Sam Bankman-Fried instructed FTX co-founder Gary Wang to create a “secret backdoor” for Alameda Research to borrow $65 billion of client money from the crypto exchange without permission.
Shocking details are coming to light in connection with the bankruptcy of the FTX crypto exchange. A few days ago a court revealed at the hearingthat Gary Wang was told by Sam Bankman-Fried to create one “a backdoor, a secret way for Alameda to borrow from customers on the stock exchange without permission” said FTX attorney Andrew Dietderich.
“Mr. Wang created this backdoor by inserting a single number into the exchange’s millions of lines of code, creating a line of credit from FTX to Alameda that the customers did not consent to.” he added. “And we know how big this credit line was. It was $65 billion.”
The Commodity Futures Trading Commission (CFTC) made similar allegations when it charged Wang in December. But the value of that credit limit has not been discussed so far. The CFTC then “practically unlimited” rated it.
And in November, Archyde.com, citing unnamed sources, claimed that Bankman-Fried moved $10 billion between the two companies, with another $2 billion still unaccounted for.
Dietderich told the court that the $65 billion back door is Alameda “he bought airplanes, houses, organized parties, distributed political donations”.
Bankman-Fried is the second largest donor to Democrats, but says she has given the same amount to Republicans.
A property in the Bahamas worth $256.3 million was also registered in FTX’s name – including 15 condominium units in the same building. According to other court filings, FTX spent $6.9 million on food and parties in just nine months. According to Dietderich, the rest of the money went to personal loans, sponsorships and investments.
FTX has so far recovered $5 billion in cash, crypto and securities and “plans to monetize more than 300 other non-strategic investments” worth $4.6 billion.
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