methodology employed by Grogan in discovering the additional wallets, to which he responded by citing various sources including public information, court filings, and bankruptcy consolidations wherein the FTX estate was given key control of the Alameda accounts.

Insights from 2021 by Alameda’s Former CEO

In a discourse dating back to 2021, Sam Trabucco, the former CEO and crypto quant trader at Alameda Research, elaborated on USDT’s trading dynamics. Trabucco discussed the volatility of USDT’s premium over other stablecoins like USDC, attributing it to the complex creation and redemption process for USDT. He further explained how adept firms like Alameda could leverage these price deviations to align USDT’s price closer to $1, especially during instances where it diverged from this peg.

The significant quantity of USDT minted by Alameda Research underpins the close relationship between large crypto trading firms and stablecoin operations. Grogan’s findings provide a glimpse into the intricate dynamics of USDT’s minting and redemption processes, illuminating the mechanisms that assist in maintaining the stablecoin’s peg to the US dollar.

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