Gary Wang, Caroline Ellison: Looking at Day 5 of Sam Bankman-Fried's Trial

FTX co-founder and former Chief Technology Officer Gary Wang began testifying in earnest last Friday in Sam Bankman-Fried’s trial.

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Wang revealed:

• FTX’s insurance fund was calculated by taking the total volume of trades over the past 24 hours, multiplying that by “a random number that’s around 7,500” and dividing that figure by 1 billion (the prosecutor asked if the “number ha[d] anything to do with the actual number in the insurance fund?” to which the answer, obviously, was “no”).
• FTX customer balances were “approximately equal” to what was in the company’s hot wallets – except there was an Alameda subaccount with a balance around minus $8 billion that was excluded from the list of customer balances.
• In hindsight, we knew this, but FTX and Bankman-Fried were tweeting that FTX was fully liquid and funded after CoinDesk reported on the balance sheet even while FTX ran out of funds to honor withdrawal requests. (“FTX was not fine and assets were not fine because FTX did not have enough assets for customer withdrawals,” Wang said).

The defense began cross examining Wang on Friday, but Judge Lewis Kaplan cut attorney Christian Everdell off a few minutes prior to the scheduled end time after yet again warning the lawyer about repeating questions that have already been answered. Tuesday should see Everdell and his team complete the cross-examination.

Defense attorneys may try to poke holes in Wang’s assertions that Bankman-Fried directed or controlled a lot of what happened with Alameda’s use of FTX customer funds.

Later on Tuesday, Caroline Ellison is expected to take the stand. The defense is similarly likely to try and discredit her as a witness, whether by saying she did not heed Bankman-Fried’s warnings to hedge Alameda’s positions or by arguing her recollections or actions may have been impaired.

For their part, prosecutors say she can share information about the crimes she committed with Bankman-Fried. As a reminder, Ellison, like Wang, pleaded guilty to conspiracy charges last year, shortly after Bankman-Fried was arrested.

Sam Kessler has more here on how her testimony may shake out.

What we're expecting

As mentioned above, Caroline Ellison is expected to begin testifying in a few short hours, after the defense concludes its cross-examination of Gary Wang.

The DOJ also named BlockFi’s Zac Prince and Pinecone’s Elan Dekel as possible witnesses. While there does not seem to be a strict timeline for when they'll testify, they may follow Ellison.

That being said, given that Wang, one of the FTX inner circle, has already spent over a day testifying, my guess is we won’t hear from anyone but Ellison until later in the week at the earliest.