FTX co-founder admits multi-billion-dollar fraud

investmentnews.com:

FTX co-founder Gary Wang said he and Sam Bankman-Fried committed a multibillion-dollar fraud with customer funds that led to the cryptocurrency exchange’s collapse, shortly after taking the stand against his onetime math camp buddy and MIT roommate.

Dressed in a gray suit and red tie, Wang didn’t make eye contact with Bankman-Fried as he entered the Manhattan courtroom Thursday afternoon to testify as a government witness. At one point, Assistant US Attorney Nicolas Roos asked Wang, 30, to identify his former colleague. Wang craned his neck, looking around the courtroom before pointing towards Bankman-Fried, who was seated between his lawyers.

Prosecutors claim Bankman-Fried orchestrated a scheme in which billions of dollars in FTX customer funds were secretly transferred to affiliated hedge fund Alameda Research. 

The testimony by Wang, who pleaded guilty to fraud and agreed to cooperate against his onetime friend in December, promises to be among the most powerful the government puts on against Bankman-Fried. Wang, also FTX’s chief technology officer, said Bankman-Fried directed him to alter the cryptocurrency exchange’s code so that Alameda was able to draw a $65 billion line of credit. 

“It withdrew so much that FTX was not able to pay customers who tried to withdraw,” Wang said.

Wang initially appeared nervous and spoke quickly on the stand, though he seemed to become more at ease as questioning continued. His testimony on Thursday was relatively brief, but he’s expected to return to the stand on Friday. 

As an FTX co-founder, Wang was once a billionaire, though he said his wealth never matched that of Bankman-Fried, who was estimated to be worth $26 billion before the exchange’s collapse. The unequal relationship