In the ongoing legal proceedings, FTX’s former Chief Technology Officer, Gary Wang, made a startling revelation in court. He alleged that the then-CEO, Sam Bankman-Fried, had granted Alameda Research’s account permission to trade more assets than it actually possessed.
Wang, a co-founder and the former Chief Technology Officer of FTX, took the stand once again during the fourth day of the criminal trial of the former CEO, Sam “SBF” Bankman-Fried. He aimed to shed light on the intricate connections between the cryptocurrency exchange and Alameda Research.
According to reports from Inner City Press, on October 6th, Wang returned to a New York courtroom and testified that Alameda’s FTX account was the sole account authorized to engage in trading activities exceeding its available funds—a feature known as “allow negative.” The former Chief Technology Officer claimed that Bankman-Fried had specifically instructed him and Nishad Singh, the former FTX Engineering Director, to implement this feature back in 2019.
Wang disclosed that this “allow negative” addition to FTX’s code had enabled Alameda to accumulate a negative balance surpassing FTX’s entire 2020 revenue of $150 million, reaching an astonishing $200 million. He further testified that Bankman-Fried had extended a staggering $65 billion line of credit to Alameda, despite making public statements that contradicted the true nature of their relationship.
“We had initially pledged not to utilize funds in this manner,” Wang asserted during his testimony, as reported. “After I pointed out that the Alameda balances were off by billions, [SBF] requested a meeting at our Bahamas office. He inquired about the glitch, and subsequently informed Caroline [Ellison] that Alameda could proceed with returning the borrowed funds.”
Wang also disclosed that Bankman-Fried had attributed Alameda’s “special privileges” on FTX to the exchange’s own FTX Token (FTT), which Alameda utilized for trading when its account balance plunged below zero. Notably, the former Chief Technology Officer contended that Alameda had been able to directly withdraw funds from FTX.
At the heart of the prosecution’s case against Bankman-Fried are allegations that the former CEO misappropriated FTX user funds at Alameda without obtaining customers’ consent. During his testimony on October 5th, Wang admitted to committing crimes alongside Bankman-Fried and former Alameda CEO Caroline Ellison, having previously pleaded guilty to fraud charges in December 2022.
Sheila Warren, CEO of the Crypto Council for Innovation, remarked, “Much like the Elizabeth Holmes trial was not about diagnostic testing, the SBF trial is not about crypto.” She noted that Sam Bankman-Fried’s trial was primarily a spectacle of his personal decline, and as the trial progressed, more evidence of his self-serving actions was expected to surface.
Bankman-Fried’s criminal trial is anticipated to continue into November, with Ellison and Singh likely to appear as witnesses against the former CEO. Meanwhile, SBF is expected to remain in custody throughout the trial, following Judge Lewis Kaplan’s decision to revoke his bail in August. Whether Bankman-Fried will choose to testify remains uncertain.