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FTX, Tether’s Bahamas banker linked to questionable US bank purchase

FTX NFT Bahamas, peer to peer, cryptocurrency platform symbol gold coin on green screen background.

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The hidden ties between the FTX digital asset exchange and the Tether stablecoin may be getting more specific, thanks to a questionable investment in an obscure US bank.

FTX had its first U.S. bankruptcy court hearing in Delaware this week, and online attendees heard a number of eye-opening facts, including lawyers appointed to oversee the collapsed stock saying the company was run “effectively in personal possession. [CEO/founder] Sam Bankman-Fried (SBF). SBF has been accused of using billions in FTX customer deposits to bail out Alameda Research, an FTX affiliated market firm, in a futile effort to keep his incestuous Ponzi scheme going.

SBF’s claim to control all of FTX/Alameda creates problems for lawyers and bankruptcy experts whose job it is to assess which assets listed on the balance sheet actually exist beyond SBF’s imagination. With billions owed to creditors, FTX’s lawyer James Bromley told the court it was “vital that we first maximize the value of the assets we own, whether that be selling assets, selling businesses or restructuring businesses”.

Among the tangible items listed in the Alameda asset “silo” is an $11.5 million stake in FBH Corp, the parent company of Farmington State Bank in Washington state. In March, FBH announced an investment by Bahamas-based Alameda Research Ventures in FBH, which immediately named its wholly-owned Farmington subsidiary Moonstone Bank.

The New York Times reported that before Alameda’s investment, Farmington was a fairly sleepy company with only three employees and average deposits of about $10 million. Within months of Alameda’s deployment, Federal Deposit Insurance Corporation (FDIC) records show that Moonstone’s deposits had grown to $84 million, $71 million of which was held in just four new accounts.

Farmington previously offered neither credit card services nor online banking, but FBH’s announcement of the Alameda deal called Moonstone “a robust financial platform that powers high-growth innovators and disruptors.” Farmington’s interim website was later amended to claim that, under its new Moonstone identity, it aimed to support “the development of next-generation finance.”

Questions are now mounting about how Alameda was able to acquire a stake in a US bank without facing regulatory backlash because of its involvement in a financial sector that the US government is openly hostile to. The fact that Alameda’s holdings valued the bank well above its true value should have raised alarms in both Washington state and Washington, DC (or perhaps SBF’s original strategy of appending “Research” to Alameda’s name actually achieved its goal of reversing regulatory oversight).

There’s also the fact that Farmington’s parent company, FBH, was run by the same Bahamian who served as the head banker for both FTX/Alameda and Tether.

Go Go Gadget Fraudulator!

FBH, which bought Farmington in 2020, is chaired by Jean Chalopin, who also chairs Bahamian Deltec Bank & Trust. (Trivia note: Chalopin is the creator of the Inspector Gadget animated TV series, so you’d think he could easily afford a barber whose toolbox includes more than a salad bowl and hedge trimmers, but he’s French. do we know.)

Chalopin began investing in Deltec in the 1980s, and he owned the joint venture and became chairman of the board. Chalopin claimed to have met Giancarlo Devasini, the founder of both the Bitfinex exchange and Tether, in 2017. The following year, Deltec took on Bitfinex/Tether as a client, and Chalopin signed a statement vouching for the assets that supposedly backed Tether’s USDT coin (these reserves are known to have never been audited). .

A year after Chalopin’s FBH bought Farmington, the Federal Reserve Bank of San Francisco accepted the bank’s application to become a member of the Federal Reserve System. This approval allows access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which enables cross-border transactions through correspondent bank accounts, and Fedwire Funds Services, which enables “large, time-critical payments”.

At the end of 2021, Alameda was the second largest recipient of all USDT (Tether) issued to date, with almost all USDT ending up in FTX. To buy USDT, one must (allegedly) send real US dollars to Tether, which would require the help of a US bank.

As have others pointed outUS-based individuals/entities who believed they were sending money to FTX’s international site often discovered (after the fact) that their money was actually sent to Alameda or one of its affiliates.

