Former FTX CTO Testifies About Connection Between FTX and Alameda Research
During the criminal trial of ex-FTX CEO Sam Bankman-Fried, Gary Wang, the co-founder and former CTO of the bankrupt crypto exchange, testified about the relationship between FTX and Alameda Research. Wang revealed that Alameda Research’s account on FTX had special privileges that allowed it to trade more funds than it had available. This was made possible by an “allow negative” feature authorized by Bankman-Fried, which enabled Alameda to hold a negative balance larger than FTX’s revenue in 2020. Wang claimed that he increased Alameda’s line of credit up to $65 billion under Bankman-Fried’s instructions, using FTX customers’ funds without their permission.
Bankman-Fried Allegedly Lied About Alameda’s Connection with FTX
Wang also testified that Bankman-Fried made public statements claiming that Alameda was treated equally and did not use funds from FTX. However, prosecutors presented a tweet from 2019 where Bankman-Fried stated that Alameda did not use funds from FTX. Interestingly, Wang confirmed that the “allow negative” feature was added to the exchange’s codebase on the same day as the tweet. Additionally, Bankman-Fried allegedly lied on Twitter and phone calls by assuring customers that their funds were safe.
Hot Take: Former FTX Executives Face Fraud Allegations
Gary Wang has admitted to committing fraud-related crimes while at FTX alongside Sam Bankman-Fried, Caroline Ellison (former CEO of Alameda), and Nishad Singh (former engineering director). The trial is expected to continue until November, and it remains to be seen if other former top executives will testify. This case highlights the potential misuse of customer funds and the need for transparency and accountability in the cryptocurrency industry.
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