The bombshell statement revealed the co-founder of the cryptocurrency exchange FTX ordered by Sam Bankman-Fried Creating a “secret” backdoor to transfer money to Alameda Research.
FTX lawyer Andrew Dietderich informed about this Delaware A bankruptcy court on Wednesday ordered Gary Wang to set up a secret line of credit for client funds from FTX to a hedge fund.
Dietderich told the court that Wang ‘created this backdoor by inserting a single number into millions of lines of code for the exchange’, creating a line of credit that ‘customers did not consent to’.
An FTX attorney testified that the backdoor was “a secret way for Alameda to borrow money from customers on the exchange without authorization.” Business Insider informed.
A bombshell affidavit revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to create a “secret” backdoor to transfer money to Alameda Research.
“Wang created this backdoor by inserting a single number into the millions of lines of code for the exchange, creating a line of credit from FTX to Alameda that customers did not consent to,” Dietderich said.
“And we know the size of that line of credit. It was 65 billion dollars.
Bankman-Fried transferred $10 billion between the two companies, with another $2 billion still undisclosed, he told Reuters in November.
The attorney’s affidavit corroborates the Commodity Futures Trading Commission’s allegations. Website.
Last month, the CFTC filed charges against Wang and Alameda Research CEO Caroline Ellison, who was Bankman-Fried’s on-again, off-again girlfriend.
The CFTC accused Wang of creating a “virtually unlimited” secret line of credit. Dietderich’s testimony is believed to be the first time an FTX official has given a firm dollar value to a line of credit.
Wang and Ellison both pleaded guilty to federal charges including wire fraud and conspiracy. They cooperated with the investigators.
FTX attorney Andrew Dietderich told a Delaware bankruptcy court on Wednesday that Gary Wang was instructed to set up a secret line of credit of client funds from FTX to the hedge fund.
Bankman-Fried was seen arriving at a hearing at the US Federal Court in New York on January 3. He has pleaded not guilty to fraud and other criminal charges.
Bankman-Fried, who was arrested last month and extradited to the United States from her home base in the Bahamas, is under house arrest in her parents’ $4 million Palo Alto home under the terms of her $250 million bond release.
While awaiting trial, Bankman-Fried pleaded not guilty in a Substack blog post Thursday.
“I did not steal funds, and I certainly did not hide billions,” Bankman-Fried wrote.
‘Almost all of my assets could and still are being used to stop FTX clients.’
The 30-year-old disgraced former crypto kingpin has accused Binance boss Changpeng ‘CZ’ Zhao of waging a long campaign to destroy his empire.
DailyMail.com has unearthed a photo from March 2021 showing the 30-year-old SBF winger holding his ex-girlfriend Caroline Ellison, 28, on her 29th birthday. They are pictured with FTX co-founder Gary Wang (left).
The judge scheduled the trial of the SBF to October 3 at the court hearing to be held on January 3.
He claimed that Zhao’s “fateful tweet” on November 6 capped “an extremely effective months-long PR campaign against FTX.”
“In November 2022, an extreme, rapid, targeted crash by Binance’s CEO bankrupted Alameda,” Bankman-Fried wrote.
The disgraced FTX founder’s business collapsed after Zhao tweeted that Binance had lost its position in FTX’s in-house digital token FTT.
The tweet caused a domino effect that pushed Bankman-Fried’s crypto hedge fund Alameda Research into bankruptcy, and FTX had to file for bankruptcy on November 11.
Bankman-Fried now faces eight criminal charges, accusing him of defrauding FTX investors whose money he held. He made his first appearance in a Manhattan court last month when a judge released him on $250 million bail.
On January 3, he pleaded not guilty to wire fraud and other criminal charges. The judge scheduled his trial for October 3.
Continuing to make public appearances like this is likely to raise eyebrows, as he ignores advocates who advise him to “get in the hole.” Lawyers said that such statements will make life difficult for his defense attorneys in the upcoming trial.
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