The criminal trial involving Sam Bankman-Fried, the co-founder and CEO of the defunct cryptocurrency exchange FTX, reached a critical juncture with key testimony from Gary Wang, FTX’s co-founder and Chief Technology Officer. Wang, who has been friends with Bankman-Fried since high school, has pleaded guilty to wire fraud and other charges and is cooperating with authorities.
Wang stated that they permitted Alameda Research, a crypto hedge fund also co-founded by Bankman-Fried, to withdraw “unlimited funds.” He further elaborated that special computer code features, directed by Bankman-Fried, allowed Alameda to maintain negative balances and unlimited open positions. These coded privileges facilitated Alameda’s withdrawal of an astonishing $8 billion and drawing $65 billion on its line of credit before FTX’s collapse.
As of now, prosecutors are focusing on proving that Bankman-Fried, who has been in custody since August, intentionally deceived investors and customers for personal gain, including the purchase of luxury real estate and making significant political contributions. Bankman-Fried has pleaded not guilty to all charges, including wire fraud and conspiracy to commit money laundering.
Wang also disclosed his compensation details, revealing that he earned a $200,000 annual salary and held 17% equity in FTX, while Bankman-Fried owned approximately 65%. Wang was also allocated up to $300 million for investment in other startups and had withdrawn $200,000 from FTX to build a house.
Per the testimony, Wang’s primary role at FTX was coding, while Bankman-Fried was responsible for public-facing duties such as lobbying and media interactions. The trial, expected to last up to six weeks, will continue with further testimonies.
Furthermore, Matt Huang, a managing partner at venture capital firm Paradigm, also testified that his firm would not have invested $278 million in Bankman-Fried’s ventures had they known the funds would be redirected to Alameda Research. Huang also revealed that Paradigm had requested a seat on FTX’s board, expressing initial skepticism about the exchange’s governance structure.
The prosecution has indicated that they will use testimonies from Bankman-Fried’s “trusted inner circle” to substantiate their case, including those from Carolyn Ellison, Alameda Research’s former CEO, and Nishad Singh, FTX’s former engineering director. Both Wang and Bankman-Fried were billionaires at the time their businesses collapsed. Additionally, Wang shared that the name “Alameda Research” was strategically chosen to facilitate business operations, including securing bank accounts and attracting investors.
