Former FTX CEO Sam Bankman-Fried (SBF) may have played a role in the Terra ecosystem’s collapse. The United States Federal Prosecutors are currently investigating the likelihood of the event. According to a report from The New York Times, there might have been a correlation between SBF hedge fund Alameda Research’s market execution on TerraUSD ($UST) and Luna ($LUNA) on the day of the crash.
The inflow of sell orders on Terra’s algorithmic stablecoin $UST exceeded the buy orders, causing the price to fall and depeg from its 1:1 ratio with the US dollar. The UST stablecoin’s crash subsequently led to the fatal plunge of its sister token, $LUNA. According to Time, the crash wiped out $400 billion in crypto market capitalization.
Do Kwon, CEO of TerraForm Labs, revealed via Twitter that Genesis Trading had provided $1 billion to Alameda before the crash. He also questioned the firm about why it needed to borrow nine figures in bitcoin on the day of the event. “What’s done in darkness will come to light,” Kwon added.
The New York Times reports also confirm that FTX is under investigation for violating US money laundering laws. Sam Bankman-Fried, responding to the allegations, stated:
“I am 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.”
The investigation is still ongoing, and the court has not found SBF guilty of these allegations. Sam Bankman resigned as CEO of FTX on November 11 after the company declared bankruptcy.
The crashes of FTX and Terra were historical events that shook the crypto markets this year.
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