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PHOTO: NYTIMESAn FTX co-founder informed a judge that Sam Bankman-Fried’s tweet claiming the Bitcoin exchange was “fine” was false.
According to former CEO Gary Wang, Mr. Bankman-Fried knew the company had a $8 billion shortfall when he made the job. A few days later, it filed for bankruptcy.
In a New York courtroom, Mr. Wang was providing testimony on Mr. Bankman-Fried’s fraud trial.
Wang has entered a guilty plea already.
The 30-year-old, who ascended to the position of chief technology officer at FTX after becoming a friend from high school math camp, was on trial for a second day on Friday. Prosecutors questioned him about spreadsheets, tweets, and private conversations as they attempted to bridge the gap between the company’s public image and its internal operations.
According to Mr. Wang, Mr. Bankman-Fried had made unfounded public claims on multiple occasions regarding the firm’s financial situation.
Mr. Wang stated, “FTX was not fine.” “Assets were not fine, because FTX did not have enough assets for customer withdrawals.”
In November of last year, FTX filed for bankruptcy due to an overwhelming number of clients attempting to take their money out.
Not long after, Mr. Bankman-Fried was accused of stealing money from FTX customers, misrepresenting to lenders and investors, and committing fraud and money laundering. He’s refuted the accusations made against him.
The Department of Justice has claimed that he used Alameda, a cryptocurrency trading company Mr. Bankman-Fried had formed a few years prior, to channel client funds toward real estate acquisitions, political contributions, marketing, and other expenses.
Mr. Wang said the court, “We publicly stated that we would not use customer funds in this manner.”
Prior to FTX’s insolvency, according to Mr. Wang, he and Mr. Bankman-Fried talked about the continuously expanding hole on the company’s financial sheet caused by Alameda’s large withdrawals of customer monies.
According to him, Alameda was already taking out more money in withdrawals from its platform than FTX was making from trading fees as early as the end of 2019.
The court heard that by June 2022, Mr. Bankman-Fried had requested an examination of Alameda’s indebtedness to FTX, leaving senior officials arguing over the correct amount via spreadsheet. That month, Mr. Wang estimated the amount to be about $11 billion.
Even though there have been statements in the public domain to the contrary, he claimed that Alameda’s account was special because of characteristics like a $65 billion line of credit at FTX and the capacity to have a negative balance.
A short while after FTX launched in 2019, Mr. Bankman-Fried claimed on Twitter that Alameda, his trading company, had an account on the exchange that was “exactly like everyone else’s.”
According to Mr. Wang, Mr. Bankman-Fried ordered him to change the platform’s programming that day so that Alameda could take out an infinite amount of money.
In another case, the head of FTX shared a post using what the prosecution described as a “fake number” on the amount kept in a fund meant to shield against losses.
Conrad Everdell Less than an hour was given to the attorney for Mr. Bankman-Fried to cross-examine Mr. Wang before the day’s proceedings concluded.
He proposed that Alameda’s account’s special characteristics resulted from its function as a “market-maker” on the platform, which facilitated seamless trade.
A six-week trial period is anticipated. Next week, Mr. Wang will continue to testify. After him will be Caroline Ellison, the former girlfriend of Mr. Bankman-Fried and the former chief executive of Alameda, who has already entered a guilty plea.
Credits: BBC
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