Major stablecoin issuer Tether froze $46.5 million of USDT held by the collapsing crypto exchange FTX, reportedly at the request of law enforcement.
Specifically, this is the USDT held on the Tron blockchain in a wallet belonging to FTX, according to block explorer Tronscan.
This wallet contains USDT 46,549,320, along with some TRX, USDD, and other coins, with a total value of $66.4 million. This means that the majority of the wallet’s contents have been frozen.
That said, the reason appears to be a legal investigation.
CoinDesk quoted a Tether executive as stating that the company is “starting to receive requests from [law enforcement] to temporarily freeze assets while an investigation occurs.”
Among the law enforcement agencies with which a spokesperson said Tether has “open dialogue,” they named the US Department of Justice.
As reported, the DoJ and the US Commodity Futures Trading Commission (CFTC) are currently investigating FTX. Furthermore, reportedly, the US Securities and Exchange Commission (SEC) is said to have already been investigating FTX’s handling of customer funds and its crypto-lending activities for several months, while also looking into FTX’s relationship with FTX US.
No connection to FTX
Tether Global has been rumored to have been connected to FTX and its parent company Alameda Research. The company, however, issued a statement on Wednesday claiming that,
“Tether has absolutely no credit towards FTX or Alameda Research. Tether is completely unexposed to Alameda Research or FTX.’’
Additionally, Tether CTO Paolo Ardoino tweeted that the company will not be providing any financial support to FTX.
Tether further reiterated that the majority of Tether’s reserves are now US Treasuries.
In a Thursday announcement, it “highlighted a massive reduction in commercial papers with exposure only representing 0.07% of the reserves,” adding that it reduced its commercial paper exposure by more than $24 billion with no losses over the course of 2022.
‘USDT did not depeg’
Meanwhile, Coingecko showed that USDT fell 4% from its $1 peg on Wednesday morning, UTC time. The reason behind the drop was generally presumed to be the spreading FTX contagion.
However, per a Wednesday statement by Tether, this was due to a data issue that stemmed from CoinGecko’s Application Programming Interface [API] connection with a few exchanges, adding: “Tether did not depeg. The price discrepancy of USDT existed there and there alone while on Binance, Bitfinex, and Coinbase it was trading within 10bps from parity.”
As for FTX’s FTT coin, it’s up nearly 24% in the last day and is down 86% over the past week, trading at $3.43 on Friday morning.
Compiled by Coinbold