Currency

FTX used Python code to spoof the number of its insurance fund: Gary Wang Cryptocurrency scrgruppen

Cryptocurrency exchange FTX used hidden Python code to distort the value of its insurance fund — a pool of funds meant to prevent user losses during massive liquidation events — according to testimony from FTX co-founder Gary Wang.

In new curse certificate On October 6, FTX’s former CTO, Gary Wang, said that FTX’s so-called $100 million insurance fund in 2021 was actually fabricated, and did not actually contain any of the exchanges’ FTX tokens (FTT). claimed.

Instead, the number offered to the public was calculated by multiplying the daily trading volume of the FTX token by a random number close to 7,500.

When prosecutors uncovered the aforementioned tweet — among other general statements about its value — and asked Wang if that amount was accurate, he responded with one word: “No.”

“On the one hand, there is no financial transaction tax in the insurance fund. It is just a US dollar number. Secondly, the number mentioned here does not match what was in the database.

One piece of evidence in the October 6 trial shows the alleged code used to create the size of the so-called “support fund,” or public insurance fund.

FTX’s insurance fund is designed to protect users’ losses in the event of sudden and huge market movements, and its value is often promoted on its website and social media.

However, according to Wang’s testimony, the amount in the fund was often insufficient to cover these losses.

For example, in 2021, a trader was able to exploit a bug in FTX’s margin system to take a large position in MobileCoin, resulting in a loss worth hundreds of millions of dollars for FTX, according to Wang.

When Bankman Fried realized the insurance fund had been exhausted, Wang said he was asked to make the Alameda company “take on” the loss. This was supposedly an attempt to hide the loss, as Alameda’s balance sheets were more private than those of FTX.

Related: Pro-XRP lawyer John Deaton criticizes Sam Bankman-Fried sympathizers

In addition to exposing the allegedly fraudulent nature of FTX’s insurance fund, Wang claimed that Bankman-Fried asked him and Nishad Singh to implement an “allow_negative” balance feature in the code at FTX, which allowed Alameda Research to trade in an almost unlimited number. Liquidity in crypto exchange.

On October 5, Wang – who has already pleaded guilty to all charges against him – pleaded guilty to wire fraud, commodities fraud and securities fraud along with Bankman-Fried, former Alameda Research CEO Carolyn Ellison, and former FTX engineering director Nishad Singh.

magazine: How to protect your cryptocurrencies in a volatile market – Bitcoin OGs and experts discuss it

Cryptocurrency scrgruppen

Related Articles

Back to top button