United States federal prosecutors have reportedly begun investigating whether the collapse of the Terra ecosystem was in fact triggered by market manipulation tactics by former FTX CEO Sam Bankman-Fried.
According to a Dec. 7 report from The New York Times (NYT), the prosecutors — as part of a broader inquiry into FTX’s own collapse — are investigating whether Bankman-Fried’s empire intentionally caused a flood of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC (formerly UST).
The sudden increase in UST sell orders were said to make it difficult to match them with corresponding “buy” orders, which in turn forced more downward price pressure on UST, causing it to depeg from its intended 1:1 ratio with the U.S. Dollar.
The events also led to the fall of Terra’s native token, Terra Classic, LUNC (formerly LUNA) as the two cryptocurrencies were designed to be linked.
But while no one has been able to precisely determine the root cause behind the collapse of LUNC and USTC in May, it is known that the majority of the USTC sell orders came from Bankman-Fried’s trading firm Alameda research, according to the NYT.
A person with knowledge on the matter also told NYT that Alameda Researched also placed a big bet on the price of LUNC falling.
Like with most comments Bankman-Fried has shared since FTX’s collapse, the former CEO claimed that he was “not aware of any market manipulation and certainly never intended to engage in market manipulation,” according to NYT.
“To the best of my knowledge, all transactions were for investment or for hedging,” he added.
Responding to the recent report, Terraform Labs CEO Do Kwon shared his thoughts on the matter to his 1 million Twitter followers in a Nov. 8 tweet, who suggested it was time for Genesis Trading come clean about an alleged $1 billion loan in UST to “SBF or Alameda” shortly before Kwon’s Terra ecosystem crashed.
Kwon also stated that a large currency contraction that UST underwent in Feb. 2021 was started by Alameda “when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis.”
“What’s done in darkness will come to light,” Kwon added on the matter.
Spain’s central bank, the Bank of Spain (BDE) said it intends to launch an experimental program to begin testing wholesale Central Bank Digital Currencies (CDBCs) and is seeking collaboration proposals from local finance and technology institutions.
The bank will focus on three main areas with the program that seeks to simulate the movement of funds, experiment with the liquidation of financial assets, and analyze the benefits and drawbacks of introducing a wholesale CBDC to its current processes and infrastructure according to a translated Dec. 5 statement.
A wholesale CBDC refers to a digital currency typically for use by banks to keep reserves with a central bank, as compared to a retail or general-purpose CBDC that’s open to use by the public.
The program is “exclusive” to the BDE and it stated it was unrelated to work being undertaken in the European Union researching the use of a digital euro.
Interested parties wishing to participate in the program must meet the minimum requirements set by the bank and disclose the “economic means” they’re willing to commit to the project in an application process which closes on Jan. 31, 2023.
In its reasoning for undertaking the program, the BDE said the study of CBDCs can help determine to what extent they can contribute to “adapting to the needs and demands of an increasingly digital society.”
It also noted CBDCs are being “analyzed and experimented” on within a number of jurisdictions mainly focusing on a retail application, however, it stated more companies are delving into those “of a wholesale nature or interbank.”
Brad Jones, the Assistant Governor of the Reserve Bank of Australia (RBA) said on Dec. 8 at a central bank conference that a retail CBDC could result in people avoiding commercial banks entirely and potentially displace the Australian dollar.
The RBA’s Australian dollar eAUD CBDC trial released on Aug. 9 has seen over 80 financial entities proposing use cases according to Jones but noted banks could face liquidity issues if a CBDC becomes the preferred source of holdings.
The Bank of Thailand (BOT) is also expecting to launch a pilot of a retail CBDC before the end of 2022, with a testing environment limited to 10,000 people.
This comes after the Bank of China launched the first trial of its e-CNY in April 2020, now the most widely adopted CBDC in the world, having marked $14 billion worth of transactions during its pilot phase.
Messaging app Telegram has rolled out a new update enabling users to create accounts using blockchain-based anonymous numbers, as opposed to cell phone numbers.
Telegram already hides people’s private phone numbers from non-added users on the app, however, users will now be able to hide numbers from everyone, which is likely to please people who value privacy-focused features.
The messaging platform has become a popular app for crypto enthusiasts. The move is part of a 9.2 update launched on Dec. 6, which also enables users to auto-delete timers on messages in new chats.
To use the feature, users will need to purchase “blockchain-powered anonymous numbers” from Fragment, a decentralized auction platform founded by Telegram creator Pavel Durov.
Fragment sells user names and anonymous numbers that are only compatible with Telegram. Purchases are made on the platform via Telegram’s affiliated token The Open Network (TON).
Unfortunately for U.S. users however, Fragment does not offer its services to citizens located there.
Upon purchasing a number, people can then use these private numbers to receive verification code texts after signing in to Telegram.
People can purchase a random number on Fragment for 9 TON ($16) or they can buy and sell ones via auction. It appears that some specific numbers are attracting a lot of demand, as “+888 8 888” currently has the highest bid of 33,075 TON ($60,527) at the time of writing.
Following the FTX debacle last month, Durov revealed via his Telegram channel on Nov. 30 that the company is building a suite of decentralized tools in response to yet another occurrence of malfeasance by a centralized crypto entity.
Adding to Fragment, Durov indicated that Telegram is looking to roll out noncustodial wallets and decentralized exchanges among other apps.
“The solution is clear: blockchain-based projects should go back to their roots – decentralization. Cryptocurrency users should switch to trustless transactions and self-hosted wallets that don't rely on any single third party," he wrote.
This Daily Dose was brought to you by Cointelegraph.