What FTX listed as its “Insurance Fund” was actually a bogus amount calculated using a random number generator, according to court testimony from the exchange’s co-founder Gary Wang.
A transcript of the court proceedings provided by BitMEX research indicates that Wang was questioned last week about the alleged insurance fund during the trial of former FTX CEO Sam Bankman-Fried.
Wang reportedly said the backstop fund listed assets worth $5.5 million and 5 million of the exchange’s native token, FTT. However, the exchange’s co-founder noted that there was in fact no FTT in the insurance fund and that the USD amount in the fund was lower than what was reported.
Wang said the fake USD number was generated by taking the daily volume at FTX, multiplying that amount “by a random number around 7,500” and then dividing that result by 1 billion.
FTX filed for bankruptcy last November after its own assets collapsed and the company was forced to halt customer withdrawals.
Bankman-Fried is facing a slew of charges for allegedly defrauding customers, mishandling billions of dollars worth of their money, and making illegal political donations. If convicted, he could face more than 100 years in prison.
Last December, Wang reportedly pleaded guilty to federal charges related to the implosion of FTX. He cooperated with the prosecution and testified against Bankman-Fried.
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