NEW YORK — Alameda Research had “special privileges” at FTX that allowed the crypto hedge fund to spend $8 billion of exchange customers’ money, Gary Wang, a former top lieutenant in Sam Bankman-Fried’s empire, testified at trial Friday.
Taking the stand in an ill-fitting black suit, Wang, who co-founded both companies with Bankman-Fried, said that in July 2019, just shortly after the exchange opened for business, Bankman-Fried directed him to write code for FTX that would let Alameda’s account balance fall below zero. It was a secret feature that no other customer of the crypto exchange had, the insider-turned-government witness said.
“Sam told me to make sure Alameda’s accounts would never get liquidated on FTX,” Wang said.
Wang is the first of at least three witnesses from Bankman-Fried’s inner circle who pled guilty to financial crimes and are now testifying against the alleged fraudster in his criminal trial.
Once known as FTX’s quiet chief technology officer, Wang in his testimony introduced the jurors to the byzantine financial arrangements that the government alleges enabled the two companies to steal billions of dollars from FTX customers.
Months after the crypto exchange FTX was founded in 2019, Wang said Friday, he wrote “allow negative equals zero” code specified to Alameda accounts. He said Bankman-Fried ordered the code so that the hedge fund could spend money on the exchange’s FTT token, the token created by FTX, but Alameda’s spending grew broader – and never stopped.
“Sam said that he wanted to pay for FTT-related expenses from Alameda accounts,” Wang said.
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