According to a Dec. 7 article from The New York Times (NYT), the prosecutors are looking into whether Bankman-enterprise Fried’s purposefully sparked a flurry of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC as part of a larger investigation into FTX’s own collapse (formerly UST).
It was claimed that the sudden rise in UST sell orders made it challenging to match them with corresponding “buy” orders, which in turn increased downward pressure on UST’s price and caused it to depeg from its intended 1:1 ratio with the U.S. Dollar.
As the two cryptocurrencies were intended to be linked, the events also caused Terra Classic, LUNC (formerly LUNA), the native token of Terra, to crash.
Although the exact reason for the fall of LUNC and USTC in May remains unknown, it is clear that most of the sell orders for USTC originated from Bankman-trading Fried’s company Alameda research, according to the NYT.
According to a source with knowledge of the situation who spoke to NYT, Alameda Researched also made a sizable wager on the price of LUNC dropping.
The former CEO stated that he was “not aware of any market manipulation and certainly never meant to engage in market manipulation,” as he has done with the majority of his remarks since FTX’s demise.
“To the best of my knowledge, all transactions were for investment or for hedging,” he added.
Do Kwon, the CEO of Terraform Labs, tweeted on November 8 to his 1 million followers in response to the current report, saying it was time for Genesis Trading to be transparent about an alleged $1 billion UST loan to “SBF or Alameda” just before Kwon’s Terra ecosystem collapsed.
Kwon also claimed that Alameda “sold 500MM UST in minutes to drain its curve pools during the MIM crisis,” which caused a significant currency contraction to occur in UST in February 2021.
Coincu will continue to update the situation related to Sam Bankman-Fried, you can find out more information through this article.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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