On day four of the criminal trial of former FTX CEO Sam Bankman-Fried, Gary Wang, who co-founded the now-bankrupt crypto exchange and served as its former chief technology officer (CTO), testified. During his testimony, the former FTX executive revealed details about the connection between the cryptocurrency exchange and Alameda Research.
According to various reports, on Friday, October 6, Wang appeared again in court and testified that Alameda Research’s account on FTX was allowed to trade more funds than it had available. The former FTX CTO reportedly said that Sam Bankman-Fried authorized the integration of a “allow negative” feature, which afforded Alameda “special privileges” on FTX.
Wang reportedly revealed that the “allow negative” feature enabled Alameda to hold a negative balance more than FTX’s revenue at some point in 2020 ($200 million against $150 million). According to reports, Wang claimed that he increased Alameda’s line of credit several times and up to $65 billion under Bankman-Fried’s instructions.
When the government’s prosecutors questioned where the money came from, Wang reportedly affirmed that it came from FTX’s customers’ funds. Based on the co-founder’s testimony, Bankman-Fried claimed that the “allow negative” feature was all about FTT, a native cryptocurrency “created to act as equity in FTX.”
Wang reportedly acknowledged that the customers never authorized their funds to be used by Alameda Research. “The customers did not give us permission to use their accounts like this,” the former FTX chief technology officer allegedly said.
During his testimony, Wang was asked whether he remembered Bankman-Fried making public statements about Alameda’s unusual connections with the FTX exchange. “Yes, he (SBF) said they (Alameda Research) were treated equally and didn’t use FTX funds,” the FTX cofounder allegedly affirmed.
Furthermore, the prosecutors showed Wang – and the court – a 2019 tweet from SBF claiming that Alameda was not using funds from FTX. Interestingly, Wang affirmed that Bankman-Fried ordered the addition of “allow negative” in the exchange’s codebase on the same day the tweet was made.
It appears that is not the only time Bankman-Fried lied about Alameda’s activities on the FTX exchange. The former FTX CTO testified that Bankman-Fried subsequently claimed on Twitter (now X) and on phone calls that customer funds were kept safe.
On Thursday, October 5, Gary Wang reportedly admitted to committing fraud-related crimes while at the FTX exchange alongside Sam Bankman-Fried, former Alameda CEO Caroline Ellison, and former engineering director Nishad Singh. With the trial expected to continue till November, it remains to be seen whether or when the other former top FTX and Alameda executives will take the stand.
FTT price trading at $1.188 on the daily timeframe | Source: FTTUSDT chart on TradingView
Featured image from Vox, chart from TradingView