Gary Wang, who made a surprising statement at the hearing of Sam Bankman-Fried, the co-founder of the bankrupt crypto exchange FTX, stated that the reported size of FTX's insurance fund did not accurately reflect the truth.
FTX Co-Founder Announces Random Number Entered into Insurance Fund
According to Wang's statement, the exchange used an unusual method to calculate the funds in the insurance reserve.
A random number, around 7,500, was multiplied by the platform's daily trading volume and the result was divided by one billion. This figure was later shown as the amount added to the insurance fund. However, this figure shown did not correspond to the actual amount allocated.
When asked by prosecutor Nicolas Roos whether the figure shown corresponded to the actual balance in the insurance fund, Wang said firmly: “No.”
Insurance funds serve as a very important safety net in the cryptocurrency space. Designed to cover profits and losses, these funds ensure that profitable positions are not automatically closed due to widespread counterparty liquidations.
Wang's statements raise questions about the transparency and accuracy of FTX's financial practices. It underscores the importance of robust regulatory oversight and transparency measures in the crypto industry to protect investors and maintain market integrity.
As the case progresses, more details may emerge about FTX's inner workings and the practices that led to its collapse.
This case is a striking reminder of the need to be careful and exercise due diligence in the rapidly evolving world of cryptocurrency. Investors are advised to be careful and look for platforms that prioritize transparency and regulatory compliance.
*This is not investment advice.
