Do Kwon asks if Genesis had provided $1B for SBF to attack UST Do Kwon asks if Genesis had provided $1B for SBF to attack UST
The authorities are reportedly investigating whether SBF manipulated Terra UST and Luna's price to benefit Alameda and FTX.
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Updated: Aug. 25, 2023 at 2:24 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Terra founder Do Kwon questioned if Genesis Trading provided $1 billion UST to Sam Bankman-Fried and Alameda as “ammo for a peg attack.”
I think the time has come for @GenesisTrading 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
— Do Kwon 🌕 (@stablekwon) December 8, 2022
In a Dec. 8 twitter thread, Kwon asked whether Genesis Trading bought $1 billion UST from Luna Foundation Guard because it had an “interest to participate in the Terra Defi ecosystem.” However, he believes that the lender gave these USTs to Alameda to fund the peg attack.
He added that Alameda borrowed nine figures in Bitcoin from Voyager when UST depegged and asked other large firms to borrow more BTC. Kwon wondered if these funds were used for shorting BTC to handicap LFG reserves.
Also, Kwon highlighted that the most significant currency contraction for UST happened in February 2021 when Alameda sold $500 million UST within minutes during the MIM crisis to drain its Curve pools.
Community questions Kwon’s claim
Several crypto community members have disagreed with Kwon’s claim, with some pointing out that UST and LUNA would have collapsed regardless of the attack.
Attack or not, Luna would have collapsed by now
— Algod (@AlgodTrading) December 8, 2022
Others noted that Genesis had exposure to 3AC, which makes it dumb for it to fund an attack on UST since this was what led to 3AC’s bankruptcy. The hedge fund’s implosion significantly impacted Genesis Trading’s liquidity.
Once again, 3ac exposure to luna was not large (100-200m) on a multibillion fund
— Do Kwon 🌕 (@stablekwon) December 8, 2022
However, Kwon claimed that 3AC only had about $100 – $200 million exposure to Luna, which is relatively small for a multibillion-dollar hedge fund.
Authorities are investigating SBF for market manipulation
Meanwhile, The New York Times revealed that federal investigators were looking into whether SBF manipulated Terra UST and Luna’s price to benefit Alameda and FTX.
The report added that the investigation was still in the early stages, and it is unknown if the prosecutors have found any wrongdoing. According to the report, this was part of a more extensive investigation into FTX’s collapse and all the factors that contributed to it.
US lawmakers have invited the embattled founder to appear for a hearing voluntarily. The lawmakers have threatened to subpoena him if he fails to honor their invitation.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.
TerraClassicUSD
$0.02113
TerraUSD (UST) is a decentralized and algorithmic stablecoin on the Terra blockchain.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Genesis Group
Genesis Group provides cloud based information technology services to businesses and end users for a range of applications including video rendering, AI, and blockchain development applications.
Do Kwon began his professional journey as an engineer, contributing to tech giants Apple and Microsoft.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.