New Revelations of Secret Credit Line at Center of FTX Fallout

Table of Contents

• Investigators Uncover Details of Alleged Relationship Between Bahamas Bank and FTX Founder
• Journalist Piece Together events Leading to FTX Collapse

Investigators Uncover Details of Alleged Relationship Between Bahamas Bank and FTX Founder

Reports indicate a Bahamas bank played a central role in the downfall of cryptocurrency exchange FTX through a little-known line of credit provided to founder Sam Bankman-Fried (SBF). According to documents published by investigative journalist Zeke Faux of Bloomberg, Deltec Bank & Trust Ltd. granted SBF a “secret” multi-million dollar line of credit that was used to purchase billions of dollars worth of the stablecoin Tether from Tether’s Chief Financial Officer [Tether’s Official Website]. This arrangement, kept hidden from bank executives and FTX investors, helped fuel the rapid growth of Bankman-Fried’s digital trading firm Alameda Research and allowed it to become a major market influencer through its Tether holdings.

Through Telegram messages obtained from Caroline Ellison, former CEO of Alameda and SBF’s ex-girlfriend, conversations between FTX and Alameda executives and Tether officials were revealed. One exchange included Ryan Salame, former CEO of FTX Digital Markets, discussing the relationship between FTX funds and Giancarlo Devasini of Tether. An Alameda trader’s role in the arrangement was described as simply “making money for Sam.” The undisclosed line of credit from Deltec Bank allegedly enabled this behind-the-scenes dealing that ultimately led to billions in lost investor funds when FTX collapsed.

While details of the secret funding arrangement are still emerging, Deltec Chairman Clayton Deltec has denied any prior knowledge of misconduct. The bank is now facing legal action for its role. Several former FTX and Alameda employees, including Gary Wang and Nishad Singh, have testified against SBF as part of cooperation agreements with US authorities regarding the company’s downfall. SBF himself was found guilty on seven counts of fraud in November 2023 and is currently detained ahead of his March 2024 sentencing at Metropolitan Detention Center in Brooklyn. A February 21 hearing will address new representation as his March court date approaches.

Journalist Piece Together events Leading to FTX Collapse

Investigative journalists like Bloomberg’s Zeke Faux ([Tweet by Zeke Faux](https://twitter.com/ZekeFaux/status/1759253220751229101?ref_src=twsrc%5Etfw)) have worked to piece together the sequence of events that led to the stunning collapse of FTX through documents, records and communications. The [Bahamas Bank Deltec Accused of Giving SBF Secret Credit to Buy Tether](https://www.bloomberg.com/news/articles/2024-02-17/bahamas-bank-deltec-accused-of-giving-sbf-secret-credit-to-buy-tether) story brings additional light to Bankman-Fried’s unregulated activities and reliance on opaque funding arrangements like the one reportedly provided by Deltec that enabled his rapid rise in the crypto sector. As the lawsuit against Deltec moves forward and Bankman-Fried’s own legal troubles are addressed in court, more insight into the undue risks and lack of transparency that ultimately cratered FTX may continue to surface.

Representatives from Deltec Bank and Tether have so far declined to comment on the allegations, while the fallout from the FTX collapse that shook investor confidence in 2022 continues well into 2024. Further judicial proceedings promise to offer still more perspective on how one of the largest crypto exchanges was built on a house of cards through risky dealings now under investigation.

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