The lawsuit alleges that FTX secretly used Deltec Bank to create and sell tether for profit.
According to a court case described by Bloomberg on February 17, FTX companies created and profited from Tether through contracts with partner banks.
The case quotes Caroline Ellison, former CEO of Alameda Research.
“Alameda was able to generate USDT on credit through an unofficial Deltec line of credit and sell that USDT for a profit before funding the purchase by depositing U.S. dollars into a Deltec account on Tether.”
Alameda Research was a sister company to FTX. Supposedly, Alameda transferred funds to the Deltec account to fund the creation of billions of dollars of Tether (USDT) in 2020 and 2021. Alameda received the corresponding USDT tokens a few days before payment. The assets were then sold for a profit.
Bloomberg described the arrangement as a short-term credit line and a “three-day grace period.” Deltec reportedly did not provide the contract, which was kept confidential, to other customers.
The lawsuit also alleges that Deltec facilitated widespread misappropriation of funds despite there being ample reason to suspect the transfer of funds between FTX and Alameda. Deltec reportedly took FTX customer deposits and transferred the funds to Alameda. Additionally, Deltec excluded Alameda from some of its rules and favored Alameda’s withdrawals during the cryptocurrency collapse.
Previous developments have revealed a relationship between FTX and Moonstone Bank (aka Farmington State Bank), led by Deltec Chairman Jean Chalopin. Moonstone received $11.5 million from Alameda and $50 million from a company linked to FTX employee Ryan Salame. Moonstone closed in February this year following the Federal Reserve’s August 2023 shutdown.
Deltec has denied any wrongdoing.
Deltec representatives told Bloomberg that the bank and its chairman, Jean Chalopin, had no knowledge of the misconduct. Deltec attorney Desiree Moore said:
“The new claims rely heavily on unsubstantiated statements from individuals who we understand are settling lawsuits with plaintiffs in exchange for information.”
Bloomberg did not specify what the incident in question was, but said the charges were filed in federal court in Florida on Friday, February 16. A class action lawsuit was filed today in Florida targeting Sullivan and Cromwell, a law firm linked to FTX, but it does not appear to include related charges.
A previous lawsuit filed in Florida in February 2023 named Deltec Bank as a defendant, but the public listing does not include updates on that case after June 2023. Therefore, it is unclear whether this is the incident in question. Another lawsuit from the same plaintiff, Connor O’Keefe, began in Washington in July 2023. Deltec Bank likewise denied any claims at the time.
All of the above incidents are separate from FTX’s ongoing bankruptcy case and the criminal case that convicted former FTX CEO Sam Bankman-Fried.
According to Bloomberg, no charges were filed against Tether in this case.