FTX Founder Was Involved in Collapse of Terra: Report
- US authorities have begun investigating if the founder of FTX, Sam Bankman-Fried, had involvement in the implosion of the Terra ecosystem.
- Officials believe that SBF might’ve manipulated the price action of the UST and LUNA tokens in order to provide benefit to FTX and Alameda.
- Mastermind of Terra, Do Kwon, stated “what’s done in darkness will come to light,” while sharing the news.
- Do Kwon raised many questions regarding the practices of FTX and Alameda and about the whereabouts of various funds borrowed and lent.
What might come as a surprise to every crypto enthusiast is how far and how deeply the former CEO and founder of the bankrupt crypto exchange FTX, Sam Bankman-Fried, also known as SBF in the crypto community, was involved in controversial events.
As per a new coverage from New York Times, the crypto industry’s “white knight” might’ve been involved in the collapse of Terra’s stablecoin UST and LUNA tokens.
The collapse of the Terra ecosystem and the depegging of the UST stablecoin back in the month of May initiated a string of violent bearish events in the crypto space, wipining billion, possibly trillions from the industry which is still in its nascent stage. Federal prosecutors are now investing if the founder of FTX had anything to do with the collapse of Do Kwon’s master product, the UST-LUNA model.
As per the New York Times coverage, US authorities are suspicious of SBF having a role in the collapse of algorithmic stablecoin UST and its native token LUNA. Interestingly, the officials believe that SBF might’ve manipulated the price action of the UST and LUNA tokens in order to benefit the firms under his control, i.e., FTX and its sister company, Alameda Research.
The report, citing people familiar with the matter, stated that it was these practices from SBF that could’ve initiated the collapse of Terra econsystem and caused a market turmoil, taking down Three Arrows Capital (3AC), Celsius Network, and others. Additionally, the case is still being investigated and the probe has just begun to figure out if the 30-year old American was actually involved or not.
However, Do Kwon, the founder of Terraform Labs, the firm responsible for the development of the Terra ecosystem, took to Twitter to state that “what’s done in darkness will come to light.” He added that now the founder of FTX will have to give answers to what was being done behind closed doors in the crypto space.
“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 said.
Moreover, Kwon also questioned why FTX’s sister firm Alameda borrowed more than $1 billion worth of bitcoin from Voyager Digital, which is also now bankrupt, during the UST depegging scenario and also why the trading firm requested leading companies to obtain over $10 million in Bitcoin (BTC).
Additionally, Kwon claims that “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.”
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
