🚨 Get Your Free NFT Certificate Mint by Completing the Web3 Exam! START NOW
My Learnlist: Coming Soon!
My Learnlist: Coming Soon!

Learn by real-life examples: Select, Track & Understand any cryptos with the unique Learnlist feature!

Notify Me!
Portfolio: Coming Soon!
Portfolio: Coming Soon!

Set your wallet & get powerful insights backed by data. Easily learn how to use it for your highest rewards!

Notify Me!

Gary Wang Testifies FTX Manipulated Insurance Fund Figures

Gary Wang Testifies FTX Manipulated Insurance Fund Figures

Bombshell testimony from Gary Wang challenges FTX's insurance fund integrity.

Gary Wang, the co-founder of bankrupt cryptocurrency exchange FTX, claimed that FTX had manipulated the value of its insurance fund. This fund was purportedly set up to safeguard users from major financial losses.

During the trial proceedings on October 6, Gary Wang stated that FTX had never held any of its own FTX Tokens (FTT) in its highly publicized $100 million insurance fund for the year 2021. 

Best Crypto Analysis Indicators Explained (Beginner-Friendly Animation)

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

Best Crypto Analysis Indicators Explained (Beginner-Friendly Animation)

Best Crypto Analysis Indicators Explained (Beginner-Friendly Animation) Best Crypto Analysis Indicators Explained (Beginner-Friendly Animation)

Wang indicated that the published fund value was manipulated by taking the daily trading volume of the FTX Token and multiplying it by an arbitrary figure of around 7,500

When asked about the authenticity of this figure during the trial, he responded with a simple “No.” An exhibit presented during the trial displayed the alleged Python code responsible for inflating the size of what was termed the "Backstop Fund."

Contrary to the figures that were publicly displayed, Wang said:

For one, there is no FTT in the insurance fund. It’s just the USD number. And, two, the number listed here does not match what was in the database.

It’s noteworthy that FTX had consistently touted the value of its insurance fund across various platforms. This fund was supposed to act as a financial cushion for users in the event of drastic market fluctuations. However, Wang stated that the fund was often insufficient to cover user losses

As an example, Wang mentioned a 2021 incident where a trader manipulated a flaw in FTX’s margin trading system to build a disproportionately large position in MobileCoin. This reportedly led to a loss of hundreds of millions of dollars.

FTX CEO Bankman-Fried allegedly directed Wang to shift the loss onto Alameda Research, whose financials were less publicly transparent than those of FTX. 

Furthermore, Wang disclosed that a feature called “allow_negative” was added to the FTX codebase at the request of Bankman-Fried. This enabled Alameda Research to trade on FTX with virtually unlimited liquidity

It is worth noting that Gary Wang also testified on October 5 and provided glimpses of how FTX operated before its sudden collapse.

The revelations about FTX's allegedly inflated insurance fund value cast a shadow over the crypto exchange's practices and its commitment to user protection. Gary Wang's testimony serves as a moment of reckoning for FTX and raises several questions that the cryptocurrency community is eagerly awaiting answers to.

Aaron S., Editor-In-Chief
Having completed a Master’s degree on Economics, Politics & Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US’ Western and Japan’s Collective forms of capitalism, 1945-2020.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.



Earn Huge Exclusive Binance Learners Rewards