
When Zixiao Wang was chief technology officer at the now-bankrupt cryptocurrency exchange FTX, he personally signed for hundreds of millions of dollars in loans. He couldn't'recall,' he said during his third day of testimony in the blockbuster trial of former cryptocurrency mogul Sam Bankman-Fried.
Wang, who signed a cooperation agreement with the government to testify against Bankman-Fried, said that FTX's former CEO had directed him to take out the loans from Alameda Research, the cryptocurrency hedge fund Bankman-Fried also owned. These were for 'investment', Wang said, but he couldn't remember what most were for, other than some capital allocated for the purchase of LedgerX, which FTX bought in 2021.
The debt payments on the loans became so cumbersome, Wang said, that he took out another loan from Alameda Research for $1 million to cover those expenses.
After the defense and prosecution asked him questions about the considerable debt he took on from Alameda, Judge Lewis Kaplan, who is presiding over the trial, intervened. He said, "It is really hard to ask what you asked, he said.
Wang responded, in reference to Bankman-Fried, whom he had originally met at a high school math camp.
lawyers for the former CEO of FTX drew out the discussion on loans in an apparent effort to show that previous legal counsel for FTX, particularly Can Sun and Dan Friedberg, gave executives at the exchange unwarranted and risky legal advice, according to a filing Bankman-Fried filed on Monday. Sun and Friedberg directed him to sign the promissory notes, Wang said.
This is potentially part of a broader strategy to wage an advice-of-counsel defense, or that Bankman-Fried and his lieutenants acted on allegedly misplaced legal guidance.
The third and final day of his testimony included the most accurate account of his final days at FTX, including his ability to put himself personally on the hook for hundreds of millions of dollars in debt on Bankman-Fried's behalf.
He said that he voluntarily met with prosecutors on Nov.17, less than a week after the crypto exchange filed for bankruptcy. discussions between Wang, his lawyers, and the government accelerated, and on Dec. 19 he signed a cooperation agreement with the Justice Department.
He left the stand on Tuesday afternoon. The next scheduled witness was Caroline Ellison, former CEO of Alameda Research, who also agreed to cooperate with the government.