2023-10-06 23:15:40
Secret credit lines, hidden losses, fake accounts: the co-founder of the FTX platform lifted the veil on Friday on the financial acrobatics of the former cryptocurrency idol, Sam Bankman-Fried, which ultimately led to his downfall.
• Read also: Ex-cryptocurrency star Sam Bankman-Fried tried for fraud in New York
Co-founder of FTX with “SBF”, Zixiao “Gary” Wang was its technical manager at the time of its bankruptcy, in November 2022. Indicted by the courts, just like Sam Bankman-Fried, he pleaded guilty to four counts of accusation and agreed to cooperate with the federal prosecutor in Manhattan.
He is the first major witness to appear at the trial of his former partner, which began Tuesday in New York and which could last six weeks.
Sam Bankman-Fried is accused of having diverted, without their knowledge, funds of clients of the cryptocurrency exchange platform to finance risky investments of the hedge fund Alameda Research, which he controlled, but also to buy real estate in the Bahamas.
Gary Wang on Friday portrayed a character willing to break the law and lie to enable FTX and Alameda to post sustained growth and profits.
As early as 2019, a few months after the creation of FTX, “SBF” had the operating software modified to allow Alameda to borrow on the platform, which only a handful of clients were authorized to do, in limited amounts.
This modification was not communicated to the general public, nor to customers or investors, said Gary Wang, whose sentence, which has not yet been pronounced, should be reduced because of his collaboration with the Public minister.
“The clients did not give us permission to use this money for other purposes,” explained this computer scientist whose fortune, estimated at $4.6 billion before the FTX crash, has soared, just like that of “SBF”.
To make matters worse, Sam Bankman-Fried claimed to journalists and investors that “Alameda was treated like any other trader” on the platform, according to Gary Wang.
The limit set on this line of credit granted to Alameda was gradually increased, ultimately reaching the astronomical amount of 65 billion dollars.
At the time of FTX’s bankruptcy, some eight billion dollars belonging to the platform’s customers were missing, borrowed by Alameda, which was unable to repay them.
Sam Bankman-Fried had, moreover, placed this debt in a false account created in the name of a fictitious person, according to the co-founder of the platform.
Gary Wang also stated that Sam Bankman-Fried had, on several occasions, requested that customer losses, the amount of which exceeded their assets, be absorbed by Alameda, to hide these transactions from the general public and not to degrade the image from FTX.
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