January 2, 2024

On Friday, Gary Wang, former business partner, original co-founder of FTX, and one of Sam Bankman Fried’s trusted inner circle took to the witness stand. 

Gary Wang gave his testimony over the course of several days. One of the biggest revelations was confirmation of the Alameda backdoor programmed into FTX’s code. 

And even more shocking was that, according to Wang, Sam Bankman-Fried was not surprised to discover a huge $8 billion deficit in the days leading up to FTX's collapse. 

SBF faces seven counts of conspiracy, fraud and money laundering due to the catastrophic collapse of his cryptocurrency exchange and its problematic hedge fund, Alameda Research. 

Gary Wang - who also started Alameda with SBF in 2017 and co-founded FTX in 2019 - told the New York City jury that Sam Bankman-Fried was unfazed when he reported the worrying shortfall and presented the numbers. 

Wang’s federal court testimony stated that SBF responded with, “That sounds correct” while retaining a neutral demeanor despite the severity of the news.

Caroline Ellison reveals all as star witness

On Tuesday 10 October, Caroline Ellison took to the stand as star witness. The former CEO of Alameda Research wasn’t just business partners with Sam Bankman-Fried, but lovers as well.

Although this had long been known since FTX’s collapse, Caroline confirmed it in her testimony before stating that when it came to Alameda’s operations, she was always directed by Sam.

“I would always ultimately defer to Sam,” she testified. Ellison also said that there was an “essentially unlimited” line of credit Alameda had at FTX, and further added that Bankman-Fried “was the one who set up these systems.”

After signing a plea deal with the US government, it’s no surprise that Caroline is pointing the finger at her former business partner and ex-lover. Her testimony is damning for SBF and echoes the statements we’ve already heard from other business partners such as Gary Wang and Adam Yedida. 

Sam Bankman-Fried knew of FTX’s Alameda backdoor 

When Sam Bankman-Fried, the disgraced crypto mogul and former CEO of FTX, went on trial last week, the world knew there would be some interesting developments. 

As well as the likes of Caroline Ellison and Gary Wang, Adam Yedidia, a friend of Sam’s and a past developer at FTX, has also taken the stand.

He claimed to have left FTX when he heard about what had happened with Alameda. He stated, "I was concerned that, as a developer for FTX, I may have unwittingly written code that contributed to a crime."

Code was implemented into the exchange’s website allowing Alameda's balance sheet to go negative. Alameda was able to accrue a negative balance sheet reaching $65 billion! 

Apparently, this was originally uncovered by a whistleblower working for LedgerX, a futures exchange owned by FTX. It was LedgerX's Chief Risk Officer, Julie Schoening, who later got fired. 

Senior staff member Nishad Singh has already been charged and pleaded guilty to federal fraud and will testify against FTX.

FTX users can have their justice as they come face-to-face with Sam Bankman-Fried. The court will call victims during the trial to explain how the scandal has affected them and their lives. 

It has been an interesting few days in court for SBF, and we are sure more will come. Read on to learn more about his charges and his business's wrongdoings.

The charges against Sam Bankman-Fried

The collapse of FTX began at the beginning of November 2022. In December Sam Bankman-Fried was arrested by the U.S. government in the Bahamas where FTX had been operating since their inception. 

SBF is currently on trial for fraud. Not one case of it, but a total of seven counts that include both wire and transfer fraud, which are classed as federal charges. 

Of course, like many high-class criminals, SBF has denied all these charges and has maintained his innocence despite the damning evidence against him. 

Interestingly, only two of the wire fraud charges are "substantive". And these relate to his FTX exchange customers and the sister company Alameda Research. 

When charges are substantive, this means that prosecutors must be able to prove that Sam did those specific charges himself - something that the testimonies of his former business partners will help with.

The U.S have charged Bankman-Fried with:

  • Wire fraud
  • Wire fraud (conspiracy)
  • Securities fraud
  • Securities fraud (conspiracy)
  • Money laundering

There is also another charge against him for breaking campaign finance laws

FTX and SBF were big advocates of political funding and it turned out that they were funding both sides of American politics. 

SBF may be in prison for the rest of his days

Sam Bankman-Fried could now face 115 years in prison if found guilty of his alleged charges. 

Michael Kanovitz, a partner at Loevy & Loevy law firm, believes he will receive the whole sentence.

If the prosecution can prove he knowingly stole billions from users whilst also destroying proof, it may be a life behind bars for Sam. 

And with Caroline Elison taking to the stand today, there are sure to be some crucial revelations. 

As the news unfolds, we will keep you in the know! It is running until the 9th of November, so there will be a lot to unpick during this time!

If you enjoyed this article, stay tuned for more updates on SBF’s trial. And in the meantime, why not check out our other crypto-related content?

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Tom F.

Tom is one of the content managers here at Cryptology. While still fresh in his career he has been able to firmly place himself within the world of crypto and content creation, producing work for a number of publications including esports.net and The Times of Malta newspaper.