FTX’s ‘Insurance Fund’ Was an Arbitrary, Made-Up Number, According to Co-Founder Gary Wang: Report
The co-founder of FTX, Gary Wang, testified in court that the “Insurance Fund” listed by the exchange was actually a fake amount generated using a random number generator. During the trial of former FTX CEO Sam Bankman-Fried, Wang revealed that the backstop fund claimed to have $5.5 million and 5 million FTT tokens. However, there was no FTT in the fund, and the reported USD amount was lower than the actual figure.
Wang explained that the fake USD number was calculated by multiplying FTX’s daily volume by a random number around 7500 and then dividing it by 1 billion. Last year, FTX filed for bankruptcy after its native asset collapsed and customer withdrawals were suspended.
Bankman-Fried is facing multiple charges related to defrauding customers, mishandling funds worth billions of dollars, and making illegal political donations. Wang had previously pleaded guilty to federal charges and is now cooperating with prosecutors in the case against Bankman-Fried.
Hot Take: FTX’s Fake Insurance Fund Raises Questions about Transparency
The revelation that FTX’s “Insurance Fund” was an arbitrary, made-up number raises concerns about transparency and trust within the cryptocurrency industry. Investors rely on exchanges to provide accurate information about their funds’ security, and any deception can have serious consequences. This case highlights the need for stricter regulations and oversight to ensure that exchanges operate ethically and protect their customers’ assets. It also serves as a reminder for crypto investors to conduct thorough due diligence before trusting any platform with their funds.
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