Former crypto billionaire Sam Bankman-Fried is being investigated for potentially manipulating the markets for two cryptocurrencies, The New York Times (NYT) reported.
U.S. Prosecutors in the Southern District of New York are exploring whether Bankman-Fried propped up the prices of cryptocurrencies TerraUSD and Luna to benefit his crypto exchange FTX and its associated trading firm, NYT reported.
Federal prosecutors are said to be investigating whether FTX’s founder, Sam Bankman-Fried, manipulated the market for two cryptocurrencies, leading to their collapse and creating a domino effect that caused the implosion of his cryptocurrency exchange. https://t.co/CZEhEBkhV2
— The New York Times (@nytimes) December 8, 2022
Bankman-Fried’s alleged market manipulation led to the collapse of both crypto tokens and the domino effect contributed to the collapse of FTX, according to NYT. The investigation is part of a broader inquiry into the Bankman-Fried’s fallen crypto empire and reports about billions of customer funds being misused. (RELATED: Here’s Why Disgraced Crypto Mogul Sam Bankman-Fried Hasn’t Been Arrested Yet)
TerraUSD was known as a “stablecoin” because it was pegged to the U.S. Dollar, but its value was not backed up directly by U.S. dollars unlike other stablecoins. Luna was a second coin linked to TerraUSD and its price was based on how many were in circulation, NYT specified.
A bankruptcy watchdog at the Justice Department recently called for a public, independent investigation into FTX, labeling it “likely the fastest corporate failure in American history” in a Delaware filing. The U.S. Southern District had been looking into FTX months before its collapse, Bloomberg reported.
Additionally, Bankman-Fried could be facing a subpoena from California Democratic Rep. Maxine Waters, Chairwoman of the House Financial Services Committee. Waters tweeted Wednesday “a subpoena is definitely on the table” following a CNBC report saying she was not planning on delivering a subpoena.
Lies are circulating @CNBC that I am not willing to subpoena @SBF_FTX. He has been requested to testify at the December 13th hearing. A subpoena is definitely on the table. Stay tuned.
— Maxine Waters (@RepMaxineWaters) December 8, 2022
Bankman-Fried has been “requested to testify at the December 13th hearing,” Waters said, referring to a scheduled hearing by the financial services committee about the collapse of FTX. Waters’ office did not immediately respond to the Daily Caller’s request for comment.
The initial reports about misused customer funds created mass customer withdrawals from FTX, which filed for bankruptcy Nov.11. Bankman-Fried resigned from his position as CEO of FTX in the wake of the collapse.
He told NYT he was “not aware of any market manipulation and certainly never intended to engage in market manipulation,” in a statement. “To the best of my knowledge, all transactions were for investment or for hedging,” he added.
Bankman-Fried’s wealth peaked at $26.5 billion and it stood at $17.2 billion in Sept. 2022, Forbes calculated. He told Axios he has $100,000 left in his bank account now that his crypto fortune is gone.