Crypto exchange FTX used hidden Python code to misrepresent the value of its insurance fund — a pool of funds meant to prevent user losses during huge liquidation events — according to testimony from FTX co-founder Gary Wang.
In a damning new testimony on Oct. 6, FTX’s former chief technology officer, Gary Wang, said that FTX’s so-called $100 million insurance fund in 2021 was actually fabricated, and also never actually contained any of the exchanges’ FTX tokens (FTT) as claimed.
Instead, the figure shown to the public was calculated by multiplying the daily trading volume of the FTX Token by a random number close to 7,500.
When the prosecution surfaced the above tweet — among other public statements of its value — and asked Wang whether this amount was accurate he replied with a single word: “No.”
“For one, there is no FTT in the insurance fund. It’s just the USD number. And, two, the number listed here does not match what was in the database.”
An exhibit in the Oct. 6 trial shows the alleged code used to generate the size of the so-called “Backstop Fund” or public insurance fund.
From yesterday’s exhibits in US v. Sam Bankman-Fried:
The prosecution shows that the “insurance fund” that FTX bragged about was fake, and just calculated by multiplying daily trading volume by a random number around 7500 pic.twitter.com/EDiVPOHODP
FTX’s insurance fund was designed to protect user losses in case of huge, sudden market movements and its value was often touted on its website and social media.
According to Wang’s testimony, however, the amount contained within the fund was often insufficient to cover these losses.
For example, in 2021, a trader was able to exploit a bug in FTX’s margin system to take an outsized position in MobileCoin, which resulted in a loss to the tune of hundreds of millions dollars for FTX, according to Wang.
When Bankman-Fried realized that the insurance fund had all but been exhausted, Wang said he was told to make Alameda “take on” the loss. This was supposedly in an attempt to hide the loss, as Alameda’s balance sheets were more private than those of FTX.
In addition to revealing the allegedly fraudulent nature of FTX’s insurance fund, Wang claimed that he and Nishad Singh were prompted by Bankman-Fried to implement an “allow_negative” balance feature in the code at FTX, which allowed Alameda Research to trade with near-unlimited liquidity on the crypto exchange.
Coinbase, Kraken, Ripple, a16z and others pressed the Senate to add explicit protections for developers and non-custodial services in the market structure bill.
Reform’s plan was meant to be detailed. Instead, there’s more confusion.
The party had grown weary of the longstanding criticism that their tough talk on immigration did not come with a full proposal for what they would do to tackle small boats if they came to power.
So, after six months of planning, yesterday they attempted to put flesh on to the bones of their flagship policy.
At an expensive press conference in a vast airhanger in Oxford, the headline news was clear: Reform UK would deport anyone who comes here by small boat, arresting, detaining and then deporting up to 600,000 people in the first five years of governing.
They would leave international treaties and repeal the Human Rights Act to do it
But, one day later, that policy is clear as mud when it comes to who this would apply to.
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Image: Nigel Farage launched an airport-style departures board to illustrate how many illegal migrants have arrived in the UK. Pic: PA
I asked Farage at the time of the announcement whether this would apply to women and girls – an important question – as the basis for their extreme policy seemed to hinge on the safety of women and girls in the UK.
He was unequivocal: “Yes, women and children, everybody on arrival will be detained.
“And I’ve accepted already that how we deal with children is a much more complicated and difficult issue.”
But a day later, he appeared to row back on this stance at a press conference in Scotland, saying Reform is “not even discussing women and children at this stage”.
He later clarified that if a single woman came by boat, then they could fall under the policy, but if “a woman comes with children, we will work out the best thing to do”.
A third clarification in the space of 24 hours on a flagship policy they worked on over six months seems like a pretty big gaffe, and it only feeds into the Labour criticism that these plans aren’t yet credible.
If they had hoped to pivot from rhetoric to rigour, this announcement showed serious pitfalls.
But party strategists probably will not be tearing out too much hair over this, with polling showing Reform UK still as the most trusted party on the issue of immigration overall.
The “White Whale” increased his social media pressure campaign to $2.5 million after claiming that MEXC requested an in-person KYC verification in Malaysia.