Original - Odaily

Author - JK

Following the collapse of digital currency giant FTX, its CEO Sam Bankman-Fried is now in court facing a series of charges. The trial, which attracted widespread media attention around the world, aimed to shed light on the perspectives of key players behind FTX’s collapse and SBF’s potential liability. This article will take a look at the testimony of a number of key witnesses, ranging from close associates to former employees, who have come forward, as well as a list of other key witnesses who will take the stand next.

Gary Wang: Instructed by SBF to open a backdoor to Alameda and also obtain loans from the company

Who is Gary Wang? He was the co-founder and CTO of FTX and has a deep personal relationship with Sam Bankman-Fried, whom he has known since high school and was roommates at MIT. Before joining FTX, Wang had experience working at Google. On Google, Gary Wang’s Chinese name is Wang Zixiao. His court testimony exposed shady practices within FTX that involved the illegal use of huge amounts of client funds. The inside stories shed light on the complex relationship between FTX and its affiliate Alameda Research.

The two were pictured together at MIT. Source: SDNY US Attorneys Office

In court, Gary Wang admitted that under the direction of Sam Bankman-Fried,He made changes to FTXs backend code. The changes gave Alameda Research, a hedge fund founded by SBF, unique access to credit lines of up to $65 billion, a figure so large that it shocked even a judge.According to reports, Judge Lewis A. Kaplan even confirmed in court whether Wang meant billion instead of millon in English.

Going further, Wang noted that this authority allowed Alameda to generate negative balances,And make unlimited withdrawals from your FTX user account.When asked about the source of the withdrawn funds, Wang made it clear,These are FTX client funds.

Gary Wang’s testimony further proves that the tweets sent by SBF on the eve of FTX’s collapse claiming that there were no problems with FTX were complete lies.

At the same time, Gary Wang also mentioned,He personally borrowed $35 million from Alameda to buy a property,Whether this is a compliance operation still needs to be questioned. At the same time, SBF transferred $1 million to Wang’s FTX account to pay interest on the loan. FTX attorney and chief compliance officer Dan Friedberg, who was referred to as SBFs mediator in previous FTX bankruptcy filings, signed the promissory note documenting the loan. The lawyer will also testify.

Gary Wangs testimony matched that of another witness, Adam Yedidia. He and Bankman-Fried had known each other since their days at MIT and later worked and lived together in Bankman-Frieds $30 million apartment in the Bahamas (where FTXs top coterie lived). ). While working as a developer at FTX, Yedidia discovered the scale of Alamedas borrowings from FTX and confronted SBF directly in June 2022, expressing concerns about Alamedas ability to repay this massive debt. While the SBF maintains that he was not deeply involved in Alamedas day-to-day operations and relied primarily on Caroline Ellison, Yedidias testimony appears to contradict this. Ultimately, when Yedidia learned in early November that Bankman-Fried had allegedly used deposits from FTX clients to pay for Alamedas expenses, he decided to quit his job at FTX and cut ties with SBF.

Caroline Ellison: SBF told me FTX funds were misappropriated to repay Alameda borrowers

On October 10, local time in the United States, Sam Bankman-Fried’s ex-girlfriend and Alameda Research CEO Caroline Ellison also testified in court. Ellison joined Alameda in 2018 and became co-CEO of the company in October 2021. She was once a member of the SBFs most closely-knit coterie of three, involved in nearly all of Alamedas operations. Before testifying in court, she had pleaded guilty and struck a deal with the U.S. government to testify in exchange for a reduced sentence.

In court, she described SBFs strategy to desperately seek more money after Alameda suffered huge losses, according to NBC. Her testimony stated that in order to achieve this goal, SBF instructed employees to obtain loans by any means possible and created the digital token FTT.Alameda says she owns 60% to 70% of the token’s supply, when the market price of FTT rose from the initial 10 cents to $50, Alameda made billions as a result.

Ellison also noted that SBF persuaded her to record these FTT assets on the balance sheet, allowing Alameda to borrow the funds, despite her initial belief that doing so was misleading. Later, Alameda adopted the same strategy for other coins.

Among other things, Ellison cited Alamedas $5 billion in private loans to company insiders. This is consistent with the testimony of Gary Wang.

Caroline Ellison attended court. Source: Bloomberg

Ellison said:“Alameda took billions of dollars from FTX clients and invested them in its own investments and repaid borrowers.” “We ultimately took approximately $14 billion, some of which we were able to repay,” she testified explain. He (SBF) was originally the CEO of Alameda and the owner of Alameda, and he directed me to commit these crimes.

Ellison also said the SBF considered himself to have a 5% chance of becoming president of the United States.

How did the SBF side respond?

Defense lawyers on the SBF side currently describe the SBF as someone who means no harm. SBFs attorney, Mark Cohen, claimed that SBF was just aMath nerd who never drinks or parties, nor did I deceive or intend to deceive anyone. He said just because people lost money on the platform did not mean SBF had committed fraud. During the trial, SBF kept taking notes on his computer and only occasionally spoke with his attorney.

Responding to Wangs testimony, Cohen said it was not a secret that Alamedas role as a compliant market maker on FTX was a way to ensure it could borrow funds when it needed liquidity.

In the testimony against Ellison, SBFs lawyers believed that Ellison was fully responsible and claimed that she had made negligence in the management of the company. However, Ellison insists SBF is the final decision-maker and has been involved in Alameda matters.

At the same time, SBF lawyers reminded the jury that several witnesses had cooperated with the U.S. government in exchange for reduced sentences.The implication is that this may cause their testimony to be biased.

What other important witnesses will be present in the future?

The trial is expected to last six weeks, with the first week not yet over. Nishad Singh, the last member of the SBFs three-person inner circle and the prosecutions last star witness, is yet to appear. In addition, there are quite a few witnesses worth looking forward to:

• Nishad Singh, former head of engineering at FTX

• Ryne Miller, General Counsel, FTX US

• Daniel Friedberg, former Chief Compliance Officer at FTX

• Ryan Salame,Former Co-CEO of FTX Bahamas branch

• Anthony Scaramucci, founder of SkyBridge Capital and a friend and business partner of Bankman-Fried

• Alfred Lin, Sequoia Capital

• Zac Prince, CEO of BlockFi

• SBF’s professor parents, Barbara Fried and Joseph Bankman

Other entities that may testify include various venture capital funds and cryptocurrency-focused companies such as Genesis, Lightspeed Venture Partners, Ontario Teachers Pension Fund, Third Point, Signature Bank and Voyager Digital.