Hedge fund co-owner testifies in FTX case
Sam Bankman-Fried's college roommate and ex-colleague, Gary Wang, testified on Thursday at the FTX cryptocurrency exchange founder's fraud trial that Bankman-Fried told him to give a hedge fund they co-owned special trading privileges on FTX. The special privileges granted to the hedge fund, Alameda Research, included a US$65 billion line of credit, several orders of magnitude bigger than the amount other users were able to borrow, he said. Hong Kong-based Alameda had withdrawn US$8 billion from FTX by the time of the exchange's bankruptcy in November 2022, Wang testified. "It withdrew so much that FTX was not able to repay customers who were trying to withdraw," Wang, FTX's former chief technology officer, said on the stand. He added that Bankman-Fried had directed him to implement the changes giving Alameda special privileges. Wang, 30, is the first of three former close associates of Bankman-Fried to testify at the trial, which began on Tuesday. All three have pleaded guilty to fraud charges and agreed to cooperate with prosecutors. Bankman-Fried's trial kicked off nearly a year after FTX froze customer withdrawals and declared bankruptcy in a dramatic collapse that shocked financial markets and left its founder's reputation in tatters. Federal prosecutors in Manhattan say the 31-year-old former billionaire stole billions of dollars in FTX customer deposits to plug losses at Alameda, buy real estate and donate to U.S. political candidates. Bankman-Fried has pleaded not guilty. His lawyer, Mark Cohen, said in his opening statement that cooperating witnesses like Wang may be "spinning" Bankman-Fried's decisions they agreed with at the time as "sinister." Earlier on Thursday, Matt Huang, the head of a crypto-focused hedge fund, Paradigm, which invested in FTX, said he was told Alameda received "no preferential treatment" on the platform. Huang said he was concerned about links between the two firms, but said Paradigm was "assured that they would become less linked over time." Paradigm invested US$278 million in FTX starting in 2021, but has now written off the investment entirely, Huang said. Wang, who was born in China, said he met Bankman-Fried at a math camp in high school and they later became roommates at the Massachusetts Institute of Technology.  He and Bankman-Fried founded Alameda in 2017. While both moved on to FTX after it was founded in 2019, they remained Alameda's sole owners, with Bankman-Fried owning 90 percent and Wang the remaining 10 percent. They were among 10 roommates at a US$35 million penthouse in the Bahamas, where FTX was based. Wang said Bankman-Fried decided to name the firm Alameda Research because it "makes it easier to do business if the name doesn't mention trading or cryptocurrency."_____________________________
Last updated: 2023-06-10 HKT 09:06 