SBF Probed For Role In Terra Luna Collapse, Do Kwon Chimes In.
According to a recent report by the New York Times, U.S. federal prosecutors are currently looking into whether former FTX CEO Sam Bankman-Fried may have had a hand in manipulating market prices and causing the collapse of the Terra ecosystem earlier this year.
The Probe on SBF
Despite no one being able to precisely determine the cause for Terra’s stablecoin UST depegging earlier in May, a number of unnamed sources have claimed that the majority of the USTC sell orders were from Sam Bankman-Fried’s hedge fund, Alameda research.
According to the Times however, another unnamed source claims that a majority of the USTC sell orders came from SBF’s crypto exchange, FTX.
Whether it was FTX or Alameda, this intense sell pressure was reportedly the main cause which forced more downward price pressure on UST causing it to depeg, cutting the price of the Luna token along with it.
The NYT also reports that an unnamed source claims that Alameda Research had placed a big bet on the price of LUNC falling.
In response to these rumors, SBF argues that he 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.” SBF said.
Do Kwon Responds
In a response to this report, Terra founder Do Kwon has made a series of Tweets accusing SBF and his companies FTX & Alameda Research as well as Genesis Trading for causing the depegging of UST and ultimately the collapse of the Terra ecosystem.
Do Kwon asserts that Genesis Trading had provided $1 billion to SBF which was then used to manipulate the prices shortly before the Terra ecosystem crashed.
“I think the time has come for Genesis Trading to reveal if they provided the $1B UST shortly before the crash to SBF or Alameda – the purchase from LFG was represented as stemming from “interest to participate in the Terra Defi ecosystem” – not to provide ammo for a peg attack.” Do Kwon wrote.
This is fairly public knowledge at this point, but the large currency contraction that UST went through in Feb 2021 was started by Alameda, when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis
— Do Kwon 🌕 (@stablekwon) December 8, 2022
In addition to that, Do Kwon claims that SBF manipulating Terra’s prices wasn’t unlikely as he had done the same thing in the past. Kwon reveals that Alameda was behind the large currency contraction that UST underwent in February of 2021 when “they sold 500mm UST in minutes to drain its curve pools during the MIM crisis.”