FTX co-founder Gary Wang turns on friend and business partner Sam Bankman-Fried to admit they DID commit ‘wire fraud, commodities fraud and securities fraud’ at trial
The co-founder of FTX dramatically told a court on Thursday that he had committed fraud with Sam Bankman-Fried.
Gary Wang, who has pleaded guilty to his part in the scheme, agreed when prosecutors asked him if he had “committed financial crimes” while working at FTX, where he was technical director.
When asked what types of crimes they are, Wang replied: “Wire fraud, commodity fraud, securities fraud.”
Wang, one of the prosecution’s key witnesses, said he committed the crimes together with Bankman-Fried, Caroline Ellison and Nishad Singh.
Ellison formerly led Alameda Research, FTX’s sister company, and Singh was a top FTX engineer. Both have admitted their part in the scheme and are expected to testify at trial.
FTX founder Sam Bankman-Fried is stuck in the Bahamas after resigning as CEO on Friday
The jury has been sworn in and opening statements are underway in the fraud trial of controversial FTX founder Sam Bankman-Fried
Wang, 30, told the court he was born in China and had known Bankman-Fried since childhood when they went to summer camp together.
They were roommates at MIT, Wang told the court, but he has now turned against his former friend.
The court found that Wang and Bankman-Fried owned both FTX and Alameda Research.
Explaining the fraud, Wang said, “We gave special privileges to Alameda Research, allowing it to withdraw unlimited amounts from the platform (FTX) and lied to the public about it.”
Wang said that before FTX collapsed, Alameda had borrowed $8 billion from FTX, all of which was money from FTX customers.
Another benefit Alameda received was a $65 billion line of credit with FTX, which Wang said was far larger than that of other major investors.
Earlier in the day, the jury was shown photos of Bankman-Fried and two others eating in their apartment, with a large bottle of ketchup and a can of LaCroix in the foreground.
Despite their wealth, the FTX employees living there complained about the penthouse rent, which appeared to be $15,000 each.
The residents of the building sent group messages with the group name ‘People of the House’.
In one, someone said they would “probably have to pay $15,000 a month,” but said it would be “kind of a pain.”
Wang, one of the prosecution’s key witnesses, said he committed the crimes together with Bankman-Fried, Caroline Ellison and Nishad Singh. Both have admitted their part in the scheme and are expected to testify at trial
Bankman-Fried, with Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, to their left, at Bankman-Fried’s birthday in Hong Kong. The group dressed up in wigs that resembled Bankman-Fried’s hairstyle
The 31-year-old was arrested at the exclusive 12,000-square-foot pass in the Bahamas, where he lived with eight college friends after setting up the company’s headquarters there.
Adam Yedidia, who worked as a software developer at FTX until November 2022, told the court he quit when he learned that Alamada Research, FTX’s sister company, had used FTX customer deposits to pay his creditors.
On Thursday, he testified that he remembered that the “cost of the rent sounded very high” and was “commensurate with an apartment that cost $35 million.”
It is unclear why FTX staff paid rent when Bankman-Fried purchased the apartment.
At the end of the messages, Bankman-Fried wrote that he “assumed that ultimately it was only Alameda (Research, FTX’s sister company) that paid for it.”
Assistant U.S. Attorney Danielle Sassoon asked Yedidia if Bankman-Fried “slept on a beanbag chair with any regularity?”
The detail was often repeated in profiles of Bankman-Fried to show that he was an unconventional billionaire.
Yedidia said it was “much rarer” than when FTX was previously based in Hong Kong.
In the Bahamas, he “took a nap every now and then, but not that often,” he said.
Yedidia revealed that Bankman-Fried asked for his advice about Caroline Ellison, who was in charge of Alameda.
He said: ‘Sometime in early 2019 the suspect told me that he and Caroline had had sex and asked if it was a good idea to date them. I said no.
“He said he thought I would say something like that.”
Yedidia told the jury that Bankman-Fried told him he was “more willing to take risks than many others” and that taking risks was “reasonable.”
Adam Yedidia, who worked as a software developer at FTX until November 2022, told the court he quit when he learned that Alamada Research, FTX’s sister company, had used FTX customer deposits to pay his creditors.
Yedidia gave evidence under an immunity agreement, which meant he could not be prosecuted for anything he said. Yedidia said he feared he had “accidentally” written something into FTX’s code that was used in criminal activity.
He called Bankman-Fried a “good friend” whom he first met at MIT, where they lived together.
The jury watched a video on the FTX website called ‘Get To Know Crypto’, which explained what cryptocurrency is and featured a cartoon version of Bankman-Fried.
It described FTX as a group of “visionaries” and said FTX was a place where “investing and ethics can meet.”
The jury was shown the cover of Forbes magazine on which Bankman-Fried appeared and Yedidia said the former FTX boss played an important role in marketing the company.
The judges also saw the TV commercial for FTX featuring Tom Brady playing golf, with the football legend saying FTX is the “best way to get into the game.”
Brady’s then-wife Gisele also appears in the splashy ad.
The jury also saw FTX’s Super Bowl ad featuring Larry David, for which he reportedly received $10 million.
In the commercial, David jokingly tells an actor not to invest in crypto because he is right about everything.
After both were shown, judge Lewis Kaplan asked Yedidia, “Who is Tom Brady?”
He replied that he was a football player.