Former FTX CEO Sam Bankman Freed (SBF) Opens $65 Billion ‘Secret Backdoor Credit Facility’ For Alameda Research In Crypto Exchange Co-Founder Gary Wang FTX attorney Andrew Dietrich said.
Attorneys disclosed the information at a Delaware bankruptcy court hearing on January 11. reportThe questionable line of credit was funded by FTX customers. According to Dietderich’s testimony, “The backdoor was a covert method for Alameda to borrow from the exchange’s customers without authorization.”
“Mr. Wang created this backdoor by inserting a single number into the millions of lines of code for the exchange, creating a line of credit from FTX to Alameda that the customer did not agree to.
“And we know the size of that line of credit. It was $65 billion.”
Alameda Research, a sister company of FTX, was at the center of the dramatic collapse of cryptocurrency exchanges. November 2022, FTX Group and over 130 subsidiaries filing for bankruptcy In the US, due to the “liquidity crunch”.
In a Pre-Death Summary published on January 12, SBF Denies allegations of stolen FTX fundsHe said, “Alameda has lost liquidity and FTX International has lost liquidity as well because Alameda had opened margin positions on FTX. I made it impossible.”
In December, the US Commodity Futures Trading Commission (CFTC) filed a complaint alleging a number of unfair business practices between the two companies. The commission claimed that FTX executives created a feature in the code that “allowed Alameda to maintain an essentially unlimited line of credit on FTX.”
Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang have already pleaded guilty to charges related to the case. Bankman-Fried is pleaded not guilty to eight criminal chargesThis includes alleged campaign finance violations and wire fraud. His trial is scheduled to begin in October.