Original author: Protos Staff
Original compilation: defioasis, Wu said about blockchain
As SBF’s trading empire collapses, Cumberland has become one of the most important trading firms in cryptocurrency.
Protos analysis shows that in 2021, SBF’s Alameda Research and Cumberland received the vast majority of all Tether-USDT. Alameda has since gone bankrupt and its largest shareholder, SBF, has been convicted of multiple felonies.
When we released Tether Papers at the end of 2021, Alameda was responsible for at least $36.7 billion in USDT issuance; Cumberland was responsible for at least $23.7 billion.
Note: Tether Papers related articles:
https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/
https://protos.com/tether-minted-usdt-stablecoin-crypto-two-alameda-cumberland/
Who is Cumberland?
Cumberland is a subsidiary of Chicago-based DRW, named for its founder, Donald R. Wilson. DRW is a major commodities trading firm that has previously sparred with the Commodity Futures Trading Commission (CFTC).
The CFTC filed a lawsuit in November 2018 accusing DRW of manipulating inactive markets, and in an unusual turn, DRW won the case, with the court ruling that it “smarter than its counterparty in a swap transaction and Not illegal.”
Since launching in 2014, Cumberland has focused exclusively on the cryptocurrency market. Because of its long history with the industry, when the U.S. Securities and Exchange Commission (SEC) needs to better understand “the nature of the Bitcoin OTC market” or other issues in the cryptocurrency market, the agency turns to Cumberland for more information. Deep understanding.
Cumberland plays a variety of roles in the cryptocurrency industry, including market maker, over-the-counter (OTC), venture capital, and proprietary trading.
Cumberlands interactions with large and mysterious corporations
Cumberland is an extremely important market maker on Binance; the vast majority of USDT issued to Cumberland is sent directly to Binance — approximately 79%. Smaller portions were sent to other exchanges, including Poloniex.FTX, Bitfinex, Huobi (now HTX), and OKX.
Cumberland mainly issues USDT on Ethereum, but also on Omni and Tron; Alameda Research mainly issues USDT on Tron, but also on Ethereum.
Cumberland also interacts with a number of other trading firms, including with a group of firms we call Shilongs Web including Paretone Capital, Aoide Capital, Max Victory Wealth Management and ZB Trade.
Cumberland has also had dealings with cryptocurrency lenders, mentioning in a tweet that it had borrowed money from Genesis.
Since the release of Tether Papers, the crypto company has begun sending large amounts of USDT to Coinbase addresses, following Coinbase’s listing of USDT in May 2021. Cumberland has also begun interacting with Kraken more frequently, specifically using its Tron-based wallet.
FTX debtor sends stablecoin to Cumberland
There has been an interesting series of interactions between Cumberland and Alameda Research.
0xF02e86D9E0eFd57aD034FaF52201B79917fE0713 is an address belonging to Alameda Research and tagged by Breadcrumbs and Arkham Intelligence.
Arkham tweeted on January 13 this year that the address appeared to be used by the liquidator to consolidate assets.
Note:
https://twitter.com/ArkhamIntel/status/1613610800366882817
So, what’s going on with $1.82? At first glance, this seems like an odd amount of money to send from one trading company to another; not even enough to buy a Big Mac.
However, this amount is very similar to other stablecoin transactions between these companies:
(1) On March 17, 2023, Alameda Research sent $1.83 of BUSD, $1.82 of DAI, and $1.81 of Paxos Standard (USDP) to Cumberland.
Unlike the November 8 transaction, these transactions were followed by larger transactions, including $2,896,700 in BUSD, $2,107,100 in DAI, and $138,000 in USDP.
(2) On March 13, 2023, Alameda Research sent $1 USDT to Cumberland.
Later on the same day, another $49,929,000 USDT was sent, and the next day another $379,078 USDT was sent.
The previous trades were almost like test trades, but there was no larger trade after the small trade on November 8th. These transactions may be the conversion and consolidation of assets by FTX debtors.
A love for algorithmic stablecoins
Cumberland, one of the firms that provided input to the Presidential Task Force’s report on stablecoins, made clear that it believes stablecoins should be regulated by bank regulators, reserves should be capped, and stablecoin issuers should publish proof of reserves.
In the document Overview of Stablecoins on the Market, the company also made it clear that it still believes Terra does not prove that algorithmic stablecoins are dangerous.
Cumberland wrote: “The incentives for UST payments overwhelm the utility of Luna’s own existence. This is unique to UST and is not representative of the structure of most algorithmic stablecoins.”
Cumberland is also an active participant in other stablecoin issuers, including USDC, and previously interacted with Binance-peg BUSD until its demise.
It is important to note that these actions by Cumberland are not evidence of illegal conduct. As a major market maker and over-the-counter trading desk, the use of various stablecoins is expected as part of its role in the ecosystem.
