Sam Bankman-Fried's trading firm borrowed $65 billion from FTX via a 'secret backdoor' to fund donations and a luxury lifestyle, bankruptcy court hears
Sam Bankman-Fried instructed his FTX cofounder Gary Wang to create a"secret" backdoor to enable his trading firm Alameda to borrow $65 billion of clients' money from the exchange without their permission, the Delaware bankruptcy court was told Wednesday.
Wang was told to create a"backdoor, a secret way for Alameda to borrow from customers on the exchange without permission," according to FTX's lawyer, Andrew Dietderich. "Mr Wang created this back door 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," he added."And we know the size of that line of credit. It was $65 billion."But the value of that line of credit hasn't been revealed before now. The CFTC then described it as"virtually unlimited.
Dietderich told the court that with the $65 billion back door, Alameda"bought planes, houses, threw parties, made political donations."
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