FTX meltdown raised questions on stablecoin issuer Tether.
Tether has always had close ties to SBF's former empire.
The vast majority of all transactions processed by FTX involved USDT.
FTX and Tether remains in doubt because the banks used by both companies are run by the same person.
Alameda Research, a subsidiary of FTX, invested $11.5 million in Farmington State Bank's parent company, FBH, which is led by Jean Chalopin. Surprisingly, Chalopin is also the chairman of the Bahamas-based Deltec Bank, Tether's primary bank.
FTX and Alameda’s Tether Connection
As per an American media outlet, the bankruptcy of FTX reveals unexpected investments by SBF and raises questions about its operations. In March, FTX invested $11.5 million in Farmington State Bank's parent company, FBH, based in Washington, through its trading firm Alameda Research. The bank has one branch and three employees, but no online banking or credit card services are available.
Before the acquisition, Farmington had a net worth of $5.7 million and deposits of nearly $10 million, according to the Federal Deposit Insurance Corporation. However, following FTX's agreement with the bank, led by Ramnik Arora, FTX's head of product, deposits increased to $84 million. The $71 million came from just four new accounts, according to the FDIC.
Jean Chalopin, chairman of Farmington and Deltec, persuaded regulators to allow FTX to operate in The Bahamas. Deltec is also the primary bank for Tether, the stablecoin issuer. Some believe that the collapse of FTX will have the greatest impact on Tether because Alameda and FTX were Tether's largest trading partners. Tether CTO Paolo Ardoino, on the other hand, denied any exposure to FTX.
However, experts are concerned about the stablecoin's undiscovered links to FTX's fraudulent operations. Tether's second-largest customer, Alameda, received over $36 billion in Tether. Furthermore, FTX used USDT for transactions. Tether CTO Ardoino, on the other hand, denied saying "Alameda sent USD and got USDT," claiming it was purely transactional.
Sam Bankman-Interactions Fried's with Federal Authorities
Banking experts are perplexed as to how federal regulators approved FTX's purchase of a stake in a U.S.-licensed bank. Furthermore, a cryptocurrency firm purchasing a stake in a bank worth twice its book value should have raised red flags for the FDIC, state regulators, and the Federal Reserve.
Furthermore, SBF has been linked to SEC Chair Gary Gensler and chastised for not discouraging investors. In fact, FTX executives gave nearly $70 million to both Democrats and Republicans during the midterm elections.
Read also: Why Investors Fear That Crypto Will Face More Problems | Genesis Meltdown
