July 21, 2024
FTX Co-Founder Gary Wang Testifies: Allegations of Wire Fraud Involving SBF's Inner Circle
Policy & Regulation

FTX Co-Founder Gary Wang Testifies: Allegations of Wire Fraud Involving SBF’s Inner Circle

Sam Bankman-Fried and his inner circle engaged in wire fraud, according to testimony given in court by FTX co-founder Gary Wang.

Wang added on Thursday afternoon that the trading desk Alameda Research, established by Bankman-Fried, had access to customer deposits on the cryptocurrency exchange and sibling business FTX. “We allowed Alameda to withdraw unlimited funds,” Wang said.

Gary Wang, a co-founder of FTX, entered a guilty plea and consented to assist law enforcement in their FTX investigation. Although he helped establish the crypto giant FTX and has known Bankman-Fried since high school, he had a considerably lower profile than Bankman-Fried throughout the heyday of the crypto industry.

According to Wang, Alameda had a sizable line of credit, the ability to place orders on the FTX platform that were completed more quickly, and the ability to withdraw an infinite amount of money. He said that it was permitted to have a negative balance. Alameda had taken $8 billion from the platform and $65 billion from its line of credit by the time FTX failed, according to Wang’s evidence.

He said that Alameda’s debt set it apart from other market makers that operated on FTX. According to Wang, other market leaders often had credit lines in the millions, not billions.

Wang also said that he received a $200,000 yearly salary and owned 17% of FTX. Wang testified that Sam possessed “like 65%” of the business at the time. Bankman-Fried had 90% of the stock in Alameda Research, while he held the remaining 10%.

Wang said that while working there, he was granted access to up to $300 million to invest in other new businesses and was permitted to withdraw $200000 to purchase a house.

Wang said in his evidence that Bankman-Fried handled tasks involving the public, such as lobbying and speaking with the media, whereas his function was restricted to coding.

Before Wang could wrap up his testimony, the court was dismissed. The prosecution might begin tomorrow morning, according to Judge Lewis Kaplan.

In his testimony on Thursday, managing partner of the venture capital firm Paradigm, Matt Huang, stated that his company would not have given Bankman-Fried’s firm $278 million if it had known that the money would be diverted to Alameda Research. According to him, the firm’s investment has now been written down to nothing.

In addition, Huang said that Paradigm had at first been dubious of FTX’s “unique governance structure.” Huang acknowledged that Paradigm had requested a seat on the FTX board and that it wasn’t the only investor to do so during cross-examination by Mark Cohen, one of the lawyers for Bankman-Fried.

Huang said Bankman-Fried informed Paradigm that Alameda Research did not receive preferential treatment on FTX’s cryptocurrency exchange after expressing worries regarding frontrunning, a tactic that entails trading on insider information.

Image: Wallpapers.com

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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