- Former Binance CEO raises questions on the potential involvement of the infamous FTX exchange in the LUNA/UST crash or depeg in 2022.
- His comments follow the recent report that the Court has granted 3AC’s request to increase its claim against FTX from $120 million to $1.53 billion.
Binance founder Changpeng Zhao (CZ) has joined the FTX bandwagon as he questions whether the infamous exchange had anything to do with the LUNA/UST crash in May 2022.
The 3AC and FTX Legal Battle
While the reasons for his suspicion were not stated, CZ’s comments come in response to an update on the ongoing court case between Three Arrows Capital (3AC) and FTX. As shared by “MBottjer” who identifies himself as the co-founder of FTX Creditor, 3AC recently asked a bankruptcy court to permit the request to increase its claim against FTX from $120 million to $1.53 billion.
The reason for this jump has to do with a discovery that FTX liquidated a staggering $1.53B of 3AC’s assets exactly two weeks before it (3AC) went into liquidation.
The information obtained by the Liquidators in the year since they filed their Original POC led them to the new conclusion that just two weeks before the commencement of the 3AC Liquidation, the $1.53 billion of assets that 3AC had on the FTX platform were liquidated to satisfy $1.3 billion in liabilities to FTX.
Explaining why this was missed in the initial filing, 3AC explained that FTX was also in bankruptcy and had access to key data. However, efforts to get enough details from them were futile until the official deadline passed. The delay also prevented liquidators from understanding the scope of transactions between 3AC and FTX.
FTX objected to this claim, as they argued that the filing was made too late which violated the bankruptcy process. Interestingly, this objection was dismissed by the court. Per the court documents, much of the delay in filing the amendment claim was due to FTX’s failure to provide the necessary documents. For this reason, it has granted the request for 3AC to amend its original proof claim.
Having considered all the evidence presented, I find that the balance of the equities is in favour of allowing the Amended POC.
Prior to this, 3AC had also filed a $1.3 billion legal claim against Terraform Labs, accusing them of being responsible for its collapse, as detailed in our last news piece.
Who Else Could Be Involved in the UST Crash?
In November 2022, a renowned crypto enthusiast identified as Darrow.eth created a thread in an attempt to explain the crash of UST, which was mentioned in our previous report.
According to him, it would be interesting to find any affiliation with FTX. Until then, he believes that three main wallets were buying and selling LUNA immediately at a loss to “intentionally run down the chart.” Per his understanding, it is strange for anyone to buy with a limited order at a spot price and then sell immediately to market using a bot.
In an accompanying image, Darrow.eth explained that there were serious suppressions on the buy orders.
On May 12, 2022, the suppression ran down the price to zero as they literally bought all available shares according to the post. While many ask whether FTX had a hand in this, Darrow.eth pointed out that the US Federal Reserve rather benefits the most from the crashing UST. According to him, the plan was to attack the stablecoin market to maintain the global economic dominance of the USD.
Amidst the backdrop of this, Terraform Labs founder Do Kwon, who was earlier arrested in connection with this, had his status conference postponed to April 6 from March 10 after authorities disclosed to have found four terabytes of additional evidence, as outlined in our recent blog post.
