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.
Sam Bankman-Fried of FTX is said to have given Alameda Research ‘special privileges’
According to various reportsOn Friday, October 6, Wang appeared in court again and testified that Alameda Research’s account on FTX was allowed to trade more money than was available. The former CTO of FTX reportedly said that Sam Bankman-Fried had authorized the integration of an “allow negative” feature, which gave Alameda “special privileges” on FTX.
Wang reportedly revealed that the negative allow feature allowed Alameda to maintain a negative balance greater than FTX’s revenue ($200 million versus $150 million) sometime in 2020. According to reports, Wang claimed he had raised Alameda’s credit line several times and up to $65 billion under Bankman-Fried’s instructions.
When government prosecutors questioned where the money came from, Wang reportedly confirmed that it came from FTX clients’ funds. Based on the co-founder’s testimony, Bankman-Fried claimed that the “negative allow” feature was all about FTT, a native cryptocurrency “created to act as equity in FTX.”
Wang reportedly acknowledged that the clients never consented to their funds being used by Alameda Research. “The customers did not give us permission to use their accounts in this way,” the former FTX Chief Technology Officer reportedly said.
Has SBF repeatedly lied about connections to Alameda?
During his testimony, Wang was asked if he remembered Bankman-Fried making public statements about Alameda’s unusual connections to the FTX exchange. “Yes, he (SBF) said they (Alameda Research) were treated equally and did not use FTX funds,” the FTX co-founder reportedly confirmed.
Additionally, prosecutors showed Wang – and the court – a 2019 tweet from SBF claiming that Alameda did not use FTX funds. Interestingly, Wang confirmed that Bankman-Fried ordered the addition of “allow positive” to the exchange’s codebase on the same day the tweet was made.
It appears this isn’t the only time Bankman-Fried has lied about Alameda’s activities on the FTX exchange. The former CTO of FTX testified that Bankman-Fried then claimed on Twitter (now X) and through phone calls that customers’ money had been kept safe.
On Thursday October 5 Gary Wang has reportedly admitted to committing fraud-related crimes while at the FTX trade show with Sam Bankman-Fried, former Alameda CEO Caroline Ellison, and former chief technical officer Nishad Singh. With the trial expected to last until November, it remains to be seen if and 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