The chilling multi-million dollar sum that Sam Bankman-Fried hid from his FTX clients for his personal luxuries

The young man accused of committing a multi-million dollar fraud, Sam Bankman-Fried, gave instructions to his FTX co-founder, Gary Wang, to create a “secret” back door that would allow his Alameda trading firm to borrow $65 billion of exchange clients’ money without their permission.

This was reported to the Delaware bankruptcy court by FTX attorney Andrew Dietderich, who explained that Wang was instructed to create a “back door, a secret way for Alameda to borrow money from exchange clients without their permission.” Business Insider reported.

“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,” he added. “And we know the size of that line of credit. It was 65,000 million dollars, ”he specified.

The Commodity Futures Trading Commission (CFTC) made similar allegations when it filed charges against Wang in December. But until now the value of that line of credit had not been discussed. The CFTC described it at the time as “virtually unlimited,” Business Insider reported.

Some time ago, Reuters quoted anonymous sources as saying that Bankman-Fried “had moved $10 billion between the two companies, with another $2 billion still unaccounted for.”

Dietderich testified in court that with the $65 billion from the back door, Alameda “bought planes, houses, gave parties, made political donations.”

In fact, it should be remembered that Bankman-Fried is the second largest donor to Democratic causes, but he claimed that he donated the same amount to Republicans using “dark” money.

“Also registered in the name of FTX was real estate in the Bahamas worth $256.3 million, including 15 condominiums in the same building. Other court documents say FTX spent $6.9 million on “dining and entertainment” in just nine months, the BI reported.

In this regard, Dietderich said that “the rest of the money went to personal loans, sponsorships and investments.”

“We know that all this has left a deficit, in value to reimburse customers and creditors,” he acknowledged. That amount “will depend on the size of the claim pool and our recovery efforts.”

The court heard that FTX had so far recovered $5 billion in cash, cryptocurrency and securities, with “plans to monetize over 300 other non-strategic investments” worth $4.6 billion.

Federal prosecutors in Manhattan claimed last month that Bankman-Fried stole billions of dollars from FTX clients to pay off debts from its cryptocurrency-focused hedge fund, Alameda Researchbuy luxurious real estate and make donations to American political campaigns.

“I didn’t steal funds and I certainly didn’t hide billionsBankman-Fried wrote in a blog post on Substack, in a rare public statement from a US criminal defendant.

Defense attorneys often advise their clients to keep quiet before trial because prosecutors can use their comments against them in court. His trial is scheduled to begin on October 2, 2023.

In the post, Bankman-Fried did not directly address many of the other charges brought against him by federal prosecutors in Manhattan last month, namely that misled investors and lenders about the financial conditions of FTX and Alameda.

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