May 23, 2024

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Sam Bankman-Fried, CEO of FTX. Image: Getty Images

Sam Bankman-Fried probed over Terra-LUNA crash: report

Federal prosecutors are reportedly investigating Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX.com, for possible market manipulation that led to the Terra-LUNA crash in May, according to the New York Times.

See related article: Could FTX woes bring on another crypto freeze resembling Terra-Luna?

Fast facts

  • U.S. prosecutors in Manhattan are examining the possibility of Bankman-Fried for manipulating the price of failed algorithmic stablecoin TerraUSD (UST) and its sister token LUNA, to benefit the two companies he founded, FTX and its brokerage arm, Alameda Research, two unnamed people familiar with the matter told the New York Times.
  • The investigation is reportedly still in its early stages, and it’s still unclear whether the prosecutors have determined any wrongdoing from the embattled founder.
  • Bankman-Fried was “not aware of any market manipulation and certainly never intended to engage in market manipulation,” he said in a statement, according to the New York Times. 
  • While the exact cause of TerraUSD and LUNA’s collapse is still unclear, a big chunk of UST sell orders may have come from Alameda Research, which reportedly placed short positions to benefit from falling LUNA prices during the May crash, according to the unnamed sources cited by the New York Times. 
  • The Terra network (now Terra Classic) halted block production in May, after UST lost its dollar peg, causing its LUNA’s price to sink to near-zero. 

See related article: What lessons can we learn from Terra’s LUNA/UST meltdown?