Adam Yedediah, Sam Bankman-Fried’s college classmate and early FTX employee, continued his testimony on October 5, the second day of former FTX CEO Bankman-Fried’s trial in New York. Jedediah testified for the prosecution with immunity.
During the investigation by Assistant U.S. Attorney Danielle Sasson, Yedediah told the court that he started as a trader for Alameda Research and then worked for FTX as a software developer from January 2021 until November 2022, when he resigned. In the Bahamas, Jedediah was one of the “house people” – the 10 people who shared a large apartment in the luxury Albany resort. He reported to former FTX engineering director Nishad Singh and “unofficially” to FTX co-founder Gary Wang and Bankman Fried.
As he understood it, when Alameda Research traded FTX, the ultimate beneficiaries of the profits were Bankman-Fried and Wang, Yedidia said.
Yedidia said he co-wrote the coder to automate customer deposits and withdrawals from FTX. Bankman-Fried was also “heavily involved” in the project. Yedidia initially thought the customer deposits would go to FTX’s bank account, but he learned that FTX was having trouble opening a bank account and the deposits went to an account in the name of North Dimension Inc., which was controlled by Alameda Research.
As far as he knew, the agents were instructed to send deposit funds to the North Dimension account, Yedediah said, and did not know that the Alameda company controlled it. He said either Singh or FTX settlements chief Ray Salama told him about the arrangement.
“At some point in late 2021, FTX successfully opened a bank account and customers had the option to send funds to FTX Digital Markets,” Yedidia said. He said he was aware that some customer deposits continued to go to the account controlled by Alameda. Research after that.
Deposits were also tracked in an internal FTX database to an account called “Fiat at FTX.com,” which contains information, not money. Yedidia explained that the sum of customer deposits should equal the amount of liability in “Fiat at FTX.com.”
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Yedidia learned in late 2021 that the automation code he helped develop had a bug. Because of the error, the customer withdrawals reduced the liability recorded in “Fiat at FTX.com,” as was correct, but did not reduce Alameda Research’s liability to FTX, as they should have done.
“Gary [Wang] Or Nishad [Singh]”He told Yedidia about the error, he said, and spoke to Bankman-Fried about it. The error inflated Alameda Research’s liability by $500 million after about six months, and was not fixed for another six months, or until “around June 2022.” Yedidia later indicated that he fixed the flaw in mid-June 2022.
Yedidia said Bankman-Fried ordered him to fix the flaw after Bankman-Fried, former Alameda Research CEO Carolyn Ellison, Wang and Seng held a meeting about “full accounting of the two companies” — FTX and Alameda Research.
He said that while Yedidia fixed the flaw, Alameda Research’s liabilities reflected in the “Fiat at FTX.com” account were recorded at $16 billion. After the reform, Alameda Research’s liabilities were reduced to $8 billion. This number was visible to others in the company.
Adam Yedidia, SBF snitch has deleted his X account. @adamyedidi10070
My friend, you need to take that L for the rest of your life to the grave. You lived with the guy and went to college with him and you can’t even wait until his guilt is proven before you turn on him. Fertilize it
– Martin Shkreli (e/acc) (@wagieeacc) October 4, 2023
Yedidia expressed concern about the significant responsibility remaining for Bankman Fried, who reassured him that the company was “bulletproof last year” and would be “bulletproof” again in six months to three years. He added that Yedidia considered the word “bulletproof” to mean enjoying sound financial health.
Jedediah stated in his testimony that the “Ahl al-Bayt” used the messaging application Signal to communicate. He used Signal to deliver documentation of bug fixes in customer deposit and withdrawal automation to Bankman-Fried. Yedidia said the app is set to automatically delete messages after a certain period of time.
The Yedidia website said that Bankman-Fried explained that preserving the messages “is all a downside.” “If regulators find something they don’t like in the letters, it will be bad for the company,” Yedidia said, summarizing Bankman-Fried’s words. “He didn’t use those exact words, but that was the gist of what he said,” Jedediah explained.
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