Former FTX Developer Testifies on $8B Crypto Exchange Deficit in SBF Trial – Cryptopolitan

In a pivotal development on the third day of the criminal trial for Sam “SBF” Bankman-Fried, the former CEO of crypto exchange FTX, his roommate from MIT, and former FTX developer, Adam Yedidia, took the stand. Yedidia’s testimony shed light on the alleged $8 billion deficit that FTX reported before its bankruptcy, with a focus on the relationship between FTX and Alameda Research, a key element in the fraud allegations against SBF.

Assistant U.S. Attorney Danielle Sassoon led the questioning, during which Yedidia revealed that he had informed Bankman-Fried about a bug in FTX’s code that resulted in “Alameda’s liabilities not decreasing,” leading to the massive $8 billion error. Yedidia also disclosed that his decision to resign from FTX was prompted by the revelation that “Alameda had used customer deposits to pay its loans.”

Key testimony and controversies emerge in SBF trial

Yedidia stated that Bankman-Fried had instructed him, along with the entire company, to use the messaging app Signal for discussions related to FTX’s code. This move was aimed at maintaining a level of discretion, as Signal offers an auto-delete feature for messages. According to Yedidia, SBF emphasized that retaining potentially incriminating messages could be detrimental to the company if regulators ever uncovered them.

Interestingly, Yedidia recounted an encounter with Bankman-Fried near a paddle tennis court in The Bahamas, where he confronted SBF about the $8 billion deficit. Bankman-Fried reportedly attempted to reassure his former roommate about the situation, indicating the seriousness of the matter.

Assistant U.S. Attorney Sassoon also delved into Bankman-Fried’s personal life, questioning Yedidia about his knowledge of SBF’s relationship with former Alameda Research CEO Caroline Ellison. Yedidia stated that SBF had informed him that he and Ellison had engaged in a sexual relationship and had even asked for his opinion on whether they should date. Yedidia responded with a negative view on the matter.

Caroline Ellison is expected to testify against Bankman-Fried as part of a plea agreement with prosecutors. The trial, presided over by Judge Lewis Kaplan, made headlines in August when SBF’s bail was revoked following allegations of witness intimidation. The prosecution argued that Bankman-Fried had revealed some of Ellison’s personal journals to New York Times reporters, which raised concerns about witness interference.

The trial, which commenced on October 3 with jury selection, is anticipated to extend through November. Upcoming witnesses include Gary Wang, one of the co-founders of FTX, as well as former FTX engineering director Nishad Singh and former FTX chief operating officer Constance Wang.