SBF trial update day 4: FTX co-founder Gary Wang nails himself to the cross alongside Sam Bankman-Fried
- Gary Wang returned to court on day four, after revealing how SBF allowed Alameda unlimited withdrawals despite negative balances.
- The backstop/insurance funds did not always have enough to cover large losses on the FTX platform.
- FTX advertised a ghost insurance fund. There wasn’t $5 million available (5.25M FTT). The amounts in those accounts were lower.
- The trial started with jury selection on October 3 and is expected to go for the next six weeks.
Sam Bankman-Fried (SBF) trial’s fourth day in court came with more interesting revelations from co-founder Gary Wang after his testimony on day three. In his previous citations, Wang revealed how SBF had allowed Alameda Research, the trading desk set up by Bankman-Fried, to execute unlimited withdrawals of funds from FTX, and even maintain negative balances which in normal circumstances would have automatically been liquidated.
SBF trial continues with more revelations from Gary Wang
SBF allowed Alameda to withdraw $8 billion in customer deposits from the FTX exchange and an additional $65 billion from a credit line it had exclusive access to. While this privilege was never earned, today’s discoveries were even more shocking according to live updates from Blockworks.
According to Wang, SBF prevented the FTX accounts held by Alameda from being liquidated even if they ran negative balances. Indeed he is said to have gone further, requesting that they be coded to enable this negative feature. This also allowed the hedge fund to withdraw funds even if its balance was negative.
In addition, FTX advertised a ghost insurance (backstop), but the numbers were fake. Specifically, there was no $5 million available (5.25 million FTT) because the amounts in those accounts were lower. According to Wang, this meant that FTX’s purported insurance fund was not always sufficient to cover large losses on the FTX platform, which in turn translated to the “average Joe” being left unprotected.
Wang testified to committing a litany of crimes alongside SBF, Caroline Ellison, and Nishad Singh. Despite nailing himself to the cross, he underscored that in the end, the buck rested with SBF who always had the final say on matters.
Paradigm co-founder and former Sequoia partner Matt Huang did not make any interesting revelations.
Stay tuned for more updates. BlockFi founder and CEO Zac Prince, and vice president of product at management system company Pinecone, Elan Deke will be next if they have anything shocking to say.
Cryptocurrency prices FAQs
How do new token launches or listings affect cryptocurrency prices?
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
How do hacks affect cryptocurrency prices?
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
How do macroeconomic releases and events affect cryptocurrency prices?
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
