Co-founder of FTX: FTX is not very good and its assets are in poor condition

Author: James Cirrone, blockworks Translator: Shan Oppa, Golden Finance

FTX is not very good and the asset status is not very good.

This is a statement from former co-founder and CTO Gary Wang. He returned to the witness box this week to take part in the SBF trial.

FTX’s collapse last November was made public in part by former CEO Ban SBF’s own tweets. One of his most famous messages (later deleted) was posted less than a week before FTX declared bankruptcy and read: "FTX is fine, assets are fine."

Wang told the court today that the content of the tweet was false. There is an $8 billion hole in the core of FTX's balance sheet, and sister company Alameda Research is also facing trouble with the loan. Wang said SBF was well aware of the debt when it tweeted. Wang further testified that some client assets were also simply "lost," while other funds were invested.

Prosecutors sought to use Wang's testimony to prove that many of SBF's public statements about FTX's solvency and risk exposure since the exchange's inception were false. In a Bloomberg Podcast segment hosted by Matt Levine, SBF boasted about FTX’s lack of liquidation risk — specifically, that FTX has never had a single day with a blowout bigger than its revenue.

That's not the case, Wang said. He claimed that on the days when FTX losses were likely to occur, the losses were transferred to Alameda at the request of SBF.

Bahamas regulators step in

According to Wang’s testimony, Wang stayed in the Bahamas with SBF after FTX declared bankruptcy on November 11. On November 12, one day after filing for bankruptcy protection, Wang said while traveling to and from the offices of the Bahamas Securities Commission that SBF told him to stop transferring any assets to the United States.

Instead, SBF told Wang that they should send the assets to Bahamian regulators because they seemed more "friendly." SBF got this impression after meeting with his father, Joseph Bankman, and their attorney.

Wang told the court that he ignored the advice of U.S. bankruptcy lawyers and followed the SBF's orders - later that day he transferred the FTX assets to a Bahamian liquidator.

Wang then left SBF on November 16 for the Bahamas. He subsequently met with U.S. officials on November 17 to cooperate with prosecutors on the SBF charges. Wang told the court he did not expect the government to reduce his sentence because of his cooperation, but said he hoped to avoid jail time. Wang faces up to 50 years in prison.