Deltec Bank and Trust Ltd, based in The Bahamas, stands accused of covertly extending a $2 billion line of credit to Alameda Research. A lawsuit, filed by those who claim to be victims of Sam Bankman-Fried, accused Deltec of granting a three-day grace period to Alameda Research for the settlement of purchased stablecoins.
Deltec Bank Accused of Secretly Extending a $2 Billion Credit Line to Alameda Research
This article was published more than a year ago. Some information may no longer be current.
WRITTEN BY
SHARE
Misappropriation of Customer Funds
A lawsuit accusing Deltec Bank and Trust Ltd of clandestinely aiding one of Sam Bankman-Fried’s (SBF) entities’ purchase of the stablecoin tether has been filed by victims of his fraudulent practices, a Bloomberg report has said. The Bahamas-based bank, in addition to providing a billion-dollar line of credit, is also implicated in assisting SBF in the misappropriation of customer funds.
The lawsuit, which seeks damages from those allegedly enabling SBF, claims that Deltec granted a three-day grace period to Bankman-Fried’s Alameda Research for the payment of purchased stablecoins. This privilege, however, was not extended to other customers.
Through the credit line, Alameda Research was able to profit from the variance between the price of one stablecoin and the greenback.
“Alameda could create USDT on credit through the unofficial Deltec Line of Credit and sell that USDT for a gain before having to fund the purchase by depositing U.S. dollars in Tether’s Deltec account,” Caroline Ellison, the ex-Alameda Research boss, reportedly said in a declaration filed on Feb. 16.
Deltec’s $50 Million Loan From FTX
However, a lawyer representing Deltec at Venable LLP in Chicago reportedly claimed that neither the bank nor its chairman, Jean Chalopin, were aware of FTX’s malpractices before they became public knowledge. Stuart Hoegner, the legal representative for Tether, reportedly did not immediately respond to Bloomberg’s request for comment.
Meanwhile, on top of granting Alameda Research a $2 billion credit line, the Bahamas-based bank is also accused of exempting the crypto hedge fund from certain rules and prioritizing its withdrawals.
In a surprising turn of events, Deltec itself is reported to have received a $50 million loan from an entity controlled by Ryan Salame, a former executive with FTX. The lawsuit also cast a spotlight on text messages that seemingly allege the confirmed the existence of a close relationship between Tether CFO Giancarlo Devasini and traders at Alameda Research.
What are your thoughts on this story? Let us know what you think in the comments section below.
