Day 3 - October 5, 2023

Adam Yedidia testified that FTX customers sent fiat deposits to the Alameda-controlled North Dimension account and that, as far as he knew, customers were not told of Alameda’s control. He said an internal account tracked Alameda’s liability for those deposits and that, after he corrected a code bug, the balance showed approximately $8 billion owed to FTX customers in June 2022. Yedidia testified that he told Bankman-Fried the corrected amount, transmitted his analysis through Signal, and later found that the transmitting message had been automatically deleted while the underlying document survived. He also described Bankman-Fried as atypically worried or nervous when saying FTX and Alameda were no longer “bulletproof.” On cross-examination, Yedidia acknowledged introducing the bug, described the limits of his financial knowledge, and discussed his immunity orders and meetings with prosecutors. He clarified that his resignation followed secondhand information about what Caroline Ellison reportedly said at an Alameda meeting. On redirect, he distinguished knowing about the approximately $8 billion liability from later learning that customer money had been used to repay loans, which he understood to mean the money was gone. The court struck his broad statement that FTX had defrauded customers. Paradigm co-founder Kungyu Matthew Huang testified that the investment firm raised governance concerns and asked whether Alameda received preferential treatment, recalling assurances that it did not and that FTX and Alameda would become less linked. He said Paradigm was not told that Alameda could avoid ordinary liquidation rules, maintain a negative balance, or access other customers’ deposits. Paradigm invested about $278 million in FTX and FTX.US and later marked the investment to zero. On cross-examination, Huang said Paradigm was generally satisfied with management’s answers before investing and knew that FTX lacked a board. The court limited questioning suggesting investor gullibility or negligence and rejected the defense’s characterization of Huang as an undisclosed expert. Gary Wang admitted committing fraud with Bankman-Fried, Nishad Singh, and Caroline Ellison and testified under a cooperation agreement. He said FTX code gave Alameda undisclosed privileges to maintain negative balances, withdraw without ordinary limits, and use a $65 billion line of credit. Wang testified that Alameda had withdrawn $8 billion by FTX’s bankruptcy, leaving FTX unable to repay customers seeking withdrawals. He said he implemented or used implementations of special features at Bankman-Fried’s direction and described Bankman-Fried as FTX’s final decision-maker when the co-founders disagreed.