With FTX’s investigations still ongoing, US prosecutors in Manhattan have also begun examining whether Sam Bankman-Fried, the former CEO of the bankrupt cryptocurrency, had a hand in the collapse of Terra’s digital currencies — LUNA and UST.

Prosecutors Look Into Whether SBF Caused LUNA and UST Collapse

The New York Times reported on Wednesday that the prosecutors are considering the chances that Bankman-Fried caused the collapse of LUNA and UST in the interest of his companies, FTX and Alameda Research. People familiar with the matter said this is part of the ongoing investigation into FTX’s crash.

Notably, the Terra ecosystem collapsed in May after its algorithmic stablecoin UST depegged to a significant low, dragging along LUNA, which was closely connected to the stability of UST. The incident resulted in the first wave of liquidity crunch in the cryptocurrency market, as several companies, including Celsius, had exposure to Terra.

Do Kwon Thinks SBF and Alameda Are Responsible

Responding to the new investigation by the Manhattan prosecutors, the founder of Terra, Do Kwon, laid arguments that suggest Sam Bankman-Fried and his companies could have orchestrated Terra’s downfall. In one claim, Kwon accused Genesis Trading of providing $1 billion UST to SBF or Alameda shortly before the stablecoin depegged.

“I think the time has come for Genesis Trading to reveal if they provided the $1B UST shortly before the crash to SBF or Alameda — the purchase from LFG was represented as stemming from “interest to participate in the Terra Defi ecosystem” — not to provide ammo for a peg attack,” Kwon tweeted.

Terra’s founder also claimed that Alameda borrowed nine figures in Bitcoin from Voyager and asked other big companies to borrow more, for reasons which he said could have been to “short btc to handicap lfg reserves.”

Meanwhile, Do Kwon is hiding from prosecution over Terra’s collapse. In September, Interpol issued a red notice for Kwon, but his whereabouts remain unknown.

(By Ibiam Wayas)