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Recap of Week 1 of Broken Trusts as Loyalists testifes – Crypto News

Published

2 years ago

October 10, 2023

Dripp

The first week of trial of FTX’s former CEO, Sam Bankman-Fried (SBF) has unveiled a troubling narrative of deception, mismanagement, and alleged wrongdoing that ultimately led to the downfall of the trading firm and Alameda Research. As loyalists and former insiders take the stand to testify, a clearer picture of the alleged misconduct is emerging.

SBF Trial: Witnesses’ Testimony

The trial’s first week opened a window into the inner workings of FTX, a company once valued at a staggering $32 billion. Witnesses portrayed a company that operated with an air of secrecy and informality that is far from what one might expect in such a high-stakes industry.

Among the shocking revelations was the claim by Adam Yedidia, a former FTX employee, that he and SBF discussed an $8 billion liability owed to FTX by Alameda as early as June 2022. This revelation suggests that FTX was far from the robust and bulletproof entity it was believed to be, even as it courted billions of dollars in investment.

Another bombshell came from Gary Wang, a co-founder of FTX. Wang revealed that Alameda Research enjoyed unprecedented special privileges on FTX. He hinted that Alameda had a $65 billion credit line, a stark contrast to the paltry credit lines available to other customers.

Wang went on to detail how Alameda had the ability to maintain a negative account balance and borrow money from FTX customers, actions that were allegedly carried out without proper authorization.

The trial also exposed issues surrounding FTX’s backstop insurance fund, which was supposed to protect customers’ positions when liquidation was required. Wang claimed that the fund’s reported value on the FTX website was, in reality, a fabricated number.

The Pivotal Testimony Ahead

As the trial enters its second week, former Alameda CEO Caroline Ellison, who previously pleaded guilty to related charged, is set to take the stand.

Regarded as the prosecution’s star witness, her testimony is expected to shed further light on the inner workings of both FTX and Alameda Research, as well as SBF’s role in decision-making. Ellison’s willingness to cooperate and provide insight may impact her eventual sentencing.

The trial is far from over, but the revelations from the first week of testimony have already shaken the crypto community and raised serious questions about the integrity of FTX and SBF.