Blockchain data flagged by Coinbase director Conor Grogan shows that Alameda Research redeemed more than $38 billion in Tether (USDT) tokens in 2021, despite not having equivalent assets under management.
On-chain data shows that Alameda minted $39.55B USDT, which accounts for 47% of Tether’s circulating supply today.
A previous report from Protoss estimated the figure to be around $36.7B; I was able to update these figures with other wallets I found pic.twitter.com/fYBvGAYlFd
— Connor (@jconorgrogan) October 9, 2023
Grogan said that at the peak of the cryptocurrency bull market in 2021, the total value created by USDT was higher than Alameda’s total book assets.
Grogan also said that the USDT redemption ordered by FTX is likely to come from Alameda’s tokens, totaling 3.9 billion USDT. Most of the redemption amounts were made during the collapse of the Terra algorithm stablecoin.
In January 2021, Sam Trabucco, former co-CEO of Alameda, commented on popular reports of Tether minting large amounts of USDT, and provided insights into how Alameda could benefit from arbitrage opportunities related to the value of USDT on various trading pairs on different exchanges. Insider insights.
BTW, to connect some dots here – many people seeking to acquire tokens like USDT *do not* do so by creating them. They usually do this just by buying in the market – and they buy a lot, and very aggressively. https://t.co/pKRj3AMJ9D
— Sam Trabucco (@AlamedaTrabucco) January 11, 2021
Trabucco described how premiums for USDT trades to $1 typically fluctuate, as Bitcoin (BTC) to USDT trades result in a slight deficit in basis points compared to BTC/USD trades.
“Please note that *these* are the best markets for determining where to trade USDT – for example, the BTC/USDT and BTC/USD markets combined are more liquid than the USDT/USD market on any exchange, so from these ( Even a two-legged deal) is more important.”
Trabucco went on to explain that premiums for other USD stablecoins such as USD Coin (USDC) are less volatile due to the creation and redemption processes involved in USDT. Given the ability of specific companies to create and redeem USDT, most market participants acquire and trade USDT from the market itself rather than directly from Tether’s vaults.
“When USDT rises above $1? A mature company like Alameda, with a great setup on all exchanges and bots that can execute multiple forks at once, they will want to sell! We did — a lot of.”
Trabucco added that Alameda is able to “safely make large bets” due to its ability to create and redeem USDT when needed. The former CEO of Alameda described it as a “win-win” situation for the trading company and the stability of USDT’s dollar peg:
“Obviously, we’re making money because we can sell at a higher price than we create, but we’re also keeping the price consistent so that when aggressive buyers come in, the price stays close to $1.”
Alameda thus profits from the ability to create USDT tokens by charging a premium for arbitrage opportunities. Sam Bankman-Fried himself has chimed in on the 2021 debate, stating that Alameda actively converts USDT to USD.
It’s kind of funny hearing people claim that you can’t create/redeem USDT in USD.
Like, I don’t know what to tell you, you can, we’ll tell you. https://t.co/8XthTsk1xr
— SBF (@SBF_FTX) January 12, 2021
Cointelegraph has reached out to Tether to confirm the number of USDT tokens minted at Alameda’s request.
Magazine: The truth behind Cuba’s Bitcoin revolution: a report from the field
Svlook
