Here’s How Sam Bankman-Fried Allegedly Used Customer Funds On Alameda Research
October 07 2023 - 10:00AM
NEWSBTC
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. FTX’s Sam Bankman-Fried Allegedly Gave
Alameda Research ‘Special Privileges’ 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. Related Reading: Dogecoin Under Pressure: Will
Bearish Momentum Push Meme Coin Below $0.06? 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. Did SBF Repeatedly Lie About Connections With
Alameda? 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. Related
Reading: Trillions In Shiba Inu On The Move: What Lies Ahead For
The Meme Coin? 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:
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