In an unfolding courtroom drama, key personnel from cryptocurrency exchange FTX and its associated entity, Alameda Research, testified, shedding light on potentially damning financial mismanagement and misrepresentation practices. The revelations came to the forefront during the questioning of Gary Wang and Caroline Ellison by the prosecution, with content provided by Inner City Press.
Gary Wang, a former employee of FTX, recounted several episodes where Alameda Research’s financial operations raised concerns. Wang mentioned that on Nov 6, a staggering amount of about $100 million was being withdrawn per hour from FTX, which led to a cumulative shortfall of $8 billion. The discourse also touched upon a ‘Korean friend’ account and allegations about Sam Bankman-Fried (referred to as Sam), the head of Alameda, considering shutting down Alameda due to financial mismanagement.
Further, the testimonies elucidated instances where FTX misrepresented its financial health to customers and investors. Ellison, who had a romantic relationship with Sam, revealed that although FTX marketed itself as safe and well-regulated, it had a line of credit on its platform allowing Alameda to withdraw coins even when they didn’t have them. Ellison also disclosed that FTX funds, to the tune of ten to twenty billion dollars, were deposited into Alameda’s accounts, and were used for various purposes including repaying loans, investments, and stable coin conversions.
The courtroom also saw details emerging about personal ventures being funded through loans from Alameda. For instance, Wang admitted to receiving over $200 million in loans from Alameda for venture investments and buying a house. These loans were apparently signed off without consulting lawyers, revealing a lack of due diligence.
Ellison’s testimony unveiled troubling relationships and ambitions. She mentioned her romantic involvement with Sam and his ambitions to become the President of the United States. Ellison also highlighted a concerning scenario where FTX’s equity value was at risk, with a negative figure of $2.7 billion being thrown into the mix, indicating significant financial instability.
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