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FTX's Bankman-Fried faces market manipulation investigation, Do Kwon interferes

Published on

February 7, 2023
Read Time:2 Minute, 19 Second

US federal prosecutors have reportedly begun investigating whether or not the collapse of the Terra ecosystem was in truth triggered by market manipulation techniques by former FTX CEO Sam Bankman-Fried.

In accordance with a December 7 report report from the New York Instances (NYT), as a part of a broader probe into FTX's personal collapse, prosecutors are investigating whether or not Bankman-Fried's empire deliberately brought about a spate of "promote" orders on Terra's algorithmic stablecoin, TerraClassicUSD, USTC (previously VAT).

The sudden spike in UST promote orders reportedly made it tough to match them with corresponding “purchase” orders, which in flip led to elevated value stress on UST, inflicting it to deviate from its meant 1:1 ratio to the US greenback retreated.

The occasions additionally led to the autumn of Terra's native token, Terra Basic, a way (previously LUNA) as the 2 cryptocurrencies have been designed to be linked.

However whereas nobody has been in a position to pinpoint the reason for the LUNC and USTC collapse in Might, what is understood is that almost all of USTC promote orders got here from Bankman-Fried's buying and selling agency Alameda Analysis, in accordance with the NYT.

An individual with data of the matter additionally advised NYT that Alameda Researched additionally positioned a big wager on LUNC's value.

As with a lot of the feedback Bankman-Fried has shared since FTX collapsed, the previous CEO claimed that he was "not conscious of any market manipulation and definitely by no means meant to interact in market manipulation," in accordance with the NYT.

"To the most effective of my data, all transactions have been for funding or hedging functions," he added.

Associated: The Nightmare Continues for Sam Bankman-Fried and FTX – Regulation Decoded 14-21 November

In response to the current report, Terraform Labs CEO Do Kwon shared his ideas on the matter along with his 1 million Twitter followers in a Nov. 8 tweet that instructed it was about time Genesis Buying and selling mentioned a alleged $1 billion mortgage in UST cleared up: SBF or Alameda” simply earlier than the collapse of Kwon's Terra ecosystem.

I believe the time has come for that @GenesisTrading to disclose whether or not they supplied the $1bn UST to SBF or Alameda simply previous to the crash - LFG's buy was portrayed as "curiosity in collaborating within the Terra Defi ecosystem" - to no ammo present for a peg assault

— Do Kwon (@stablekwon) December 8, 2022

Kwon too specified {that a} main forex contraction that UST underwent in February 2021 was began by Alameda "once they bought 500mm of UST in minutes to empty their curve swimming pools through the MIM disaster."

"What was performed at nighttime will come to mild," Kwon added on the topic.

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Azeez Mustafa
Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author.
Last Updated : February 7, 2023
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