In a significant development, Gary Wang, the former Chief Technology Officer and co-founder of FTX, testified in court, revealing that he, along with Sam Bankman-Fried and fellow former executives Caroline Ellison and Nishad Singh, had committed multiple forms of financial fraud. This revelation came as Wang took the stand as the fourth witness in the U.S. Department of Justice’s trial against Sam Bankman-Fried.
According to Wang’s testimony, they engaged in wire fraud, securities fraud, and commodities fraud. Notably, Wang, Ellison, and Singh had already pleaded guilty to these charges shortly after Bankman-Fried’s arrest. Wang disclosed, “We gave special privileges to Alameda Research to allow it to withdraw unlimited funds from FTX and lied about it.”
Sam Bankman-Fried is currently facing fraud and conspiracy charges related to the collapse of his cryptocurrency empire, which prosecutors have described as a “house of cards.”
Wang’s testimony also shed light on the special privileges granted to Alameda Research, a hedge fund run by Caroline Ellison, with authorization to withdraw substantial sums from FTX. Additionally, Alameda had access to a virtually limitless line of credit and had the ability to place orders slightly faster than other market makers.
The trial further revealed a significant software bug in FTX’s handling of customer deposits, resulting in an $8 billion overstatement of Alameda’s debt to the exchange’s customers. Former FTX developer Adam Yedidia explained this accounting error, which led to complications in tracking customer debts. Yedidia mentioned a conversation with Bankman-Fried, where he expressed concerns about the debt situation, stating, “we were bulletproof last year, but we’re not bulletproof this year.”
Yedidia, testifying under a grant of immunity, also informed the jury that he resigned from FTX after discovering that Alameda had used customer deposits to repay its creditors, a move that he found concerning and unethical.
As the trial continued, Bankman-Fried was observed in the courtroom, interacting with those present and working on his laptop. His parents were also in attendance, with his father, Joseph Bankman, taking notes during the proceedings. One juror was noted to have fallen asleep during portions of the testimony.
