Federal prosecutors are investigating whether FTX’s founder, Sam Bankman-Fried, manipulated the market for two cryptocurrencies this past spring, leading to their collapse and creating a domino effect that eventually caused the implosion of his own cryptocurrency exchange last month, The New York Times reports, citing people with knowledge of the matter. From the report: U.S. prosecutors in Manhattan are examining the possibility that Mr. Bankman-Fried steered the prices of two interlinked currencies, TerraUSD and Luna, to benefit the entities he controlled, including FTX and Alameda Research, a hedge fund he co-founded and owned, the people said. The investigation is in its early stages, and it is not clear whether prosecutors have determined any wrongdoing by Mr. Bankman-Fried, or when they began looking at the TerraUSD and Luna trades. The matter is part of a broadening inquiry into the collapse of Mr. Bankman-Fried’s Bahamas-based cryptocurrency empire, and the potential misappropriation of billions of dollars in customer funds.

Federal prosecutors and the Securities and Exchange Commission have been examining whether FTX broke the law by transferring its customer funds to Alameda. Last month, a run on deposits exposed an $8 billion hole in the exchange’s accounts, causing the company to collapse. Mr. Bankman-Fried stepped down as FTX’s chief executive when the company filed for bankruptcy on Nov. 11. FTX is also under investigation for violating U.S. money-laundering laws that require money transfer businesses to know who their customers are and flag any potentially illegal activity to law enforcement authorities, three people familiar with the investigation said. That investigation, first reported by Bloomberg News, began several months before the bankruptcy of FTX. Investigators are also looking into the activities of other offshore cryptocurrency trading platforms.

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Source: Slashdot – FTX Founder Sam Bankman-Fried Is Said To Face Market Manipulation Inquiry