The co-founder of bankrupt digital asset exchange FTX says sister company Alameda had already used billions of dollars of FTX client assets for trading purposes in 2019.
According to lengthy court transcripts issued by Inner City Press on the social media platform
Wang – along with Sam Bankman-Fried and other FTX executives – is accused of defrauding investors and mishandling billions of dollars of customer funds in connection with FTX’s 2022 demise. However, Wang and others have decided to collaborate with the authorities and to testify against Bankman-Fried.
Wang says that Nishad Singh, another co-founder of FTX, added an “allow negative” feature to FTX’s platform code in 2019, which allowed Alameda to use more money than was in its account to support FTX Token (FTT), as well as for trading purposes.
“Sam asked Nishad and me to do that [add the code]. In 2019. It was about FTT, a cryptocurrency we created to act as equity in FTX.
But it wasn’t just used for FTT – Alameda used it to trade when the account balance was below zero.”
Wang further says that since July 2019, Alameda has used the ‘allow negative’ feature to withdraw $8 billion worth of fiat money and digital assets from FTX.
Wang also says customers have never consented to their money being used in such a way, according to Bankman-Fried authorized Alameda will receive a credit of $65 billion.
If convicted of his charges, Bankman-Fried faces decades behind bars.
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