FTX Co-Founder Drops Spicy Details, Doesn't Elaborate.

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FTX CO-FOUNDER GIVES SPICY DETAILS, DOESN’T ELABORATE

New day starts, new details emerge. The waters of the FTX lake are definitely getting murkier. So, let’s start with…

Gary Wang, the co-founder of the bankrupt exchange, testifies FTX Manipulated Insurance Fund Figures.

In his testimony on October 6, Wang asserted that FTX had never maintained any of its own FTX Tokens (FTT) within the highly publicized $100 million insurance fund for the year 2021.

He revealed that the reported fund value had been manipulated by multiplying the daily trading volume of the FTX Token by an arbitrary factor of approximately 7,500.

When questioned about the authenticity of this figure during the trial, his response was a straightforward "No." 

Wang must have drawn inspiration from this iconic David Lynch interview:

A piece of evidence presented during the proceedings displayed purported Python code responsible for inflating the size of the so-called "Backstop Fund."

In stark contrast to the publicized figures, Wang revealed that there were no FTT tokens in the insurance fund; it consisted solely of a USD value.

Furthermore, he noted that the displayed number did not align with the data stored in the database.

It's worth highlighting that FTX had consistently emphasized the significance of its insurance fund, presenting it as a safety net for users during periods of extreme market volatility.

Nevertheless, Wang contended that the fund often fell short of covering user losses.

As an illustrative example, Wang mentioned an incident in 2021 where a trader exploited a vulnerability in FTX's margin trading system to amass a disproportionately large position in MobileCoin, resulting in losses amounting to hundreds of millions of dollars.

Allegedly, FTX CEO Bankman-Fried directed Wang to transfer the loss to Alameda Research, whose financial activities were less transparent than those of FTX.

Additionally, Wang disclosed that a feature known as "allow_negative" had been added to the FTX codebase at Bankman-Fried's request, granting Alameda Research nearly limitless liquidity when trading on FTX.

Well, what can be added? FTX is definitely a maze that’s easy to get lost in. The longer you explore, the foggier the landscape gets. The FTX waters are definitely not the clearest, and it seems like it’s only about to get murkier, as the trial continues.

TL;DR: Gary Wang, co-founder of the bankrupt FTX exchange, testified that FTX manipulated its insurance fund figures, revealing that the reported fund value was artificially inflated and that there were no FTX Tokens in the fund, contrary to public claims.

Sam Bankman-Fried Trial Continues

We invite you to join a discussion with BitDegree Co-Founder @DStasiulis, and special guest Jong-Chan Chung @guyukyukgu, Venture Manager at @bcfounders.

Learn:

• How startup accelerators like BFG help Web3 startups and who should join them.

• What's the current fundraising landscape for early-stage Web3 startups?

• The success stories from BFG Web3 accelerator and learnings relevant to founders.

📅 Date: October 12th
🕐 Time: 13:00 UTC+0 / 20:00 GMT+7 / 22:00 GMT+0 / 9:00 EDT
📍 It will go Live on LinkedIn. You’ll find the event right here.

BITE-SIZED NEWS

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Sounds interesting? Find more crypto news on our website: 

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Disclaimer: This newsletter is strictly educational. None of this information is intended to be financial advice. Always do your research and act responsibly with your profits.