SBF, Tether, and Bahamas Bank, Accused of Secretly Colluding

• A new lawsuit reveals a tight web of connections between SBF, Deltec Bank, and Tether. 
• Court documents shed light on how Deltec Bank facilitated SBF’s fraud. 
• The lawsuit also casts a shadow on Tether’s meteoric rise. 

The Bahamas has long been a haven for FTX’s disgraced founder , Sam Bankman-Friend, who sought shelter in the Lost Paradise when allegations against him escalated. While it was a mystery why the former crypto poster boy was affectionate for the island, new revelations shed light on an interesting connection between the entities, adding a crucial piece to the puzzle. 

SBF, Deltic, and Tether Alleged to be a Throuple

Over 7000 pages of Telegram chats, a declaration from SBF’s former belle and colleague Caroline Ellison, and other documents published as part of the new filing submitted in a Florida Federal court revealed a tight web of connections between SBF, The Bahamas, and leading stablecoin issuer Tether . 

The lawsuit alleges that SBF’s trading arm, Alameda Research , artificially inflated the growth of Tether using a secret short-term line of credit worth billions of dollars from the Bahamas-based Deltec Bank. 

According to the lawsuit , SBF’s companies started opening accounts at Deltec in 2018 to facilitate easier access to Tether. Alameda would then transfer funds from its Deltec account to Tether’s to create USDTs. 

During the crypto boom between 2020 and 2021, SBF’s fund allegedly helped create billions of Tether tokens. According to the lawsuit, Alameda would receive these tokens days before paying for them and subsequently capitalize on arbitrage opportunities. 

Additionally, the lawsuit contends that Deltec played a major role in facilitating SBF’s misappropriation of customer funds by transferring them between FTX and Alameda accounts. The lawsuit also reveals that Alameda and Deltec’s relationship was not one-sided.

You Scratch My Back, I Scratch Yours

Documents reveal that Deltec was generously compensated for its oversight. Allegedly, Deltec not only facilitated FTX’s fraudulent activities but also assisted Alameda in bending the rules and policies. When the crypto industry crashed following the fiasco, the bank prioritized FTX’s withdrawals over other customers .

According to the lawsuit, FTX reciprocated by aiding Deltec when needed. In October 2021, after the bank failed to raise loan capital, its parent, Deltec International Group, received a $50 million loan from an entity controlled by FTX executive Ryan Salame. At press time, Deltec denied any wrongdoing despite the lawsuit highlighting the bank had enough reason to be suspicious of the transfers. 

Desiree Moore, a lawyer for Deltec at Venable LLP in Chicago, said the bank and its chairman, Jean Chalopin, did not know about FTX’s misconduct until it was made public.

“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,” Moore said. 

While Deltec prepares for defense, Tether has yet to respond. 

Tether’s Awkward Silence

While Tether has not been directly implicated in the lawsuit, it has yet to publish an official response to the allegations against it. The lawsuit could cast a shadow over USDT’s meteoric rise, which has already faced scrutiny for its legitimacy despite Tether’s dismissal of such claims.

Text messages in the filing reveal that Tether’s chief financial officer, Giancarlo Devasini, was friends with Alameda’s traders. They exchanged messages celebrating milestones: first to $10 billion, then to $20 billion and $30 billion, arguing over who drove the group’s success.

“We are a big family…we will conquer the world,” Devasini wrote to Alameda traders in 2020.

Adding to the controversy, the lawsuit comes just as Tether teeters on the edge of a $100 billion market cap.

On the Flipside

• Deltic Bank’s chairman, Jean Chalopin, is neighbors with Tether’s chief financial officer, Giancarlo Devasini, in the Bahamas. 
• FTX recently abandoned all plans to revive its exchange . 
• Following FTX’s downfall, Tether released a statement asserting the collapse posed no risk to USDT because Alameda always paid for its tokens using US Dollars. 

Why This Matters

The charges levied against Deltec Bank and SBF introduce a new layer of complexity into the ongoing FTX saga. The new charges could also affect SBF’s sentencing, due in March 2024.

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