Surprising testimony revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to create a “secret” backdoor to transfer funds to Alameda Research.
FTX attorney Andrew Dietderich told the Delaware Bankruptcy Court on Wednesday that Gary Wang was asked to set up a secret line of credit for clients’ funds from FTX to the hedge fund.
Dietderich told the court that Wang “created this back door by inserting a single number into the exchange’s millions of lines of code” to create a line of credit, which “the clients did not agree to.”
An FTX attorney testified that the backdoor was Alameda’s “secret way of borrowing from clients on the exchange without permission.” Business interested mentioned.
Surprising testimony revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to create a “secret” backdoor to transfer funds to Alameda Research.
“Wang created this backdoor by inserting a single number into the exchange’s millions of lines of code, creating a line of credit from FTX to Alameda, which clients did not approve of,” Dietrich testified.
And we know the size of that line of credit. It was $65 billion.
Sources told Reuters in November that Bankman-Fried moved $10 billion between the two companies, with another $2 billion missing.
The attorney’s testimony confirms allegations made by the CFTC, the independent federal agency that “regulates derivatives such as futures and swaps,” according to it. website.
Last month, the CFTC filed charges against Wang and Carolyn Ellison, the chief research officer at Alameda, who was also Bankman-Fried’s on-again, off-again 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 a line of credit a fixed dollar value.
Both Wang and Ellison pleaded guilty to federal charges, including fraud and conspiracy. They have been cooperating with investigators.
FTX attorney Andrew Dietderich told a Delaware bankruptcy court on Wednesday that Gary Wang was asked to set up a secret line of credit for client funds from FTX to the hedge fund.
Bankman Fried is seen arriving for a hearing in US Federal Court in New York, January 3.
Bankman-Fried, who was arrested and extradited to the United States from his home base in the Bahamas last month, is under house arrest at his parents’ $4 million Palo Alto home pursuant to the release terms of his $250 million bond.
While awaiting trial, Bankman-Fried posted a post on the Substack blog Thursday declaring his innocence.
Bankman-Fried wrote, “I didn’t steal money, and I certainly didn’t hide billions.”
“Nearly all of my assets were and still are usable to support FTX clients.”
The disgraced 30-year-old former crypto king has accused Binance chairman Changpeng ‘CZ’ Zhao of waging a long campaign to destroy his empire.
DailyMail.com revealed a photo from March 2021 that shows the SBF, 30, with his arm around ex-girlfriend Caroline Ellison, 28, from his 29th birthday. Pictured with FTX co-founder Gary Wang (left)
A judge set SBF’s trial to begin October 3 during the January 3 hearing
He claimed Zaw’s “fatal tweet” on November 6 capped a “months-long highly effective PR campaign against FTX.”
Bankman-Fried wrote: “In November 2022, a severe, rapid and targeted crash precipitated by the CEO of Binance bankrupted Alameda.
The disgraced FTX founder’s business collapsed shortly after Zhao tweeted that Binance was giving away its position on FTT’s internal digital token FTX.
The tweet started with a domino effect that pushed Bankman-Fried’s crypto hedge fund Alameda Research into bankruptcy and FTX having to file for bankruptcy on November 11th.
Bankman-Fried now faces eight criminal charges, accusing him of defrauding FTX investors whose money he was holding. He made his debut in a Manhattan court last month, when a judge released him on bail on a $250 million bond.
On January 3 he pleaded not guilty to fraud and other criminal charges. A judge has set his trial for October 3.
Continuing to speak out like this is likely to raise eyebrows, ignoring the lawyers who advised him to “recline into a hole.” Lawyers said such statements would likely make life more difficult for defense attorneys at his upcoming trial.
“Beer aficionado. Gamer. Alcohol fanatic. Evil food trailblazer. Avid bacon maven.”