FTX Utilized Python Code to Fake Insurance Fund Number: Gary Wang
- Former FTX executive Gary Wang said that the firm’s insurance fund was not worth $100 million.
- The number was made by multiplying the exchange’s daily volume with a number close to 7,500.
- The “Backstop Fund” was touted on the exchange’s social media and website.
- The actual amount in the fund made it incapable of protecting the users of the platform during volatile times.
Gary Wang, the co-founder of FTX and a person very close to Sam Bankman-Fried, also known as SBF in the digital assets sector, has testified in the case, stating that the exchange used Python programming language to fake its insurance fund figures. The fund was kept to keep the exchange’s users safe in times of significant losses during huge liquidation events.
According to the testimony provided by Gary Wang, the $100 million insurance fund figure boasted by FTX was just a facade that never actually contained any of the exchanges’ FTX tokens (FTT), as claimed by the digital asset trading platform in 2021.
The former chief technology officer of the bankrupt crypto exchange confirmed that the number displayed to the public was generated by multiplying the daily trade volume with a number close to 7,500.
The prosecutor brought the post on social media platform X (formerly known as Twitter) in front of Wang, asking if the number was true, to which he replied, “No!”
“For 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.”
An exhibit from the trial shows the alleged code that was used to generate numbers in the “Backstop Fund” that FTX had previously boasted in a social media post.
It is important to note here that the FTX public insurance fund was displayed heavily on social media and other platforms. Its main purpose was to protect the investors trading on the crypto exchange during times of huge volatility and uncertain market movements. Wang noted that the actual amount in the fund was quite little to cover such losses or protect investors.
Wang also added that when SBF realized that the insurance fund was depleted, he asked Alameda to “take on” the loss, supposedly in an attempt to hide the loss. Alameda Research was a private firm, and therefore, its balance sheets were not subject to as much public scrutiny as FTX’s balance sheets.
According to a previous report from BitcoinWisdom, Wang also stated that Alameda had access to unlimited money that was deposited by customers on the bankrupt crypto exchange.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
