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Was Sam Bankman-Fried To Blame For Terra’s Unfortunate Crash In May?

Author: Qadir AK

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Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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According to recent reports, federal prosecutors are investigating whether Sam Bankman-Fried, the founder of FTX, manipulated the market for two cryptocurrencies this past spring, causing their demise and setting off a chain reaction that ultimately led to the collapse of his own cryptocurrency exchange last month. 

It is unclear at this time what the outcome of the investigation will be, and what impact it may have on the cryptocurrency industry as a whole. It is also unclear what Bankman-Fried’s stance is on the matter. Moreover, was there a link between FTX and Terra’s crash?

Was Bankman-Fried involved with the Terra/Luna Crash?

The likelihood that Bankman-Fried manipulated the prices of two interconnected currencies, TerraUSD and Luna, to benefit the firms he controlled, such as FTX and Alameda Research, a hedge fund he co-founded and owned, is being looked into by US authorities in Manhattan.

Since this investigation is only just beginning, it’s unclear whether or not authorities have found evidence of Bankman’s crime or when they began looking into the TerraUSD and Luna trades. The case is part of a larger inquiry into FTX’s collapse and the alleged loss of potentially billions of dollars in customer assets.

Previous reports have also indicated that Terra’s stablecoin unpegged from the dollar in May. The company that created it, Terraform Labs, flooded the market with LUNA tokens to keep the peg stable. That plan backfired, LUNA crashed, and UST dropped even further, triggering the year’s first widespread cryptocurrency panic, the effects of which we are still experiencing to this day. 

According to some shocking insider sources, FTX was the source of a deluge of sell orders for US Treasury securities (USTs). Small quantities were ordered rapidly.

It should be emphasized that people who were pushing the initiative may have made significant profits from Luna’s price drops. However, the entire system broke down, wiping away up to a trillion dollars from the cryptocurrency markets and causing a subsequent meltdown.

Six months later, the aftermath of that crash effectively put an end to SBF’s crypto empire.

Wrapping up

The reasons behind the two cryptocurrencies’ fluctuations are unknown at this time and it could be harmful to try and assume anything. 

All we can be hopeful of is that some big market players aren’t able to profit from the misfortune of others and are served justice soon enough.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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