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The FTX co-founder testified in court Thursday that he committed fraud with Sam Bankman-Fried.
Gary Wang, who pleaded guilty for his role in the scheme, agreed when prosecutors asked whether he “committed any financial crimes” while working at FTX, where he was a technical director.
Asked about the type of crimes, Wang replied: “Electronic fraud, commodity fraud, securities fraud.”
Wang, who is one of the prosecution’s main witnesses, said he committed the crimes with Bankman-Fried, Caroline Ellison and Nishad Singh.
Ellison ran Alameda Research, FTX’s sister company, and Singh was one of FTX’s top engineers. Both admitted their roles in the scheme and are expected to testify at trial.
FTX founder Sam Bankman-Fried is holed up in the Bahamas after resigning as CEO on Friday.
The jury has been sworn in and opening statements are underway in the fraud trial of embattled FTX founder Sam Bankman-Fried.
Wang, 30, told the court he was born in China and had known Bankman-Fried since childhood, when they went to summer camp together.
At MIT, they were roommates, Wang told the court, but he has now turned on his former friend.
The court heard that Wang and Bankman-Fried owned both FTX and Alameda Research.
Explaining the fraud, Wang said: “We granted special privileges to Alameda Research that allowed it to withdraw unlimited amounts of funds from the (FTX) platform and lied to the public about it.”
Wang said that before FTX collapsed, Alameda borrowed $8 billion from FTX, which was entirely FTX’s customer money.
Another benefit given to Alameda was a $65 billion credit line with FTX that Wang said was much larger than that of other large investors.
Earlier in the day, the jury saw photos of Bankman-Fried and two others eating in their apartment, with a large bottle of ketchup and a can of LaCroix in the foreground.
Despite their wealth, the FTX employees who lived there complained about the penthouse rent which appeared to be $15,000 each.
People living at the property sent group messages with the group name “People in the House.”
In one, a person said they could “probably pay $15,000 a month” but said “it would be pretty difficult.”
Wang, who is one of the prosecution’s main witnesses, said he committed the crimes with Bankman-Fried, Caroline Ellison and Nishad Singh. Both admitted their roles in the scheme and are expected to testify at trial.
Bankman-Fried, with Caroline Ellison, managing director of Alameda Research, and Gary Wang, co-founder of FTX, to their left, at Bankman-Fried’s birthday party in Hong Kong. The group wore wigs resembling Bankman-Fried’s hairstyle
The 31-year-old was arrested at an exclusive 12,000 square foot plot in the Bahamas where he lived with eight college friends after setting up the company’s headquarters there.
Adam Yedidia, who worked as a software developer at FTX until November 2022, told the court he resigned when he discovered that Alamada Research, FTX’s sister company, was using FTX customer deposits to pay his creditors.
On Thursday, he said he remembered “the cost of rent seemed very high” and that it was “on par with an apartment that cost $35 million.”
It’s unclear why FTX staff were paying rent when Bankman-Fried purchased the apartment.
At the end of the messages, Bankman-Fried wrote that he “assumed it was basically Alameda (Research, FTX’s sister company) that ultimately paid.”
Assistant U.S. Attorney Danielle Sassoon asked Yedidia if Bankman-Fried “frequently slept on a beanbag?”
This detail was often repeated in profiles of Bankman-Fried to show what an unconventional billionaire he was.
Yedidia said this was “much rarer” than when FTX was previously based in Hong Kong.
In the Bahamas, he took “occasional naps, but not very frequently,” he said.
Yedidia revealed that Bankman-Fried asked for his opinion on Alameda manager Caroline Ellison.
He said: “In early 2019 the defendant told me that he and Caroline had had sex and asked me if it was a good idea for them to go out together. I said no.
“He said he thought I would say something like that.”
Yedidia told the jury that Bankman-Fried told him he was “more willing to take risks than many others” and that taking risks was “reasonable.”
Adam Yedidia, who worked as a software developer at FTX until November 2022, told the court he resigned when he discovered that Alamada Research, FTX’s sister company, was using FTX customer deposits to pay his creditors.
Yedidia testified under an immunity deal, meaning he could not be prosecuted for anything he said. Yedidia said he was concerned he had “inadvertently” written something into FTX’s code that was being used in criminal activity.
He called Bankman-Fried a “close friend” who he first met at MIT, where they lived together.
The jury watched a video posted on FTX’s website called “Get To Know Crypto” that explained what cryptocurrency is and featured a cartoon version of Bankman-Fried.
He describes FTX as a group of “visionaries” and says FTX is a place where “investing and ethics can come together.”
The jury was shown the Forbes magazine cover that Bankman-Fried was featured on and Yedidia said the former FTX boss played a major role in marketing the company.
Jurors also saw the television commercial for FTX featuring Tom Brady playing golf in which the football legend says FTX is “the best way to get into the game.”
Brady’s then-wife Gisele is also featured in the splashy ad.
The jury also saw FTX’s Super Bowl ad featuring Larry David, for which it received $10 million.
In the commercial, David jokingly tells an actor not to invest in crypto because he is right about everything.
After the two were examined, Judge Lewis Kaplan asked Yedidia, “Who is Tom Brady?”
He replied that he was a footballer.