Manhattan federal prosecutors have initiated an inquiry into whether Sam Bankman-Fried deliberately drove up the prices of two cryptos this spring, resulting in their downfall and, eventually, the downfall of his own crypto exchange last month.
According to crypto media outlets, Bankman-Fried may have manipulated the prices of TerraUSD and Luna, both of which are connected to his companies FTX and Alameda Research, in an effort to benefit them.
The Securities and Exchange Commission (SEC) and federal prosecutors are conducting an inquiry into whether FTX’s transfer of consumer money to Alameda was unlawful.
Furthermore, they are assessing whether FTX breached U.S. anti-money laundering regulations, which necessitate that money-transfer companies identify their customers and inform law enforcement of any potential criminal behavior.
Separately, the new management at FTX has employed a team of forensic investigators from consultancy firm AlixPartners to help find the billions of dollars lost from the no-longer-operational Bitcoin exchange.
A lawyer for FTX’s creditors has reported that a large sum of assets have gone missing from the crypto exchange as of the end of November.
The money has been moving through various crypto mixers and exchanges in order to be laundered. Furthermore, a story has come to light regarding a 27-year-old Indian businessman who lost $2 million when FTX crashed.
He had initially invested in the exchange back in 2020, and is now taking legal action against its founder, Bankman-Fried, for wire fraud.
To help remedy the situation, a forensics company has been commissioned to take charge of “asset tracing,” which involves finding and recovering the lost digital assets.