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Sam Bankman-Fried's Trial: Shocking Revelations of $65 Billion Credit Line and Unlimited FTX Withdrawals

Jack Evans
Oct 9, 2023 at 04:51 pm

On this pivotal day of the trial, Gary Wang, the former CTO of FTX, took the stand as a key witness. Wang's testimony painted a picture of financial machinations that rocked the cryptocurrency industry. He revealed that Alameda Research, a firm he worked for, had an extraordinary $65 billion credit line on FTX, far surpassing any other entity on the platform. This credit line allowed Alameda to operate under different rules, enabling them to secretly trade beyond their account balance.

Perhaps even more shocking was the revelation that Alameda had implemented an "allow negative" code on their FTX account, permitting them to enter positions and withdraw funds even when their account balance was in the negative territory. This unprecedented access resulted in heavy losses and significant cash outflows. In fact, it was disclosed that Alameda had withdrawn more funds from FTX than the exchange had generated in revenue from fees, leaving a staggering $200 million deficit.

Wang's testimony also exposed SBF's efforts to maintain a facade of integrity and security for his hedge fund. He spoke of deceptive practices, including the creation of a fake insurance fund, to assure customers of their asset safety. Behind the scenes, Alameda leveraged its massive credit line to withdraw customer crypto assets from the exchange.

As the trial progressed, it became evident that SBF was aware of the dire financial situation, with Alameda being $20 billion in debt. The former FTX CTO revealed that SBF, along with other co-conspirators, had used customer funds to repay loans, raising serious questions about the legality of their actions.

The trial of Sam Bankman-Fried has entered a critical phase with shocking revelations about Alameda Research's financial maneuvers and its impact on FTX and its customers. As the prosecution seeks to present audio evidence and delve further into the case, the cryptocurrency community watches with bated breath. The outcome of this trial could have far-reaching implications for the industry, underscoring the need for transparency and accountability in the world of cryptocurrencies.

Read more: Galxe Security Breach Shakes Web3 Community: Users Scramble to Protect Their Funds

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