FTX Collapse: Sam Bankman-Fried Reportedly Faces Market Manipulation Inquiry by US Prosecutors

US prosecutors are looking into whether Sam Bankman-Fried controlled the prices of two interlinked currencies, TerraUSD and LUNA.

By Reuters | Updated: 8 December 2022 11:36 IST

FTX Collapse: Sam Bankman-Fried Reportedly Faces Market Manipulation Inquiry by US Prosecutors

Photo Credit: FTX

FTX remains the subject of an active and ongoing investigation by Bahamian authorities

Highlights

FTX filed for bankruptcy last month after a $1 billion liquidity crisis
Meltdown has led investors to question viability of cryptocurrency sector
Prosecutors asking for details on communications firms have had with FTX

US federal prosecutors are investigating whether FTX's founder Sam Bankman-Fried manipulated the market for two cryptocurrencies this May that led to their collapse and resulted in the implosion of his own cryptocurrency exchange, the New York Times reported on Wednesday.

The prosecutors are looking into whether Bankman-Fried controlled the prices of two interlinked currencies, TerraUSD and LUNA, to benefit the entities he controlled including FTX and Alameda Research, the report said.

The investigation is in its early stages, the newspaper said, adding that it is not clear whether prosecutors have determined any wrongdoing by Bankman-Fried, or when they began looking at the TerraUSD and Luna trades.

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A spokesperson for the Manhattan US Attorney's office did not respond immediately to request for comment.

Regulators around the globe, including in the Bahamas where FTX is based and in the United States, are investigating the role of FTX's top executives including Bankman-Fried in the firm's stunning collapse, Reuters has previously reported.

The collapsed cryptocurrency exchange remains the subject of "an active and ongoing investigation" by Bahamian authorities, Bahamian Attorney General Ryan Pinder said last month, as he praised the Bahamas' regulatory regime and swiftness with which it responded to the crisis.

FTX Investors Approached by US SEC for Details on FTX, Sam Bankman-Fried

The crypto exchange filed for bankruptcy last month after a liquidity crisis that saw at least $1 billion (roughly Rs. 8,200 crore) of customer funds vanish. FTX's demise comes after a string of meltdowns that have taken down other key players including Voyager Digital and Celsius Network and led some global investors to question the viability of the cryptocurrency sector.

In recent weeks, US authorities have sought information from investors and potential investors in FTX, according to two sources with knowledge of the requests.

Federal prosecutors in New York are asking for details on any communications such firms have had with the crypto firm and its executives, including Bankman-Fried, the sources said. Bloomberg previously reported the information requests.

FTX and Alameda research did not respond to Reuters request for comments.

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