Sam Bankman-Fried asked FTX co-founder Gary Wang to create a “secret” backdoor that enabled Alameda Research to borrow $65 billion of customers’ money from the defunct crypto exchange, FTX lawyer said.
Gary Wang, who has pleaded guilty for his involvement in FTX collapse, was told to create a “backdoor” for Alameda to borrow from customers on the exchange without permission,” said FTX lawyer Andrew Dietderich.
Alameda had backdoor access to FTX customers’ funds
Andrew Dietderic told bankruptcy court in Delaware that Wang created this backdoor by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, without customers’ consent. The limit of that credit line was $65 billion, the lawyer added, as per NYPost report.
Earlier, similar allegations were made by CFTC against the crypto exchange founders. However, the CFTC did not mention how much funds Alameda had access to. At the same time, reports surfaced claiming that SBF moved $10 billion between the two companies, and $2 billion remained unaccounted for.
In his press run later last year, SBF denied all such claims of building a backdoor access in FTX.
SBF used backdoor accessed funds to spend on luxury
FTX lawyer further revealed in court that Alameda used those $65 billion back door accessed funds to buy planes, houses, throw parties, and make political donations. Court filings disclose that SBF spent nearly $40 million on hotels, travel, food and luxury items in just nine months. FTX employees in the Bahamas had perks including free travel to anywhere in the world at the FTX office. Millions of dollars were spent on meals and entertainment just a few months before FTX filed for bankruptcy.
SBF recently filed in a court seeking to block FTX creditors from taking his Robinhood shares worth $450 million.
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