U.S. federal prosecutors have reportedly launched an investigation into whether Sam Bankman-Fried manipulated prices of TerraUSD USTC/USD and Luna LUNA/USD to benefit the entities he owned — cryptocurrency exchange FTX and Alameda Research.
What Happened: According to a report by New York Times, the inquiry is in its initial phase and is part of a broader inquiry into the downfall of FTX and the possible misuse of billions of dollars of customers’ money, which have reportedly gone missing.
Federal prosecutors and the Securities and Exchange Commission are examining if FTX has violated any law by transferring its customer's money to Alameda. Last month, a rush on withdrawals revealed an $8 billion hole in the exchange's finances, which caused the company to go bust. Bankman-Fried resigned from his position as FTX CEO when the company filed for bankruptcy on Nov. 11.
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Why It Matters: It is also being investigated whether FTX broke U.S. anti-money-laundering laws which call for money transfer businesses to identify their clients and inform the authorized authorities of any suspicious behavior.
In a statement to New York Times, Bankman-Fried said 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,” he added.
Do Kwon, the founder of stablecoin Terra tweeted that “the time has come for Genesis Trading to reveal if they provided the $1 billion UST shortly before the crash to SBF or Alameda.”
Kwon said that Alameda had taken out a loan "of nine figures worth of" Bitcoin BTC/USD from Voyager — disclosed in public bankruptcy records — on the dates of the stablecoin de-peg and requested other big corporations to loan even more (ten figures).
He insisted that the purpose of this loan must be made known to the public. “What’s done in darkness will come to light,” he said.
Representatives of the U.S. Attorney’s Office for the Southern District of New York in Manhattan did not immediately respond to Benzinga’s comment.
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