
Sam Bankman-Fried, his college roommate and ex-colleague, Gary Wang testified on Thursday at the FTX cryptocurrency exchange founder's fraud trial that Bankman-Fried told him to give a hedge fund they co-owned special trading privileges on FTX.
The special privileges granted to Alameda Research included a US$65 billion line of credit, which was larger than the amount other users were able to borrow. At the time of the trade's bankruptcy in November 2022, Alameda withdrew US$8 billion from FTX, Wang testified.
The former chief technology officer of FTX, Wang, said in a statement. Bankman-Fried, who had ordered him to implement the changes, said that Alameda had been given special privileges by Bankman-Fried.
Wang, who is the first of three former close associates of Bankman-Fried to testify at the trial, is the first of three former close associates to testify. The men have pleaded guilty to charges of fraud and agreed to cooperate with prosecutors.
Bankman-Fried's trial began nearly a year after FTX collapsed customer withdrawals and declared bankruptcy in a dramatic collapse that stunned financial markets and left Bankman-Fried's reputation in tatters.
Federal prosecutors in Manhattan say the 31-year-old billionaire stole billions of dollars in FTX customer deposits to plug losses at Alameda, buy real estate and donate to US political candidates.
In his opening statement, Cohen said, Cooperating witnesses like Wang may 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.
Bankman-Fried met Wang at a high school math camp and later became roommates at the Massachusetts Institute of Technology. The FTX team also included 10 employees of Alameda and FTX who lived in a US$35 million penthouse apartment in the Bahamas, where FTX was based.
Earlier this week, jurors heard about Adam Yedidia, a former FTX computer programmer who reported to Wang and was also friends with Bankman-Fried at MIT.
In June 2022, Yedidia said, in fixing an error in FTX's code, Alameda owed FTX US$8 billion. The debt had arisen because the exchange couldn't open its own bank accounts and had instructed FTX's users to wire money to Alameda.
But Yedidia grew worried about the debt, and asked Bankman-Fried about it while playing padel tennis at their Bahamas apartment complex. He added: Bankman-Fried appeared worried as well.
We were bulletproof last year but we're not bulletproof this year, Yedidia testified.
Bankman-Fried took a break from typing on a laptop on the defence table in front of him at the trial, looking up at Yedidia as he walked by. Yedidia did not turn to look at him.
The defendants' parents, Stanford Law School professors Joseph Bankman and Barbara Fried, passed notes on a yellow legal pad to each other as Yedidia testified.
Other Cooperating Witnesses included Nishad Singh, FTX's former engineering chief, and Caroline Ellison, Alameda's former chief executive officer and Bankman-Fried's on-and-off girlfriend.