Alameda Research and Cumberland Holdings dominate the market for the stablecoin USDT, according to a report by Protos. Alameda Research, the sister company of the FTX exchange, holds nearly 50% of the total USDT supply, with approximately $36.7 billion. Cumberland, a major market maker, has also acquired a significant portion of USDT. Together, these two companies control nearly 70% of all USDT in circulation.
The report highlights the centralization issues associated with these large holdings. It is worth noting that Alameda Research was involved in the collapse of FTX and is currently under investigation in the United States.
Protos’ report reveals that Alameda Research has emerged as the largest purchaser of USDT since its launch. Interestingly, a significant portion of these holdings, around 31.7 billion USDT, was acquired in 2022, accounting for approximately 86% of the company’s total capital. Alameda Research sent these funds to various exchanges, with FTX being the main recipient, receiving 30.1 billion USDT. Other exchanges, including Binance, Huobi, and OKEx, also received USDT from Alameda.
Similarly, Cumberland Holdings, the cryptocurrency trading arm of DRW Holdings, is the second-largest holder of USDT. Since 2014, Cumberland has acquired 23.7 billion USDT from Tether’s treasury bonds, with a significant portion of this acquisition (74% or 17.6 billion USDT) occurring in the past year. The report highlights Cumberland’s close partnership with Binance as its main source of liquidity and market-making.
With a market value exceeding $83 billion, USDT and Tether are currently facing scrutiny from regulators and the media due to concerns about transparency and compliance. Recently, Tether was fined $41 million by the U.S. Commodity Futures Trading Commission (CFTC) for making false statements regarding the reserves backing the stablecoin. Additionally, Bloomberg accused Tether of running a Ponzi scheme, alleging that the company used its reserves to finance billions of dollars in short-term loans to Chinese firms. Tether has denied all allegations and has taken steps to increase transparency regarding the reserves backing its largest stablecoin.
Overall, the concentrated holdings of USDT by Alameda Research and Cumberland Holdings highlight the need for greater decentralization and regulatory oversight in the stablecoin market. The ongoing controversies surrounding Tether and USDT serve as further reminders of the importance of transparency and accountability in the cryptocurrency industry.