During the trial of ex-FTX CEO Sam Bankman-Fried, the former FTX CTO, Gary Wang, testified about the connection between the crypto exchange and Alameda Research.
Wang revealed that Bankman-Fried allowed Alameda Research to trade more funds than they had available by authorizing an "allow negative" feature. This feature gave Alameda Research special privileges on FTX, allowing them to hold a negative balance exceeding FTX's revenue.
Wang stated that he increased Alameda's line of credit to $65 billion on Bankman-Fried's instructions, and this money came from FTX's customers' funds. Bankman-Fried claimed the "allow negative" feature was related to FTT, FTX's native cryptocurrency.
Notably, customers never authorized the use of their funds by Alameda Research, according to Wang.
Wang also confirmed that Bankman-Fried had made public statements about Alameda's activities on FTX, including a tweet in 2019. Interestingly, the "allow negative" feature was added to the exchange's codebase on the same day as that tweet.
Bankman-Fried allegedly made multiple false claims about the safety of customer funds, both on social media and in phone calls.
It's worth noting that Gary Wang admitted to fraud-related crimes during his time at FTX alongside Bankman-Fried and other executives. The trial is set to continue until November, with more former FTX and Alameda executives expected to testify.
