An explosive testimony has revealed that the co-founder of the cryptocurrency exchange FTX was ordered by Fried Sam Bankman to create a ‘secret’ backdoor to funnel money into Alameda Research.
FTX attorney Andrew Dietderich told the Delaware bankruptcy court on Wednesday that Gary Wang was told to create the secret line of credit from FTX client funds to the hedge fund.
Dietderich told the court that Wang “created this backdoor by inserting a single number into millions of lines of code for the exchange” creating the credit line, to which “customers did not consent.”
FTX’s lawyer proved that the back door was a “secret way for Alameda to borrow from clients on the exchange without permission.” Business Insider informed.
Explosive testimony has revealed that Sam Bankman-Fried ordered the co-founder of cryptocurrency exchange FTX to create a “secret” backdoor to funnel money to Alameda Research.
“Wang created this back door by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent,” Dietderich testified.
And we know the size of that line of credit. It was $65 billion.
Bankman-Fried had moved $10 billion between the two companies, and another $2 billion has yet to be accounted for, sources told Reuters in November.
The attorney’s testimony corroborates allegations made by the Commodity Futures Trading Commission, the independent federal agency that “regulates derivatives such as futures and swaps,” according to its website.
Last month, the CFTC filed charges against Wang and Alameda Research CEO Caroline Ellison, who was also Bankman-Fried’s on-and-off girlfriend.
The CFTC accused Wang of creating a “virtually unlimited” secret line of credit. Dietderich’s testimony is believed to be the first time an FTX official has given the credit line a firm dollar value.
Wang and Ellison have pleaded guilty to federal charges including fraud and conspiracy. They have been cooperating with investigators.
FTX attorney Andrew Dietderich told the Delaware bankruptcy court Wednesday that Gary Wang was told to create the secret line of credit from FTX client funds to the hedge fund.
Bankman-Fried was seen arriving for a plea hearing in US Federal Court in New York on January 3. He has pleaded not guilty to fraud and other criminal charges.
Bankman-Fried, who was arrested and extradited to the US from his base of operations in the Bahamas last month, is under house arrest at his parents’ $4 million Palo Alto home under the conditions of his release. bail of $250 million.
While awaiting trial, Bankman-Fried published a post on the Substack blog Thursday professing her innocence.
“I did not steal funds, and I certainly did not save billions,” Bankman-Fried wrote.
“Almost all of my assets were and still are usable to support FTX clients.”
The 30-year-old disgraced former crypto king accused Binance chief Changpeng ‘CZ’ Zhao of waging a lengthy campaign to destroy his empire.
DailyMail.com discovered an image from March 2021, showing SBF, 30, with his arm around ex-girlfriend Caroline Ellison, 28, on her 29th birthday. They are pictured with FTX co-founder Gary Wang (left)
A judge set SBF’s trial to start on October 3 during his January 3 plea hearing.
It alleged that Zhao’s ‘fateful tweet’ on November 6 capped an ‘extremely effective months-long PR campaign against FTX’.
“In November 2022, an extreme, swift, and targeted crash precipitated by the CEO of Binance rendered Alameda insolvent,” Bankman-Fried wrote.
The disgraced FTX founder’s business collapsed shortly after Zhao tweeted that Binance was abandoning its position in FTX’s in-house digital token FTT.
The tweet started a ripple effect that pushed Bankman-Fried’s crypto hedge fund Alameda Research into insolvency and FTX had to file for bankruptcy on Nov. 11.
Bankman-Fried now faces eight criminal charges, accusing him of defrauding FTX investors whose money he had. He made his first appearance in a Manhattan court last month, when a judge released him on bail with a $250 million bond.
On January 3, he pleaded not guilty to fraud and other criminal charges. A judge has set his trial to begin on October 3.
Continuing to speak publicly in this way is likely to come as a surprise, as he is ignoring the lawyers who advised him that he should ‘back down a hole’. The lawyers said such statements would likely make life more difficult for defense attorneys at their upcoming trial.
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