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Sam Bankman-Fried “directed FTX co-founder to create secret backdoor” to Alameda Research


A bombshell testimony revealed that the co-founder of the cryptocurrency exchange FTX was ordered by Sam Bankman-Fried for creating a “secret” backdoor to funnel money to Alameda Research.

FTX attorney Andrew Dietderich told the Delaware bankruptcy court on Wednesday that Gary Wang was told to set up a secret line of credit of client funds from FTX to the hedge fund.

Dietderich told the court that Wang “created this backdoor by inserting a single number into millions of lines of code for the exchange,” creating the line of credit, which “the customers did not agree to.”

FTX’s attorney testified that the backdoor was “a secret way for Alameda to take loans from customers on the exchange without authorization,” Business Insider reported.

A bombshell testimony has revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to set up a ‘secret’ backdoor to funnel money to Alameda Research

“Wang created this backdoor by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda that the customers did not agree to,” Dietderich testified.

“And we know the size of that line of credit.” It was $65 billion.

Bankman-Fried transferred $10 billion between the two companies, with another $2 billion still unaccounted for, sources told Reuters in November.

The attorney’s testimony backs up allegations made by the Commodity Futures Trading Commission, the independent federal agency that “regulates derivatives such as futures and swaps,” according to their website.

Last month, the CFTC filed charges against Wang and Alameda Research CEO Caroline Ellison, who was also Bankman-Fried’s on-again, off-again girlfriend.

The CFTC accused Wang of creating a “virtually unlimited” secret line of credit. Dietderich’s testimony is believed to be the first time an FTX employee has given the line of credit a hard dollar value.

Wang and Ellison pleaded guilty to federal charges including fraud and conspiracy. They have cooperated with the investigators.

FTX attorney Andrew Dietderich told a Delaware bankruptcy court on Wednesday that Gary Wang was told to set up a secret line of credit of client funds from FTX to the hedge fund

FTX attorney Andrew Dietderich told a Delaware bankruptcy court on Wednesday that Gary Wang was told to set up a secret line of credit of client funds from FTX to the hedge fund

Bankman-Fried was seen arriving for a plea hearing in US Federal Court in New York on January 3.  He has pleaded not guilty to fraud and other criminal charges

Bankman-Fried was seen arriving for a plea hearing in US Federal Court in New York on January 3. He has pleaded not guilty to fraud and other criminal charges

Bankman-Fried, who was arrested and extradited to the U.S. from his home base in the Bahamas last month, is under house arrest at his parents’ $4 million Palo Alto home under the terms of his release on $250 million bond.

While awaiting trial, Bankman-Fried published a post on Substack’s blog Thursday declaring his innocence.

“I did not steal funds and I certainly did not hide billions,” Bankman-Fried wrote.

“Almost all of my assets were and still can be used to support FTX customers.”

The 30-year-old disgraced former crypto kingpin has accused Binance boss Changpeng ‘CZ’ Zhao of waging a sustained campaign to destroy his empire.

DailyMail.com uncovered a photo from March 2021 showing SBF, 30, with his arm around ex-girlfriend Caroline Ellison, 28, from his 29th birthday.  They are pictured with FTX co-founder Gary Wang (left)

DailyMail.com uncovered a photo from March 2021 showing SBF, 30, with his arm around ex-girlfriend Caroline Ellison, 28, from his 29th birthday. They are pictured with FTX co-founder Gary Wang (left)

A judge scheduled the case against SBF to begin on October 3 during his January 3 hearing

A judge scheduled the case against SBF to begin on October 3 during his January 3 hearing

He claimed that Zhao’s “fateful tweet” on November 6 capped a “highly effective, months-long PR campaign against FTX.”

“In November 2022, an extreme, rapid, targeted crash triggered by Binance’s CEO rendered Alameda insolvent,” Bankman-Fried wrote.

The disgraced FTX founder’s business collapsed shortly after Zhao tweeted that Binance was abandoning its position on FTX’s domestic digital token FTT.

The tweet started a domino effect that pushed Bankman-Fried Alameda Research’s crypto hedge fund into bankruptcy and FTX had to file for bankruptcy on November 11.

Bankman-Fried now faces eight criminal charges accusing him of defrauding FTX investors whose money he held. He made his first appearance in a Manhattan court last month when a judge released him on $250 million bail.

On January 3, he pleaded not guilty to charges of fraud and other crimes. A judge scheduled his trial to begin on October 3.

Continuing to speak publicly like this is likely to raise eyebrows as he ignores lawyers who advise him to “retire into a hole”. Lawyers said such statements are likely to make life more difficult for defense attorneys in his upcoming trial.


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