Sam Bankman-Fried's Trial Day 3: Shocking Information Revealed! – Coinpedia Fintech News

On October 5th, the prosecution cross-examined Adam Yedidia about a significant $8 billion financial matter connecting Alameda and FTX. Yedidia, a close friend of Sam Bankman-Fried and a former FTX developer, also resided at Bankman-Fried’s lavish $35 million Bahamas property.

This is a story of finances, yes, but also one of trust, betrayal, and much more. Read on.

The $8 Billion Puzzle

Yedidia revealed that in early 2021, FTX had transferred user funds to an Alameda account called “North Dimension” because they faced difficulties securing a regular bank account. This transfer created an $8 billion obligation for Alameda towards FTX by June 2022.

Surprisingly, Yedidia knew about this transfer in 2021 but didn’t think much of it. However, his perspective changed in 2022 when he learned of the enormous debt. He discussed his concerns with Bankman-Fried during a game of tennis.

Yedidia claims that Bankman-Fried stated that the companies should pay off their debt within six months to three years. Yedidia expressed his concern to Bankman-Fried, emphasizing the urgency of paying off the debt.  

Bankman-Fried assured Yedidia that they would prioritize resolving the obligation and explore various strategies to expedite repayment.  

Under questioning, Yedidia expressed his trust in Sam Bankman-Fried, Caroline, and others at Alameda to handle the situation responsibly. However, his trust was shattered when he discovered in November 2022 that Alameda not only retained the funds but also used them to pay off its own debts.

Also Read: FTX Co-Founder Testifies That Sam Bankman-Fried Committed Wire Fraud!

Testimonies from Key Figures

The October 5th trial also featured testimony from Gary Wang, co-founder of FTX and Alameda Research, and Matthew Huang, co-founder of Paradigm. Paradigm had invested $278 million in FTX between 2021 and 2022 through two fundraising rounds.

Admissions and Perks

During his brief testimony, Gary Wang admitted to engaging in wire fraud, securities fraud, and commodities fraud, alongside Bankman-Fried, Caroline Ellison, and others. Wang also disclosed Alameda’s unique advantages within FTX, such as a massive $65 billion credit line and unlimited fund withdrawals, unlike other market makers.

There were reports of a potential $200 million to $300 million loan from Alameda for cryptocurrency ventures, although these loans were not recorded in Wang’s account. Wang’s testimony was scheduled to continue on October 6th.

Defense Responds

In response to the prosecution’s claims of fund mixing, Bankman-Fried’s defense sought to provide the jury with a broader understanding of FTX and Alameda’s connection. They highlighted FTX’s rapid expansion and the long hours worked by Bankman-Fried and senior team members during the bullish 2021 market.

The defense also mentioned the Securities and Exchange Commission’s offer of immunity to Yedidia, protecting him from accountability for his involvement at FTX, in exchange for his cooperation.

Also Read: FTX Margin System Controversy: Was CEO Bankman-Fried Defrauding Investors?

Furthermore, the defense stressed that FTX’s difficulty in obtaining a bank account and its reliance on Alameda’s ‘North Dimension’ for fund deposits were widely recognized in the industry. The cross-examination of Yedidia was set to resume in the afternoon, in the federal courtroom in lower Manhattan.

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