Zixiao (Gary) Wang personally signed for hundreds of millions of dollars in loans when he was chief technology officer at the now-bankrupt crypto exchange FTX. Why? He couldn’t “recall,” he said during his third day of testimony in the blockbuster trial of the former crypto mogul Sam Bankman-Fried.
Wang, who signed a cooperation agreement with the government to testify against Bankman-Fried, said that the former CEO of FTX had directed him to take out the loans from Alameda Research, the crypto hedge fund Bankman-Fried also owned. These were for “investments,” Wang said, but he couldn’t remember what most were for, other than some capital allocated for the purchase of LedgerX, which FTX bought in 2021.
Interest payments on the loans became so cumbersome, Wang added, that he took out yet another loan from Alameda Research for $1 million to cover those costs. (He spent $200,000 of that loan on a house in St. Kitts.)
After the defense and prosecution asked him questions about the considerable debt he took on from Alameda, Judge Lewis Kaplan, who is presiding over the trial, intervened. “Why’d you sign a bunch of loan documents when you didn’t know they were for?” he asked.
“Sam told me to, and I trusted him,” Wang responded, in reference to Bankman-Fried, whom he had originally met at a math camp in high school.
Lawyers for the former CEO of FTX drew out the discussion on loans in an apparent attempt to show that previous legal counsel for FTX, specifically Can Sun and Dan Friedberg, gave executives at the exchange unwarranted and risky legal advice, according to a filing Bankman-Fried’s lawyers filed on Monday night. Wang said that both Sun and Friedberg directed him to sign the promissory notes.
This is potentially part of a broader strategy to wage an advice-of-counsel defense, or that Bankman-Fried and his lieutenants acted on allegedly misplaced legal guidance.
In addition to Wang’s willingness to put himself personally on the hook for hundreds of millions of dollars in debt on Bankman-Fried’s half, the third and final day of his testimony included the most precise account of his final days at FTX.
He said that he voluntarily met with prosecutors on Nov. 17, less than a week after the crypto exchange filed for bankruptcy. Discussions between him, his lawyers, and the government accelerated, and he signed a cooperation agreement with the Justice Department on Dec. 19.
He left the stand on Tuesday afternoon. The next scheduled witness was Caroline Ellison, the former CEO of Alameda Research who also agreed to cooperate with the government.
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