FTX Co-Founder Testifies Against Sam Bankman-Fried, Accusing Them of Financial Crimes and Deception

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During a pivotal moment in the trial, the co-founder of FTX, Gary Wang, delivered damning testimony against his former business partner, Sam Bankman-Fried. Before a New York jury, Wang revealed that he and Bankman-Fried had engaged in financial misconduct and had deceived the public in the lead-up to the cryptocurrency trading platform’s collapse in the previous year.

Wang, at the age of 30, acknowledged his involvement in wire fraud, securities fraud, and commodities fraud during his tenure as the Chief Technical Officer at FTX. He also disclosed that he held ownership in Alameda Research, a cryptocurrency hedge fund founded by him and Bankman-Fried in 2017. Importantly, this fund was used to illicitly withdraw a staggering $8 billion from FTX funds. According to Wang, these illegal actions were directed by Bankman-Fried.

This revelation came on the second day of what promises to be a protracted six-week trial. Prosecutors are aiming to substantiate their claim that Bankman-Fried misappropriated billions of dollars from investors and customers. This alleged misconduct was supposedly driven by a desire to acquire luxury beachfront properties, amass personal wealth, and make substantial political contributions exceeding $100 million, all with the intent of influencing cryptocurrency regulation.

It’s worth noting that Bankman-Fried, aged 31, has been in custody since August and was extradited from the Bahamas to face charges in Manhattan federal court. Throughout the proceedings, he has consistently pleaded not guilty.

Prior to the trial’s commencement, prosecutors pledged to rely on testimonies from individuals within Bankman-Fried’s inner circle to establish that he intentionally defrauded investors and clients, and subsequently covered up his actions. In contrast, the defense contends that Bankman-Fried’s actions were driven by a genuine attempt to salvage his businesses in the aftermath of the cryptocurrency market’s collapse.

In a brief half-hour of testimony, Wang admitted to allowing Alameda Research unrestricted access to withdraw funds from FTX while also deceiving the public about it. Furthermore, he disclosed that Alameda Research was not only permitted to maintain negative balances and unlimited open positions but also that its underlying code allowed for a staggering line of credit amounting to $65 billion. This figure prompted a brief inquiry from Judge Lewis A. Kaplan to ensure the distinction between billions and millions.

Wang revealed that Bankman-Fried was the mastermind behind these unique code features. He had first met Bankman-Fried over a decade ago during a high school summer camp, shortly after moving to the United States from China and growing up in Minnesota.

The financial largesse at Alameda was such that Wang, despite his relatively young age, was able to borrow a million dollars for a home purchase and secure between $200 million and $300 million for investment purposes. Wang’s financial situation was significantly bolstered by his ownership stakes of 10% in Alameda and 17% in FTX, assets that would have made him a billionaire had the businesses not collapsed.

Gary Wang is the first of three former high-ranking executives who will testify against Sam Bankman-Fried. These individuals have pleaded guilty to fraud charges in exchange for potential leniency during sentencing. The other two are Carolyn Ellison, Alameda Research’s former CEO and a former romantic partner of Bankman-Fried, and Nishad Singh, the former Engineering Director at FTX.

Earlier in the proceedings, Adam Yedidia, a former software developer for FTX, testified that he had left the company in November after discovering that Alameda had used investor funds to repay creditors. He recalled living with Bankman-Fried and other top executives, where he expressed concerns about Alameda’s significant debt owed to FTX. Bankman-Fried, seemingly nervous, replied that becoming financially secure could take anywhere from three months to three years.

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More about FTX Trial

• FTX Founder Sam Bankman-Fried Faces Trial Over Allegations of Financial Misconduct
• Gary Wang Testimony Reveals Financial Crimes in FTX Trial
• Sam Bankman-Fried’s Defense in FTX Trial
• Former Executives Carolyn Ellison and Nishad Singh’s Cooperation Deals
• Adam Yedidia’s Testimony on Alameda Research’s Financial Practices