Gary Wang, the co-founder and former chief technical officer of FTX, a cryptocurrency exchange that collapsed in March 2023, testified in a Manhattan federal court on Thursday that he and Sam Bankman-Fried, the CEO of FTX and Alameda Research, a crypto hedge fund, committed a multibillion-dollar fraud with customer funds. Wang said he and Bankman-Fried started Alameda in 2017 and used it to withdraw $8 billion from FTX accounts illegally. He said Bankman-Fried directed the illegal moves and lied to customers, regulators, and investors about the financial situation of FTX and Alameda.
Yedidia reveals close ties between FTX and Alameda
Adam Yedidia, a senior software developer at FTX and a longtime friend of Bankman-Fried, also testified for the prosecution on Thursday under an immunity order. He said he met Bankman-Fried at MIT and worked with him at FTX. He said he lived with Bankman-Fried in a luxury apartment complex in the Bahamas, where FTX was based. Yedidia said he discovered an $8 billion liability on Alameda’s balance sheet in November 2022, which represented the money that FTX customers would be owed if they decided to withdraw their deposits. He said he asked Bankman-Fried about it and got a vague answer. He said he trusted Bankman-Fried and hoped he would handle the situation. He said he resigned from FTX in March 2023 after learning that Alameda had used FTX customer profits to pay back its creditors.
Julliard describes how he lost his investment in FTX
Marc-Antoine Julliard, a commodities trader who had invested in FTX, was the first witness to testify on Wednesday. He said he learned about FTX from a friend and searched online for information about it. He said he followed FTX and Bankman-Fried’s Twitter accounts and opened an FTX account in spring 2021. He said he was impressed by Bankman-Fried’s positive image and reputation as the future face of the crypto industry. He said he deposited $150,000 in his FTX account and started trading cryptocurrencies. He said he lost more than $100,000 when FTX declared bankruptcy in March 2023. He said he never received any warning or explanation from FTX or Bankman-Fried about the collapse.
Bankman-Fried faces seven counts of fraud and conspiracy
Bankman-Fried, 31, is one of the most prominent figures in the crypto world. He founded FTX in 2019 and claimed it was one of the largest and most innovative crypto exchanges in the world. He also founded Alameda Research, a crypto hedge fund that claimed to manage over $10 billion in assets. He is known for his philanthropy and advocacy for effective altruism. He is facing seven counts of wire fraud, securities fraud, commodities fraud, and conspiracy for his role in the FTX scandal. He has pleaded not guilty and his defense team has argued that he is a victim of a market crash and a regulatory crackdown that affected the entire crypto industry. The trial is expected to last for several weeks.