Cryptocurrency exchange FTX was the victim of a major theft in 2020. Co-founder Sam Bankman-Fried and his partner Gary Wang allegedly used customer funds to create a backdoor that allowed them to borrow an astonishing $65 billion without permission. In this blog post, we will look at how Bankman-Fried and Wang allegedly used customer funds without consent to create what they thought was their own personal line of credit.
Alameda Research is a hedge fund founded by Bankman-Fried and Wang. According to court testimony, Dietderich said that “Mr. Wang created this backdoor by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent”. In other words, Wang allegedly inserted code into FTX’s system that enabled him and Bankman-Fried to use customer funds as their own personal line of credit without the customers’ knowledge or consent.
It wasn’t until 2019 when the Financial Industry Regulatory Authority (FINRA) conducted an audit of FTX that the theft came to light. FINRA determined that Bankman-Fried had created a massive series of transactions between FTX and Alameda Research over several months in 2019 totaling $65 billion without customer authorization – effectively stealing money from unsuspecting users who believed they were making legitimate investments on the platform.
Bankman-Fried was forced to pay fines and restitution fees totaling more than $11 million for his part in the scheme. He was also forced to give up his position as chairman at both FTX and Alameda Research and has since resigned from all positions within both companies. Additionally, he has been barred from serving as an officer or director at any public company for two years by FINRA due to his involvement in fraudulent activities related to the case. As for Wang, he is currently still employed by both companies but is facing criminal charges in Delaware related to his involvement in the scheme as well as civil action brought against him by investors who lost money due to his actions.
It is shocking that someone could be so brazen as to steal such an enormous sum of money from customers who trusted them enough to invest with them on their platform—but unfortunately, it happens all too often in today’s digital world. We hope this serves as a cautionary tale for investors everywhere who must always remain vigilant when investing online, no matter how trustworthy their broker or exchange might seem at first glance! For website owners and SEO newbies out there, remember that SEO helps optimize your visibility online which means more people will see your website giving you a greater chance of success with your product or service – just don’t forget about cyber security! Protect yourself by taking all necessary precautions while dealing with digital investments!
