The former CEO of the bankrupt crypto exchange FTX – Sam Bankman-Fried (SBF) – might also be involved in Terra’s crash. Federal prosecutors have launched an investigation to determine whether he manipulated trades that led to the collapse of UST and LUNA earlier this year.
Orchestrating Terra’s Catastrophe, too?
According to a recent New York Times coverage, US authorities have doubts that Bankman-Fried could have played a role in the collapse of Terra’s algorithmic stablecoin UST and its native token LUNA.
People familiar with the matter revealed that he might have machinated the market to benefit the organizations he controlled – FTX and Alameda Research. His endeavors might have triggered the downfall of Terra and the consecutive domino effect in the entire industry.
The investigation is still in its early days, and prosecutors have yet to determine whether or not the 30-year-old American is guilty.
Do Kwon – Co-Founder of Terraform Labs – shared the report on his Twitter account, saying, “what’s done in darkness will come to light.”
The South Korean believes that Genesis Trading provided $1 billion in UST to Bankman-Fried or Alameda Research before the stablecoin’s depeg:
“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.”
Kwon further questioned why Alameda borrowed more than $1 billion worth of bitcoin from Voyager during the depeg and why requested other leading companies to obtain over $10 million in BTC.
Terra and FTX: The Negative Highlights of 2022
The former’s problems started in May when UST lost its peg and plunged way below the target of $1. Due to the asset’s algorithmic nature and connection with LUNA, certain traders managed to exploit this and profit by arbitrage trading it. This essentially drove both tokens’ prices to virtually zero in a matter of days.
As mentioned above, FTX faced liquidity issues and crashed spectacularly, triggering a market decline and colossal problems for numerous companies and individuals involved with it.
For his part, SBF has given some controversial comments regarding the adverse event but has so far failed to provide concise information on how it all went down. Many, including CZ and Elon Musk essentially called him a fraudster.