A New Report Shows Sam Bankman-Fried Possibly Involved In Terra Collapse
The collapse of the Terra ecosystem was one of the biggest events in the crypto industry this year. As per the latest reports, the U.S. federal prosecutors have been looking into the involvement of FTX founder Sam Bankman-Fried in the collapse of the Terra ecosystem.
The latest report from New York Times highlights that FTX and Terra might have something in common. It notes that the U.S. prosecutors from Manhattan are investigating if SBF tried to manipulate the price of interlinked digital assets - TerraUSD and LUNA.
The report also adds that the involvement done to possibly benefit FTX and Alameda Research, might have led to the billion-dollar collapse of the Terra ecosystem. This investigation comes as part of the broader inquiry into FTX which went bankrupt last month.
Days ahead of the collapse in the Terra ecosystem, major market makers witnessed a surge in the sell orders in smaller denominations of TerraUSD (UST). This flood of sell orders for the UST stablecoin overwhelmed the system entirely making it hard for market makers to find matching buy orders.
The sell orders which remained unfulfilled for too long would later match with the buy orders at a lower price. This led to downward pressure in the price of TerraUSD (UST). Now, with UST linked to Terra's native token LUNA, the latter also plummeted.
The NYTimes report also notes that the bunch of sell orders for UST came majorly from SBF's crypto derivatives exchange FTX. One of the sources said that the exchange had placed a huge bet on the price of LUNA.
Any major fall in the LUNA price could have benefitted SBF allowing his to take massive profits. As we know, the collapse of the Terra ecosystem wrecked a havoc in the entire crypto ecosystem.
However speaking to New York Times, SBF said 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 hedging," he added.
Interestingly, Terra founder Do Kwon has also responded to the latest report. Partially blaming Alameda Research for the collapse, Kwon noted: "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”.
In his Twitter thread, Kwon added: “What’s done in darkness will come to light”.