Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, is escorted out of the Magistrate Court building, last month he was arrested after being criminally charged by US prosecutors, in Nassau, Bahamas, Dec 13, 2022.In mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange’s software.
The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the US Securities and Exchange Commission, which charged Bankman-Fried with fraud on Tuesday . The complaints — along with previously unreported FTX documents seen by Reuters and three people familiar with the crypto exchange — provide new insights into how Bankman-Fried dipped into customer funds and spent billions more than FTX was making without the knowledge of investors, its customers and most employees.
Bankman-Fried has apologised to customers, but said he didn't personally think he had any criminal liability. He did not tell lawmakers about the software change to exempt Alameda. Indeed, he told investors that Alameda received no preferential treatment from FTX, the SEC complaint said. To explain the change, Singh, the chief engineer, inserted a comment into the code: “Alameda would be liquidating, prevented.” He included a warning “not to liquidate the PMM."
Source: Digital Coin News (digitalcoinnews.net)
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Exclusive-How secret software change allowed FTX to use client moneyIn mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange’s software. He tweaked the code to exempt Alameda Research, a hedge fund owned by FTX founder Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda's assets if it was
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