Sam Bankman-Fried colleagues turn on him in court, claim 'FTX defrauded all its customers'

Infamous crypto-currency mogul Sam Bankman-Fried sat through testimony from his closest colleagues as they accused his company FTX of having "defrauded" its customers and using their deposits to pay off company loans.

“I love you Sam. I’m not going anywhere," a message from witness Adam Yedidia read. Yedidia worked out of FTX’s Hong Kong office and then the Bahamas before the company collapsed.

As reported by CNBC, Yedidia revealed several messages including a group chat on the messenger service Signal. That group chat showed that Bankman-Fried “assumed it’s just Alameda paying for it in the end," in reference to his $35 million penthouse.

Alameda Research was FTX's sister hedge fund, run by the former billionaire's girlfriend Caroline Ellison. It was revealed that Alameda has a $65 billion line of credit with FTX, which eventually resulted in an $8 billion debt made up of customer deposits.

Gary Wang, co-founder of FTX, revealed that code was implanted into FTX’s software that allowed special access to Alameda. The code was written by Nishad Singh, FTX’s director of engineering.

“We gave special privileges on FTX that gave unlimited withdrawals on the platform to Alameda,” Wang said.

Wang was asked by Assistant U.S. Attorney Nicolas Roos if he had committed "financial crimes while working at FTX.”

"Yes," Wang replied. Wang revealed that these crimes included wire and commodities fraud and were carried out with Singh and Ellison.

“Mr. Wang, do you see any of the people you committed those crimes with in the courtroom today?” Roos also asked.

“Yes.”

“Who do you see?” the attorney continued.

“Sam Bankman-Fried,” Wang said.

Yedidia wrote his supportive and loving message to Bankman-Fried in November 2022, but while in court he was asked what had changed. He said that he had learned that FTX had used customer deposits to pay off loans to its creditors, calling the company's actions "flagrantly wrong."

“FTX defrauded all its customers,” Yedidia said when asked why he decided to resign. He also delivered what was described as a fiery end to his testimony; however, that was stricken from the record.

Matt Huang, co-founder and managing partner of crypto venture capital firm Paradigm, also testified in court. His company's $275 million stake in FTX was lost, and he claimed that Bankman-Fried told him the funds would not go to Alameda.

Huang also claimed that he was promised that FTX gave no preferential treatment to Alameda.

The trial is expected to last six weeks. Wang faces up to 50 years in prison, while Bankman-Fried faces life in prison from seven federal charges including wire fraud, securities fraud, and money laundering.

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