The FTX founder seems to be trying to distract the crypto space from the Tether short story.
When he’s not doing media rounds on his apology tour, former chief of the failed crypto exchange FTX Sam Bankman-Fried is running his digital mouth on Twitter.
Replying to a tweet by crypto pundit Ran Neuner who suggested reviving the bankrupt exchange and issuing a new FTT token to pay for the roughly $8 billion deficit, Bankman-Fried seems to think it is the “productive path” forward.
“I continue to think that this would be a productive path for parties to explore! I *hope* that the teams in place will do so,” he tweeted, referring to the future entity who might end up winning the bid to acquire the bankrupt exchange.
Although exuding with altruism and recompense, the plan is still quite unclear on where the investment would come from to be able to issue the new token and reach the value it would deem be profitable for the creditors of the former FTX.
The whole FTX implosion started with a Dirty Bubble Media report claiming FTX’s sister hedge fund, Alameda Research, is insolvent and projected to end in bankruptcy–with most of its assets are tied to FTT and other tokens tied to Bankman-Fried.
It was also to Neuner’s question in a recent Twitter Space that Bankman-Fried admitted that FTX issued fake bitcoins; the exchange’s former Chief Regulatory Officer Daniel Friedberg initially essentially admitted to counterfeiting crypto.
The Tether short story
The proverbial karma seems to have come back for FTX and Bankman-Fried. The exchange had launched a series of pushes online to campaign for a short position on Tether.
But the layer behind the short position campaign might have just unraveled. In a The New York Times article which covered the text exchanges between Bankman-Fried and Binance CEO Changpeng Zhao, it was revealed that Zhao sent an alarming text to Bankman-Fried the day before the troubled cryptocurrency exchange filed for bankruptcy.
Zhao specifically accused the FTX founder using Alameda to drive down the price of Tether’s stablecoin, whose price is designed to remain at $1.
In response, Bankman-Fried seemed bewildered: “Huh? What am I doing to stablecoins?” He added a question: “Are you claiming that you think that $250k of USDT trading would depeg it?”
Zhao responded that while he did not believe a trade of that magnitude would succeed in destroying Tether, it could still cause problems.
“My honest advice: stop doing everything,” Zhao replied. “Put on a suit, and go back to DC, and start to answer questions.”
“Thanks for the advice!” Bankman-Fried answered back.
Tether is facing an ongoing crypto asset litigation case against the stablecoin issuer and crypto exchange Bitfinex. It has been ordered by the court to produce the documents being requested by the plaintiff in an ongoing legal battle, including “those sufficient to establish USDT Reserves.”
After the court order was handed down, Tether immediately tried to downplay the recent development, saying it, “is a routine discovery order and does not in any way substantiate plaintiffs’ meritless claims.”
“We had already agreed to produce documents sufficient to establish the reserves backing USDT, and this dispute merely concerned the scope of documents to be produced,” the company said in its blog.
Down the line, the crux of the case would be on the actual reserves used to back the issued stablecoin USDT and if it was tied to US dollars as it has represented before. Whether the case would be dismissed if it was backed by other crypto assets–contrasting the “completely unbacked” argument–is also a point for discussion.
Information for this briefing was found via The New York Times and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.