Sam Bankman-Fried, former head of collapsed cryptocurrency exchange FTX, is already the central villain in one market crash this year.
But according to federal prosecutors in the US, his influence may have been the cause of a second, specifically the two-trillion-dollar rout that battered the crypto markets in May.
According to a New York Times report, prosecutors are looking into a high volume of short orders placed on FTX that sought to profit off Terraform Labs’ two multibillion-dollar crypto assets- LUNA and the UST stablecoin.
Both coins collapsed in May, causing tens of billions in losses for investors. Contagion soon spread across the entire market, sending all major cryptocurrencies into a tailspin.
Now prosecutors are examining the possibility that SBF intentionally manipulated the market for the benefit of his two major crypto firms, FTX and the Alameda Research hedge fund.
Watch: FTX collapse steals the show
SBF said he was “not aware of any market manipulation and certainly never intended to engage in market manipulation” in a statement to the New York Times.
“To the best of my knowledge, all transactions were for investment or for hedging,” he added.
If the accusations stick, the irony would be unrivalled. May’s market rout caused FTX’s FTT token to plummet in value, and as is now known, FTT comprised a significant portion of FTX and Alameda Research’s intermingled balance sheet.
Accusations mount for Sam Bankman-Fried
A run on deposits in November exposed an $8bn black hole where customer funds should have been, opening the possibility of criminal charges under money laundering laws for SBF.
Speaking of manipulation, Sam Bankman-Fried’s mentor-turned-public executioner Changpeng ‘CZ’ Zhao has accused his former protege of being a “master manipulator when it comes to media and key opinion leaders” in a Tuesday Twitter thread.
CZ, whose public spat with SBF preceded SBF’s demise, called him “one of the greatest fraudsters in history” and liar.
With the likelihood of charges mounting, SBF could soon be the latest high-profile figure in the dock in a year of white-collar reckoning, starring:
Theranos
Once the darling of the Silicon Valley elite, Theranos founder Elizabeth Holmes was found guilty of fraud in January following a three-month trial that garnered immense public intrigue.
The story of Theranos, once valued at US$9bn and backed by billionaires including Rupert Murdoch, needs little introduction, having been the subject of countless columns, books and a Hulu original series starring Amanda Seyfried.
Holmes was sentenced to 11 years in prison in November, while former business partner and boyfriend Sunny Balwani this week was sentenced to an even heftier 13 years.
Wirecard (ETR:WDI)
Former Wirecard chief Markus Braun took the stand in Munich this week.
Braun and two other executives face fraud and market manipulation charges within the collapsed blue-chip payment company, which was once valued at nearly US$30bn and had the backing of major German politicians.
Wirecard’s demise sent shockwaves through the German markets, and its insolvency was the first ever for a DAX constituent.
Braun’s trail begins in Munich, Germany– Credit: Reuters/Lukas Barth
Braun, who has been under arrest since 2020, denies the charges, and has accused associates of creating a “shadow structure” under his nose.
He faces up to 15 years if proven guilty.
Influencers get off the hook
A class-action lawsuit filed against Kim Kardashian and champion boxer Floyd Mayweather was dismissed on Wednesday by a federal judge in California.
In a January court filing by Scott+Scott Attorneys At Law, the class action argued that Kardashian and Mayweather used “false or misleading statements” to “artificially inflate the price” of the EthereumMax token, which ended up being a pump-and-dump scam.
Kardashian promoted the scam on Twitter, whereas Mayweather donned the EMAX logo during his boxing match with YouTuber Logan Paul.
BREAKING NEWSDespite the dismissal, Judge Michael Fitzgerald of California said in his Wednesday ruling that the case raised "legitimate concerns" surrounding influencers' attitude to promoting "snake oil" to fans.The secret to success…hard work and lots of it. @floydmayweather sharing his thoughts on his upcoming fight and cryptocurrency at the Bitcoin conference in Miami Florida today!
“Cryptocurrency it’s the new wave, it’s what everybody’s doing”$eMax Seen on Fox News pic.twitter.com/pvqGU8TmLN
— EthereumMax ✪ (@ethereum_max) June 4, 2021
Kardashian didn’t get off totally scot free: The Securities and Exchange Commission (SEC) demanded she rummage through one of her Balenciaga purses and cough up US$1.3mln for failing to disclose payment she received for promoting the scam.