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FTX’s Sam Bankman-Fried Facing Market Manipulation Inquiry, Possible Subpoena

  • Sam Bankman-Fried is being compelled to testify in front of Congress on Dec. 13 as part of its inquiry into the FTX collapse.
  • Bankman-Fried has said he will not be ready for the testimony, but lawmakers are ready to subpoena him.
  • Additionally, regulators are opening a probe into FTX’s role in the Terra (LUNA-USD) collapse.
FTX logo displayed on a smartphone with black background and phone resting on black keyboard
Source: shutterstock.com/Poetra.RH

Sam Bankman-Fried’s terrible year, presumably of his own making, is only continuing this week. The FTX pariah has been stoking the ire of regulators and lawmakers around the world from his Bahamas hideout. And while these frustrations have largely gone unpunished, lawmakers are assuring that his day of reckoning will come soon. Specifically, a new investigation seeks to uncover alleged market manipulation by Bankman-Fried’s company. As this investigation gets underway, the once-billionaire may also be forced to come testify in the United States.

Earlier this week, Bankman-Fried bantered with House Representative Maxine Waters over Twitter regarding his incoming testimony. The two are very familiar with one another; Bankman-Fried has testified in front of Waters before, although that instance saw him testifying as an expert rather than a suspect. But as Congress prepares its Dec. 13 inquiry into FTX’s collapse, Bankman-Fried is being a bit more resistant.

Bankman-Fried’s appearance is an absolute necessity, seeing as he was the founder, CEO and head shot-caller at FTX. Although he has been very vocal across media channels in the past couple of weeks, he told Waters that he will not be ready for testimony by Dec. 13, saying he will testify after he is finished “learning and reviewing what happened.”

This change in attitude over speaking publicly is leading many to believe that Bankman-Fried is trying to avoid perjuring himself. Whether or not this is his reasoning, Congress members are not going to let him call the shots. Waters stated Wednesday evening that she is willing to subpoena Bankman-Fried, contrary to a report by CNBC. Senate Banking Committee members Sherrod Brown and Pat Toomey have also expressed interest in subpoenaing the former CEO.

FTX’s Sam Bankman-Fried Facing Fed Investigation Ahead of Testimony

Sam Bankman-Fried’s woes don’t end with Congress’ FTX inquiry, either. The ex-exec is also becoming the subject of a new investigation by federal prosecutors regarding FTX’s role in the Terra (LUNA-USD) collapse.

FTX remains the big story of the quarter in crypto. However, investigators are also taking a look back in time at May’s Terra collapse. There seems to be reason to ask whether FTX played a more direct role in the meltdown than previously thought.

A new report shows that the Feds have opened up an investigation into whether or not Bankman-Fried had manipulated the market for TerraUSD and LUNA to benefit FTX. Earlier this year, TerraUSD’s de-pegging from its $1 price threw the entire network off of its equilibrium, beginning a domino effect that bankrupted three of the industry’s most notable lending and investing companies.

FTX truly started to shine in the public eye in the aftermath of that collapse. The company went on to agree to acquire crypto lender BlockFi, extend a line of credit to Voyager Digital and claim to still have $1 billion left over for more bailouts. Of course, after FTX’s collapse, investors know this was nothing more than a lie.

According to the report, the probe is in its very early stages. The Terra investigation will be just the first bullet point on a deep dive into the entire saga.

The probe comes just weeks after a founder of Three Arrows Capital, one of the companies bankrupted by Terra, accused FTX and Alameda Research of market manipulationCoinMetrics’ Lucas Nuzzi has pointed to on-chain data as further evidence of such manipulation. Nuzzi suggests that FTX activated 173 million FTX Tokens (FTT-USD) to bail out a secretly beleaguered Alameda during the second quarter.

On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.


Article printed from InvestorPlace Media, https://investorplace.com/2022/12/ftxs-sam-bankman-fried-facing-market-manipulation-inquiry-possible-subpoena/.

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