Sam Bankman-Fried Reportedly Under Investigation for Market Manipulation

  • U.S. prosecutors are reportedly investigating Sam Bankman-Fried’s involvement with the collapse of Terra, and if he had manipulated the prices of UST and LUNA at the time.
  • The New York Times pointed out that the majority of UST “sell” orders had come from Alameda Research, with sources claiming the company had placed bets on LUNA falling in price.


U.S. prosecutors are investigating if former FTX CEO Sam Bankman-Fried (SBF) had any connection to the collapse of the Terra ecosystem earlier this year, The New York Times (NYT) reported on 7 December.

The publication cited two people familiar with the matter, who noted that the prosecutors were looking into a possible market manipulation of the TerraUSD (UST) and LUNA tokens from SBF and Alameda Research. Back in May, a sudden increase in UST “sell” orders made it dificult to match them with corresponding “buy” orders, which eventually forced the algorithmic stablecoin to lose its 1:1 USD peg, resulting in the collapse of the Terra ecosystem.

While the exact cause for the collapse of Terra is yet to be discovered, NYT noted that the majority of UST sell orders in May came from SBF’s trading firm Alameda Research. The unnamed sources also claimed that at the time Alameda had placed a big bet that the price of LUNA was going to fall significantly. In response to the accusations, SBF once again pushed the narrative that he was unaware of what was happening in his own companies, claiming that he “never intended to engage in market manipulation”.

Soon after NYT’s report, Terraform Labs CEO Do Kwon suggested on Twitter that Genesis Trading had provided an alleged $1 billion loan in UST to either “SBF or Alameda” shortly before the price crash of the stablecoin. Do Kwon also claimed that the large currency contraction of UST was started by Alameda, “when they sold 500mm UST in munites to drains its curve pools during the MIM crisis”.

Earlier this week, SBF was invited by Congresswoman Maxine Waters to participate in the upcoming 13 December Congress hearing regarding the collapse of the FTX empire. The former CEO, however, said he will appear before her committee and explain what happened only after he had “finished learning and reviewing” the situation, suggesting that it will not be this year. Waters later pushed back at the excuse of the former FTX CEO, saying that his knowledge was already “sufficient for testimony”, and earlier today said that a “subpoena is definitely on the table”.

Related Coverage
New FTX CEO Considers Restarting the Exchange
  • The new CEO of FTX, John J. Ray III, told the Wall Street Journal that had formed a task force to explore the option of restarting the international exchange.
  • Ray noted he was willing to revive the platform if that could recover more value for the company’s customers than liquidating its assets.
January 19, 2023, 6:42 PM


Authorities Reportedly Raid Nexo’s Bulgarian Offices
  • The probe into Nexo’s activities in Bulgaria was launched several months ago, after international services detected suspicious transactions aimed at circumventing Russian sanctions.
  • Reports suggest that Nexo is also being investigated for allegedly committing major financial crimes, and participating in money laundering activities.
CFTC Files Market Manipulation Lawsuit Against Mango Markets Exploiter
  • The CFTC has filed a lawsuit against Avraham Eisenberg, and charged him with two counts of market manipulation for his involvement in the Mango Market exploit.
  • The individual had revealed himself as the exploiter on 15 October, claiming his actions were legal, and was later arrested by the DoJ on similar charges.