3.3 min read
Market Manipulation investigation on Sam Bankman-Fried
Written byEdna Buckley
December 8, 2022
- Federal prosecutors are reportedly investigating whether FTX founder Sam Bankman-Fried was involved in the TerraUSD and Luna debacles.
- These prosecutors believe that SBF may have manipulated the prices of the said assets.
- The collapse of TerraUSD was caused by an increase in the number of sell orders that came, including from FTX.
- FTX lowered the price of Luna around the same time in order to “get a good profit.”
The Crypto-Verse has seen the demise of two major projects this year. While recovering from the infamous Terra crash, the community was quickly hit by the decline of the FTX empire. Manhattan prosecutors believe there may be a connection between the two.
Federal prosecutors are reportedly investigating whether FTX founder Sam Bankman-Fried was involved in the TerraUSD and Luna debacles. According to a recent New York Times report, these prosecutors believe that SBF may have manipulated the prices of the said assets. He does this to bring profit to the company he owns.
Back in May 2022, Terra’s stablecoin UST lost its $1 peg, causing massive market chaos. The asset failed to repeg and is trading at $0.02074 at press time.
“The matter is part of a broadening inquiry into the collapse of Mr. Bankman-Fried’s Bahamas-based cryptocurrency empire, and the potential misappropriation of billions of dollars in customer funds.”
It's worth noting that the investigation launched by the New York City Attorney's Office is still in its early stages. As such, the relationship of the former FTX CEO to the Terra ordeal remains uncertain. The report continued,
But why is SBF being investigated for Terra's crash?
According to the New York Times, the decline in TerraUSD was caused by an increase in the number of sell orders. A source told The Times that the sell orders came from FTX. Apparently, FTX also lowered the price of Luna around the same time in order to “get a good profit.” However, "the entire TerraUSD Luna ecosystem hit rock bottom."
Also, it should be noted that FTX was researched months before the recent crash. This is done to determine whether there have been any possible breaches of money laundering laws. But SBF continues to deny all of these allegations, saying:
“[I was] not aware of any market manipulation and certainly never intended to engage in market manipulation. To the best of my knowledge, all transactions were for investment or for hedging,”
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