Gary Wang, a key witness for prosecutors in the trial of hisformer partner, Sam Bankman-Fried (SBF), revealed that he and SBF committedmultiple financial crimes related to their oversight of the now-bankrupt cryptoexchange, FTX. This admission, according to a report by CNNcomes as asignificant twist in the legal battle, shedding light on a massive, years-longscheme to deceive customers and defraud investors.
Prosecutors claim that FTX directed customers’ fundsstraight into a bank account controlled by Alameda, which was not related toFTX except for a common founder. This action, they argue, misled customersabout where their money was and how it was being used, creating a web ofdeception. Unlike regular FTX’s customers, Alameda enjoyed the privilege ofrunning a negative balance and making “unlimited withdrawals” fromFTX’s accounts.
Claims FTX’s Hedge Fund Had $65B LOC
Furthermore, prosecutors stated that Alameda had access to aline of credit of up to $65 billion to use as collateral when making bets. Thissum greatly exceeded the credit provided by FTX to other major investors,raising questions about preferential treatment. When asked whether theseadvantages were openly shared with customers or investors, Wang said it wasnot. Additionally, Wang revealed that he personally wrote computer code forspecific features under SBF’s guidance.
Initially, the special privileges extended to Alameda Research were intended to be limited by FTX’s revenue. However, Wang disclosedthat Alameda’s spending expanded beyond these confines, according to a reportby Coindesk. He approached SBF multiple times when he realized thatthe spending exceeded the agreed limits.
“We’re Not Bulletproof Anymore”
Another significant moment in the trial came with thetestimony of Adam Yedidia, a former employee of FTX and a close friend of SBF.Yedidia reportedly recounted a conversation where he raised concerns about alooming liability of $8 billion over Alameda’s balance sheet, the Financial Times reported. This $8 billionrepresented the funds FTX’s customers would be owed if they chose to withdrawtheir deposits. Yedidia’s trust in SBF was shaken when he learned that FTXcustomers’ deposits were used to pay Alameda’s creditors, which he consideredwrong.
Yedidia’s testimony exposed an important conversationsix months before FTX’s collapse. This exchange occurred following a game ofpaddle tennis as Yedidia and SBF sought shelter from the Bahamas sunin the luxurious Albany resort, where they shared a penthouse worth $35million.
Yedidia recalled asking SBF if everything wasokay, expressing concerns about Alameda’s acceptance of bank transfers of FTXcustomer funds before securing its own bank accounts. SBF’s response was:”We were bulletproof last year, but we’re not bulletproof anymore,”suggesting he was aware of the impending financial challenges facing the crypto exchange.
Gary Wang, a key witness for prosecutors in the trial of hisformer partner, Sam Bankman-Fried (SBF), revealed that he and SBF committedmultiple financial crimes related to their oversight of the now-bankrupt cryptoexchange, FTX. This admission, according to a report by CNNcomes as asignificant twist in the legal battle, shedding light on a massive, years-longscheme to deceive customers and defraud investors.
Prosecutors claim that FTX directed customers’ fundsstraight into a bank account controlled by Alameda, which was not related toFTX except for a common founder. This action, they argue, misled customersabout where their money was and how it was being used, creating a web ofdeception. Unlike regular FTX’s customers, Alameda enjoyed the privilege ofrunning a negative balance and making “unlimited withdrawals” fromFTX’s accounts.
Claims FTX’s Hedge Fund Had $65B LOC
Furthermore, prosecutors stated that Alameda had access to aline of credit of up to $65 billion to use as collateral when making bets. Thissum greatly exceeded the credit provided by FTX to other major investors,raising questions about preferential treatment. When asked whether theseadvantages were openly shared with customers or investors, Wang said it wasnot. Additionally, Wang revealed that he personally wrote computer code forspecific features under SBF’s guidance.
Initially, the special privileges extended to Alameda Research were intended to be limited by FTX’s revenue. However, Wang disclosedthat Alameda’s spending expanded beyond these confines, according to a reportby Coindesk. He approached SBF multiple times when he realized thatthe spending exceeded the agreed limits.
“We’re Not Bulletproof Anymore”
Another significant moment in the trial came with thetestimony of Adam Yedidia, a former employee of FTX and a close friend of SBF.Yedidia reportedly recounted a conversation where he raised concerns about alooming liability of $8 billion over Alameda’s balance sheet, the Financial Times reported. This $8 billionrepresented the funds FTX’s customers would be owed if they chose to withdrawtheir deposits. Yedidia’s trust in SBF was shaken when he learned that FTXcustomers’ deposits were used to pay Alameda’s creditors, which he consideredwrong.
Yedidia’s testimony exposed an important conversationsix months before FTX’s collapse. This exchange occurred following a game ofpaddle tennis as Yedidia and SBF sought shelter from the Bahamas sunin the luxurious Albany resort, where they shared a penthouse worth $35million.
Yedidia recalled asking SBF if everything wasokay, expressing concerns about Alameda’s acceptance of bank transfers of FTXcustomer funds before securing its own bank accounts. SBF’s response was:”We were bulletproof last year, but we’re not bulletproof anymore,”suggesting he was aware of the impending financial challenges facing the crypto exchange.
