FTX’s ‘Insurance Fund’ Was an Arbitrary, Made-Up Number, According to Co-Founder Gary Wang: Report
FTX's Designated 'Insurance Fund' Revealed as a Simulated Figure Generated by Random Number Algorithm, Confirms Exchange Co-Founder Gary Wang in Court Testimony
A court transcript provided by BitMEX Research reveals that Gary Wang was questioned about the alleged insurance fund during the recent trial of former FTX CEO Sam Bankman-Fried.
According to Wang's testimony, the reported assets in the backstop fund were $5.5 million and 5 million of FTX's native token, FTT. However, Wang admitted that there were no actual FTT assets in the insurance fund, and the USD amount was lower than what was officially stated.
Wang explained that the fictitious USD figure was calculated by taking FTX's daily trading volume, multiplying it 'by a random number that's around 7500,' and then dividing the result by 1 billion.
FTX filed for bankruptcy in November of the previous year after the value of its native asset collapsed, leading to the suspension of customer withdrawals.
Bankman-Fried faces multiple charges, including allegations of defrauding customers and mishandling billions of dollars of their funds, along with illegal political contributions. If convicted, he could potentially face a sentence of over 100 years in prison.
In December, Wang reportedly pleaded guilty to federal charges connected to FTX's collapse and has since been cooperating with the prosecution, testifying against Bankman-Fried.
Oct 11, 2023