The FTX co-founder dramatically revealed in court on Thursday that he committed fraud with Sam Bankman-Fried.
Gary Wang, who has pleaded guilty to his role in the scheme, agreed when prosecutors asked him whether he “committed financial crimes” while working at FTX, where he was a technical director.
When asked about the nature of the crimes, Wang replied: “Wire fraud, commodity fraud, securities fraud.”
Wang, a key prosecution witness, said he committed the crimes along with Bankman-Fried, Caroline Ellison and Nishad Singh.
Ellison previously ran Alameda Research, FTX’s sister company, and Singh was a top engineer at FTX. Both have admitted their involvement in the scheme and are expected to testify at trial.
FTX founder Sam Bankman-Fried is stuck in the Bahamas after stepping down 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.
They were roommates at MIT, Wang said in court, but he has now turned against his former friend.
The court heard that Wang and Bankman-Fried owned both FTX and Alameda Research.
Explaining the fraud, Wang said: “We gave Alameda Research special privileges that allowed it to withdraw unlimited amounts of funds from the platform (FTX) and lied to the public about it.”
Wang said that before FTX collapsed, Alameda had borrowed $8 billion from FTX, which was all funds from FTX customers.
Another benefit given to Alameda was a $65 billion credit line with FTX, which Wang said was much larger than other major investors.
Earlier in the day, the jury was shown 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 living there complained about the rent for the penthouse, which was apparently $15,000 each.
The residents of the property sent group messages with the group name “People of the House.”
In one of them, a person said they could “probably pay $15,000 a month” but said it would be “pretty difficult.”
Wang, a key prosecution witness, said he committed the crimes along with Bankman-Fried, Caroline Ellison and Nishad Singh. Both have admitted their involvement in the scheme and are expected to testify at trial
Bankman-Fried with Alameda Research managing director Caroline Ellison and FTX co-founder Gary Wang to her left, at Bankman-Fried’s birthday in Hong Kong. The group wore wigs similar to Bankman-Fried’s hairstyle
The 31-year-old was arrested at the exclusive 12,000-square-foot residence in the Bahamas, where he was living with eight college friends after setting up the company’s headquarters there
Adam Yedidia, who worked as a software engineer at FTX until November 2022, told the court that he resigned when he discovered that Alamada Research, FTX’s sister company, was using FTX customers’ deposits to pay off its creditors.
On Thursday, he testified that he remembered that “the cost of the rent sounded very high” and “in relation to an apartment that cost $35 million.”
It is unclear why FTX employees were paying rent when Bankman-Fried purchased the apartment.
At the end of the news, Bankman-Fried wrote that he “assumed that basically only Alameda (Research, FTX’s sister company) was paying for it.”
Assistant U.S. Attorney Danielle Sassoon asked Yedidia if Bankman-Fried “frequently slept on a bean bag chair?”
This detail was often repeated in Bankman-Fried’s profiles to show that he was an unconventional billionaire.
Yedidia said this is “much rarer” than when FTX was previously based in Hong Kong.
In the Bahamas, he would “nap occasionally, but not very often,” he said.
Yedidia revealed that Bankman-Fried had asked him for advice regarding Caroline Ellison, who was in charge of Alameda.
He said: “At some point in early 2019 the defendant told me that he and Caroline had had sex and asked if it was a good idea for them to date. “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 risk-taker than many people” and that taking risks was “rational.”
Adam Yedidia, who worked as a software engineer at FTX until November 2022, told the court that he resigned when he discovered that Alamada Research, FTX’s sister company, was using FTX customers’ deposits to pay its creditors.
Yedidia gave his testimony under an immunity agreement, meaning he could not be prosecuted for his statements. Yedidia said he was worried he may have “accidentally” written something into FTX’s code that was used for criminal activity.
He called Bankman-Fried a “close friend” whom he first met at MIT, where they lived together.
The jury watched a video posted on the FTX website called “Get To Know Crypto,” which explained what cryptocurrency is and featured a cartoon version of Bankman-Fried.
It described FTX as a group of “visionaries” and said FTX is a place where “investment and ethics can come together.”
The jury was shown the cover of Forbes magazine that featured Bankman-Fried, and Yedidia said the former FTX boss played an important role in marketing the company.
The judges also watched the TV commercial for FTX featuring Tom Brady playing golf, in which the football legend says FTX is the “best way to get in the game.”
Brady’s then-wife Gisele also appears in the eye-catching advertisement.
The jury also saw FTX’s Super Bowl commercial featuring Larry David, for which he was reportedly paid $10 million.
In the ad, David jokingly tells an actor not to invest in crypto because he is right about everything.
After both were paraded, Judge Lewis Kaplan asked Yedidia, “Who is Tom Brady?”
He replied that he was a football player.