An attorney for FTX, Andrew Dietderich, alleged that SBF ordered Gary Wang to establish a concealed point of access, referred to as a “secret backdoor,” that permitted his hedge fund, Alameda Research, to borrow $65 billion from clients’ funds without obtaining their approval.
According to the NYPOST, Dietderich testified that this backdoor was created by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not give their consent.
FTX Ex-CEO Moves Over $10B Between Firms
The lawyer’s testimony corroborates allegations made by the Commodity Futures Trading Commission (CFTC), which filed charges against Wang and Alameda Research CEO Caroline Ellison last month.
According to Reuters, Bankman-Fried had moved $10 billion between the two companies, with a further $2 billion still unaccounted for. However, both Wang and Ellison have pleaded guilty to federal fraud and conspiracy charges and are cooperating with investigators.
On Thursday, while awaiting trial, Bankman-Fried wrote a Substack blog post in which he declared his innocence. He asserted that he did not steal funds and did not hide away billions and that nearly all of his assets were, and still are, being used to support FTX customers.
As reported by TronWeekly, the former CEO of FTX, has outlined the convergence of three significant occurrences that ultimately caused the company’s downfall.
In his statement, he blamed Changpeng Zhao, CZ, the CEO of Binance. He alleged that CZ waged a lengthy campaign to destroy his empire and that the “fateful tweet” on November 6th was the culmination of that campaign.
He claims that the tweet caused an extreme and quick crash in the market, which made his hedge fund, Alameda, insolvent. FTX filed for bankruptcy on November 11th, 2022.
Furthermore, SBF stated that when John Ray became CEO of FTX US and initiated the bankruptcy process, the exchange had more than $350 million in net cash. He mentioned that the net cash was more than the customer’s balances and called “the time it took for customers to receive their money back ridiculous.”
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