Bloomberg published the lawsuit on February 17. The lawsuit says that the FTX crypto exchange allegedly profited from Tether (USDT) by using a covert agreement with Deltec Bank.
As per Caroline Ellison, the former CEO of Alameda Research, the company could produce USDT on credit and sell it for a profit through an unauthorized line of credit with Deltec without having to pay for it right away.
Alameda generated billions of dollars in USDT through the arrangement in 2020 and 2021 by selling the crypto for a profit and then paying for the expenses.
By using this strategy, referred to as a short-term credit line, Alameda was able to conduct transactions using money it had not yet paid for.
The lawsuit alleges that Deltec transferred the exchange customer deposits to Alameda in violation of standard procedures and enabled the misappropriation of funds between FTX and Alameda.
Additionally, it implies that Deltec gave Alameda’s transactions special attention, particularly during dips in the crypto space.
The relationships between Deltec and FTX also reached Moonstone Bank, to which Alameda gave significant funding and an FTX associate.
In August 2023, Moonstone Bank came under Federal Reserve scrutiny; as a result, it stopped operations in February.
According to Deltec representatives, the bank’s chairman and attorney Desiree Moore, were not aware of any wrongdoing.
They contended that the accusations were based on uncorroborated statements made by people attempting to resolve legal disputes.
