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Samuel Bankman-Fried repeatedly spread false or racist rumors about Binance CEO Changpeng Zhao before the collapse of Bankman-Fried’s crypto exchange FTX, according to Binance Chief Strategy Officer Patrick Hillman.

“Sam was CONSTANTLY spreading fake rumors about  @cz_binance, because shading him as an ‘evil Chinese’ was critical to his scam. You can’t pretend to be Luke Skywalker without Darth Vader,” Hillman tweeted late in the evening of April 20.

Hillman was referring to a new account of the demise of FTX published in Puck magazine, written from the perspective of Anthony Scaramucci of the hedge fund Skybridge Capital. The story describes how SBF bought a $45 million ownership stake in Skybridge, and how Scaramucci then invested $10 million of that in FTT, the bankrupt exchange’s native token. The collapse of FTX in November rendered that investment almost worthless.

During those talks — and their joint trips to the Middle East seeking investments in Dubai — SBF was “bad-mouthing” CZ, Puck reported:

During SBF’s meetings with officials in Dubai, he had been bad-mouthing Changpeng “CZ” Zhao, the founder of Binance and SBF’s rival crypto mogul. The Mooch had not been involved in those meetings, but his Skybridge colleague had been there and reported the bad form back to him. 

This behavior seemed worrisome. After all, The Mooch had come of age professionally at Goldman Sachs, where corporate politesse is the coin of the realm, partly out of practicality: life is long and unpredictable and colleagues can become competitors and then clients. Also, people talk. “He was lighting CZ up,” The Mooch continued. “And these are small towns. They look glitzy from a travel brochure, but trust me, these are small, very connected, interconnected towns. It got back to CZ” As also recounted previously, SBF’s denigration of CZ led the latter to suggest publicly that he might consider selling his $500 million investment in FTT tokens. 

The Block contacted SBF’s lawyers for comment but we did not immediately hear back.

SBF’s rivalry with CZ

SBF and CZ have long had a personal rivalry. At one point, when FTX was in trouble but still operating, Binance offered to rescue FTX in a $1 billion buyout. But Binance backed out of the deal a day later after doing due diligence on the company. “The issues are beyond our control or ability to help,” Binance said at the time.

FTX filed for bankruptcy hours later.

Patrick Hillman’s tweet about SBF and CZ. Source: Twitter. 

Prior to that, CZ accused SBF in a Signal group chat of trying to “depeg” tether, a stablecoin also known as USDT whose value is tied to the U.S. dollar, according to the Wall Street Journal.

CZ made the accusation on Nov. 10, after pulling out of the FTX rescue. “Stop trying to depeg stablecoins. And stop doing anything. Stop now, don’t cause more damage,” CZ told SBF, according to the Journal.

FTX’s sister hedge fund, Alameda Research, had in fact recently sold $250,000 of tether. The sum was too small on its own to devalue USDT below its $1 peg. But the trade might have been enough to sow fear in the market if trading was thin.

CZ’s advice for SBF

“My honest advice: stop doing everything. Put on a suit, and go back to DC, and start to answer questions,” CZ reportedly told SBF.

SBF denied he was trying to depeg tether.

“Thanks for the advice!” He said on Signal, per the Journal. “Did you attempt to accuse me of trying to depeg a stablecoin by doing a $250,000 trade?” 

Hillman also denied on Twitter that the animosity between SBF and CZ caused Binance to back out of the rescue deal or jettison its holdings of FTT. “Sam denigrating CZ was the norm for us,” he said. “Had nothing to do with deciding to sell the worthless FTT on the company’s books.”

Patrick Hillman says SBF’s gossip was “the norm.” Source: Twitter. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Late last night, stablecoin issuer Tether minted one billion USDT tokens on the Ethereum network.

According to Tether CTO Paolo Ardoino, the minting represented an “inventory replenish.” He added that it was “an authorized but not issued transaction, meaning that this amount will be used as inventory for the next period [of] issuance requests and chain swaps.”

