Bankman-Fried Prioritized Hedge Fund: Ex-Colleague

Sam Bankman-Fried’s faculty roommate and ex-colleague, Gary Wang, testified on Thursday on the FTX cryptocurrency alternate founder’s fraud trial that Bankman-Fried informed him to present a hedge fund they co-owned particular buying and selling privileges on FTX.

The particular privileges granted to the hedge fund, Alameda Research, included a $65 billion line of credit score, a number of occasions larger than the quantity different customers have been in a position to borrow, he stated. Alameda withdrew $8 billion from FTX on the time of the alternate’s chapter in November 2022, Wang testified.

“It withdrew so much that FTX was not able to repay customers who were trying to withdraw,” Wang, FTX’s former chief know-how officer, stated on the stand. He added that Bankman-Fried had directed him to implement the modifications giving Alameda particular privileges.

Wang is the primary of three former shut associates of Bankman-Fried to testify on the trial, which started on Tuesday. All three have pleaded responsible to fraud costs and agreed to cooperate with prosecutors.

Bankman-Fried’s trial kicked off practically a 12 months after FTX froze buyer withdrawals and declared chapter in a dramatic collapse that shocked monetary markets and left its founder’s popularity in tatters.

Federal prosecutors in Manhattan say the 31-year-old former billionaire stole billions of {dollars} in FTX buyer deposits to plug losses at Alameda, purchase actual property and donate to U.S. political candidates.

“All that was left in FTX was what amounted to an IOU from Alameda,” prosecutor Thane Rehn stated in his opening assertion on Wednesday.

Bankman-Fried has pleaded not responsible. His lawyer, Mark Cohen, stated in his opening assertion that cooperating witnesses like Wang could also be “spinning things that Sam said and did at the time that were good-faith business decisions that they themselves were fine with” as “sinister” in hindsight.

Wang and Bankman-Fried met at a math camp in highschool and later grew to become roommates on the Massachusetts Institute of Technology. They have been additionally amongst 10 FTX and Alameda staff who lived collectively in a $35 million penthouse condo within the Bahamas, the place FTX was based mostly.

Earlier on Thursday, jurors heard from Adam Yedidia, a former FTX laptop programmer who reported to Wang and was additionally buddies with Bankman-Fried at MIT.

Yedidia stated that in fixing an error in FTX’s code in June 2022, he noticed that Alameda owed FTX $8 billion. The debt had arisen as a result of the alternate couldn’t open its personal financial institution accounts and had instructed FTX’s customers to wire cash to Alameda, he stated.

But Yedidia grew involved that the debt was too massive, and requested Bankman-Fried about it whereas enjoying padel tennis at their Bahamas condo complicated. He stated Bankman-Fried appeared nervous as properly.

“Sam said something like, ‘we were bulletproof last year, but we’re not bulletproof this year,'” Yedidia testified on Thursday.

At the trial on Thursday, Bankman-Fried took a break from typing on a laptop computer on the protection desk in entrance of him to search for at Yedidia as he walked by earlier than testifying. Yedidia didn’t flip to take a look at him.

The defendant’s dad and mom, the Stanford Law School professors Joseph Bankman and Barbara Fried, took notes on a yellow authorized pad that they handed forwards and backwards to one another as Yedidia testified.

Other cooperating witnesses set to testify embody Nishad Singh, FTX’s former engineering chief, and Caroline Ellison, Alameda’s former chief government officer and Bankman-Fried’s on-and-off girlfriend.