Gary Wang, a former classmate of Sam Bankman-Fried, testified at his criminal trial. They had known each other since they were 7 years old and later became college classmates at MIT
Wang and Bankman-Fried co-founded FTX, a cryptocurrency exchange, and Alameda Research, a crypto hedge fund
In court, Wang confessed that they had committed fraud together. They used computer code to provide Alameda Research unlimited access to withdraw FTX customer funds and relaxed margin trading collateral requirements
Wang stated that Bankman-Fried directed him to create features in FTX's code that allowed Alameda Research these privileges, though Bankman-Fried did not personally write or review the code
Alameda Research withdrew $8 billion from FTX customer funds by the time FTX declared bankruptcy in November 2022
The excessive withdrawals by Alameda Research left FTX unable to repay its customers who were attempting to withdraw their funds
Other members of Bankman-Fried's inner circle, including Caroline Ellison and Nishad Singh, are expected to testify. All three have pleaded guilty to criminal charges
The code Wang wrote exempted Alameda from the rules that applied to other FTX customers, allowing them to bypass restrictions
Alameda was awarded a $65 billion line of credit at FTX, which was not disclosed to customers or investors
Alameda eventually borrowed up to $14 billion from FTX, using customer deposits to repay loans to creditors, which was perceived as highly questionable and unethical