Blockchain data analyzed by Coinbase director Conor Grogan suggests that Alameda Research, a cryptocurrency trading firm, redeemed more than $38 billion for Tether (USDT) tokens in 2021, despite not having the equivalent assets under management.
Alameda Minted $39.55B of USDT, Nearly Half of Tether's Circulating Supply
Onchain data reveals that Alameda was responsible for minting $39.55 billion worth of USDT, which accounts for about 47% of Tether's circulating supply.
A previous report estimated this number at around $36.7 billion, but Grogan was able to update the figures with additional wallets he discovered.
USDT Creation Exceeded Alameda's Total Assets during Bull Run
Grogan points out that the total value of USDT creation surpassed the total assets held by Alameda during the height of the cryptocurrency market bull run in 2021.
He also suggests that USDT redemptions ordered by FTX, another cryptocurrency exchange, were likely carried out with Alameda's tokens, totaling 3.9 billion USDT. The majority of these redemptions were made during the collapse of the Terra Luna algorithmic stablecoin.
Alameda's Profit from Arbitrage Opportunities
Former Alameda co-CEO Sam Trabucco shed light on how the firm profited from arbitrage opportunities related to the value of USDT. Trabucco explained that Alameda took advantage of the volatility in USDT trading, particularly when compared to Bitcoin-to-US dollar trades.
He also highlighted that other stablecoins like USD Coin (USDC) had less volatile premiums due to the creation and redemption processes associated with USDT. Since select firms have the ability to create and redeem USDT, most market players acquire and trade USDT from the markets rather than directly from Tether's treasury.
Trabucco emphasized that Alameda could safely undertake large trades by creating and redeeming USDT when necessary. This approach enabled the firm to collect premiums through arbitrage opportunities and maintain the stability of USDT's dollar peg.
Tether Confirmation
Cointelegraph has reached out to Tether to verify the amount of USDT tokens that were minted at Alameda's request.
Source: The Guardian
