Gary Wang, once CTO of FTX, took the stand as a star witness against his former partner in crime, Sam Bankman-Fried. The revelations from Wang’s testimony on October 6th are as juicy as a freshly squeezed organic orange.
Read more: FTX’s Big Bang 2.0: How do Investors get Benefited?
Gary Wang asserted that the purported $100 million insurance fund claimed by FTX in 2021 was a sham. He revealed that the fund never actually held any of the exchange’s FTX tokens (FTT) as it had been portrayed.
Instead, the number presented to the public was determined by multiplying the daily trading volume of the FTX Token by an arbitrary figure, approximately in the vicinity of 7,500.
Wang’s Shocking Plea Deal
Gary Wang, the man who once stood at the helm of FTX’s technological empire, dropped a bombshell in court. He revealed that he had pleaded guilty in December 2022, potentially facing a staggering 50 years behind bars. Wang’s hoping his cooperation with the prosecutors will land him a cushy sentence, or better yet, no time at all. It’s a high-stakes game of legal poker, and Wang seems to be holding some aces up his sleeve.
FTX’s Catastrophic Collapse
Wang spilled the beans on how FTX hit the rocks in November 2022. Heightened withdrawals left FTX high and dry, unable to satisfy its users’ thirst for cash. Why? Because they had shipped billions of dollars to their sister firm, Alameda Research. Wang’s revelation that Alameda owed up to $14 billion to FTX painted a picture of fiscal recklessness that would make even the most daring crypto cowboy cringe.
Fake Funds and Exploits
The intrigue doesn’t stop there. Wang revealed that FTX’s website was peddling a fake backstop insurance fund that was supposed to cover user losses. FTX’s users were hoodwinked, and their trust was shattered. Adding insult to injury, Wang unearthed a 2021 exploit in FTX’s margin system that led to a position worth hundreds of millions going up in smoke. But instead of owning up to it, Bankman-Fried decided to pass the buck to Alameda Research. It’s a tale of shifting blame and shady deals that’s enough to make even the most obscure crypto altcoin seem straightforward.
Alameda’s Wild Ride
Perhaps the most shocking revelation is that FTX allowed Alameda to run wild, with an unlimited, negative balance. Wang claimed this borrowed money “belonged to customers” and was used without their consent.
Conclusion
As Gary Wang’s testimony continues to rock the crypto, we wonder what other skeletons might come tumbling out of FTX’s (not so) well-tailored closet.
More Info:
- Cryptocurrency Chaos: SEC Takes On Prager Metis Over FTX Audit Scandal
- Can you trust crypto exchanges after the collapse of FTX?
With the trial far from over, one thing’s for sure: this is a story that will keep us all on the edge of our seats. Stay tuned!
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