Citing two anonymous sources, The New York Times reported that US federal prosecutors are investigating FTX founder and former CEO Sam Bankman-Fried for allegedly manipulating two cryptocurrencies last spring. Here are the details…
LUNA investigation into FTX founder
They launched an investigation to determine whether Bankman-Fried controlled the TerraUSD and Luna prices in favor of FTX and its affiliated trading company Alameda Research, according to the Times. The investigation is in its early stages. It is unclear whether prosecutors identified any wrongdoing by the crypto exchange founder. The problems surrounding Bankman-Fried escalated after the collapse of FTX.
As we reported as Kriptokoin.com, the exchange filed for Chapter 11 bankruptcy on November 11, after it failed to provide a recovery after a week of intense liquidity crunch. Bankman-Fried resigned as CEO the same day. Reports reported that at the time, FTX transferred billions of dollars of client funds to Bankman-Fried’s Alameda Research.
Bankman Fried told the Times on Wednesday that he was “not aware of any market manipulation”. He stated that he “absolutely has no intention of engaging in market manipulation.” “As far as I know, all transactions were for investment or hedging purposes,” he added, according to the Times.
Comment from Do Kwon
As it is known, Terra’s stablecoin left the dollar stable in May. The firm behind it, Terraform Labs, flooded the market with LUNA tokens to keep the stable. That failed, the LUNA collapsed and the UST fell further, causing the first major crypto crisis of the year. According to the report, a flood of UST sell orders originating from FTX caused this. “Orders were in small batches, but delivered very quickly,” he added.
The surge in sell orders for TerraUSD upset the system and pushed the UST price down, making it harder to find “buy” orders. The LUNA token, which secured the stablecoin, collapsed soon after. “The majority of sell orders for TerraUSD seemed to come from one place: Sam Bankman-Fried’s cryptocurrency trading company that also placed a big bet on Luna’s falling price,” the report said.
Meanwhile, Do Kwon made statements on the subject. In his statements on Twitter, Kwon drew attention to the issue of whether Genesis gave the $1 billion UST to SBF or Alameda. While stating that this needs to be disclosed, he said, “It was said that the USTs from the LUNA Foundation were received to join the Terra ecosystem.”
SBF summoned to court
Luna price drops may have resulted in huge profits for those behind the event. However, the entire system collapsed, wiping a trillion dollars from the crypto markets and the ensuing collapse. Also, the consequences of this collapse brought the end of SBF’s crypto empire six months later. Meanwhile, House Financial Services Committee Chair Maxine Waters said she plans to bring Sam Bankman-Fried to court. The committee announced that it expects the SBF on 13 December. But it’s unclear whether SBF will go.
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