FTX Trial Unveils Secret Alameda Advantage

FTX and Alameda Research Connection

Gary Wang, co-founder and former Chief Technology Officer of FTX, testified on the links between the cryptocurrency exchange and Alameda Research during the trial of former CEO Sam Bankman-Fried. In a New York courtroom, Wang detailed how the Alameda account on FTX was uniquely allowed to trade beyond its available balance, a feature called "allow negative."

Implementation of the "Allow Negative" Feature

Wang revealed that Sam Bankman-Fried instructed him and former FTX engineering chief Nishad Singh to implement the "allow negative" feature in 2019. This feature enabled Alameda to reach a negative balance exceeding FTX's 2020 revenue—$200 million compared to $150 million. This exclusive feature gave Alameda a trading advantage not available to other users on the platform.

Significant Credit Line Disclosed

The trial also disclosed that Bankman-Fried extended a $65 billion credit line to Alameda, despite publicly stating a different relationship between FTX and Alameda. This revelation highlights the discrepancy between public statements and the actual financial dealings between the two entities.

These insights from the trial raise significant questions about the operational transparency and ethical practices within FTX and its affiliated companies. The ongoing proceedings are closely watched by the crypto community and regulators, as they may have far-reaching implications for the industry.