Crypto Analyzer

FTX CEO Sam Bankman-Fried Accused of Creating Secret Line of Credit Without Customer Permission

FTX CEO c has been accused of ordering the creation a secret line without customers’ permission. James Dietderich, a FTX lawyer, testified that the “backdoor” was a way for Alameda without permission to borrow money from customers of the exchange. This testimony supports the allegations made last month by the Commodity Futures Trading Commission, (CFTC), against Gary Wang, FTX cofounder, and Caroline Ellison CEO of Alameda Research.

Wang was accused by the CFTC of creating a secret, “virtually infinite” line of credit. According to Dietderich’s testimony, this is the first time that an official of FTX has given the credit line a dollar value. Wang and Ellison pleaded guilty in federal court to fraud and conspiracy charges. They are cooperating fully with investigators.

Bankman-Fried, who was arrested and extradited from the US, is now under house arrest at the home of his parents, while awaiting trial for federal fraud. In a Substack blog, he claimed his innocence and denied any wrongdoing. He also stated that almost all of his assets could be used to support FTX customers. He also accused Binance CEO Changpeng Zhao “CZZ” Zhao, of leading a campaign against his empire.

Bankman Fried’s parents are also planning for potential legal exposure. His father has hired a Manhattan-based lawyer. While testifying on Capitol Hill last month, current FTX CEO John Ray confirmed that his team was investigating the role that Bankman and his wife, fellow Stanford law professor and Democratic operative Barbara Fried, played in the platform’s collapse.