In a sensational turn of events, the former cryptocurrency prodigy, Samuel Bankman-Fried‘s ongoing trial has revealed some startling claims. Taking center stage was Gary Wang, the long-awaited witness and cofounder of FTX, who claimed that Alameda Research, under the directive of Bankman-Fried, was afforded “special privileges,” including a whopping $65 billion line of credit on FTX’s cryptocurrency exchange, a fact undisclosed to the public.
Equally shocking was Wang’s claim of Alameda Research withdrawing more funds than it possessed on the exchange, thus accruing a colossal $8 billion debt. This staggering debt accumulation, Wang clarified, was made possible through changes implemented in FTX’s code ordained by Bankman-Fried to enable Alameda Research’s account to go beyond negative and expedite order processing rates.
Bankman-Fried’s opulent lifestyle, funded by Alameda Research, has garnered extensive criticism. This included expenses such as a $35 million luxurious Bahamian penthouse for FTX employees. Consequently, the US Department of Justice has presented a forfeiture bill listing private jets, worth over a total of $28.5 million, in Bankman-Fried’s possession that could potentially be seized due to his ongoing legal tribulations.
Addressing Alameda Research’s negative balance, Wang insinuated misappropriation of customers’ money echoing the counterclaims of Bankman-Fried’s statements that Alameda’s trading involved only its own funds and not customer funds. However, Wang’s statement outlining customers’ lack of consent for their funds’ usage seems to refute this.
Further clouding the proceedings was a recorded conversation with a trader from Alameda Research, where Bankman-Fried allegedly authorized company withdrawals from FTX as long as total trade revenue was greater. However, painstaking analysis by Wang late in 2019 or early 2020 brought to light a debt amount spiralling past total trade revenue, rendering the debt effectively irredeemable and a significant risk for the exchange.
Upon the plummeting of FTX fuelled by panic over its complicated funds in November 2022, Bankman-Fried’s tweet reassuring the community about FTX’s stability starkly contradicted Wang’s testimony of the exchange’s real condition.
Gary Wang now faces up to 50 years of incarceration under his cooperation agreement with the US government having admitted to four distinct felonies. Bankman-Fried, charged with wire fraud, conspiracy to commit fraud and conspiracy to commit money laundering among others, could potentially be looking at a life sentence if found guilty.
While the defence dismisses the allegations as a bold venture trying to establish a market in an emerging economy with limited competition, the community eagerly awaits the trial’s next stage, especially the forthcoming testimony of the prosecution’s star witness, Caroline Ellison.
Source: Cryptonews
