Gary Wang, co-founder of the cryptocurrency exchange FTX, testified against the company's CEO, Sam Bankman-Fried, in a criminal fraud trial this Friday. Wang, who is also a programmer with a net worth of nearly $5 billion, claimed that Bankman-Fried directed Alameda Research to misuse billions of dollars from FTX customers.
The allegations stem from special privileges Bankman-Fried allegedly instructed to be granted to Alameda Research. These privileges included creating a secret backdoor in FTX's code base in the Bahamas, which allowed Alameda to borrow unlimited funds. This information was not disclosed to stakeholders.
Bankman-Fried now faces charges of wire fraud, securities fraud, money laundering, and related conspiracy. The CEO is accused of using up to $10 billion of FTX customer money for personal projects.
Wang and another FTX employee, Nishad Singh, confessed to their roles in creating the secret backdoor. Wang also revealed that Bankman-Fried had Alameda’s balance visible on his office computer screen and discussed the money owed by Alameda at a meeting in June 2022.
Earlier this year, Wang pleaded guilty to federal fraud charges related to these events. Paradigm, a venture capital firm and one of FTX’s biggest backers, has since voiced concerns about their investment due to FTX's relationship with Alameda.
In mid-2022, Bankman-Fried admitted that his firm was on shaky footing. Adam Yedidia, an FTX developer and M.I.T. classmate of Bankman-Fried, corroborated this claim during his testimony in the trial.
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