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How SBF’s Alameda Earned $38 Billion USDT

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Coinbase’s director, Conor Grogan, has uncovered blockchain data that sheds light on substantial USDT minting activities orchestrated by Sam Bankman-Fried’s Alameda Research in 2021.

The data from the blockchain, as analyzed by Coinbase’s director, Conor Grogan, reveals that Alameda Research redeemed over $38 billion worth of Tether (USDT) tokens in 2021, even though their assets under management did not appear to justify such massive redemptions.

Grogan’s findings indicate that the creation of USDT tokens surpassed the total assets held by Alameda Research at the peak of the cryptocurrency market’s bull run in 2021.

Grogan also posits that the USDT redemptions, which were seemingly orchestrated by FTX, were likely associated with Alameda’s tokens, totaling a staggering 3.9 billion USDT. A significant portion of this redemption activity occurred during the collapse of Terra’s algorithmic stablecoin.

In January 2021, former co-CEO of Alameda, Sam Trabucco, chimed in on the reports of substantial USDT minting by Tether. He provided insights into how Alameda profited from arbitrage opportunities tied to the value of USDT across different exchanges. Trabucco pointed out that the premium at which USDT traded compared to $1 was often volatile. This volatility stemmed from the fact that Bitcoin-to-USDT trades resulted in a slight deficit in basis points compared to BTC/USD trades.

Trabucco emphasized that markets involving BTC/USDT and BTC/USD were the most reliable indicators of USDT’s trading value, surpassing the liquidity of any exchange’s USDT/USD market. As a result, USDT’s value fluctuated more in these markets due to their higher liquidity.

Trabucco further explained that other stablecoins, like USD Coin, exhibited less volatile premiums due to the different creation and redemption processes associated with USDT. Since select firms had the capability to create and redeem USDT, most market participants acquired and traded USDT directly from the markets rather than Tether’s treasury.

Regarding USDT’s value exceeding $1, Trabucco noted that a sophisticated firm like Alameda, equipped with advanced setups and trading bots across multiple exchanges, would capitalize on the opportunity to sell. Alameda took advantage of these situations frequently.

Trabucco highlighted that Alameda’s ability to create and redeem USDT tokens as needed allowed them to make profits by selling above the creation price. This, in turn, helped keep USDT’s value close to $1, benefiting both Alameda and the stability of USDT’s dollar peg.

In conclusion, Alameda’s profitable involvement in arbitrage opportunities was intricately linked to its capacity to create and redeem USDT tokens, an advantage that played a pivotal role in maintaining USDT’s stability. Sam Bankman-Fried, the founder of Alameda, also joined the discussion in 2021, confirming that Alameda actively redeemed USDT for U.S. dollars.

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Cryptocurrency Market Update: Bitcoin Slips Below $70,000 Amidst High Liquidation

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In a swift turn of events, Bitcoin (BTC), the pioneering cryptocurrency, dropped below the $70,000 threshold early on Wednesday following a wave of investor sell-offs. Just a day prior, Bitcoin had crossed the $71,000 mark, but market sentiment swiftly shifted, dragging other major altcoins—including Ethereum (ETH), Dogecoin (DOGE), Ripple (XRP), Solana (SOL), and Litecoin (LTC)—into the red zone.

According to CoinMarketCap data, the overall Market Fear & Greed Index stood at 75 (Greed) out of 100, indicating a mix of optimism and apprehension among traders. Notably, the Bittensor (TAO) token emerged as the top gainer with a remarkable 24-hour surge of over 7 percent, while dogwifhat (WIF) experienced the largest loss, plummeting nearly 16 percent.

Bitcoin (BTC) Price Update Bitcoin’s price tumbled to $69,089.01, marking a 24-hour dip of 3.05 percent, as reported by CoinMarketCap. On the Indian exchange WazirX, BTC was priced at Rs 60.93 lakh.

Other Major Cryptocurrencies Ethereum (ETH) saw a 24-hour loss of 4.81 percent, trading at $3,508.86, while Dogecoin (DOGE) registered a dip of 5.59 percent, currently priced at $0.1879. Litecoin (LTC) and Ripple (XRP) also experienced losses, with Solana (SOL) marking a 24-hour loss of 3.44 percent.

Top Gainers and Losers Bittensor (TAO) led the pack of gainers with a 7.30 percent surge, while dogwifhat (WIF) suffered the most significant loss, dropping by 15.58 percent.

Market Analysis and Expert Insights Experts weighed in on the market scenario, attributing Bitcoin’s downturn to heightened liquidations and cautious sentiment ahead of the upcoming US CPI data release. While Bitcoin’s immediate support rests at $67,700, resistance is expected at $70,400. Ethereum proponents face challenges amid hopes for an ETF approval, with the SEC providing limited updates on the matter.

