Investors have pulled at least $700 million from Tether’s U.S. dollar stablecoin, USDT, in a sign that fears of contagion in the cryptoverse over the collapse of Sam Bankman-Fried’s Bahamas-based FTX crypto exchange are well founded.
FTX started freezing withdrawals earlier this week due to liquidity issues.
Tether has frozen $46 million worth of USDT at the request of law enforcement, a Tether executive told CoinDesk. USDT, which usually trades between $0.999 and $1.01, fell 3 percent from its $1 peg earlier Thursday, Nov. 10, before rebounding. USDT was trading at $0.9983 as of this writing.
“We are starting to receive requests from LE to temporarily freeze assets while an investigation occurs,” the executive said, using an acronym for law enforcement.
The frozen wallet belonged to crypto exchange FTX, according to Tronscan data. “While we cannot specifically comment, Tether routinely has an open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability,” a Tether spokesperson said in an email to MarketWatch.
SBF’s troubles are mounting and it goes beyond his personal net worth, CoinGape reported. Within days, SBF’s fortune shrank from $16 billion per Bloomberg’s Billionaire Index to $991 million.
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The world’s largest crypto exchange, FTX rival Binance, walked away from an offer to buy FTX a day after making the proposal after reviewing FTX’s finances.
The current selloff is a direct result of the actions of FTX and Sam Bankman-Fried, according to Lucas Nuzzi, head of R&D at Coin Metrics. FTX provided a massive bailout to sister company Alameda Research, also owned by SBF. This bailout likely put such a big dent in FTX’s balance sheet that it became insolvent.
Do Kwon, the founder of the $60 billion collapsed stablecoin project Terra, made an online guest appearance Tuesday on the “Up Only” podcast after news broke of the FTX collapse. Kwon has been keeping a low profile since his crypto project crashed in May 2022.
His whereabouts unknown, Kwon is wanted by South Korean authorities for alleged breaches of capital-markets law and he is being hunted by Interpol, the International Criminal Police Organization based in France. He’s the subject of an Interpol red notice, Bloomberg reported. That’s a request to law enforcement worldwide to find and arrest a person pending extradition.
“I can’t stop but thinking how similar is what SBF has done with his FTT token to the scheme that Do Kwon played between UST, Anchor and Luna,” u/GrimmReaperBG posted on a Redditt discussion board. “… it becomes obvious for me that SBF has a very strong joker in the FED, because such manipulation is at the very least what one calls ‘money laundering’ and it’s probably much worse than just that.”
Some agreed that SBF is on his way to becoming the next Do Kwon. Others said the SBF-Do Kwon scenarios are very different.
“big difference in the cause of the meltdown,” Reddittor Beyonderr wrote. “SBF is just one of us by holding too many alt coins and overusing leverage on his FTT trade.”
Photos: Interpol, ewn.co.nz / Sam Bankman-Fried screenshot from video, https://www.coindesk.com/business/2022/11/09/sam-bankman-fried-no-longer-a-billionaire-after-146b-overnight-wipe-out/