06/10/2023 – 21:34
Secret lines of credit, hidden losses and fake accounts: financial maneuvers of the former king of cryptocurrencies Sam Bankman-Fried were revealed this Friday (06) in his trial for fraud, by his former partner on the FTX platform.
Zixiao “Gary” Wang, the company’s chief technical officer when it collapsed in November 2022, pleaded guilty to four charges and agreed to cooperate with Manhattan federal prosecutors.
Wang is the first important witness to testify in the trial against his former partner, which began last Tuesday in New York and could last six weeks.
Bankman-Fried, known in the industry by the acronym SBF, is accused of diverting client funds from the FTX cryptocurrency platform into risky investments in the Alameda Research fund, which he controls, and the purchase of real estate in the Bahamas.
Wang today described a character who was willing to break the law and lie to allow FTX and Alameda to post profits and sustained growth. In 2019, months after the creation of FTX, SBF changed the operating software to allow Alameda to borrow on the platform.
The change was not communicated to the general public, nor to clients or investors, said Wang, whose sentence, which has not yet been announced, is expected to be lessened due to his cooperation with the prosecution.
“Clients did not give us authorization to use the money for other purposes,” highlighted Wang, whose fortune, estimated at US$4.6 billion (R$24 billion) before the collapse of FTX, soared, as did SBF’s.
At the time of FTX’s collapse, there was a shortage of around US$8 billion (R$41 billion) belonging to the platform’s clients, loaned to Alameda, which was unable to repay them.
Sam Bankman-Fried deposited this debt into a fake account created in the name of a fictitious person, Wang reported, adding that on several occasions, SBF requested that clients’ losses, the value of which exceeded their assets, be absorbed by Alameda, the in order to hide these transactions from the general public and not tarnish FTX’s image.
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