FTX executives committed financial crimes, says co-founder

Wang, the fourth witness called by the U.S. DoJ in Bankman-Fried’s trial, said he committed fraud alongside others

FTX’s Sam Bankman-Fried committed financial crimes, the exchange’s co-founder Gary Wang said after taking the stand late Thursday.

Wang, the fourth witness called by the U.S. Department of Justice (DoJ) in Bankman-Fried’s trial, said he committed wire fraud, securities fraud and commodities fraud alongside Bankman-Fried and Caroline Ellison, who ran Bankman-Fried’s Alameda Research hedge fund, and former FTX executive Nishad Singh.

Wang, Ellison and Singh all pleaded guilty to charges shortly after SBF was arrested.

We gave special privileges to Alameda Research to let it withdraw unlimited funds from FTX and lied about it, he added.

SBF faces fraud and conspiracy charges arising out of the collapse of his crypto empire, which prosecutors said was a “house of cards” during opening arguments on Tuesday.

Alameda had the authorization to withdraw large amounts of funds as well as a large line of credit that was “essentially without any limit,” and could place orders slightly faster than other market makers, he added.

Wang followed Paradigm co-founder Matt Huang, who testified about his firm’s past investments in FTX. The firm invested nearly $278 million or so across different rounds in FTX and FTX U.S., Huang said. Asked how Paradigm presently values the FTX equity it holds, Huang said: we marked it to zero dollars.

A software bug that followed the unusual way FTX handled customer deposits overstated how much its sister firm Alameda owed the exchange’s customers by $8 billion, another witness said earlier Wednesday.

A vital part of the relationship was banking. In FTX’s early days, customers deposited fiat by wiring money to Alameda instead of FTX directly, former FTX developer Adam Yedidia told the court. This unusual relationship complicated how the firms tracked debts owed to customers. Yedidia said there was a bug in the accounting software that by June last year showed Alameda owed far more money than it actually did.

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