Wang, who pleaded guilty to fraud in December and agreed to cooperate against her ex-boyfriend, may be one of the most compelling statements the government has ever made against Bankman-Fried. Wang, who is also FTX's chief technology officer, said Bankman-Fried ordered him to change the cryptocurrency exchange's code to allow Alameda to obtain a $65 billion credit line.
"There were so many withdrawals that FTX was unable to pay customers who tried to withdraw money," Wang said.
At first, Wang appeared nervous and spoke quickly on the witness stand, but appeared to calm down as the questioning continued. His testimony on Thursday was relatively brief, but he is expected to return to the stand on Friday.
As co-founder of FTX, Wang was once a billionaire, though he said his fortune never matched Bankman-Fried's fortune, which was estimated at $26 billion before the stock market crash. The one-sided relationship extended to Alameda, Wang said, where he owned 10 percent of the company and Bankman-Fried 90 percent. And when conflicts arose, Bankman-Fried had the final say.
In 2017, Bankman-Fried asked Wan, then working at Google, to co-found a cryptocurrency trading company with him. Wang testified that Bankman-Fried chose the name Alameda Research because it sounded "prestigious."
"He said it's easier to do business if the name doesn't mention cryptocurrency trading, that it's easier to get a bank account or rent an office and things like that," Wang said.
Wang said Bankman-Fried oversaw the process by which senior FTX officials were able to accept hundreds of millions of dollars from Alameda. "He told us what we had to follow," Wang testified, such as how much collateral was required for certain positions and how much money could be deposited or withdrawn.
Wang's statement potentially undermines Bankman-Fried's claim that she was not involved in Alameda's management and instead relied on its CEO, Caroline Allison, who is also her ex-girlfriend. Bankman-Fried's attorneys say she made mistakes but had no malicious intent.
Ellison also pleaded guilty to wire fraud and had his testimony rebutted in his opening statements Wednesday.
Earlier Thursday, Adam Yedidia, another MIT classmate who worked for FTX, testified that Bankman-Fried knew of and was concerned about FTX's potential shortfall of $8 billion in Alameda loans over five months. until the collapse of both companies. Yedidia told the jury he would testify under immunity from prosecution.
Yedidia said he discovered Alameda's large liability to FTX in June 2022 while working on an internal accounting program and decided to discuss the matter with Bankman-Fried.
"It was for me," Yedydya testified. "To Alameda, FTX's debt seemed like a lot of money. And he wanted to make sure Alameda could pay off that debt. When asked by Assistant US Attorney Daniel Sassoon why he was concerned, Yedidia said, "FTX's clients may need $8 billion."
Yedidia said she raised the issue with Bankman-Fried outside the $35 million luxury condo she shared with eight other people in the Bahamas. "Everything is fine?" He said he asked.
"In response, Sam said something like, 'Last year we defended. This year we're not bulletproof,'" Yedidia testified, adding that Bankman-Fried seemed nervous and worried. Yedidia said this was not typical of a friend I had known. for many years.
Yedidia claims he received a $6 million bonus at the end of 2021, which he immediately invested in FTX shares. Although his base salary was between $175,000 and $200,000, Yedidia said he received millions of dollars in cash bonuses and stock options.
During cross-examination of Yedidia, the defense tried to play down Bankman-Fried's net worth, once estimated at $26 billion, by comparing the penthouse in the Bahamas to a guesthouse and asking Yedidia if she had seen sometimes one that her friend watched and played sports. owned cars, purchased yachts or luxury goods. Yedidia's clothes said no.
"I've never seen her in nice clothes," he said.
Prosecutors tried to emphasize the close friendship between Yedidia and Bankman-Fried by asking the former about a conversation in which the FTX co-founder sought advice about his relationship with Ellison.
Yedidia testified that Bankman-Fried told her in 2019 that she and Ellison, who was not yet Alameda's CEO, had had sex and asked if it would be a good idea for them to go on a date.
"I said no," Yedidia said, without elaborating.
Later, when customers quickly left FTX in November 2022, Yedidia and Bankman-Fried texted each other.
"I told him, 'I love you, Sam, I'm not going anywhere, don't worry,'" Yedidia said on the witness stand.
But he said he resigned shortly after learning that Alameda Research was using FTX client funds to pay its creditors.
Yedidia said he has not spoken to Bankman-Fried since his resignation. Unlike Vahn, the two made eye contact when Jedidiah entered the courtroom and nodded in appreciation.
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