The co-founder of bankrupt digital asset exchange FTX says that its sister firm Alameda had been using billions of dollars worth of FTX customer assets for trading purposes as early as 2019.

According to lengthy court transcripts released by Inner City Press on the social media platform X, FTX co-founder Gary Wang was recently questioned by an Assistant United States Attorney about his involvement in the alleged fraud.

Wang – alongside Sam Bankman-Fried and other FTX executives – is accused of defrauding investors and mishandling billions of dollars worth of customer funds related to the 2022 downfall of FTX. However, Wang and others have decided to cooperate with authorities and testify against Bankman-Fried.

Wang says Nishad Singh, another co-founder of FTX, added an “allow negative” feature to FTX’s platform code in 2019 that enabled Alameda to use more money than it had in its account to prop up FTX Token (FTT) as well as for trading purposes.

“Sam asked Nishad and I to [add the code]. In 2019. It was about FTT, a cryptocurrency we created to act as equity in FTX.

But it wasn’t only used for FTT – Alameda used it to do trading when its account balance was below zero.”

Wang goes on to say that Alameda used the “allow negative” feature to withdraw $8 billion worth of fiat currency and digital assets from FTX since July 2019.

Wang also says that customers never agreed to have their funds used in such a way, adding that Bankman-Fried authorized Alameda to have a line credit to the tune of $65 billion.

If convicted of his charges, Bankman-Fried faces several decades behind bars.

Featured Image: Shutterstock/Tatkhagata

The post Alameda Tapped Billions of Dollars in FTX User Funds As Early as 2019, Says Co-Founder Gary Wang: Report appeared first on Crypto News Australia.

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Filed under: Bitcoin - @ October 8, 2023 5:23 pm