FTX Co-Founder Testifies About Wire Fraud
During court proceedings, FTX co-founder Gary Wang testified that Sam Bankman-Fried and his inner circle engaged in wire fraud. Wang revealed that Alameda Research, the trading desk founded by Bankman-Fried, had access to customer deposits on FTX and could withdraw unlimited funds. He explained that Alameda had a large line of credit and was allowed to carry a negative balance. By the time FTX collapsed, Alameda had withdrawn $8 billion from the platform and drawn $65 billion on its line of credit.
Alameda’s Unique Indebtedness
Wang emphasized that Alameda’s indebtedness set it apart from other market makers on FTX. While other market makers typically had lines of credit in the millions, Alameda’s line of credit was in the billions. Wang also disclosed that he earned a $200,000 annual salary with 17% equity in FTX, while Bankman-Fried owned the majority stake in both FTX and Alameda Research.
Wang’s Role and Testimony Continuation
Wang described his role at FTX as primarily focused on coding, while Bankman-Fried handled public-facing duties. The court adjourned before Wang could complete his testimony, with prosecutors set to continue the next day.
Investor Testimony Reveals Concerns
During Thursday’s proceedings, Matt Huang from venture capital firm Paradigm testified that the firm would not have invested $278 million in Bankman-Fried’s companies if it had known about funds being funneled to Alameda Research. Huang also expressed initial skepticism about FTX’s governance structure and mentioned that Paradigm requested a seat on FTX’s board.
Denial of Preferential Treatment
When concerns were raised about frontrunning, Bankman-Fried assured Huang that Alameda Research received no preferential treatment on FTX’s crypto exchange.
Hot Take: FTX Co-Founder Accuses Bankman-Fried of Wire Fraud
In a dramatic turn of events, FTX co-founder Gary Wang testified in court that Sam Bankman-Fried and his inner circle committed wire fraud. Wang revealed that Alameda Research, founded by Bankman-Fried, had access to customer deposits on FTX and could withdraw unlimited funds. The testimony highlighted Alameda’s unique indebtedness compared to other market makers on the platform. Additionally, investor Matt Huang expressed concerns about funds being diverted to Alameda Research and requested a seat on FTX’s board. These revelations add further complexity to the ongoing investigation into FTX and its operations.
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