Sam Bankman-Fried’s trading firm Alameda Research secretly dipped into FTX customer funds just months after the crypto exchange was founded, the company’s co-founder testified.
Gary Wang, a former college roommate of Bankman-Fried’s who became one of his closest friends and colleagues, told the jury in Manhattan federal court on Friday that he had been instructed in 2019 to let Alameda have a negative balance on FTX. Along with a “large line of credit” from the crypto exchange, that meant Alameda was soon in effect “taking customers’ money”, Wang said.
“The money belonged to customers, and the customers did not give us permission to use [it] for other things,” he said of the deposits used to fund Alameda’s negative balance, allowing the trading firm to in effect withdraw unlimited amounts from FTX.