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Sam Bankman-Fried mentioned the huge debt owed by his non-public buying and selling agency Alameda to prospects of his FTX cryptocurrency alternate in June 2022, six months earlier than FTX collapsed, in keeping with testimony from one of many disgraced tycoon’s former roommates.
Adam Yedidia, who had labored at FTX, on Thursday described the dialog that befell after a recreation of paddle tennis, hiding from the Bahamas solar in a shelter on the bottom of the luxurious Albany resort the place he lived with Bankman-Fried in a $35mn penthouse.
“Are we OK?” Yedidia stated he requested Bankman-Fried, expressing considerations concerning the $8bn legal responsibility created by Alameda’s acceptance of financial institution transfers of FTX buyer cash — earlier than the alternate was in a position to safe its personal financial institution accounts.
“We have been bulletproof final 12 months, however we’re not bulletproof anymore,” Yedidia recalled Bankman-Fried saying.
The testimony, given underneath a grant of immunity from prosecution, suggests Bankman-Fried knew about how FTX buyer cash had flowed to Alameda’s accounts lengthy earlier than the corporate collapsed in November 2022. Yedidia’s cross examination will proceed afterward Thursday.
Yedidia’s account got here on the third day of Bankman-Fried’s carefully watched legal trial in a Manhattan courthouse, as the previous crypto billionaire battles fees that he defrauded prospects, lenders and traders in his corporations.
Yedidia stated he needed immunity as a result of he “was involved that as a developer at FTX I could have unwittingly written code that contributed to the fee of a criminal offense”.
Bankman-Fried, who has pleaded not responsible, has referred to “the poorly labelled inner bank-related account” in his telling of how the alternate collapsed, however has downplayed how a lot he knew about this banking association and when he turned conscious of the dimensions of the legal responsibility.
A buddy of Bankman-Fried’s since college, Yedidia lived with the FTX boss and co-founder Gary Wang in the identical coeducational fraternity at MIT. He joined FTX as a developer in early 2021.
Yedidia testified that he had been conscious of how FTX buyer cash was being despatched to financial institution accounts managed by Alameda, and labored on the system that settled buyer deposits. He stated he assumed that Alameda was holding the funds and would be capable to return them to prospects if wanted.
He informed the jury that in June 2022 he noticed a gathering between Bankman-Fried and his top three executives — Wang, Nishad Singh and Caroline Ellison — that resulted in a “full accounting” of each corporations’ monetary state of affairs.
After this, Yedidia stated Bankman-Fried instructed him to appropriate a bug in FTX’s code that triggered Alameda’s obligation to FTX prospects to be overstated. Yedidia stated he realized that the true legal responsibility was $8bn, and wrote a postmortem report that he despatched to Bankman-Fried.
“The quantity appeared giant to me,” he stated, prompting him to boost considerations with Bankman-Fried on the paddle tennis courtroom, who he stated reassured him.
“I trusted Sam. I hoped that Sam, Caroline and others at Alameda would deal with the state of affairs,” Yedidia stated.
He remained at his buddy’s aspect because the disaster engulfed FTX in November 2022. Yedidia described a message he despatched to Bankman-Fried as staff started quitting FTX en masse: “I like you. I’m not going anyplace. Don’t fear.”
Days later, nevertheless, Yedidia give up. He informed the jury: “I realized that Alameda Analysis has used FTX buyer deposits to pay again its loans to collectors.”