USDT is the crypto industry’s most-popular stablecoin, pegged to 1:1 to the United States dollar. It is commonly used to facilitate trading on large exchanges that don’t accept fiat currencies.

Tether’s dominance in the stablecoin market is growing

Tether is the dominant stablecoin issuer on the Ethereum blockchain.

The total amount of USDT on Ethereum amounts to over 35 billion tokens. Its closest competitor, the Circle-issued USDC, accounts for less than 30 billion tokens. Meanwhile, Binance USD — which is not currently minting new tokens — makes up less than seven billion tokens.

Broadening the scope to the entire stablecoin supply across multiple blockchains further intensifies Tether’s dominance in the sector.

USDT comprises over 81.5 billion dollar-pegged tokens, while USDC still remains under 30 billion tokens. No other stablecoin is even close.

Are USDT supplies indicative of crypto market trends?

Some argue that the supply of USDT has historically indicated the direction in which the price of bitcoin — or the crypto market, as a whole — will trend.

“Generally, Tether issues new USDT when they see and anticipate higher demand for it,” Simon Cousaert, a research director at The Block, explained. “This indicates new cash is coming into the system — generally used to buy bitcoin, ether and other cryptocurrencies.”

“I don’t subscribe to Tether conspiracies, but I do subscribe to supply and demand,” Decentrader founder and well-known crypto trader filbfilb once similarly tweeted when discussing the relationship between USDT’s supply and the bitcoin price in 2020 — when the foremost cryptocurrency was trading under $11,000.

Furthermore, one study from BDC Consulting conducted correlation tests on many indicators last June. It concluded that the supply of USDT “does feature a strong and statistically significant correlation” with the bitcoin price. “The resulting model with market entries and exits timed with the USDT supply spikes yielded an ROI [return on investment] of 229%, showing that stablecoin supply data can be used in trading,” it said.

Tether reported a net profit of $700 million for the fourth quarter of 2022, which it said was additional to its reserves, in February. At the time, it claimed its consolidated total assets amounted to at least $67.04 billion, while its consolidated total liabilities amounted to $66.08 billion — reflecting excess reserves of at least $960 million.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Since The Merge moved Ethereum away from an energy-intensive proof-of-work consensus mechanism to a more environmentally friendly proof-of-stake method, the supply of ether has declined by more than 100,000 coins.

Over the last 217 days, the total supply of ether has declined by 103,092 coins — worth more than $200 million at current prices — according to Ethereum tracking website ultrasound.money.

Were The Merge never to have happened and Ethereum remained secured by miners, as opposed to stakers, the ether supply would have increased by more than 2.52 million coins — or $4.9 billion. The supply of Ethereum’s native coins would also have increased yearly by 3.53%.

Instead, post-Merge Ethereum’s coin supply is down by 0.144% per year. Furthermore, ultrasound.money claims $1.2 billion is being removed from the ether supply over the same time frame.

The supply of ether has declined by 0.144% yearly since The Merge. Source: ultrasound.money

The current supply of ether is roughly 120,418,032 million coins.

Ethereum Improvement Proposal 1559 started the fire

Though The Merge has undoubtedly catalyzed Ethereum’s reduction in native-coin supply, it did not itself implement the burning of ether. Instead, that tokenomic aspect was triggered by Ethereum Improvement Proposal 1559 — or EIP-1559, for short — which was pushed via the London upgrade.

Last August — or 623 days ago, to be precise — Ethereum’s London upgrade effectively split transaction fees into a base cost and a priority fee. The former is burned, while the latter served as a form of payment to miners — which no longer exist for the protocol.

EIP-1559 was also designed to exert deflationary pressure on the ether supply since the base fee gets burned and can no longer be used on the network — reducing the amount of inflation on the Ethereum network. But it, itself, hasn’t decreased the blockchain’s total supply. Since London went live, the total supply of ether has increased by 3.21 million coins.

On the subject of burning ether, that activity has increased since Ethereum’s Shapella upgrade opened up staked ether withdrawals just over one week ago.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.