FTX co-founder tells trial how Bankman-Fried lied

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FTX co-founder tells trial how Bankman-Fried lied

Day four of Sam Bankman-Fried's federal fraud and money-laundering trial featured testimony from FTX co-founder Gary Wang, who told investigators how he and the defendant engaged in financial crimes and lied about it.

Hammering home the government's case, Wang, 30, the first of three of the prosecution's star witnesses, told a New York jury that he and Bankman-Fried illegally diverted billions from the accounts of FTX customers and investors and lied to the public ahead of the cryptocurrency trading platform's collapse last November.

While serving as FTX's former chief technology officer and part owner of hedge fund Alameda Research, Wang said he and Bankman-Fried began illegally shifting FTX funds to Alameda and eventually withdrew $8 billion.

Bankman-Fried directed him to grant special privileges on their FTX website to Alameda, by altering the computer code controlling its operations to grant a credit line of as much as $65 billion - a number so enormous it prompted Judge Lewis A. Kaplan to make sure Wang meant 'billion' instead of'million'. The damning testimony by Wang, Bankman-Fried's former friend and college roommate, continued Friday as prosecutors laid out their case against the former cryptocurrency superstar, contending he masterminded a'massive fraud' involving billions of dollars.

Wang, a former top executive, is the first of three former top executives slated to testify against Bankman-Fried after pleading guilty to fraud in cooperation deals with the government that may win them leniency at sentencing.

The former execs are Carolyn Ellison, former CEO of Alameda, and Bankman-Fried's ex-girlfriend, and Nishad Singh, FTX's former engineering director.

Bankman-Fried, who has been arrested since August, has maintained his innocence since his arrest in the Bahamas last December. If convicted of seven charges against him, he faces a possible jail term of more than a century.

He didn't make eye contact with Bankman-Fried as he entered a Manhattan courtroom to testify for the prosecution, Bloomberg News reported. Bankman-Fried swiped at least $10 billion from millions of customers and investors to finance outside ventures like political donations and purchases of luxury real estate, said Assistant U.S. Attorney Nathan Rehn in his opening statement.

His testimony contrasted with that of Adam Yedidia, another of Bankman-Fried's former friends and classmates. Bankman-Fried privately expressed concern about a potential $8 billion shortfall at FTX from loans to Alameda five months before both companies collapsed.

Under questioning by Assistant U.S. Attorney Danielle Sassoon, Yedidia said he brought up the issue with Bankman-Fried, asking him if things were alright.

Last year, we were bulletproof. We're not bulletproof this year,' Yedidia testified, describing Bankman-Fried as appearing atypically nervous.

Bankman-Fried's testimony could effectively undercut Bankman-Fried's claim that he was not closely involved in the running of Alameda and relied instead on its chief executive officer, Ellison, who was also his then on-and-off girlfriend.

He testified under immunity that he became 'longtime friends' with Bankman-Fried while both were students at the Massachusetts Institute of Technology. They later worked and lived together at Bankman-Fried's $30 million apartment in the Bahamas.

Yedidia said he quit his job as a FTX developer and began speaking to Bankman-Fried after learning early last November that Bankman-Fried had allegedly diverted FTX customer deposits to cover expenditures of Alameda.

The defense has a very different story to tell.

The defense attorneys contend that their client had nothing criminal in mind while building his crypto empire. Bankman-Fried has 'a very different story' to relay than the one told by prosecutors, his attorney Mark Cohen said in his opening statement.

The procedure is expected to last six weeks.

Bankman-Fried had a net worth of $32 billion, or $32 billion, before FTX collapsed and filed for bankruptcy. When smaller crypto firms started blowing up in early 2022, Bankman-Friedman publicly said he would help rescue the market.

The prosecution was correct to focus on Bankman-Fried's use of customer money without their consent, rather than delving too deeply into the world of cryptocurrencies, according to a former federal prosecutor.