New York — In a compelling turn of events, the prosecution presented a crucial testimony on Thursday during the trial of FTX founder, Sam Bankman-Fried. Co-founder Gary Wang took the stand and revealed shocking details of financial crimes and deceit that ultimately led to the collapse of the cryptocurrency trading platform.
Wang, the former chief technical officer at FTX, confessed to committing wire, securities, and commodities fraud. He admitted his involvement in Alameda Research, a cryptocurrency hedge fund established by him and Bankman-Fried in 2017. This fund served as a means to illegally siphon $8 billion from FTX. Wang explicitly pointed out that Bankman-Fried was the orchestrator behind these illicit maneuvers.
These revelations unfolded on the second day of what promises to be a lengthy trial, expected to span up to six weeks. Prosecutors are determined to demonstrate that Bankman-Fried misappropriated billions of dollars from unsuspecting investors and customers. The alleged stolen funds were allegedly used for personal acquisitions, including luxurious beachfront properties. Additionally, Bankman-Fried allegedly used a portion of the ill-gotten gains to make substantial political contributions amounting to over $100 million, with the goal of influencing cryptocurrency regulations.
Bankman-Fried, who has been incarcerated since August, was extradited from the Bahamas in December of last year after being charged in Manhattan federal court. Despite the mounting evidence against him, he consistently maintains his innocence.
Prior to the commencement of the trial on Tuesday, prosecutors made a promise to rely on testimony from Bankman-Fried's "trusted inner circle" to substantiate their claims of intentional theft and subsequent attempts to cover it up. On the other hand, the defense argues that Bankman-Fried acted in good faith as he valiantly attempted to salvage his businesses following the cryptocurrency market crash.
In a mere half hour on the stand, Wang admitted to allowing Alameda Research unrestricted access to FTX funds, acknowledging that they deliberately misled the public.
Alameda Research's Extravagant Operations and Testimonies Surface in Court
Retaining key details of a courtroom testimony involving Alameda Research and its former executives
One of Alameda Research's former top executives, Wang, recently testified in court about the company's questionable practices. Notably, he revealed that Alameda was permitted to maintain negative balances and unlimited open positions. What's more, the computer code that governed the company's operations was even designed to offer a staggering line of credit of $65 billion, a figure that caught the attention of Judge Lewis A. Kaplan.
Wang's testimony shed light on his relationship with Bankman-Fried, the individual responsible for directing the implementation of these unique computer code features. Their connection dates back over a decade when they first met at a high school summer camp after Wang's move from China to the United States, where he grew up in Minnesota.
During his time at Alameda Research, Wang received a generous salary of $200,000. Additionally, he owned 10% of Alameda and 17% of FTX, which would have made him a billionaire had it not been for the eventual collapse of these businesses.
The flow of money at Alameda was seemingly boundless, as Wang disclosed his ability to borrow a million dollars for a home and between $200 million and $300 million for investments.
The other two individuals slated to testify are Carolyn Ellison, Alameda Research's former chief executive and Bankman-Fried's former girlfriend, and Nishad Singh, the former engineering director at FTX.
Before Wang took the stand, jurors heard from Adam Yedidia, who had previously developed software for FTX. Yedidia quit the company when he discovered that Alameda had used investor funds to pay off creditors. During his time living with Bankman-Fried and other top executives in June or July of 2022, Yedidia expressed concern about Alameda's sizable debt owed to FTX. In response, Bankman-Fried expressed a lack of invincibility, stating that they were not bulletproof "last year" and that the same held true for the present year. When pressed about how long it might take to regain their former financial security, Bankman-Fried nervously suggested it could take anywhere from three months to three years.
These testimonies paint a disturbing picture of the practices and culture within Alameda Research and raise further questions about its future viability.
