FTX Co-Founder Testifies Against Sam Bankman-Fried

The fraud trial of Sam Bankman-Fried, former CEO of failed crypto exchange FTX, continued this week, with the first witnesses testifying against the former crypto billionaire.

The Associated Press reported that FTX co-founder Gary Wang began his testimony, telling a New York jury that he and Bankman-Fried committed financial crimes and lied to the public before the cryptocurrency trading platform collapsed last year.

Gary Wang was the former chief technology officer at FTX and is one of a number of star witnesses for the prosecution. Wang and Caroline Ellison (previously Alameda’s chief executive and former girlfriend of Bankman-Fried) had pleaded guilty in December to multiple criminal charges, and agreed to co-operate with the US investigation.

Wang testimony

Now in the trial, AP reported that 30 year-old Gary Wang testified he committed wire, securities and commodities fraud as the chief technical officer at FTX after also sharing ownership in Alameda Research.

Alameda Research was a cryptocurrency hedge fund that he and Bankman-Fried started in 2017 and eventually used to withdraw $8 billion in FTX funds illegally.

Wang said Bankman-Fried had directed the illegal money transfers.

In just over a half hour of testimony, Wang reportedly said he and Bankman-Fried allowed Alameda Research to withdraw unlimited funds from FTX “and we lied to the public.”

According to the Associated Press, Wang said not only was Alameda Research permitted to maintain negative balances and unlimited open positions, but the computer code that controlled its operations was written to provide a line of credit of $65 billion – a number so large that Judge Lewis A. Kaplan reportedly questioned Wang briefly to ensure he was talking about billions rather than millions.

Wang testified that the special computer code features were directed by Bankman-Fried.

Wang had met Bankman-Fried over a decade ago at a high school summer camp after moving to the United States from China and growing up in Minnesota.

Wang said he was paid $200,000 in salary, along with owning 10 percent of Alameda and 17 percent of FTX, enough shares to be a billionaire before the businesses collapsed.

He said money flowed so freely at Alameda that he was able to borrow a million dollars for a home and between $200 million and $300 million to make investments.

Other witnesses

Bankman-Fried still has to face other former colleagues testifying against him.

It includes his former girlfriend Carolyn Ellison, and Nishad Singh, the former engineering director at FTX.

AP reported that earlier in the day, jurors heard testimony from Adam Yedidia, who said he developed software for FTX before quitting the company when he learned last November that Alameda had used money from investors to pay creditors.

Yedidia reportedly said he lived with Bankman-Fried and other top executives in June or July of 2022 when he told Bankman-Fried one day that he was concerned that Alameda owed FTX a large debt. He said he wanted to know if things were OK.

“Sam said something like, ‘We weren’t bulletproof last year. We’re not bulletproof this year,’” he recalled.

When he asked how long it might take to become bulletproof again, he said a seemingly nervous and worried Bankman-Fried responded that it could take three months to three years.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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