Gary Wang, FTX’s co-founder and former Chief Technology Officer of the bankrupt exchange, has revealed details of the special privileges the defunct firm granted to sister company, Alameda Research.
An October 6 post on X (formerly Twitter) by Inner City Press detailed the court proceeding involving the testimony of Wang.
The Special Privileges
Per Wang’s testimony, Alameda enjoyed special privileges on the defunct cryptocurrency exchange, allowing it to trade faster and beyond its balance.
Wang revealed that he and the Chief Engineer, Nishad Singh, had introduced a unique code. This code enabled Alameda to maintain a negative balance right after the launch of FTX.
Furthermore, the affiliated company could withdraw funds even if their accounts showed zero balance. Thanks to an extensive line of credit.
In contrast, regular customers held credit lines up to $1 million. A a far cry from the billion-dollar limit enjoyed by Alameda. Importantly, the “allow negative” feature was exclusively accessible to Alameda.
The former CTO clarified that these privileges were extended to Alameda due to its pivotal role as FTX’s market maker. According to Wang, liquidating Alameda’s huge position could cause damage to the platform.
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Author: Oluwapelumi Adejumo
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