Per Axios
SEC Civil Complaint Alleged that Sam Bankman-Fried Intentionally Directed FTX Employees to Manipulate FTT
12/23/2022
An updated civil complaint alleges that Sam Bankman-Fried intentionally directed employees at FTX to manipulate FTT. The updated complaint also tags Gary Wang, co-founder, and Caroline Ellison, former CEO of SBF's trading firm, Alameda research, as involved with the manipulation.
Per the complaint, in 2019 and 2021, SBF directed Ellison to manipulate FTT's price by making purchases. The sale of FTT was included in an investment contract that shared how early buyers expected the crypto to increase as FTX's performance also improved.
While the initial promise was attractive to investors at first, without knowledge of the alleged manipulation detailed in the complaint, a move by FTX competitor Binance's Changpeng Zhao affected the price of FTT, which then affected the price of FTX.
In response to a CoinDesk article that questioned FTX and Alameda's solvency, Binance CEO CZ announced that he would start selling the FTT they received in a buy-back deal from FTX.
Binance was one of the early investors of FTX, and as the company grew, SBF decided to buy out Binance's stake in the company, per Fortune. As part of the exit deal, the FTX competitor received $2.1 billion worth of Binance's Stablecoin BUSD and FTT.
CZ gave a statement saying they have decided to liquidate any remaining FTT, which resulted in the former CEO of Alameda, Ellison, saying they would buy CZ's FTT tokens. However, the Binance CEO rejected which led to uncertainty and more selloffs of the now-bankrupt crypto exchange's token, which led to complications for Alameda and FTX.
CZ: "Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books."
The complaint alleges that Alameda played a part in manipulating FTT's market price which helped inflate the token's collateral. It also details that Ellison confessed to staff on Nov 19 that SBF's trading firm used customer funds to make their investments, and shortly after, there was a mass resignation of Alameda staff.
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