The FTX Co-Founder Proved Assistance to the US Authorities

FTX co-founder Gary Wang, who was found guilty of misappropriating funds on a fictitious crypto exchange, could face sentencing after his case goes to trial.

On November 13, prosecutors in the U.S. District Court for the Southern District of New York filed a brief alleging that Wang provided significant assistance in the investigation of FTX-related crimes, as well as the prosecution of Sam Bankman-Fried and several others. cases.

Government lawyers pointed out the importance of Wang’s testimony at the trial of Bankman-Fried, who was sentenced to 25 years in prison. They also suggested that if Judge Lewis Kaplan decides to sentence Wang, he could develop a tool to detect potential illegal activity in the crypto market. Prosecutors noted that Wang’s statement was accurate and supported by other evidence.

“Wang also provided significant assistance by using his exceptional computer programming skills to detect potential fraud in the stock and cryptocurrency markets, and in the process took steps to right past wrongs.”

court application

Wang, who pleaded guilty to wire fraud, commodity fraud and securities fraud in December 2022, awaits final sentencing on November 20.

Is the FTX story nearing its end?

The latest updates will make Wang the fifth and final FTX or Alameda Research executive to be sentenced. Bankman-Fried was the only person to plead not guilty. In response, former Alameda CEO Caroline Ellison and FTX Digital Markets co-CEO Ryan Salame pleaded guilty. All are currently serving federal prison sentences.

But new details continue to emerge in the Bankman-Fried case, and cases are emerging even as the founder of what was once one of the world’s largest stock exchanges remains in prison.

Meanwhile, Bankman-Fried’s assets are under threat

Previously, US prosecutors filed a lawsuit to seize Bankman-Fried’s cryptocurrency, which they said bribed Chinese officials.

The lawsuit, filed Nov. 12 in New York District Court, alleges that a Binance account, then valued at about $8.6 million but later increased to about $18.5 million, was used to launder money related to kickbacks before FTX collapsed in late 2022 .

Prosecutors stated that in 2021, Chinese authorities frozen two Alameda Research accounts holding $1 billion worth of cryptocurrencies on Chinese exchanges. Later, on November 16, 2021, Bankman-Fried was recorded transferring $40 million to his personal wallet, after which his Alameda accounts were frozen. Prosecutors allege Bankman-Fried initiated additional cryptocurrency transactions worth tens of millions of dollars to complete the bribe.

“Through investigation, the Government learned that on or about November 16, 2021, at the direction of Bankman-Fried, approximately 40 million USDT (“Bribe Payment”) was transferred from an Alameda cryptocurrency wallet hosted by FTX.”

court application

The account contained five linked deposit accounts that concealed the source of the bribe funds. They described a “flood” of deposits and withdrawals from the account and regular transfers of Bitcoin (BTC) and stablecoins to five wallets. Ellison stated that the total bribe amount was approximately 150 million dollars.

Bankman-Fried was initially indicted on additional charges of financial fraud and bribing foreign officials, but those charges were later dropped. On September 13, the defense team filed an appeal, arguing that Bankman-Fried’s trial was unfair.

Meanwhile, the new FTX management is bombarded with lawsuits

Meanwhile, FTX’s new management is once again preparing a lawsuit and demanding money. This time from Binance.

FTX bankruptcy trustees filed a lawsuit against Binance and its former CEO Changpeng Zhao, seeking returns of approximately $1.8 billion. The plaintiffs allege that Binance obtained the funds through a fraudulent transaction in 2021.

According to court documents, FTX and its trading subsidiary Alameda Research were likely insolvent from the beginning, and were certainly insolvent on their balance sheets in early 2021. Therefore, the plaintiffs allege that the share repurchase agreement was fraudulent.

The lawsuit is one of several that FTX and Alameda have filed against their former investors, affiliates and customers as part of the bankruptcy case. On November 9, companies filed 23 lawsuits. These include allegations against US exchange Crypto.com and the FWD.US political group founded by Mark Zuckerberg.

FTX also filed a lawsuit against Anthony Scaramucci and his hedge fund SkyBridge Capital. The exchange’s lawyers allege that Bankman-Fried invested $67 million in various SkyBridge projects in 2022 as Scaramucci was “seeking financial assistance.” But the plaintiffs say those investments “provided almost no benefit.” FTX is currently trying to recover more than $100 million in losses from the company, according to court documents.

Alameda also filed a lawsuit against Sasha Ivanov, founder of the Waves blockchain. The company plans to return the $90 million invested in Vires Finance. This liquidity platform later ran on Waves.

“To divert attention from his involvement in the scam, Ivanov attempted to publicly accuse Alameda of destabilizing the Waves ecosystem, tweeting that Alameda was manipulating the WAVES price and organizing FUD (“Fear, Uncertainty and Doubt”) campaigns to trigger panic selling. ”

Alameda case So what’s next?

In general, the history of FTX and exchange managers are two different stories. While platform executives serve their sentences, FTX creditors are frantically trying to get back the money they wasted.

The debt to creditors is approximately 11.2 billion dollars, and the fund to cover the debt is 14.6-16.3 billion dollars.

Therefore, there is little time left until the end of the scandalous exchange story to decide on Wang’s punishment and pay off everyone’s debts.