Sam Bankman-Fried facing investigation over alleged crypto price manipulation

Yahoo Finance's Akiko Fujita and Rachelle Akuffo discuss the latest movements from Washington on the FTX crypto collapse.

Video transcript

AKIKO FUJITA: Well, we are starting this hour with the latest allegations surrounding FTX. The New York Times reporting federal prosecutors have launched an investigation into founder Sam Bankman-Fried for market manipulation. Now they are specifically looking into the possibility he manipulated cryptocurrencies of Terra USD and Luna to benefit assets that Bankman-Fried controlled. The New York Times reporting that the investigation is still in its very early stages. Any wrongdoing has yet to be determined.

And Rachelle, as a reminder for those viewers, who maybe there's been a lot of news in the crypto land lately, but when we're talking about Terra USD and Luna, I mean, these are the two that saw a huge collapse back in May, when we saw huge withdrawals there. We saw the stablecoin Terra USD that was pegged or backed by Luna. That sort of led to a domino effect, you could argue the first domino effect we saw this year.

The allegations here in the New York Times piece saying that Sam Bankman-Fried manipulated the market to see those currencies fall so it would benefit his assets, which include FTX, as well as Alameda. And this, of course, just the very latest investigation around the collapse of FTX.

RACHELLE AKUFFO: And I mean, it's incredible to see all of this really unraveling, starting, as you mentioned, with the collapse of Luna and Terra. And then to see it now translating into what we're seeing with FTX, and as you mentioned earlier, Congresswoman Maxine Waters saying their subpoena is on the table because there was some confusion in a CNBC report whether or not SBF would end up testifying. They do expect him to testify on December 13.

And of course, we know that FTX was involved in a number of different sponsorships, at one point with Taylor Swift to sponsor her tour. That was supposed to be a $100 million deal there. That ended up falling apart according to Financial Times at around four. You also have the sports sponsorships.

We saw that they did that with the University of Berkeley, but then also trying to do that with Manchester United with Liverpool, seeing those talks as well. So it does seem like a lot of ambition. You have to wonder how much of this is poor risk management versus-- I mean, the numbers just don't add up in terms of what they had in terms of liquid funds and their ability to keep sponsoring these huge deals. It just doesn't make sense. It doesn't add up.

AKIKO FUJITA: Well, the core of the allegations being behind FTX is that they, in fact, commingled funds between Alameda, as well as FTX. But, you know, what's interesting about these allegations to me is that so much of this points to sort of the tentacles that exist within the crypto space. Of course, we should point out these are still allegations. The investigation is still in the very early phases.

But if, in fact, what the New York Times is reporting investigators are looking into are true, well, then, you've got a situation where you've got one major exchange at the time, FTX, really trying to manipulate currencies for their benefit. Of course, there was that allegation in the fall, of course, on the back end of what happened with FTX, and saying, well, was it, in fact, Binance's CZ who came out and said there were questions about the balance sheet after that report that came out from CoinDesk. Did he potentially pull that trigger that led to all the doubts around FTX that led to the collapse?

I mean, there's certainly so much to get through to, but it is interesting to see so much of this being connected all the way back to what some would argue is the beginning of the crypto winter over the summer. Certainly something to be watching, but as you point out, investigation or multiple investigations advancing on many fronts here, not just with the federal prosecutors, but in Congress as well and something we're going to be watching really closely.

RACHELLE AKUFFO: Indeed. When you add to that class action lawsuits for people who lost out not just on FTX, but the tokens as well. You have regulatory probes coming from the SEC. You have the Justice Department calling for a probe into the bankruptcy, and you also have the federal prosecutors in Manhattan looking into FTX's unexplained $8 billion shortfall in funds. So the tentacles, as you mentioned, continuing to spread. And I'm sure we'll get something new every day as we continue to follow all of this.