FTX fraud trial: court hears Sam Bankman-Fried used crypto exchange clients’ funds without permission to invest through his personal hedge fund

FTX co-founder Gary Wang Zixiao is the first major witness to appear at his former partner’s trial for fraud, embezzlement and criminal conspiracy

Wang testified that Bankman-Fried was willing to break the law and lie to enable FTX and hedge fund Alameda Research to post strong growth and profits

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Sam Bankman-Fried, founder and former chief executive of cryptocurrency exchange FTX, has been charged with seven counts of fraud, embezzlement and criminal conspiracy, and if convicted could face more than 100 years in prison. Photo: AP

Published: 12:38pm, 7 Oct 2023Updated: 2:00pm, 7 Oct 2023

Sam Bankman-Fried knowingly used FTX clients’ funds without permission to invest through his personal hedge fund, the disgraced cryptocurrency titan’s former business partner testified in court on Friday.

Gary Wang Zixiao, a co-founder of FTX with Bankman-Fried, has already pleaded guilty to multiple counts related to the cryptocurrency trading platform’s stunning collapse, and has agreed to cooperate with federal prosecutors.

He is the first major witness to appear at his former partner’s trial, which began on Tuesday in New York and could last up to six weeks.

The 31-year-old Bankman-Fried, known as “SBF”, has been charged with seven counts of fraud, embezzlement and criminal conspiracy, and if convicted could face more than 100 years in prison.

This courtroom sketch shows FTX founder Sam Bankman-Fried, far left, listening during his fraud trial in New York, as Assistant US Attorney Nicholas Roos, centre, questions FTX co-founder Gary Wang Zixiao, far right, in court on October 6, 2023. Photo: AP

In November 2022, Bankman-Fried’s cryptocurrency exchange platform imploded, unable to cope with massive withdrawal requests from customers panicked to learn that some of FTX’s funds had been committed to risky operations by Alameda Research, his personal hedge fund.

Wang, who was FTX’s chief technology chief at the time of the collapse, on Friday described Bankman-Fried as willing to break the law and lie to enable FTX and Alameda to post strong growth and profits.

FTX fraud trial: court hears Sam Bankman-Fried used crypto exchange clients’ funds without permission to invest through his personal hedge fund

FTX co-founder Gary Wang Zixiao is the first major witness to appear at his former partner’s trial for fraud, embezzlement and criminal conspiracy Wang testified that Bankman-Fried was willing to break the law and lie to enable FTX and hedge fund Alameda Research to post strong growth and profits