Former Colleagues Testify Against Sam ‘SBF’ Bankman-Fried
The third day of former FTX CEO Sam Bankman-Fried's trial sees former colleagues and friends testifying about alleged malpractices and preferential treatments for Alameda Research.
In the high-profile trial of former FTX CEO Sam Bankman-Fried, which started this Tuesday, possibly damning testimonies came to light from two of Bankman-Fried’s former friends, Adam Yedidia and Gary Wang. Both testified under immunity, revealing intricate details of their former boss’s operation tactics. Their testimonies brought forward Sam Bankman-Fried’s alleged malpractices, specifically related to Alameda Research’s preferential treatment.
Facing the jury, Yedidia, a one-time roommate of Bankman-Fried and a senior developer at FTX, testified about an automated system he had programmed. The system automatically wired transfers to an Alameda Research bank account, converting them into user credits and tracking them via an internal database called “fiat@”. Yedidia’s testimony revealed an $8 billion overstatement of Alameda’s liabilities, causing the fiat@ account to inaccurately display a negative balance of -$16 billion.
The former CTO of FTX, Gary Wang, also testified, confessing that Bankman-Fried had directed him to allow Alameda Research to withdraw an unlimited amount of funds, even amid negative balances. He also added that the funds in such circumstances originated from FTX customer deposits. Wang’s testimony was a result of an agreement with prosecutors following a guilty plea filed in December 2022. Moreover, according to Wang, Alameda Research was granted a $65 billion credit line and “slightly faster” platform access than other market makers.
Bankman-Fried refrained from his usual practice of taking notes, instead focusing intently on Wang’s testimony. His legal team stood by him, struggling to counter the witnesses’ claims. Out of 21 overruled objections, 15 were from the defense. Additionally, the Judge ruled in their favor only six times out of 55 sustained objections. As the trial continued, the Judge appeared visibly irritated with the defense’s repeated questioning, admonishing them multiple times for their redundant queries.
Paradigm co-founder Matt Huang also testified, discussing the venture capital firm’s process of deciding to invest a total of approximately $278 million in FTX. While FTX’s rapid initial growth excited him, he expressed concerns over its lack of a formal governance structure and an absence of a board of directors. Huang recollected being assured by Bankman-Fried that Alameda Research had no preferential treatment on the FTX exchange. A statement that now stands in stark contrast to the details revealed by recent testimonies.
The prosecution will keep examining Wang, before leaving the floor to the defense for cross-examination.
