In recent events, the loans taken from Alameda Research have been scrutinized, with lawyers representing Sam Bankman-Fried, also known as SBF, seeking clarity from FTX co-founder Gary Wang.
SBF Lawyers Into The Loan’s Legalities
Sam Bankman-Fried, the founder of the now-defunct FTX exchange, seems to be in a tangle over the loans given out by Alameda Research. Lawyers on his team are eager to question Gary Wang about the details and the legal counsels involved in the loans he received from the trading firm.
Last week, during the trial, the prosecutors delved deep into Wang’s financial activities. They pointedly asked about what they described as “a series of personal loans” that ranged from roughly $200-$300 million.
These loans were notable as they were issued to Wang from Alameda to cater to venture investments by FTX and even to fund Wang’s house purchase in the Bahamas. Reinforcing the legitimacy of these loans, Bankman-Fried’s attorneys highlighted in a recent filing:
Mr. Wang’s understanding that these were actual loans – structured by lawyers and memorialized in formal promissory notes that imposed real interest payment obligations – is relevant to rebut the inference that these were simply sham loans directed by Mr. Bankman-Fried to conceal the source of the funds.
Furthermore, Bankman-Fried’s lawyers have outlined specific questions they aim to pose to Wang if given permission. According to the filed document, the questions included:
Which attorneys were involved in the loans? What was the nature of their involvement? What documents did they prepare? What were the terms of the loan and Mr. Wang’s obligations under the loan? Whether Mr. Wang had any concerns about the loans at the time he signed them.
Alameda, FTX, And The Blurring Lines
The focal point of this trial hinges on the relationship between Alameda Research and FTX. Wang’s recent testimony shed light on an interesting arrangement. Under the guidance of Bankman-Fried, Alameda Research had a unique financial liberty: the ability to withdraw funds even when faced with a negative balance.
Wang further revealed that when withdrawals occurred, the funds would be sourced directly from FTX’s customer deposits.
Notably, this isn’t Wang’s only testimony. The once-active FTX crypto exchange’s co-founder and CTO recently revealed that the claimed $100 million insurance fund for 2021 didn’t exist and never contained any FTX tokens (FTT) as previously announced.
BitMex Research shared what it claims to be a snapshot of FTX’s contentious database code. The research indicates that FTX might have used a random number generator to display the insurance fund value to the public.
SBF Trial Day 4 – Gary Wang testimony
FTX’s published insurance fund number was fake and FTX’s published insurance fund balance was produced by a random number generator!
Transcript extracts below
Q. And the number here, what is the size of the backstop fund listed?
A. Five…— BitMEX Research (@BitMEXResearch) October 6, 2023
Featured image from Unsplash, Chart from TradingView