College roommate talked to Sam Bankman-Fried about FTX’s $8B hole on a paddle tennis court: Trial

Regulation

On the third day of the criminal trial for Sam “SBF” Bankman-Fried, the former CEO’s roommate at MIT and FTX developer Adam Yedidia testified about the $8-billion deficit the crypto exchange reported prior to its bankruptcy.

According to reports from Inner City Press in United States District Court for the Southern District of New York, Yedidia took the stand on Oct. 5 to speak on the connections between the crypto exchange and Alameda Research — one of the key pieces of information at the center of SBF’s alleged fraud. Yedida reportedly informed Bankman-Fried about a bug in FTX’s code which ensured that “Alameda’s liabilities did not decrease”, resulting in a roughly $8 billion error.

Addressing questions by Assistant U.S. Attorney Danielle Sassoon, Yedidia reportedly said his resignation from FTX followed the revelation that “Alameda had used customer deposits to pay its loans”. He also claimed Bankman-Fried asked him to speak on the matter of FTX’s code via the messaging app Signal:

“He told me to use Signal. He told the entire company. It also had auto-delete […] He said it [auto-delete] was all down-side to keep messages around. If regulators found things they didn’t like, it could be bad for the company.”

SBF’s former roommate later reportedly confronted him near a “paddle tennis court” in The Bahamas regarding the $8-billion hole, at which the then CEO offered reassurances over the situation. Sassoon’s line of questioning also included Yedidia’s knowledge of Bankman-Fried’s personal relationship with former Alameda Research CEO Caroline Ellison:

“He [SBF] said they had had sex and asked me if I thought they should date […] I said no.”

Related: Sam Bankman-Fried’s jets are subject to forfeiture, says prosecution

Ellison is expected to testify against Bankman-Fried as part of her plea agreement with prosecutors. The judge overseeing the criminal trial, Lewis Kaplan, revoked SBF’s bail in August arguments from the prosecution that he had engaged in witness intimidation against Ellison and others by revealing some of her personal journals to New York Times reporters.

Bankman-Fried’s first criminal trial kicked off on Oct. 3 with jury selection and is expected to run through November. Gary Wang, one of the co-founders of FTX, will likely testify after Yedidia. Prosecutors said they may also call on former FTX engineering director Nishad Singh and former FTX chief operating officer Constance Wang.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

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