Former FTX co-founder Sam Bankman-Fried testify in fraud trial

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Former FTX co-founder Sam Bankman-Fried testify in fraud trial

Sam Bankman-Fried knowingly used FTX clients' funds without permission to invest through his personal hedge fund, the disgraced cryptocurrency giant's former business partner testified Friday in court.

Gary Wang Zixiao, a co-founder of FTX with Bankman-Fried, has already admitted to multiple charges related to the cryptocurrency trading platform's stunning collapse, and has agreed to cooperate with federal prosecutors.

He will be the first major witness to appear in his former partner's trial, which began on Tuesday in New York and could last up to six weeks.

The 31-year-old Bankman-Fried, known as, has been charged with seven counts of fraud, embezzlement and criminal conspiracy, and could face more than 100 years in prison if convicted.

This courtroom sketch features FTX founder Sam Bankman-Fried, far left, listening during his fraud trial in New York, as Assistant U.S. Attorney Nicholas Roos, centre, questions FTX co-founder Gary Wang Zixiao, far right, in court on October 6th, 2023. Photo: AP Alt= This courtroom sketch shows FTX founder Sam Bankman-Fried, far left, listening during his fraud trial in New York, as Assistant US Attorney Nicholas Roos, centre, questions FTX co-founder Gary Wang Zixiao, far right, in court on October 6, 2023. In November 2022, Bankman-Fried's cryptocurrency exchange platform collapsed, unable to cope with huge withdrawal requests from customers, panicked to learn that some of FTX's investments had been committed to risky operations by Alameda Research, his personal hedge fund.

On Friday, Wang, who was FTX's chief technology chief at the time, said Bankman-Fried was willing to break the law and lie to enable FTX and Alameda to post strong growth and profits.

Bankman-Fried's software was changed in 2019, a few months after FTX was created, to enable Alameda to withdraw unlimited funds from the platform.

That code has not been disclosed to the public or investors, according to Wang, whose own sentence has not yet been handed down, though it is expected to be reduced owing to his cooperation.

Gary Wang Zixiao, the co-founder and former chief technology officer of FTX, exits court in New York on October 6th, 2023. On October 6th, 2023, Bloomberg Alt=Gary Wang Zixiao, the co-founder and former chief technology officer of FTX, exits court in New York. Bankman-Fried falsely told journalists and investors that and that the crypto platform did not use customers' money, Wang testified.

Wang said the funds, which prosecutors allege were used by Bankman-Fried to purchase Bahamas real estate.

The line of credit awarded to Alameda was gradually increased, eventually reaching the astronomical sum of $65 billion, Wang said.

At the time of FTX's bankruptcy, some $ 8 billion in customer funds were missing, borrowed by Alameda, which was unable to reimburse them.

Bankman-Fried also said that on several occasions, Bankman-Fried had asked customer losses to be put on Alameda's books, to hide the transactions from the general public and not damage FTX's image.

The trial is set to resume Tuesday, with testimony expected from former chief executive Caroline Ellison, who has also pleaded guilty and pledged to cooperate with prosecutors.

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