FTX Co-founder Gary Wang, former Chief Technology officer of FTX, told a jury on Thursday that he was the architect behind the FTX technology. “special privileges to Alameda Research” He wrote the code for exchange into his handwritten text.
Today, the jury in Manhattan heard from three witnesses as part Sam Bankman-Fried’s trial. They were: Wang; former FTX Developer Adam Yedidia and Paradigm Co-founder Matt Huang.
Co-founders are in the spotlight
Wang, whose Alameda trading account closed the day out, said Bankman Fried directed him to give Alameda advantages that FTX customers do not have, like the ability to order slightly quicker than other market-makers.
Wang admitted to a number of crimes, including financial fraud. Wang confessed in the statement that he had committed securities fraud, fraud by wire and fraud involving commodities. He claimed that other FTX Insiders such as Bankman-Fried Caroline Ellison, and Nishad Sing, had also committed these crimes.
Blockworks reported that Wang pleaded to guilty in December last year and agreed with prosecutors to cooperate.
Wang explained that Alameda was entitled to unlimited withdrawals, even if its balance fell below zero or went negative. Wang explained that a normal trader needs sufficient funds or collateral to withdraw.
Wang claimed that these benefits were not known by the public.
Alameda’s special privileges, according to Wang, culminated in a $8 billion hole — liabilities owed to FTX customers by the time the exchange entered bankruptcy last year.
Wang was questioned by prosecutors about Alameda’s $65 billion credit line, as Alameda was a market maker on the exchange and provided liquidity. Wang explained that most market makers only have credit lines in the millions of dollars, and not billions.
“With a B,” Wang emphasized.
The prosecution sought to demonstrate that Bankman-Fried and Wang were unequal within the FTX/Alameda power structure — specifically, that Bankman-Fried was at the helm as he allegedly stole funds from FTX customers.
Prosecutors presented a document signed by Bankman-Fried and Wang that stated Bankman-Fried was the 90% owner of Alameda. Likewise, they showed that Bankman-Fried owned the majority of FTX.
If there is a disagreement “in the end, it was Sam’s decision to make,” Wang testified.
Other perspectives
By contrast, the testimony from Paradigm’s Huang represented a zoomed-out view — specifically, how FTX’s collapse impacted venture capital firms like his.
Huang stated that he was concerned about the “entanglement” Alameda, when he was contemplating an investment into FTX. Huang said that Paradigm invested because the perceived opportunities and strengths were too compelling for it to pass up.
Paradigm’s total investment in FTX and FTXUS, the American affiliate, was $278 Million. Huang, when Huang was asked by the prosecution about the current valuation of the case, said: “We have marked it down to zero.”
Today’s court proceedings included some moments of drama.
Yedidia told the court, in a blunt manner, that she was a close friend of Bankman Fried’s from college. “FTX defrauded all its customers.”
This statement, however, was ultimately struck from the court records. Both parties were in agreement on this decision.
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