Coinbase director Conor Grogan has flagged on chain data that highlights massive USDT mints ordered by Sam Bankman-Fried’s Alameda Research in 2021.
News Blockchain data flagged by Coinbase director Conor Grogan indicates that Alameda Research redeemed over $38 billion for Tether (USDT) tokens in 2021 despite not having the equivalent assets under management. According to Grogan, the total value of USDT creation was higher than Alameda’s total assets on its books at the height of the wider cryptocurrency market bull run in 2021. Grogan also suggests that FTX-ordered USDT redemptions were likely to have been from Alameda’s tokens, totaling 3.9 billion USDT. The majority of this redemption amount was carried out during the collapse of Terra’s algorithmic stablecoin. In January 2021, former Alameda co-CEO Sam Trabucco weighed in on prevailing reports of significant USDT mints carried out by Tether and gave inside insights into how Alameda profited off arbitrage opportunities relating to the value of USDT to various trading pairs across different exchanges. Trabucco described how the premium in which USDT trades to $1 was typically volatile, given that Bitcoin (BTC)-to-USDT trades resulted in a slight deficit in basis points when compared to BTC/USD trades. Trabucco went on to explain that other United States dollar stablecoins like USD Coin (USDC) had a less volatile premium due to the creation and redemption process involved with USDT. Given that select firms have the ability to create and redeem USDT, most market players acquire and trade USDT from markets themselves and not directly from Tether’s treasury. Trabucco added that Alameda was able to “safely put on big bets” due to its ability to do USDT creations and redemptions when it needed to. The former Alameda CEO described it as a “win-win” situation for the trading firm and the stability of USDT’s dollar peg: As a result, Alameda profited by collecting the premium on arbitrage opportunities through its ability to create USDT tokens. Sam Bankman-Fried himself also chimed in on the debate in 2021, stating that Alameda actively redeemed USDT for U.S. dollars. Cointelegraph has reached out to Tether to confirm the amount of USDT tokens that had been minted at the request of Alameda. 
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