Gary Wang, ex-chief technology officer of FTX, has testified in the ongoing trial of former FTX CEO Sam “SBF” Bankman-Fried.
The trial revolves around Bankman-Fried’s alleged misuse of FTX user funds in collaboration with Alameda Research, without obtaining users’ consent.
Wang, who appeared in a New York court on October 6, stated that Alameda’s account on FTX was the sole account permitted to trade beyond its available funds through an “allow negative” feature.
This feature, integrated in 2019, was reportedly on the directive of Bankman-Fried. Wang testified that the feature enabled Alameda to have a negative balance surpassing FTX’s 2020 revenue – $200 million compared to $150 million.
Wang revealed that despite Bankman-Fried’s public claims on the two entities’ relationship, he had granted Alameda a $65-billion credit line.
Further, Wang mentioned a meeting in the Bahamas office, where after highlighting Alameda’s skewed balances, Bankman-Fried instructed Alameda to return the borrowed amounts.
According to Wang’s testimony, the “special privileges” Alameda enjoyed on FTX were tied to the exchange’s FTX Token (FTT), which the company used for trades when its balance was negative.
Alameda also allegedly had the capability to directly withdraw funds from FTX.
On October 5, Wang confessed to his criminal involvement with Bankman-Fried and Caroline Ellison, the former Alameda CEO. He had previously admitted guilt in a fraud case in December 2022.
The CEO of the Crypto Council for Innovation, Sheila Warren, drew a parallel with the Elizabeth Holmes trial, suggesting the core issue isn’t about cryptocurrency but the alleged personal misdeeds of Bankman-Fried.
She commented on the ex-CEO’s downfall, anticipating further revelations of his self-interest.
Bankman-Fried’s trial is slated to continue until November, with both Ellison and Nishad Singh, ex-FTX engineering director, expected to testify against him.
Bankman-Fried remains incarcerated following a bail revocation by Judge Lewis Kaplan in August. His intention to testify remains uncertain.
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