FTX co-founder Gary Wang has revealed more details about Alameda Research's corrupt relationship with the exchange during Sam Bankman-Fried's fraud trial. Wang claimed that the function required for Alameda to steal client funds had been integrated into FTX's computer systems back in 2019. Alameda was granted three special privileges at FTX, including the "allow negative" feature, which enabled the firm to trade with more funds than it had in its account and withdraw unlimited funds from FTX.
This feature was exploited to withdraw $8 billion worth of fiat and crypto beyond what Alameda held in its account, roughly the same shortfall FTX faced when failing to fulfill client withdrawal requests last November. Wang clarified that the extra money came from FTX customers who had not explicitly opted into lending out their funds. He knew about Alameda having a negative balance as early as 2019.
Alameda was also granted an outsized $65 billion line of credit from FTX, while no other client could access credit larger than $1 billion. Wang's testimony contradicts Bankman-Fried's repeated claims that FTX customer funds went untouched and that he was unaware of Alameda's finances leading up to its collapse.
This feature was exploited to withdraw $8 billion worth of fiat and crypto beyond what Alameda held in its account, roughly the same shortfall FTX faced when failing to fulfill client withdrawal requests last November. Wang clarified that the extra money came from FTX customers who had not explicitly opted into lending out their funds. He knew about Alameda having a negative balance as early as 2019.
Alameda was also granted an outsized $65 billion line of credit from FTX, while no other client could access credit larger than $1 billion. Wang's testimony contradicts Bankman-Fried's repeated claims that FTX customer funds went untouched and that he was unaware of Alameda's finances leading up to its collapse.