Former CTO Exposes Covert Diversion of Billions by FTX CEO
In a compelling account given to federal prosecutors on Friday, Gary Wang, the co-founder of FTX, made shocking allegations against CEO Sam Bankman-Fried. According to Wang, Bankman-Fried secretly redirected billions of dollars from customer accounts to fuel trades for his hedge fund, Alameda Research. Wang revealed that he was instructed by Bankman-Fried to create a specialized trading tool that allowed Alameda to overdraw its account without the knowledge of FTX clients.
Serious Claims Made by Wang on Second Day of Testimony
Gary Wang, formerly FTX's chief technology officer, shared details of how he and developer Nishad Singh engineered the "allow negative" feature, which enabled Alameda to trade on unbacked credit. Wang contradicted the narrative presented by Michael Lewis, author of "The Big Short," painting a grim picture of FTX's internal operations. He emphasized that FTX was not in a stable condition and that its assets were not secure.
The riveting testimony was live-streamed on the X social media platform, formerly known as Twitter, by journalist Matthew Russell Lee of Inner City Press. Additional accounts of the proceedings emerged from the courthouse. Wang disclosed that although Bankman-Fried justified the creation of the trading tool for Alameda's role as the primary market maker and for FTT token trades, its usage extended beyond these purposes.
Through this covert mechanism, Alameda was able to overdraw up to $100 million from customer funds. Wang's investigation in early 2020 uncovered Alameda's staggering negative balance of over $200 million, even as FTX reported revenues of only $150 million. It was revealed that the funds Alameda utilized were directly sourced from FTX's clients.
Russell Lee's summary of the proceedings exposed how Wang accused Bankman-Fried of deceiving the public. Bankman-Fried assured clients that their funds were safe, despite the fact that Alameda's deficit skyrocketed to a shocking negative $20 billion. Prosecutors presented a revealing spreadsheet in court to highlight this discrepancy. Wang emphasized that Alameda had an enormous credit line of $65 billion.
Following an accidental disclosure of Alameda's massive debt, Wang disclosed how Bankman-Fried arranged repayments to specific lenders, including Genesis Trading. Contrary to Bankman-Fried's public denials on platforms like Twitter and in the media, Wang asserted that these repayments were sourced from FTX's user base.
Wang described a tense period where he joined Bankman-Fried and associates in the Bahamas amid the unfolding crisis. After the bankruptcy declaration, Bankman-Fried allegedly instructed Wang to stop U.S. transactions and to collaborate with the more lenient regulators in the Bahamas.
Wang swiftly left the Caribbean on November 16 and began cooperating with U.S. authorities the very next day. He expressed his hope for avoiding prison time as a result of his cooperation with law enforcement officials.
What are your thoughts on Gary Wang's second day of testimony? Feel free to share your opinions in the comments section below.
Frequently Asked Questions
How is gold taxed in Roth IRA?
An investment account's tax rate is determined based upon its current value, rather than what you originally paid. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
But if you put the money into a traditional IRA or 401(k), there's no tax when you withdraw the money. Taxes are only charged on capital gains or dividends earned, which only apply to investments longer than one calendar year.
Each state has its own rules regarding these accounts. Maryland requires that you withdraw funds within 60 business days after reaching the age of 59 1/2. In Massachusetts, you can wait until April 1st. New York offers a waiting period of up to 70 1/2 years. To avoid penalty fees, it is important to plan and take distributions in time to pay all your retirement savings.
What amount should I invest in my Roth IRA?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. These accounts cannot be withdrawn until you turn 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. First, your principal (the original deposit amount) cannot be touched. This means that regardless of how much you contribute to an account, you cannot take out any more than you initially contributed. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule states that income taxes must be paid before you can withdraw earnings. You will pay income taxes when you withdraw your earnings. Let's suppose that you contribute $5,000 annually to your Roth IRA. Let's further assume you earn $10,000 annually after contributing. This would mean that you would have to pay $3,500 in federal income tax. You would have $6,500 less. Since you're limited to taking out only what you initially contributed, that's all you could take out.
You would still owe tax on $1,500 if you took out $4,000 of your earnings. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
Two types of Roth IRAs are available: Roth and traditional. Traditional IRAs allow you to deduct pretax contributions from your taxable income. To withdraw your retirement contribution balance plus interest, your traditional IRA is available to you. A traditional IRA can be withdrawn up to the maximum amount allowed.
Roth IRAs do not allow you to deduct your contributions. But once you've retired, you can withdraw the entire contribution amount plus any accrued interest. There is no minimum withdrawal limit, unlike traditional IRAs. You don't have to wait until you turn 70 1/2 years old before withdrawing your contribution.
Is gold a good investment IRA?
If you are looking for a way to save money, gold is a great investment. You can diversify your portfolio with gold. But there is more to gold than meets the eye.
It's been used as a form of payment throughout history. It is sometimes called the “oldest currency in the world”.
Gold, unlike other paper currencies created by governments is mined directly from the earth. That makes it very valuable because it's rare and hard to create.
The supply and demand factors determine how much gold is worth. If the economy is strong, people will spend more money which means less people can mine gold. The result is that gold's value increases.
On the flipside, people may save cash rather than spend it when the economy slows. This causes more gold to be produced, which lowers its value.
It is this reason that gold investing makes sense for businesses and individuals. You will benefit from economic growth if you invest in gold.
You'll also earn interest on your investments, which helps you grow your wealth. Additionally, you won't lose cash if the gold price falls.
How Much of Your IRA Should Be Made Up Of Precious Metals
It's important to understand that precious metals aren't only for wealthy people. You don’t need to have a lot of money to invest. In fact, there are many ways to make money from gold and silver investments without spending much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. You could also buy shares in companies that produce precious metals. Your retirement plan provider may offer an IRA rollingover program.
Regardless of your choice, you'll still benefit from owning precious metals. Although they aren’t stocks, they offer the possibility for long-term gains.
They also tend to appreciate over time, unlike traditional investments. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
How much gold should your portfolio contain?
The amount of money you need to make depends on how much capital you are looking for. A small investment of $5k-10k would be a great option if you are looking to start small. You could then rent out desks and office space as your business grows. Renting out desks and other equipment is a great way to save money on rent. Rent is only paid per month.
It is also important to decide what kind of business you want to run. My website design company charges clients $1000-2000 per month depending on the order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
You won't get a monthly paycheck if you work freelance. This is because freelancers are paid. You might get paid only once every six months.
So you need to decide what kind of income you want to generate before you know how much gold you will need.
I recommend starting with $1k-$2k in gold and working my way up.
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement funds
- Fraud Advisory: Precious Metals Fraud
By: Jamie Redman
Title: FTX Co-founder Alleges Misappropriation of Client Funds in Testimony
Sourced From: news.bitcoin.com/bankman-frieds-house-of-cards-ftx-co-founder-gary-wang-spills-the-beans-on-alleged-misuse-of-client-funds/
Published Date: Fri, 06 Oct 2023 23:30:44 +0000