- FTX co-founder Gary Wang testified yesterday that Sam Bankman-Fried and his inner circle committed wire fraud through Alameda Research
- Alameda had a $65 billion line of credit at the exchange and withdrew unlimited funds
- Wang took a plea deal earlier in the year where he accepted lighter charges in exchange for testifying against Bankman-Fried
FTX co-founder Gary Wang yesterday testified in court that FTX CEO Sam Bankman-Fried and his inner circle committed wire fraud. Wang revealed that Alameda Research, the crypto hedge fund founded by Bankman-Fried, had unrestricted access to customer deposits at FTX, allowing it to withdraw unlimited funds. Despite their high school friendship and Wang’s role in establishing FTX, he maintained a lower profile in the crypto company’s heyday and has turned state’s witness in return for a lighter sentence.
Alameda Had $65 Billion Credit Line
Wang explained that Alameda had a significant line of credit for faster order execution on FTX’s platform and the ability to carry a negative balance. By the time FTX collapsed, Alameda had withdrawn $8 billion and utilized a staggering $65 billion line of credit. This indebtedness was, obviously, exceptional compared to other market makers with much smaller lines of credit.
Wang also disclosed that he had a $200,000 annual salary and 17% equity in FTX, while Sam Bankman-Fried owned about 65% of the company. In contrast, Bankman-Fried owned 90% of Alameda Research, with Wang holding the remaining 10%. Wang had the freedom to withdraw $200,000 to build a house and access up to $300 million for investments in other startups.
Wang Took Plea Deal
Any bond that Wang and Bankman-Fried may have had since their high school days has now well and truly evaporated, with Wang’s famous penchant for not talking clearly not extending as far as the courtroom. Wang pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud in December last year and agreed to testify against Bankman-Fried as part of a bargain with Federal prosecutors.