Gary Wang's Testimony Exposes Diversion of Billions from Customer Accounts
Last Friday, Gary Wang, one of the co-founders of FTX, delivered a captivating testimony to federal prosecutors. He made serious allegations against CEO Sam Bankman-Fried, claiming that Bankman-Fried covertly used billions of dollars from customer accounts to bolster trades for his hedge fund, Alameda Research. Wang provided detailed insights into how Bankman-Fried instructed him to create a specialized trading tool that allowed Alameda to overdraw its account and utilize FTX clients' funds without their knowledge.
Wang's Revelations Shed Light on SBF's Alleged Misappropriation
During his testimony, Gary Wang, formerly FTX's chief technology officer, revealed how he and developer Nishad Singh engineered a feature called "allow negative." This feature granted Alameda the ability to trade on unbacked credit. Wang's account contradicted the narrative presented by Michael Lewis, the author of "The Big Short," and painted a bleak picture of FTX's internal operations. He emphasized that FTX was not in a stable condition and that its assets were far from fine.
The gripping testimony was live-streamed on social media platform X (formerly Twitter) by journalist Matthew Russell Lee of Inner City Press. Additional accounts of the proceedings emerged from the courthouse. Wang disclosed that while Bankman-Fried justified the creation of the trading tool for Alameda's role as the primary market maker and for FTT token trades, its actual application went beyond those stated purposes.
This concealed mechanism allowed Alameda to overdraw up to $100 million from customer funds. Wang's investigation in early 2020 uncovered Alameda's astonishing negative balance exceeding $200 million, despite FTX reporting revenues of just $150 million. Wang emphasized that the funds utilized by Alameda were directly sourced from FTX's clientele.
Accusations of Public Deception and Massive Debt
Wang's accusations painted Sam Bankman-Fried as a perpetrator of public deception. While publicly assuring clients about the safety of their funds, Bankman-Fried allegedly allowed Alameda's deficit to soar to a staggering negative $20 billion. Prosecutors reinforced this claim through a revealing spreadsheet presented in court. Wang further highlighted that Alameda boasted an enormous $65 billion credit line.
Following the accidental disclosure of Alameda's massive debt, Wang revealed how Bankman-Fried orchestrated repayments to specific lenders, including Genesis Trading. Contrary to Bankman-Fried's public denials on platforms like Twitter and in media interactions, Wang asserted that these repayments were sourced from FTX's user base.
Tumultuous Moments and Collaboration with U.S. Authorities
Wang detailed a tense period in which he accompanied Bankman-Fried and associates to the Bahamas amidst the unfolding crisis. After the bankruptcy declaration, Bankman-Fried reportedly instructed Wang to suspend U.S. transactions and coordinate with the more accommodating regulators in the Bahamas.
However, Wang swiftly left the Caribbean on November 16 and collaborated with U.S. law enforcement officials the very next day. His cooperation aimed to secure a favorable outcome, with Wang expressing his hope to avoid imprisonment.
What are your thoughts on Gary Wang's second day of testimony? Share your opinions and views on this subject in the comments section below.
Frequently Asked Questions
What are the three types?
There are three main types of IRAs. Each type has its benefits and drawbacks. Below, we'll discuss each one.
Traditional Individual Retirement Accounts
A traditional IRA allows pre-tax money to be contributed to an account. This allows you to earn interest and defer taxes. When you retire, your withdrawals are not subject to tax.
Roth IRAs allow after-tax dollars to go into an account. Earnings are exempt from tax. If you withdraw funds for retirement, your withdrawals from the account are exempted of tax.
Similar to a Roth IRA except that employees must make additional contributions. The additional contributions are subject to tax, but earnings accrue tax-deferred. The entire amount can be converted to a Roth IRA if you are leaving the company.
Is it possible to hold precious metals in an IRA
This question is dependent on whether an IRA owner wishes to diversify into gold or silver, or keep them safe.
There are two options for him if he wants to diversify. He could buy physical bars of gold and/or silver from a dealer or sell these items back to the dealer at the end of the year. Imagine he doesn't desire to sell off his precious metals investments. In such a case, he should not sell his precious metal investments. They would be perfect for storing in an IRA account.
What proportion of your portfolio should you have in precious metals
Protect yourself against inflation by investing in physical gold. This is because when you invest in precious metals, you buy into the future value of these assets, not just the current price. You can expect your investment to increase in value with the rise of metal prices.
Tax benefits will accrue if your investments are kept for at most five years. And if you sell them after this period, you will have to pay capital gains taxes. Visit our website to find out more about buying gold coins.
Which type or type of IRA would be best?
When choosing an IRA, it is important to choose one that suits your lifestyle and goals. You should consider whether you wish to maximize tax deferred growth, minimize taxes now, pay penalties later or avoid taxes altogether.
The Roth option is a good choice if you have a lot of money saved for retirement, but not enough to invest. It is also an option if you are still working after age 59 1/2. You can expect to pay income taxes for any accounts that are withdrawn.
The traditional IRA is better if you want to retire earlier because you will likely owe tax on your earnings. If you are going to be working beyond 65 years old, the traditional IRA may make more sense because you can withdraw all or part of your earnings without having to pay taxes.
- Silver must be 99.9% pure • (forbes.com)
- You can only purchase gold bars of at least 99.5% purity. (forbes.com)
- The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
How to change your IRA to a gold IRA
Do you want to change your retirement savings away from a traditional IRA and into a golden IRA? Well, this article will help you do just that. This is how you can make the switch.
Rolling over is the process of transferring money from one type of IRA to another. Rolling over an account offers tax advantages. Some prefer to invest directly in physical assets like precious and rare metals.
There are two types IRAs – Traditional IRAs, and Roth IRAs. The difference between these two accounts is simple: Traditional IRAs allow investors to deduct taxes when they withdraw their earnings, while Roth IRAs don't. If you put $5,000 into a Traditional IRA today, after five years you can only withdraw $4,850. The Roth IRA would allow you to keep every cent if you invested the same amount.
These are some things to consider if you plan to convert from a Traditional IRA to a Gold IRA.
First, you will need to decide whether your current balance should be transferred to a new account. If you transfer money, income tax will apply to any earnings exceeding $10,000. However, if your IRA is rolled over, these earnings will not be subjected to income tax until age 59 1/2.
Once you have decided to open a new bank account, Most likely, you will need to present proof of identity such as a Social Security Card, passport, or birth certificate. After that, you'll need to sign paperwork proving you own an IRA. Once you've completed the forms, you'll submit them to your bank. After verifying your identity, they will give you instructions about where to send wire transfers or checks.
Now comes the fun part. The fun part is when you deposit cash into the account, and then wait for the IRS approval. Once you have received approval, you will receive a letter that allows you to withdraw funds.
That's it! Now all you have to do is sit back and watch the money grow. Remember that if you are unsure whether you want to convert your IRA, it is possible to close it and roll the balance over into a new IRA.
By: Jamie Redman
Title: Former FTX Co-Founder Reveals Alleged Misuse of Customer Funds by CEO Sam Bankman-Fried
Sourced From: news.bitcoin.com/bankman-frieds-house-of-cards-ftx-co-founder-gary-wang-spills-the-beans-on-alleged-misuse-of-client-funds/
Published Date: Fri, 06 Oct 2023 23:30:44 +0000