Crypto co-founder and FTX CTO takes the stand in fraud trial

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Crypto co-founder and FTX CTO takes the stand in fraud trial

The Sam Bankman-Fried trial grew steam after a slightly sleepier first half of the day. Prosecutors and the defense were asking about the technical details of the crypto exchange and alameda Research, a witness and former FTX developer.

And that changed around 4 p.m. when FTX co-founder and CTO Gary Wang took the stand, wearing a wrinkled suit. Before taking the stand, Bankman-Fried looked visibly irritated during a 15-minute break.

Bankman-Fried's parents were also there. They went to their son in an effort to provide support during the break. His father Joseph Bankman patted his mother, Barbara Fried, on the back, and said something and drew laughs. She didn't laugh back, but she kept looking away toward her son.

On the stand, Wang admitted that he committed wire fraud, securities fraud and commodities fraud. He said that Bankman-Fried, Nishad Singh and Caroline Ellison were the individuals he committed the crimes with.

Wang, Singh and Ellison pleaded guilty in late December 2022 as part of a deal to cooperate with the government and testify during this trial.

He added that they were given special privileges from Alameda Research, the crypto trading firm he said he and Bankman-Fried started prior to launching FTX. Those privileges included getting large lines of credit, unlimited withdrawals, and being able to have negative balances. The limited funds were from FTX customers, Wang said, and a special code was added to customer transactions that funneled the money to Alameda.

He said he was in charge of writing and rewriting code. While Bankman-Fried did not write the code, Wang said, Bankman-Fried did tell him and other developers what to implement. He said that Sam's decision was based on the decision of his father.

Due to these special privileges, Alameda had a $65 billion line of credit, Wang said. By the time the two businesses filed for bankruptcy in late November 2022, Alameda withdrew $8.5 billion, Wang said.

These internal financial advantages were not disclosed to the public, he said.

Both Alameda and FTX were started by Bankman-Fried and Wang, with ownership split 90% and 10%, respectively, and 17% equity and 65% equity. He also had 5% equity of FTX, and a number of outside investors held other positions, Wang said.

The ownership percentages have never changed, he said. Bankman-Fried and Wang were both billionaires at the time.

In his time at the companies, Wang also revealed that Alameda 'loaned' him around $200 million to $300 million. The money never went to his bank account, instead went to investments that FTX made into other companies.

The company also chose its name in order to outsmart other businesses, which may have negative connotations towards companies with crypto jargon in their titles. derived from California's Alameda County, Wang said, because it'sounds prestigious and is not using a crypto-related name.

Bankman-Fried personally and various lenders also contributed to the initial funds for Alameda. Wang said Bankman-Fried would be easier to get bank accounts, rental leases, investors and so on, with a more 'normal' company name.

In a podcast, Mr. Bankman-Fried aired a clip of Bankman-Fried from April 2021, where he explained Alameda's name. '' No one would do business with us, '' he said at the time.

Prosecutors have said Wang's testimony will continue until midday.