Crypto exchange FTX used hidden Python code to misrepresent the value of its insurance fund \u2014 a pool of funds meant to prevent user losses during huge liquidation events \u2014 according to testimony from FTX co-founder Gary Wang.\u00a0<\/p>\n
In a damning new testimony on Oct. 6, FTX’s former chief technology officer, Gary Wang, said that FTX\u2019s so-called $100 million insurance fund in 2021 was actually fabricated, and also never actually contained any of the exchanges\u2019 FTX tokens (FTT) as claimed.<\/p>\n
Instead, the figure shown to the public was calculated by multiplying the daily trading volume of the FTX Token by a random number close to 7,500.<\/p>\n
When the prosecution surfaced the above tweet \u2014 among other public statements of its value \u2014 and asked Wang whether this amount was accurate he replied with a single word: \u201cNo.\u201d<\/p>\n
\u201cFor one, there is no FTT in the insurance fund. It’s just the USD number. And, two, the number listed here does not match what was in the database.\u201d<\/p><\/blockquote>\n
An exhibit in the Oct. 6 trial shows the alleged code used to generate the size of the so-called “Backstop Fund\u201d or public insurance fund.\u00a0<\/p>\n
FTX’s insurance fund was designed to protect user losses in case of huge, sudden market movements and its value was often touted on its website and social media. <\/p>\n
According to Wang\u2019s testimony, however, the amount contained within the fund was often insufficient to cover these losses.<\/p>\n
For example, in 2021, a trader was able to exploit a bug in FTX’s margin system to take an outsized position in MobileCoin, which resulted in a loss to the tune of hundreds of millions dollars for FTX, according to Wang. <\/p>\n
When Bankman-Fried realized that the insurance fund had all but been exhausted, Wang said he was told to make Alameda \u201ctake on\u201d the loss. This was supposedly in an attempt to hide the loss, as Alameda\u2019s balance sheets were more private than those of FTX.<\/p>\n
Related: <\/em><\/strong>Pro-XRP lawyer John Deaton slams Sam Bankman-Fried sympathizers<\/em><\/strong><\/p>\nIn addition to revealing the allegedly fraudulent nature of FTX\u2019s insurance fund, Wang claimed that he and Nishad Singh were prompted by Bankman-Fried to implement an \u201callow_negative\u201d balance feature in the code at FTX, which allowed Alameda Research to trade with near-unlimited liquidity on the crypto exchange. <\/p>\n
On Oct. 5 Wang \u2014 who has already pleaded guilty to all charges pressed against him \u2014 admitted to committing wire fraud, commodities fraud and securities fraud with Bankman-Fried, former Alameda Research CEO Caroline Ellison and former-FTX director of engineering Nishad Singh. <\/p>\n
Magazine: <\/em><\/strong>How to protect your crypto in a volatile market \u2014 Bitcoin OGs and experts weigh in<\/em><\/strong><\/p>\nSource: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Crypto exchange FTX used hidden Python code<\/p>\n","protected":false},"author":3,"featured_media":182402,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\n
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