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SVB Financial Group Files for Chapter 11 Bankruptcy Protection to ‘Preserve’ Firm’s Value

SVB Financial Group Files for Chapter 11 Bankruptcy Protection to ‘Preserve’ Firm’s ValueOn March 17, 2023, SVB Financial Group, the parent company of Silicon Valley Bank, filed for Chapter 11 bankruptcy protection in the Southern District of New York. The company stated that it is no longer associated with Silicon Valley Bank (SVB) after the Federal Deposit Insurance Corporation (FDIC) placed it into receivership last week. 3 […]

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FBI, NY authorities probes collapse of TerraUSD stablecoin: Report

The controversial founder of Terraform Labs, Do Kwon is at the center of the investigation, despite believed to be hiding out in Serbia.

The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin which contributed to a $40 billion wipe out in the Terra ecosystem last May.

Two agencies within the department — the Federal Bureau of Investigation (FBI) and Southern District of New York (SDNY) have interrogated former staff at Terraform Labs in recent weeks, according to a Mar. 13 report by the Wall Street Journal (WSJ).

The probe covers similar ground to a lawsuit filed against Terraform Labs and its founder Do Kwon by the U.S. Securities Exchange Commission on Feb. 16, according to people familiar with the matter.

Among topics that investigators have asked about was the relationship between Chai, a South Korean-based payment platform and the Terra blockchain on which USTC operated.

The SEC alleged in its filing alleged that Kwon misled investors into believing that Chai transactions were processed on the Terra blockchain.

Do Kwon speaking at a conference about Terra before the LUNC and USTC collapsed. Source: Terra.

The SEC in its lawsuitalso accused Kwon of misleading investors about the risks of the algorithmic-based stablecoin, which is designed to be pegged 1:1 to the U.S. dollar.

It is unclear what specific charges the Justice Department is potentially pursuing. The investigation does not necessarily mean that charges will be filed. 

Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ

Since the collapse, Kwon reportedly left South Korea for Singapore, Dubai, and now Serbia, where he is now believed to be, according to South Korean officials. Two South Korean authorities were recently sent to Serbia to find Kwon but were unsuccessful in their search attempts.

Kwon however claims he is not “on the run” despite the South Korean prosecutors issuing Kwon an arrest warrant on Sept. 14 and a red notice filed by Interpol, a global law enforcement agency on Sept. 26.

However, Kwon claims that he hasn’t seen a copy of the South Korean arrest warrant, according to an October interview on the Unchained Podcast with Laura Shin, and he continues to deny fraud allegations on social media.

Meanwhile, New York prosecutors are understood to be investigating a series of chat-group investigations from former members at Jump Trading, Jane Street and Alameda Research, which filed for bankruptcy alongside FTX, according to a Mar. 13 report by Bloomberg.

The investigation is reportedly looking into whether market manipulation tactics were involved in the TerraUSD stablecoin project.

Cointelegraph reached out to Terraform Labs but did not receive an immediate response.

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Terraform Labs and CEO Do Kwon Charged by SEC With Multibillion-Dollar Crypto Fraud

Terraform Labs and CEO Do Kwon Charged by SEC With Multibillion-Dollar Crypto FraudThe U.S. Securities and Exchange Commission (SEC) has charged Terraform Labs and its CEO, Do Hyeong Kwon, with fraud, alleging that Kwon and his company orchestrated “a multibillion-dollar crypto-asset securities fraud.” The securities watchdog insists that Kwon raised billions from investors by creating an “interconnected suite of crypto-asset securities,” many of which were involved in […]

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SEC and CFTC Lawsuits Against Former FTX CEO Paused Until Criminal Proceedings Conclude

SEC and CFTC Lawsuits Against Former FTX CEO Paused Until Criminal Proceedings ConcludeTwo civil lawsuits, stemming from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), against former FTX CEO Sam Bankman-Fried will be paused until his criminal proceedings are complete. US Attorney Requests Pause on SEC and CFTC Lawsuits to Prevent ‘Judicial Overlap’ According to the latest decision by a New […]

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FTX Co-Founder Sam Bankman-Fried Seeks Removal of Bail Restrictions on Crypto Asset Transfers

FTX Co-Founder Sam Bankman-Fried Seeks Removal of Bail Restrictions on Crypto Asset TransfersSam Bankman-Fried, the disgraced co-founder of FTX, is seeking access to crypto assets associated with FTX and Alameda Research, according to a letter written by his attorney, Mark Cohen. Cohen insists that the existing bail conditions “related to crypto asset transfers should be removed.” Bankman-Fried’s Legal Team Argues for Removal of 2 Bail Conditions In […]

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Disgraced FTX Co-Founder Awaits Trial, Passes Time Playing Video Games and Blogging on His New Substack Newsletter

Disgraced FTX Co-Founder Awaits Trial, Passes Time Playing Video Games and Blogging on His New Substack NewsletterThe former CEO of FTX, Sam Bankman-Fried (SBF), has published a Substack newsletter on Jan. 12, 2023, and the first post is titled “FTX Pre-Mortem Overview.” In the post, SBF maintains that an “extreme, quick, targeted crash precipitated by the CEO of Binance made Alameda insolvent.” The blog post does not mention the allegations made […]

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Former FTX Director of Engineering Under Scrutiny by US Law Enforcement, Alleged Proffer Sessions Held With Prosecutors in New York

Former FTX Director of Engineering Under Scrutiny by US Law Enforcement, Alleged Proffer Sessions Held With Prosecutors in New YorkU.S. law enforcement officials are reportedly scrutinizing Nishad Singh, the former director of engineering at FTX, according to a report citing people familiar with the matter. Another report, published on Jan. 10, 2023, details that Singh met with federal prosecutors at an alleged proffer session held at the U.S. attorney’s office for the Southern District […]

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US Feds put together ‘FTX task force’ to trace stolen user funds

United States Attorney Damian Williams said the office is working “around the clock” to respond to the implosion of FTX.