Former Alameda CEO Sam Trabucco, who resigned abruptly this summer, claiming he wanted to spend more time on his boat, was visibly upset. August 2021 interview when asked if Alameda used US banks to buy USDT and if so which banks did they use. After awkwardly pretending he didn’t hear/understand the question, Trabucco finally stuttered that he wasn’t going to divulge any bank details, later by tweeting that he did not expect to be “interrogated” about banking.

Almost two years ago, SBF cleared through correspondent banks transfer money to FTX’s Deltec accounts to generate/redeem USDT with US dollars. Obviously, having a friend like Chalopin on both ends of this equation would simplify/streamline this process dramatically, not to mention eliminate the boredom that a less committed banker might feel.

Winklevoss and nod

Noah Perlman’s appearance on the bank’s board of directors also raised eyebrows about the Fed’s acceptance of Farmington’s application. Assuming it’s the same person, Perlman serves as chief operating officer at Gemini, the exchange and digital asset lending platform founded by Winklevii, which warned this week that its clients could lose hundreds of millions of dollars in value after Genesis Global Capital’s lending business suspended redemptions and started. investigate possible bankruptcy proceedings.

Incredibly, Perlman began his tenure at Gemini in 2019 as its Chief Compliance Officer and previously served as an Assistant Attorney General (Criminal Division) in the US Attorney’s Office for the Eastern District of New York.

All-in 2-7 with an off suit

As recently reported on this site, there are several common threads linking the FTX debacle to the 2011 “Black Friday” online poker allegations. Here’s another: Among the people named in the indictments was John Campos, vice president/co-owner of Utah-based SunFirst Bank.

In 2009, Campos agreed to a $10 million investment from a sketchy payment processing company, making that company SunFirst’s largest single shareholder. In exchange, Campos agreed to miscode the online poker payments because the transactions were unlikely to go unnoticed by federal watchdogs.

SunFirst earned a total of $1.6 million in fees in just over a year for handling $200 million worth of illegal poker payouts until the FDIC found out what had happened. The bank was closed, and Campos was sentenced to three months in prison (he was originally expected to face up to 45 years) and permanently banned from banking.

The Black Friday prosecutions got a big boost from Daniel Tzvetkoff, who ran defunct Australian payment processor Intabill. A year before the charges, Tzvetkoff was foolish enough to travel to Las Vegas, where he was arrested on similar gambling charges. But in exchange for a slap on the wrist, Tzvetkoff spilled his guts and went back to living the high life, reportedly with money he had stolen from poker companies before his arrest. Which brings us to…

Stable coins

Unlike other major exchanges, FTX never launched an in-house stablecoin, instead somehow favoring USDT over all the obvious advantages a proprietary stablecoin could offer.

When FTX launched in May 2019, the market capitalization of USDT was around $3 billion. By the end of 2021, when data showed that Alameda had drunk deeper into the Tether pool than almost everyone else, USDT had a market capitalization of around $68 billion.

There’s no shortage of blockchain veterans — our own Kurt Wuckert Jr. among them — who suspect that the same folks behind Bitfinex/Tether set up FTX to get a supposedly affiliated exchange to pump full of USDT and laundromat tokens to the moon. But the smoking gun that would definitively prove these ties has so far remained elusive.

So the question is: who from the FTX/Alameda rogues gallery will be “Crypto Tveztkoff” and internally spread the real story behind the Tether fraud? This allows them to avoid prison and go back to enjoying the rest of their lives with the ill-gotten gains they have no doubt hidden away. But you better act fast, folks, before another one of the rats on this sinking ship beats you to it.

Follow along CoinGeek’s crypto crime cartel a series that dives into the stream of groups – from BitMEX Thu Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether-who have chosen the digital asset revolution and transformed the minefield of naive (and even seasoned) players in the industry.

New to Bitcoin? Check out CoinGeek Bitcoin for beginners section, the definitive resource guide to learn more about Bitcoin – as originally designed by Satoshi Nakamoto – and blockchain.



Receive $10 in Bitcoin when you buy or sell $100 or more on Coinbase! https://mathisenmarketing.com/coinbase

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