Do Kwon asks if Genesis had provided $1B for SBF to attack UST

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.