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Former FTX CEO Sam Bankman-Fried has deflected a lot of the allegations leveled at him since his resignation, but today pointedly said he did not target Terra or Tether’s stablecoins.
“I made a lot of big mistakes this year. But this wasn’t one of them,” Bankman-Fried wrote on Twitter early Friday morning. “There’s no evidence, because it didn’t happen. Please, please focus on your own house.”
It was a reply to a tweet from the co-founder of defunct crypto hedge fund Three Arrows Capital Su Zhu, who said he’d been asked why he and TerraForm Labs co-founder Do Kwon have become so outspoken since FTX’s collapse at the start of November.
The firm first wobbled when it was revealed that its sister company, Alameda Research, counted billions of illiquid FTX Token (FTT) on its balance sheet. There was a last gasp as Binance considered acquiring the crypto exchange, but then backed out saying FTX was beyond its “ability to help.” FTX filed for bankruptcy two days later.
Now former competitors, like Three Arrows Capital (also known as 3AC), have started implicating the FTX founder in their own downfalls.
“I have firmly said we were hunted since my July Bloomberg interview. Go back and read it,” Zhu wrote. “Simply the truth, but one so inconvenient that at the time my own advisors didn’t want me to say it [because] it could be ‘bad optics’ and seen as ‘deflecting.’”
He has consistently said that he believed other big players in crypto markets were “hunting,” or trying to force a liquidation on, the firm’s TerraUSD position. The algorithmic stablecoin, which traded as UST, lost its one-to-one peg with the U.S. dollar in May and wiped out $40 billion in value as it went to zero.
Zhu didn’t say in July that he thought Bankman-Fried was responsible for causing Terra to collapse, which led to 3AC losing $200 million on UST, but he’s said it repeatedly since FTX filed for bankruptcy.
Zhu isn’t the only person who thinks there’s reason to believe Bankman-Fried may have manipulated markets.
The disgraced FTX CEO is being investigated by federal prosecutors to weigh the possibility that Bankman-Fried tried to destabilize Kwon’s TerraUSD (UST) and Luna, the network’s governance token, for his own gain, two people with knowledge of the matter told The New York Times.
Bankman-Fried’s denial echoes what he told The New York Times about Binance CEO’s Changpeng Zhao’s allegations that he tried to manipulate markets to force Tether, the largest stablecoin by market capitalization, to lose its peg with the U.S. dollar.
Zhao shared a series of messages with the NYT from a group chat on Signal that included Bankman-Fried on November 10, the day before FTX filed for bankruptcy. At the time, Binance had just backed out of its non-binding announcement to acquire FTX if the company’s books passed muster with their due diligence team.
In the texts, Zhao accused Bankman-Fried of trying to manipulate the price of Tether’s stablecoin, which goes by the same name as its issuer.
Tether is far and away the most important stablecoin in the crypto market, and arguably its most important asset overall, accounting for $30 billion in volume over the past day—that’s almost more than Bitcoin and Ethereum’s combined volume, according to CoinGecko. But the stablecoin and its issuer are not without their own controversy.
Since last year, the company has been on a campaign to eliminate commercial paper, or corporate debt notes, from its treasury since taking heavy criticism over it last year. In September 2021, Chinese real estate developer Evergrande was at risk of not being able to repay $300 billion worth of debt. That sparked fear around corporate paper, which at the time made up 50% of Tether’s reserves. The company later said none of its commercial paper was linked to Evergrande’s debt and has now eliminated it completely.
The lingering suspicions around Tether—regardless of whether they’re true—could have made it a target for Bankman-Fried to manipulate, according to Zhao.
“Trades of that size would not make a material impact on Tether’s pricing, and to my knowledge neither myself nor Alameda has ever attempted to intentionally depeg Tether or any other stablecoins,” Bankman-Fried said, according to the NYT. “I have made a number of mistakes over the past year but that is not one of them.”