The United States Attorney’s Office for the Southern District of New York (SDNY) has formed the FTX Task Force to “trace and recover” missing customer funds, as well as handle investigations and prosecutions related to the exchange’s collapse. 

The announcement came in a statement from U.S. Attorney Damian Williams, who is the federal prosecutor in the FTX case involving founder Sam Bankman-Fried.

Charges from the Manhattan attorney’s office against Bankman-Fried include wire and securities fraud, conspiracy to commit wire and securities fraud, money laundering and violation of campaign finance laws.

“The Southern District of New York is working around the clock to respond to the implosion of FTX,” said Williams in the statement, adding:

“It’s an all-hands-on-deck-moment.”

“We are launching the SDNY FTX Task Force to ensure that this urgent work continues, powered by all of SDNY’s resources and expertise until justice is done.”

According to the SDNY, the task force’s team consists of senior prosecutors from its securities and commodities fraud, public corruption, money laundering and transnational crime enterprise units — which will be responsible for the “investigation and prosecution of matters related to the FTX collapse.”

Meanwhile, its “asset forfeiture and cyber capabilities” will be used to “trace and recover” the billions of dollars worth of missing customer funds, it added.

A similar effort had already been underway by FTX’s new management, which hired financial advisory company AlixPartners in December to conduct “asset-tracing” for FTX’s missing digital assets.

Related: Sam Bankman-Fried enters not guilty plea for all counts in federal court

The Manhattan U.S. Attorney’s Office reportedly first began its probe of FTX’s collapse shortly after the firm filed for bankruptcy on Nov. 11.

According to its website, the U.S. Attorney's Office for the Southern District of New York is known for prosecuting cases involving the violation of federal laws and investigates a broad array of criminal conduct “even when the conduct arises in distant places.”

FTX and key executives including Bankman-Fried, co-founder Gary Wang and Alameda Research former CEO Caroline Ellison had since September 2021 been operating out of the Bahamas,  where many of the alleged crimes are believed to have been perpetrated.

On Jan. 3, Bankman-Fried pleaded “not guilty” to all eight criminal charges related to FTX’s implosion — which carries a total of 115 years of prison for the FTX founder if he is convicted.

Last month, Wang and Ellison pleaded guilty to federal fraud charges relating to their role in the collapse of the FTX exchange.

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Maybe it WAS illegal: Mango Markets exploiter arrested on fraud charges

The Mango Markets exploiter previously called his attack on the crypto exchange “legal open market actions.”

The crypto trader behind the $110 million exploit of decentralized exchange Mango Markets has been arrested in Puerto Rico — and charged with market manipulation and fraud.

According to a previously sealed complaint filed with the Southern District of New York made public on Dec. 27, the Federal Bureau of Investigation (FBI) pinned Avraham Eisenberg with one count of “commodities fraud” and one count of “commodities manipulation” in relation to his exploit of Mango Markets.

Eisenberg’s Oct. 11 exploit of Mango Markets worked by manipulating the value of the platform’s native token MNGO, artificially inflating its price relative to USD Coin (USDC).

Eisenberg and his team then took out “massive loans” against its inflated collateral, which drained Mango’s treasury of around $110 million worth of various cryptocurrencies.

A day later on Oct. 12, Mango entered into negotiations with Eisenberg for the return of the funds.

On Oct. 15, Eisenberg publicly fessed up to exploiting the crypto exchange, stating at the time he was involved in a team that “operated a highly profitable trading strategy” and said that he believed all his actions were “legal open market actions.”

The FBI in its recent complaint stated the actions by Eisenberg constitute both fraud and market manipulation, as he “willfully and knowingly” engaged in a scheme involving the “intentional and artificial manipulation” of the price of perpetual futures on Mango Markets.

This ultimately allowed him to drain $110 million worth of cryptocurrencies — most of which came from the deposits of other Mango Markets investors.

“Due to [Eisenberg’s] withdrawals, other investors with deposits on Mango Markets lost much, or all, of those deposits,” explained FBI special agent Brandon Racz in the Dec. 23 complaint.

Racz said Eisenberg may have known his actions were illegal as well, as the day after the Mango Markets exploit, Eisenberg flew from the United States to Israel.

“Based on the timing of the flight, the travel appears to have been an effort to avoid apprehension by law enforcement in the immediate aftermath of the Market Manipulation Scheme,” he said.

Eisenberg was arrested on Dec. 26 in Puerto Rico, according to a filing from the United States Attorney Southern District of New York.

Related: How low liquidity led to Mango Markets losing over $116 million

In November, Eisenberg tried his luck again, this time on Decentralized Finance (DeFi) protocol Aave, taking out a loan of 40 million CRV tokens from Aave and betting on a drop in price through a series of sophisticated short sales.

However, the plan ultimately didn’t succeed as the price actually rose during the attack, resulting in losses due to the significant short position.

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A Committee of Celsius Creditors Objects to Celsius Selling Its Stablecoin Cache

A Committee of Celsius Creditors Objects to Celsius Selling Its Stablecoin CacheA committee of unsecured creditors stemming from the Celsius bankruptcy case has filed a motion with the court to stop the now-defunct crypto lender from selling the company’s stablecoin holdings. The written protest by the group of creditors against the sale follows objections from a slew of securities regulators filed on Sept. 29. Creditors Object […]

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