- Former FTX CTO exposed fraudulent insurance fund claims during SBF’s trial.
- It includes allegations of fabricated numbers and deception in FTX’s financial reporting.
- SBF was accused of encouraging customer withdrawals to mask financial turmoil.
On the fourth day of the trial involving FTX founder Sam Bankman-Fried (SBF), FTX’s former Chief Technology Officer, Gary Wang, delivered a bombshell testimony that sent shockwaves through the crypto world. Parts of Wang’s revelations centered around the alleged fraudulent nature of FTX’s published insurance fund balance.
Under intense questioning, Wang admitted that the published insurance fund number on FTX’s platform was inaccurate and completely fabricated. When asked about the size of the backstop fund listed in a tweet, Wang revealed that it was purportedly $5.5 million and $5 million FTT (the native asset of FTX). However, he unequivocally stated that this number was a sham.
Furthermore, Wang explained the deception behind the published figure. “For one, there is no FTT in the insurance fund. It’s just the USD number. The number listed here does not match what was in the database,” he stated.
When pressed on the origin of the falsified number, Wang stated FTX was allegedly generating the figures independently and not based on the actual holdings within the insurance fund. In essence, FTX had been allegedly misleading its users by presenting false information regarding the size and composition of its insurance fund.
According to another account, Wang testified that Bankman-Fried deceived the public to stem the wave of customer withdrawals as FTX faced financial turmoil in the final days of the now-defunct crypto exchange.
Wang, who was once a close friend of Bankman-Fried, asserted during his testimony that Bankman-Fried was aware of FTX’s dire financial situation, which included a shortage of billions of dollars in funds. In response, Bankman-Fried encouraged his team to expedite customer withdrawals to create the illusion that FTX was not grappling with financial issues.
Wang claimed that Bankman-Fried took to X (formerly Twitter) to reassure the public about FTX’s stability despite knowing otherwise.
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