FTX Insurance Number Was Fake, Balance Produced By Random Number Generator: Gary Wang

The ongoing fraud trial of the disgraced crypto mogul Sam Bankman-Fried has led to several shocking revelations. The latest one was from FTX co-founder Gary Wang, who admitted the now-bankrupt company's insurance number was fake and that its balance was generated by a random number generator.

FTX deceived investors through its actions, BitMEX Research, the research arm of cryptocurrency exchange BitMEX, said, citing Wang's testimony before the court.

"FTX's published insurance fund number was fake and FTX's published insurance fund balance was produced by a random number generator," BitMEX Research, which claims it filters "out the hype with evidence-based reports on the cryptocurrency ecosystem," tweeted.

It shared the court transcript of Wang's testimony to support its claim.

"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," Wang answered when Judge Lewis Kaplan inquired about the accuracy of the numbers on the company's disclosure of the insurance fund.

When asked why the numbers in the database and the ones listed in the disclosure did not match and from where they got the number, the former crypto billionaire answered, "This comes from a page on the website that claims to show what was in the insurance fund, but it was actually calculated separately."

Apart from admitting the number was fake and that it was actually lower than what was listed, Wang explained how they came up with the figures.

"First, line 16 is saying what the name of this function is. Line 17, it's getting the daily – it's getting the total volume of trades from the past 24 hours on FTX. Then in line 19, it's taking that number, multiplying it – then multiplies that by a random number that's around 7500 and then dividing the result by a billion. That's a number that gets added to the number that shows up on the website," the former FTX CTO said.

Wang testified in court last Thursday and admitted that he, Bankman-Fried, Caroline Ellison, the former CEO of Alameda Research, and Nishad Singh, the FTX director of engineering, committed wire fraud, securities fraud and commodities fraud.

"We allowed Alameda to withdraw unlimited funds," Wang told Assistant Attorney Danielle Sassoon, adding, "[Sam handled] speaking to the media, lobbying, talking with investors. I just coded [...] in the end it was Sam's decision to make [regarding any disagreements]."