Gary Wang, co-founder and former chief technology officer of cryptocurrency exchange FTX, testified on Friday that Alameda Research, the sister trading firm of the exchange, had a special line of credit of up to US$65 billion from FTX, that allowed the firm to spend US$8 billion of customer funds.
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- Initially, the line of credit limit was US$1 billion… We picked a number so high it would never be hit,” testified Wang, on Friday.
- Wang said that shortly after co-founding the FTX and Alameda Research, Sam Bankman-Fried instructed him to write code enabling Alameda’s FTX account balance to fall below zero, as a hidden feature that would allow virtually unlimited funds for the hedge fund.
- Wang also revealed that an account tied to the user ID “seyouncharles,” to which Bankman-Fried previously referred to as a “Korean friend,” was in fact an Alameda sub-account with a negative US$8 billion in balance, which was excluded from the main Alameda accounts and interest payment calculations.
- At the end of Friday’s hearing, the Department of Justice said Wang’s testimony will conclude on Tuesday and that prosecutors expect to call in Caroline Ellison next, the former chief executive officer of Alameda Research.
- Wang is among three former FTX executives who pled guilty to financial misconduct and testified against Bankman-Fried.
- FTX filed for bankruptcy in the U.S. on Nov. 11, 2022, along with over 100 of its affiliates. Bankman-Fried has been charged with seven counts of wire fraud and money laundering and faces up to 115 years in prison.
See related article: Crypto trust on trial: Bankman-Fried faces judgment