Former Friends Testify Against FTX Founder Sam Bankman-Fried
As FTX’s collapse began, Sam Bankman-Fried received a reassuring message from his roommate and senior developer at the exchange, Adam Yedidia. However, both Yedidia and Gary Wang, co-founder of Alameda Research and FTX, testified against Bankman-Fried under immunity agreements. They claimed that Bankman-Fried had used their technical expertise to keep his empire afloat, even if it meant breaking the law or deceiving investors.
Bankman-Fried was left with only his lawyers for support as his former friends testified against him. The defense struggled throughout the proceedings, with most objections overruled and Judge Lewis A. Kaplan ruling in favor of the defense only six times out of 55 sustained objections.
Alameda’s Preferential Access
The testimony focused on the relationship between Alameda Research and FTX. Yedidia revealed that he had designed an automated system for wire transfers to an Alameda Research-owned bank account. He also mentioned a bug in the code that led to an overstatement of Alameda’s liabilities to FTX by $8 billion.
Matt Huang from Paradigm described the VC firm’s decision to invest in FTX but expressed concerns about its lack of governance structure. Huang also recalled being told by Bankman-Fried that Alameda Research did not receive preferential treatment on the FTX exchange. However, Paradigm marked its investment down to zero following the testimony.
Wang Reveals Insider Knowledge
Wang testified that Bankman-Fried allowed Alameda Research to withdraw funds even with a negative account balance, using customer deposits from FTX. He also disclosed that Alameda Research had access to a $65 billion line of credit and slightly faster platform access compared to other market makers.
During Wang’s testimony, Bankman-Fried paid close attention and refrained from taking notes. His father, Joseph Bankman, took notes while his wife, Barbara Fried, sat beside him. The prosecution will continue examining Wang and the defense will cross-examine him in the next session.
Hot Take: Testimonies Shake FTX Founder’s Defense
The testimonies of former friends and colleagues have significantly weakened Sam Bankman-Fried’s defense. They allege that Bankman-Fried relied on their technical expertise to sustain his empire, even if it involved illegal activities or deceiving investors. With objections frequently overruled and the judge expressing impatience with the defense’s repetitive questioning, the trial has not been favorable for Bankman-Fried so far. The testimony also shed light on Alameda Research’s preferential access and highlighted concerns from Paradigm regarding FTX’s governance structure. As the trial continues, it remains to be seen how this testimony will impact the final outcome.
By
By
By
By
By
By