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Private Jets, Billion Dollar Backdoors and Unlimited Withdrawals – SBF Trial Update
In summary
- FTX’s Chief Technology Officer, Gary Wang, testified that there was a code that allowed Alameda to directly receive funds from FTX, even while US $65 billion ($102 billion) in deficit
- A group of employees discovered the secret backdoor between Alameda and FTX, although no action was taken
- SBF may have to forfeit two of his private jets, worth at least US $40 million ($62 million)
New revelations have emerged overnight surrounding cryptocurrency’s highest-profile criminal case – the trial of Sam Bankman-Fried. As witnesses and testimonies from the trial begin to circle in the media, more and more information is coming to light surrounding the FTX exchange’s gross misuse of customer funds.
Alameda Received “Special Treatment”
Alameda, FTX’s investment arm and SBF’s pet project, was heavily embroiled in the criminal trial from the outset – it’s what kick-started the FTX collapse, after all. However, the degree of mismanagement SBF afforded to Alameda has become alarmingly clear, thanks to statements from ex-employees of FTX.
Former Chief Technology Officer, Gary Wang, testified: “We allowed Alameda to withdraw unlimited funds.” It appears that SBF directed revenue generated from the FTX exchange to cover losses incurred by Alameda, as well as customer’s funds. The money became accessible due to a secret backdoor code that allowed easy – but covert – transactions between the two businesses. Prosecutors have suggested this direct link allowed Alameda to operate even while in the red US $65 billion ($102 billion).
Although this use of customer’s funds was intended to be a secret, several ex-employees have come forward stating that they actually uncovered the code while sifting through FTX’s backend. The group attempted to raise the issue with the crypto exchange’s higher-ups, but their voices were never heard.
According to the WSJ, Jim Outen, one of the people who found the code, wrote to their boss: “Just wanted to point out that there are currently a few places in the… code base where Alameda gets special treatment.”
SBF Could Lose Private Jets
As stories of SBF’s misdeeds continue to surface, it seems part of his punishment might include losing two of his most prized possessions – his private jets. Prosecutors put together a “forfeiture bill of particulars”, a list of assets that the defendant (SBF) may have to forfeit as part of the criminal trial due to their use as part of illegal activities. Included in this list were two private jets – the Bombardier Global 5000 and an Embraer Legacy.
The aircraft won’t even come close to covering the ~ US $8 billion ($12.5 billion) in customer funds FTX lost due to risky trading and illegal donations – but they aren’t cheap, either. The Bombardier Global 5000 has a reported value of approximately US $27-50 million ($42-78 million), while an Embraer Legacy 650 can go for anywhere between US $16 and 20 million ($25 to 31 million).
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
