Gary Wang, an FTX Founder, Says Sam Bankman-Fried Steroid Is Misusing Funds

Gary Wang, a former top executive at the failed FTX cryptocurrency exchange, testified that the firm’s founder, Sam Bankman-Fried, was the company’s ultimate decision-maker and directed a closely-linked hedge fund to misappropriate billions of dollars in cash. From FTX customers.

Testifying for more than six hours in federal court in Manhattan on Thursday and Friday, Mr. Wang accused Mr. Alameda Research of a sister cryptocurrency trading firm of siphoning $8 billion of client money from FTX. Bankman-Fried said she was fully aware. About FTX customer assets being safe and secure Mr. He said Bankman-Fried lied in his public statements in November.

Mr. Bankman-Fried called out the larger issues at FTX, Mr. Wang told the jury of nine women and three men. “Ultimately, it was Sam’s decision,” he said.

Mr. Wang, 30, the founder of FTX and programmed its code base, said Mr. A key witness in Bankman-Fried’s high-profile criminal fraud trial. Mr. Among Bankman-Fried’s three closest advisers, Mr. Wang is one. Pleading guilty and agreeing to cooperate against the entrepreneur, he was accused of conspiring to use FTX customer money for all sorts of personal things. projects.

The saga of FTX’s rise and fall has gripped the public for months with its mix of corporate hubris and personal intrigue. Since the exchange collapsed in November, Mr. Bankman-Fried has become a symbol of the crypto industry’s excesses, and his trial is seen by some as a credibility test of the digital currency industry.

A run on deposits last year exposed an $8 billion hole in FTX’s accounts, which prosecutors allege was in large part from “special offers” that allowed Alameda FTX to siphon customer money. FTX filed for bankruptcy and Mr. Bankman-Fried was indicted a month later on wire fraud, securities fraud, money laundering and related conspiracy charges. He is innocent and faces up to life in prison if convicted.

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Within weeks of the FTX outbreak, Mr. Bankmann-Fried’s friend Mr. Wang pleaded guilty to aiding and abetting the plot. Mr. Nishad Singh and Caroline Ellison, two other top executives of Bankman-Fried’s business empire, have also pleaded guilty and are cooperating with prosecutors.

Mr. Wang and Mr. Singh admitted that those who programmed the code underlying FTX’s business created a backdoor that allowed Alameda to borrow almost unlimited amounts from the exchange. Prosecutors argued that this backdoor was one of the primary engines of the scheme to steal customer accounts.

Mr. Bankman-Fried’s legal team argued that there was a relevant business relationship between FTX and Alameda and “was not set up to create some grand scheme of fraud”.

In court on Thursday and Friday, Mr. Wang took the jury on FTX’s early days of 2019 to its stunning fall last year.

Starting in 2019, Mr. At the direction of Bankman-Fried, he and Mr. Mr. Singh also wrote FTX’s computer code. Wang said. “He asked us to do it and we told him we did it,” Mr. Wang said.

This effectively allowed the trading platform to make unlimited withdrawals from transactions, he said. None of that was communicated to customers, investors or the companies’ lenders, he said.

“We made special concessions for Alameda research at FTX,” said Mr. Wang said. “We lied to the public about this.”

Alameda was originally allowed to take revenue from FTX’s trading fees, which at the time were about $300 million, Mr. Wang said. But that line of credit grew over time, growing into the tens of billions of dollars, he said. Mr Wang said he had no problem with Mr Bankman-Fried.

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Since the FTX outbreak, Mr. Bankman-Fried repeatedly stated that she was only vaguely aware of the amount borrowed from the Alameda exchange. But Mr Wang testified that Alameda’s presence was visible on one of his computer screens in Mr Bankman-Fried’s office. At the meeting in June 2022, he asked Mr. Bankman-Fried, Mr. Singh and Ms. Ellison discussed Mr. Wang said.

At the end of the meeting at FTX’s office in the Bahamas, Mr. Wang said, Mr. Bankman-Fried, Mrs. Turning to Ellison, he said he could use more client funds to repay Alameda’s creditors.

Under cross-examination, Mr. Wang was a trading partner with some of the special privileges Alameda had to help FTX customers freely buy and sell cryptocurrencies. He is scheduled to answer additional questions from defense attorneys when the trial resumes Tuesday.

Mr. Wang and Mr. Bankman-Fried were classmates at the Massachusetts Institute of Technology before founding FTX in 2019.

Mr. Like Bankman-Fried, Mr. Wang became very rich is estimated Net worth is almost $5 billion. Within FTX, he and Mr. Bankman-Fried were also considered opposites. While Mr. Bankman-Fried Karrulus was the pitchman, Mr. Wang was a shy coder who came to work in the mid-afternoon and worked through the night.

They were also close friends who lived with eight other roommates in a luxury penthouse in the Bahamas based on FTX. That relationship ended in December, when Mr. Wang pleaded guilty to federal fraud charges, saying he knew “what I was doing was wrong.”

Mr. Before Wang took the stand, prosecutors questioned a witness. Working as a developer at FTX, Mr. Yedidia, a few months before FTX failed, in mid-2022, Mr. He recounted a conversation he had with Bankman-Fried in which the founder admitted his company was on shaky ground.

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“We were bulletproof last year, but this year we’re not bulletproof,” Mr. Yedidia said, adding that it could take six months to three years to make the company “bulletproof again,” Mr. Bankman-Fried explained.

One of FTX’s biggest backers, Matt Huang, founder of Paradigm, a venture capital firm, took the witness stand to Mr. followed Jedidiah. Mr. Huang said he would have had concerns about approving investments in FTX had he known the full extent of the transaction’s relationship with Alameda.

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