Final Thoughts The cryptocurrency market remains highly dynamic, with prices fluctuating rapidly and investor sentiment playing a pivotal role. As the market navigates through volatility, it’s essential for investors to stay informed, exercise caution, and seek expert advice before making any investment decisions.

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Cryptocurrency: A Scapegoat for Foreign Policy Failures?

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Cryptocurrency has once again found itself at the center of a heated debate, this time regarding its alleged role in facilitating illicit activities and circumventing sanctions imposed by the United States. The Biden administration, in particular, has come under scrutiny for its handling of the issue, with some accusing it of using digital assets as a convenient scapegoat for broader foreign policy shortcomings.

In a recent hearing before the Senate Banking Committee, Deputy Treasury Secretary Wally Adeyemo raised concerns about the misuse of cryptocurrencies by foreign adversaries such as Iran, Russia, North Korea, and militant groups like Hamas. Adeyemo’s remarks underscored a growing unease within the U.S. government regarding the potential national security implications of unregulated digital currencies.

However, voices from within the cryptocurrency industry and Congress have pushed back against the administration’s narrative. Faryar Shirzad, Chief Policy Officer at Coinbase, one of the leading cryptocurrency exchanges, pointed out that the prevalence of illicit activity in the crypto space is relatively low compared to traditional finance. Instead of demonizing cryptocurrencies, Shirzad argued, the focus should be on targeting bad actors operating offshore.

Senator Tim Scott, the ranking Republican on the Senate Banking Committee, echoed these sentiments, accusing the Biden administration of using digital assets as a distraction from its failure to effectively combat financial flows to sanctioned entities. Scott’s criticism reflects broader skepticism among some lawmakers about the government’s approach to regulating cryptocurrencies.

One area of potential agreement between the Biden administration and the cryptocurrency industry is the need for clearer regulations governing stablecoins, a type of digital asset pegged to a fiat currency like the U.S. dollar. Both sides recognize the importance of addressing the potential risks associated with stablecoin issuance and usage, particularly in the context of national security and financial stability.

The debate over stablecoins has intensified following reports of their alleged role in facilitating illicit transactions, including those linked to Russia’s war effort in Ukraine. The Treasury Department has called for increased oversight of stablecoin issuers and transactions, while also advocating for legislation that would subject them to stricter regulatory standards.

Despite the contentious nature of the discussion, there are signs of bipartisan cooperation on certain aspects of cryptocurrency regulation. A bipartisan bill addressing stablecoin regulation passed the House Financial Services Committee last year, signaling a potential path forward for legislative action in this area.

As the debate over cryptocurrency regulation continues to unfold, it is clear that finding the right balance between innovation and security will be paramount. While concerns about illicit activity and national security must be addressed, policymakers must also recognize the potential benefits of cryptocurrencies in fostering financial inclusion and technological advancement.

Ultimately, the resolution of these issues will require thoughtful collaboration between government officials, industry stakeholders, and lawmakers to develop a regulatory framework that promotes innovation while safeguarding against misuse. Only through constructive dialogue and cooperation can we ensure that cryptocurrencies fulfill their potential as a force for positive change in the global economy.

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Bitcoin Resurgence: Why Wall Street Is Embracing the Crypto Revolution

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Andrew Pratt of Wiser Wealth Management in Marietta, Ga., finds little resistance as he proposes Bitcoin investments to his firm’s committee. With Bitcoin surging 140% in the past year and backed by giants like BlackRock, skepticism has waned. Pratt sees the potential to allocate a modest 1% of client portfolios to Bitcoin, acknowledging the limited downside risk compared to potential gains.

The debate over Bitcoin’s intrinsic value seems to have lost its relevance amidst its soaring market performance. Once dismissed, Bitcoin now boasts a market value of $1.3 trillion, driving the total crypto market to $2.5 trillion. Wall Street, once wary, now views cryptocurrency as an opportunity for profit rather than a speculative venture.

Despite lingering doubts about Bitcoin’s utility beyond speculation, Wall Street executives are increasingly supportive. BlackRock’s CEO, Larry Fink, notably reversed his stance, endorsing Bitcoin’s long-term prospects and championing the iShares Bitcoin Trust, now one of the largest Bitcoin ETFs with nearly $18 billion in assets.

While skepticism persists about Bitcoin’s status as a real asset or currency, its growing acceptance on Wall Street underscores the evolving landscape of finance. As institutions embrace cryptocurrencies, Bitcoin’s journey from pariah to portfolio asset highlights the transformative power of digital assets in reshaping traditional investment strategies.

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