FTX and Alameda Research allegedly used the Bahamas-based bank, Deltec Bank & Trust Ltd., to secretly create and sell USDT in order to profit from it.
According to a lawsuit filed on February 16 in a Florida court, the FTX exchange and Alameda Research allegedly used the Bahamas-based bank Deltec to conduct illegal operations.
In 2018, SBF’s companies reportedly began opening accounts at Deltec to gain easier access to Tether. This allowed Alameda to simply transfer money from its Deltec account to Tether’s to create USDT.
According to the lawsuit, starting in 2021, Deltec allegedly granted Alameda a three-day grace period to pay for the USDT it was purchasing, effectively providing the fund with a short-term line of credit. This line of credit sometimes exceeded $2 billion.
The grace period granted by Deltec allegedly enabled Alameda to profit, as USDT often traded on the market for slightly more than $1. Essentially, Alameda would receive USDT that it could sell on the market before having to pay for them.
Based on the filed documents, Deltec is also accused of aiding SBF in misappropriating customer funds by facilitating transfers between FTX and Alameda Research accounts.
Venable LLP, the law firm representing Deltec in the lawsuit, maintains that the bank was not aware of any illicit activities by FTX.
Lawyers for the exchange’s clients argue that Deltec received deposits from users and, despite knowing that those funds belonged to them, improperly transferred them to Alameda. Deltec allegedly also granted exemptions to Alameda from certain regulations and, during the bear market of 2022, prioritized the company’s withdrawals over those of other customers.
