Gary Wang, a key witness for prosecutors in the trial of his
former partner, Sam Bankman-Fried (SBF), revealed that he and SBF committed
multiple financial crimes related to their oversight of the now-bankrupt crypto
exchange, FTX. This admission, according to a report by CNN, comes as a
significant twist in the legal battle, shedding light on a massive, years-long
scheme to deceive customers and defraud investors.
Prosecutors claim that FTX directed customers’ funds
straight into a bank account controlled by Alameda, which was not related to
FTX except for a common founder. This action, they argue, misled customers
about where their money was and how it was being used, creating a web of
deception. Unlike regular FTX’s customers, Alameda enjoyed the privilege of
running a negative balance and making “unlimited withdrawals” from
FTX’s accounts.
Furthermore, prosecutors stated that Alameda had access to a
line of credit of up to $65 billion to use as collateral when making bets. This
sum greatly exceeded the credit provided by FTX to other major investors,
raising questions about preferential treatment. When asked whether these
advantages were openly shared with customers or investors, Wang said it was
not. Additionally, Wang revealed that he personally wrote a computer code for
specific features under SBF’s guidance.
Initially, the special privileges extended to Alameda Research were intended to be limited by FTX’s revenue. However, Wang disclosed
that Alameda’s spending expanded beyond these confines, according to a report
by Coindesk. He approached SBF multiple times when he realized that
the spending exceeded the agreed limits.
“We’re Not Bulletproof Anymore”
Another significant moment in the trial came with the
testimony of Adam Yedidia, a former employee of FTX and a close friend of SBF.
Yedidia reportedly recounted a conversation where he raised concerns about a
looming liability of $8 billion over Alameda’s balance sheet, the Financial Times reported. This $8 billion
represented the funds FTX’s customers would be owed if they chose to withdraw
their deposits. Yedidia’s trust in SBF was shaken when he learned that FTX
customers’ deposits were used to pay Alameda’s creditors, which he considered
wrong.
Yedidia’s testimony exposed an important conversation
six months before FTX’s collapse. This conversation occurred during a game of
paddle tennis as Yedidia and SBF sought shelter from the Bahamas sun
in the luxurious Albany resort, where they shared a penthouse worth $35
million.
Yedidia recalled asking SBF if everything was
okay, expressing concerns about Alameda’s acceptance of bank transfers of FTX
customer 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 his
former partner, Sam Bankman-Fried (SBF), revealed that he and SBF committed
multiple financial crimes related to their oversight of the now-bankrupt crypto
exchange, FTX. This admission, according to a report by CNN, comes as a
significant twist in the legal battle, shedding light on a massive, years-long
scheme to deceive customers and defraud investors.
Prosecutors claim that FTX directed customers’ funds
straight into a bank account controlled by Alameda, which was not related to
FTX except for a common founder. This action, they argue, misled customers
about where their money was and how it was being used, creating a web of
deception. Unlike regular FTX’s customers, Alameda enjoyed the privilege of
running a negative balance and making “unlimited withdrawals” from
FTX’s accounts.
Furthermore, prosecutors stated that Alameda had access to a
line of credit of up to $65 billion to use as collateral when making bets. This
sum greatly exceeded the credit provided by FTX to other major investors,
raising questions about preferential treatment. When asked whether these
advantages were openly shared with customers or investors, Wang said it was
not. Additionally, Wang revealed that he personally wrote a computer code for
specific features under SBF’s guidance.
Initially, the special privileges extended to Alameda Research were intended to be limited by FTX’s revenue. However, Wang disclosed
that Alameda’s spending expanded beyond these confines, according to a report
by Coindesk. He approached SBF multiple times when he realized that
the spending exceeded the agreed limits.
“We’re Not Bulletproof Anymore”
Another significant moment in the trial came with the
testimony of Adam Yedidia, a former employee of FTX and a close friend of SBF.
Yedidia reportedly recounted a conversation where he raised concerns about a
looming liability of $8 billion over Alameda’s balance sheet, the Financial Times reported. This $8 billion
represented the funds FTX’s customers would be owed if they chose to withdraw
their deposits. Yedidia’s trust in SBF was shaken when he learned that FTX
customers’ deposits were used to pay Alameda’s creditors, which he considered
wrong.
Yedidia’s testimony exposed an important conversation
six months before FTX’s collapse. This conversation occurred during a game of
paddle tennis as Yedidia and SBF sought shelter from the Bahamas sun
in the luxurious Albany resort, where they shared a penthouse worth $35
million.
Yedidia recalled asking SBF if everything was
okay, expressing concerns about Alameda’s acceptance of bank transfers of FTX
customer 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.