Key Insights:
- Gary Wang admitted to code allowing Alameda unlimited FTX withdrawals.
- Alameda’s coding error concealed an $8 billion debt settled with customer deposits.
- Judge Kaplan expressed frustration at the defense’s repetitive questioning during the trial.
In the ongoing trial of FTX CEO Sam Bankman-Fried, co-founder Gary Wang made a significant admission. According to reports, Wang revealed that he implemented special code provisions in the cryptocurrency exchange’s system. These provisions allowed Alameda Research, another venture co-founded by Wang and Bankman-Fried, to withdraw unlimited funds from the FTX exchange.
AUSA: What was the wire fraud?
Gary Wang: We allowed Alameda to withdraw unlimited funds.
Judge Kaplan: Mr. Wang, could you slow down?
[Some had said Gary Wang couldn't or wouldn't speak. But he's speaking, and fast]— Inner City Press (@innercitypress) October 5, 2023
Despite being the technological bedrock of FTX, Wang maintained a low profile, differentiating his role by stating, “I just coded,” while Bankman-Fried actively engaged with the media and investors. Their partnership with Alameda Research also paints a stark contrast. Wang held a 10% stake, while Bankman-Fried owned the lion’s share of 90%.
On the same accord, the hedge fund’s peculiar name was supposedly chosen for practical reasons, with Wang revealing that Bankman-Fried believed it would simplify banking operations. Consequently, this revelation has further deepened the allegations of wire fraud and conspiracy to commit money laundering against Bankman-Fried.
Adam Yedidia Exposes Alameda’s Missteps
Further intensifying the trial’s drama, Adam Yedidia, a former FTX engineer and close associate of Bankman-Fried, recounted discovering a coding error that misreported Alameda Research’s liabilities. After rectifying the bug, it was found that Alameda owed a staggering $8 billion in debt, leading Yedidia to resign after learning the company used customer deposits to settle its loans.
Yedidia: I told Sam, I'm not going anywhere. Then I resigned.
AUSA: What changed?
Yedidia: I learned that Alameda had used customer deposits to pay its loans. It seemed like a flagrantly wrong thing.
AUSA: No further questions.— Inner City Press (@innercitypress) October 5, 2023
The trial also witnessed Matt Huang from Paradigm testifying. His testimony highlighted the opaque practices at FTX. Huang’s firm was led to believe that FTX had a state-of-the-art liquidation engine. In a shocking revelation during bankruptcy filings, it became apparent that Alameda was, in fact, immune to these liquidation protocols.
On the other hand, throughout the proceedings, the defense’s tactics seemed to irritate U.S. District Judge Lewis Kaplan. The repetitive line of questioning, leading to multiple objections from the prosecution, prompted Judge Kaplan to call for more streamlined and less redundant exchanges. Per reports, the trial continues with further questioning of Wang expected tomorrow, promising more insights into the inner workings of the collapsed cryptocurrency exchange.
Mubashir Ahmed is a multifaceted market analyst with extensive knowledge of the blockchain industry. He is proficient in market analysis and blockchain technology, having had experience with numerous projects in the space. He has a deep understanding of the Cryptocurrency industry, its trends, and how to best approach investing in it.
