Gary Wang, Alameda Research and FTX co-founder reveals Sam Bankman-Fried’s mystery friend, nicknamed "fiat@," a hidden $8 billion liability.
Wang was calculating outflows from FTX.
Everything seemed fine, till he learned about "our Korean friend" from Nishad Singh, another executive.
Turns out, “fiat@“ was a code for a gaping $8 billion hole in FTX's balance sheet.
It was granted special privileges so that Alameda Research wouldn't have to pay interest on its line of credit.
Sam Tweeted, "FTX is fine. Assets are fine."
Four days later, they declared bankruptcy.
Alameda got the royal carpet at FTX.
Wang upped Alameda's line of credit from “a few millions” to $65.3 billion.
No interest. No auto-liquidation. Total freebies.
These perks meant Alameda was siphoning off FTX customer deposits.
In late 2019, SBF gave Alameda the green light to withdraw funds from FTX with one condition:
the amount withdrawn should not exceed FTX's trading revenue at the time.
They take out $200M.
FTX's revenue was only $150M. 🤦
2019-2022, Alameda keeps taking.
In 2020, Wang approached SBF with the findings. SBF asked him if he was counting FTT tokens.
Wang wasn't. And even though Alameda owned most FTT tokens, and this made no sense, Wang went along.
Fast-forward, June 2022.
Crypto's down, Alameda's lenders want their money back.
But how much does Alameda owe? It's a mess.
Wang first thought it was -$19B. Nope, a software bug inflated that number.
Wang, Singh, and Alameda's CEO Ellison couldn't agree on the real debt.
Wang’s final guess?
Alameda owed FTX $11B, a mix of regular debt and a mysterious $8B "fiat@" issue.
Wang will face cross-examination from SBF's defense lawyers on Tuesday.
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