Bankman-Fried is standing trial for allegedly stealing billions of dollars from customers of the now-bankrupt cryptocurrency exchange platform FTX. The case has been called one of the biggest financial frauds in US history.
Gary Wang, FTX co-founder, began his testimony against Sam Bankman-Fried on Thursday, alleging that he and his former college roommate and boss committed financial crimes and lied to the public before the cryptocurrency trading platform collapsed last year.
The witness admitted to creating a software code for FTX which gave "special privileges" to Alameda Research, a cryptocurrency hedge fund that Bankman-Fried also co-founded.
According to Wang, the defendant directed the illegal move, that allowed Alameda to withdraw funds up to $65 billion (€61.8 billion) from FTX.
Damian Williams, the US attorney leading the prosecution, has called the case one of the biggest frauds in US history.
Adam Yedidia, a former FTX computer programmer who also took the stand on Thursday, confronted Bankman-Fried when he noticed that Alameda had borrowed $8 billion (€7.6 billion) from FTX. He said the executive appeared worried.
“Sam said something like, ‘We weren’t bulletproof last year. We're not bulletproof this year,’” Yedidia recalled when testifying.
Wang is the first of a trio of former top executives scheduled to testify against Bankman-Fried. They have all pleaded guilty to fraud charges in cooperation deals with prosecutors that could win them substantial leniency at sentencing.
What is Bankman-Fried accused of?
The 31-year-old crypto magnate was arrested in the Bahamas last December and brought to the US. That was just a few weeks after FTX collapsed and went bankrupt, as investors ran to withdraw their deposits when reports surfaced about the dim condition of sister company Alameda’s balance sheet.
Prosecutors say the defendant defrauded people and financial institutions who had accounts worth billions of dollars at FTX by stealing massive amounts of their money for his personal use.
With those funds, Bankman-Fried allegedly made risky trades at Alameda, bought luxury beachfront real estate and made over $100 million (€95 million) in political contributions to try to influence government regulation of cryptocurrency.
The crypto mogul denies wrongdoing and has pleaded not guilty. In interviews and social media posts, he has acknowledged making huge mistakes while running FTX but insists he had no criminal intent.
“I didn’t steal funds and I certainly didn’t stash billions away,” he said in a post earlier this year on the online platform Substack.
The trial started this week and is expected to end before late November.
Bankman-Fried has been jailed since August.