In a significant development that intertwines finance, cryptocurrency, and legal drama, Deltec Bank & Trust Ltd., a Bahamian financial institution, is under scrutiny for its alleged role in providing covert financial support to Sam Bankman-Fried, the former CEO of collapsed crypto exchange FTX. This accusation adds a new layer to the already complex bankruptcy and restructuring process of FTX, further complicating the saga with the latest indictment of Deltec Bank.
As reported by Bloomberg, the allegations stem from court documents and a lawsuit targeting enablers of Sam Bankman-Fried‘s fraudulent operations. These documents unveil a more intricate network of relationships than was previously understood, connecting Bankman-Fried, Deltec Bank, and the cryptocurrency Tether. The revelations come from various sources, including text messages and a declaration from Caroline Ellison, Bankman-Fried’s former colleague and ex-girlfriend.
According to the lawsuit filed in a Florida federal court, Alameda Research, FTX‘s sister trading firm, was implicated in using billions of dollars from secret short-term lines of credit provided by Deltec to manipulate the market presence of Tether, a leading issuer of stablecoin. This maneuver was aimed at artificially boosting Tether’s liquidity and market position.
Deltec Bank has been accused of complicity in Bankman-Fried’s fraudulent activities, particularly in the misappropriation of customer deposits. Allegations suggest that Deltec facilitated the movement of funds between accounts for FTX and Alameda Research, raising questions about the bank’s oversight and the suspicious nature of these transactions.
In response to the allegations, Deltec has vehemently denied any wrongdoing. Desiree Moore, a lawyer representing Deltec at Venable LLP in Chicago, stated that the bank and its executives were unaware of the alleged scheme until it became public knowledge. Moore emphasized that the accusations largely originate from individuals currently embroiled in litigation, suggesting a possible motive to implicate Deltec in exchange for legal leverage.
The implications of these allegations extend beyond Deltec and Bankman-Fried, casting a shadow over Tether’s operations. Tether, caught in the crossfire of the FTX and Deltec investigation, has yet to issue a formal statement regarding the case. This situation arises as victims of the Bankman-Fried fraud scheme seek restitution from Deltec and others implicated as facilitators of the fraud.
This unfolding drama casts doubt on Tether’s meteoric rise, challenging previous assertions by the company that its stablecoin was not manipulated. As FTX aims to continue its restructuring efforts and plans to reimburse creditors, the latest disclosures may disrupt the timeline and strategy for recovery. The FTX bankruptcy proceedings, already a labyrinth of legal and financial challenges, are set to become even more entangled with these recent revelations.
