FTX Hijacked Customer Funds As Early As 2019, Says Co-Founder. At FTX, Alameda had access rights, including the authority to accept customer funds.
Gary Wang, a co-founder of FTX, provided additional information about Alameda Research’s improper relationship during his exchange on Friday during Sam Bankman-Fried’s fraud trial.
Alameda’s Special Privileges
One of these allowed Alameda to trade with more money than it actually had in its account, known as the “allow negative” option. Wang has previously testified that Alameda had unrestricted access to FTX’s cash.
FTX Hijacked Customer Funds As Early As 2019. Later, this functionality was taken advantage of to remove an additional $8 billion in fiat and cryptocurrency from the trading company’s account, precisely the same shortage FTX encountered when it could not process client withdrawal requests in November.
Wang clarified that the additional monies came from FTX users who had not elected to lend out their cash openly. Wang claimed that even though it took years for the scheme to end, he was aware of Alameda’s negative balance as early as 2019.
He remarked, “I ran a database search in early 2020, and Alameda’s balance was negative greater than FTX income. Alameda was already in the negative by at least $200 million, while the exchange’s revenue was roughly $150 million.
Alameda’s Massive Credit Line
Alameda also had access to FTX’s enormous $65 billion line of credit. According to Wang, no other client had access to credit worth more than $1 billion.
Wang continued, “I heard him as he walked around the office, and he mentioned it on Twitter and phone calls.
The co-founder also claimed that Bankman-Fried had personally observed Alameda’s balance. This disputes SBF’s repeated assertions in interviews that he was unaware of the financial situation of Alameda before its collapse.
During cross-examination, Sam Bankman-Fried’s attorneys emphasized that Alameda’s balance was left to become harmful to act as a market maker for FTT, FTX’s native exchange token. But as Wang clarified, that part of Alameda’s position’s size was the reason the trading desk was spared from auto liquidation because it could “cause damage.
The bitcoin market has experienced significant development and innovation in recent years. As the demand for trading digital assets grows, new exchanges and platforms have appeared. FTX has drawn a lot of attention thanks to its cutting-edge features and unique methodology. This post will examine the specifics of these accusations and any potential repercussions for the crypto community.
Introduction to FTX
Before delving further into the accusations, let’s first examine FTX’s definition and the reasons for its rise to prominence in the cryptocurrency industry.
What Is FTX?
Sam Bankman-Fried and Gary Wang created the cryptocurrency exchange FTX in 2017. It immediately became well-known for its extensive selection of trading products and features, catering to new and seasoned traders. The business provides a variety of cutting-edge financial instruments, including spot trading, futures trading, options trading, tokenized equities, and more.
FTX’s Rise to Prominence
The platform launched prediction markets, volatility indices, tokenized stocks, and other industry-first features. It also attracted notice for its humanitarian activities, contributing substantial sums to numerous charity projects.
One of FTX’s co-founders, who wished to remain unnamed, made the bombshell accusations against the exchange when he stated that the business had been stealing customer funds since 2019.