Alameda’s privileges within the realm of FTX always stood unshaken. These privileges encompassed its capacity to manage client assets.
In the midst of Sam Bankman-Fried’s fraudulent trial last Friday, FTX co-founder Gary Wang unveiled a plethora of additional insights. These insights shed light on the nefarious rapport between Alameda Research and his exchange.
In his testimony, Wang asserted a crucial point. He stated that the mechanism requisite for Alameda to abscond with client funds had been intricately woven into FTX’s computational infrastructure. This integration occurred as far back as 2019.
FTX Co-Founder Reveals Alameda’s Exclusive Privileges and Controversial Financial Maneuvers
Alameda’s extraordinary entitlements were succinctly summarized by Inner City Press through Twitter. FTX Co-Founder, during his testimony, expounded upon these privileges at FTX. These privileges notably set Alameda apart from the common clientele.
One such privilege was the “endorse negativity” attribute. This attribute granted Alameda the liberty to engage in transactions with capital exceeding the actual sum held within its account. As previously attested by Wang, Alameda could extract funds from FTX limitlessly.
This particular facet was subsequently exploited. It led to the withdrawal of an astounding $8 billion in fiat and cryptocurrencies. This amount far surpassed the assets held by the trading firm. This incident was parallel to FTX’s struggle in meeting client withdrawal demands last November.
Wang clarified that the additional funds originated from FTX customers who had not explicitly consented to the lending of their assets. Despite the scheme unraveling over the span of several years, Wang disclosed that he had been aware of Alameda’s negative balance as early as 2019.
Initially, the withdrawal limit was confined to approximately $50 million to $100 million—an amount roughly equivalent to FTX’s annual revenue. However, within a mere year, Wang uncovered that this boundary had already been transgressed.
“In the early days of 2020, I conducted a database inquiry,” he remarked. It revealed that Alameda’s deficit had exceeded FTX’s earnings. While the exchange’s revenue stood at around $150 million, Alameda’s negative balance had already surpassed the $200 million mark.
Intriguing Revelations and Conflicting Claims Unveiled in FTX-Alameda Relationship
Alameda’s Monumental Line of Credit was indeed a notable feature. The trading firm enjoyed an extravagant line of credit amounting to $65 billion from FTX. This privilege, as Wang asserted, was exclusive, and no other client could lay claim to such an extensive credit line.
This contrasted sharply with Sam Bankman-Fried’s reiterated assertions. He repeatedly claimed that FTX customer funds remained inviolable. However, Wang contended otherwise, stating, “He made those claims on Twitter and during phone conversations. I overheard him as he traversed the office.”
Furthermore, the co-founder vehemently maintained a crucial point. He asserted that Bankman-Fried had personally witnessed Alameda’s financial status. This effectively contradicted SBF’s assertions in multiple interviews. SBF had claimed that he had been unaware of Alameda’s financial standing leading up to its downfall.
During cross-examination, Sam Bankman-Fried’s legal team emphasized a particular point. They highlighted that Alameda’s negative balance was tolerated because it served as a market maker for FTT, FTX’s proprietary exchange token.
Wang clarified this, however. He stated that the trading desk’s exemption from automatic liquidation was partially attributed to Alameda’s colossal position. This position held the potential to inflict substantial harm.
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