FTX’s ‘Insurance Fund’ Was an Arbitrary, Made-Up Number, According to Co-Founder Gary Wang: Report

What FTX listed as its “Insurance Fund” was actually a fake amount calculated with the help of a random number generator, according to court testimony from the exchange’s co-founder, Gary Wang.

A transcript of the court proceedings provided by BitMEX Research indicates Wang was questioned about the supposed insurance fund last week during former FTX chief executive Sam Bankman-Fried’s trial.

Wang reportedly said that the backstop fund listed assets of $5.5 million and 5 million of the exchange’s native token, FTT. The exchange’s co-founder noted, however, that there wasn’t actually any FTT in the insurance fund, and that the amount of USD in the fund was lower than what was reported.

Wang said the fake USD number was generated by taking the daily volume at FTX, multiplying that amount “by a random number that’s around 7500,” and then dividing that result by 1 billion.

FTX filed for bankruptcy last November after its native asset collapsed and it was forced to halt customer withdrawals.

Bankman-Fried faces a slew of charges for allegedly defrauding customers and mishandling billions of dollars worth of their funds, as well as making illegal political donations. If convicted, he could face more than 100 years in prison.

Last December, Wang reportedly pled guilty to federal charges relating to FTX’s implosion. He has been cooperating with the prosecution and testifying against Bankman-Fried.

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Featured Image: Shutterstock/Jorm S