Ex-CTO Testifies on Alleged Misuse of FTX Funds in Ongoing Bankman-Fried Trial
Summary:
In the criminal trial of FTX's former CEO Sam Bankman-Fried, ex-CTO Gary Wang testified that Bankman-Fried instructed the creation of a function allowing Alameda Research's account to trade more than it had available, resulting in a deficit exceeding FTX's 2020 earnings. Wang admitted to being part of these wrongdoings, revealing that despite public statements, Bankman-Fried granted Alameda a $65 billion credit line. The case, focusing on Bankman-Fried's alleged misuse of FTX user funds, is expected to continue till November.
In the ongoing criminal trial of ex-CEO Sam “SBF” Bankman-Fried, Gary Wang, co-founder and former CTO of FTX, returned to the stand on October 6th. Looking at the links between Alameda Research and the cryptocurrency platform, Wang testified that Alameda’s FTX account was the sole one permitted to trade beyond its balance with the aid of a function referred to as "allow negative". Wang alleged that Bankman-Fried instructed him and ex-engineering director Nishad Singh to add this feature in 2019.
Wang disclosed that this function facilitated Alameda to have a deficit surpassing FTX’s earnings for 2020 ($200 million compared to $150 million). Despite publicly stating otherwise, he further claimed that Bankman-Fried offered Alameda a credit line of $65 billion.
“Despite our promise not to utilise resources this way, we did just that,” Wang reportedly admitted in court. After discovering Alameda's astronomical balances, Wang was summoned by Bankman-Fried to their Bahamas office. It was here he was informed about Alameda being given permission to settle their loans.
Wang implied that the "allow negative" function, particularly relating to FTT tokens on FTX, heavily benefited Alameda, even allowing the firm to withdraw funds directly, despite their negative account balance.
The crux of the case against Bankman-Fried is his alleged misuse of FTX client funds at Alameda Research, unbeknownst to the users. Wang confessed his wrongdoings alongside Bankman-Fried and Alameda’s ex-CEO Caroline Ellison on October 5th, after pleading guilty to fraud in December 2022.
At the head of the Crypto Council for Innovation, Sheila Warren, compared this trial to the Elizabeth Holmes case. “This trial symbolizes an explosive downfall of Sam's actions, as the court proceedings will reveal his self-centered motivations", she expresses.
The prosecution of Bankman-Fried is set to persist till November, featuring testimonies from likely witnesses Ellison and Singh. Following the court's decision to deny bail, the ex-CEO will remain in custody for the duration of the trial with plans of him testifying as yet uncertain.
Published At
10/6/2023 5:09:29 PM
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