FTX co-founder testifies against Sam Bankman-Fried, saying they committed crimes and lied to public

(AP) NEW YORK — As the co-founder of the company began testifying on Thursday, prosecutors went straight to the heart of their case against FTX founder Sam Bankman-Fried, accusing him and Bankman-Fried of committing financial crimes and lying to the public prior to the collapse of the cryptocurrency trading platform last year.

Gary Wang, 30, claimed that while serving as the chief technology officer of FTX, he committed wire, securities, and commodities fraud. He also claimed joint ownership of Alameda Research, a cryptocurrency hedge fund that he and Bankman-Fried founded in 2017 and then used to fraudulently take $8 billion from FTX. He claimed that Bankman-Fried ordered the unlawful actions.

His claims were made on the second day of testimony at a trial that might run up to six weeks.

Before the trial began Tuesday, prosecutors promised to use testimony from Bankman-Fried’s “trusted inner circle” to prove he intentionally stole from customers and investors and then lied about it. Defense lawyers say Bankman-Fried had no criminal intent as he took actions to try to save his businesses after the cryptocurrency market collapsed.

In just over a half hour of testimony, Wang said he and Bankman-Fried allowed Alameda Research to withdraw unlimited funds from FTX “and we lied to the public.”

Wang said not only was Alameda Research permitted to maintain negative balances and unlimited open positions, but the computer code that controlled its operations was written to provide a line of credit of $65 billion, a number so large that Judge Lewis A. Kaplan questioned Wang briefly to ensure he was talking about billions rather than millions.

Wang testified that the special computer code features were directed by Bankman-Fried, a man he met over a decade ago at a high school summer camp after moving to the United States from China and growing up in Minnesota.

Wang claimed to have received a salary of $200,000 and to have owned 10% of Alameda and 17% of FTX, which would have made him a billionaire prior to the failure of the companies.

He claimed that because of the easy access to capital at Alameda, he was able to borrow $1 million for a house and between $200 million and $300 million for investments.

Wang is the first of three former top executives who have agreed to testify against Bankman-Fried after admitting guilt to counts of fraud in exchange for significant sentencing relief.

The other two are Nishad Singh, the former engineering director of FTX, and Carolyn Ellison, the former CEO of Alameda Research and a former girlfriend of Bankman-Fried.

Adam’s testimony was heard by the jury earlier in the day.