Sam Bankman-Fried’s dangerous financial stunts were exposed during the trial

Secret lines of credit, hidden losses, and fake accounts: The FTX co-founder on Friday unveiled the financial stunts of former cryptocurrency star Sam Bankman Fried that ultimately led to his downfall.

• Read also: Former cryptocurrency star Sam Bankman Fried has been put on trial for fraud in New York

Zixiao “Gary” Wang, co-founder of FTX with SBF, was its technical director at the time of its bankruptcy, in November 2022. He was indicted by the courts, just like Sam Bankman-Fried, and pleaded guilty to four indictment charges. She agreed to cooperate with the federal prosecutor in Manhattan.

He is the first key witness to appear in his former partner’s trial, which began Tuesday in New York and may last six weeks.

Sam Bankman accused Fried of diverting money, without their knowledge, from clients of the cryptocurrency exchange platform to finance risky investments for the Alameda Research hedge fund, which he controlled, but also to buy real estate in the Bahamas.

Gary Wang on Friday portrayed a character willing to break the law and lie to enable FTX and Alameda to achieve sustainable growth and profits.

Early in 2019, a few months after FTX was created, SBF modified the operating software to allow Alameda to borrow on the platform, which only a few clients were allowed to do, in limited amounts.

This amendment is not a large public communication, including many clients or investors, affirmed by Gary Wang, don’t know that it has been announced, will develop a connection to the collaboration with this Public Ministry.

“Customers did not give us permission to use this money for other purposes,” explained the computer scientist whose fortune, estimated at $4.6 billion before the collapse of FTX, rose just like that of SBF.

To make matters worse, Sam Bankman-Fried claimed to reporters and investors that “Alameda was treated like any other trader” on the platform, according to Gary Wang.

The limit of this credit line granted to Alameda was gradually increased, eventually reaching an astronomical amount of $65 billion.

At the time of FTX’s bankruptcy, about $8 billion belonging to the platform’s customers was missing, borrowed by Alameda, which was unable to repay it.

Furthermore, Sam Bankman Fried placed this debt in a fake account created in the name of a fictitious person, according to the platform’s co-founder.

Gary Wang also stated that Sam Bankman-Fried requested, on several occasions, that clients’ losses, the size of which exceeded their assets, be covered by Alameda, in order to hide these transactions from the general public and not to tarnish the image of FTX.