In a shocking turn of events, Gary Wang, co-founder of FTX, testified on Friday about CEO Sam Bankman-Fried's alleged covert diversion of billions from client accounts to support trades for his hedge fund, Alameda Research. Wang's testimony shed light on how Bankman-Fried instructed him to create a specialized trading tool that allowed Alameda to overdraw its account, using FTX clients' funds without their knowledge.
Wang's Testimony Exposes Misappropriation of Client Funds
Formerly FTX's chief technology officer, Zixiao (Gary) Wang, along with developer Nishad Singh, developed the "allow negative" feature, which gave Alameda the ability to trade on unbacked credit. Wang contradicted the narrative presented by Michael Lewis, author of "The Big Short," and revealed the reality of FTX's internal operations, stating that the assets were not fine and FTX was facing significant issues.
The Extent of Misuse
During his testimony, Wang disclosed that the trading tool allowed Alameda to overdraw up to $100 million from customer funds. His investigation in early 2020 uncovered Alameda's massive negative balance of over $200 million, while FTX reported revenues of only $150 million. Wang made it clear that the funds used by Alameda were directly sourced from FTX's clients.
Allegations of Public Deception
Wang accused Bankman-Fried of deceiving the public by assuring clients that their funds were safe, while allowing Alameda's deficit to reach a staggering negative $20 billion. Prosecutors presented a revealing spreadsheet in court to highlight this discrepancy. Additionally, Wang emphasized that Alameda had a credit line of $65 billion.
Repayments to Lenders
After the disclosure of Alameda's massive debt, Bankman-Fried allegedly orchestrated repayments to specific lenders, including Genesis Trading. Contrary to Bankman-Fried's denials on platforms like Twitter, Wang claimed that these repayments were funded by FTX's user base.
During a tumultuous period, Wang revealed that he accompanied Bankman-Fried and others to the Bahamas. Following the bankruptcy declaration, Bankman-Fried instructed Wang to cease U.S. transactions and coordinate with more accommodating regulators in the Bahamas.
Collaboration with Authorities
Wang swiftly left the Caribbean and began collaborating with U.S. authorities on November 17. He expressed his hope of avoiding prison time due to his cooperation with law enforcement officials.
The revelations made by Gary Wang during his second day of testimony have sent shockwaves through the cryptocurrency community. The alleged misuse of client funds by FTX's CEO raises serious concerns about the company's practices and its impact on investors. As this case unfolds, it is crucial to closely monitor the developments and hold accountable those responsible for any wrongdoing.
What are your thoughts on Gary Wang's testimony? Please share your opinions in the comments section below.
Frequently Asked Questions
What precious metals could you invest in to retire?
Silver and gold are two of the most valuable precious metals. Both can be easily bought and sold, and have been around since forever. If you want to diversify your portfolio, you should consider adding them to your list.
Gold: Gold is one the oldest forms currency known to man. It is very stable and secure. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver is a popular investment choice. It's a great option for those who want stability. Silver tends to move up, not down, unlike gold.
Platinium: Another form of precious metal is platinum, which is becoming more popular. It is very durable and resistant against corrosion, much like silver and gold. It is, however, more expensive than its competitors.
Rhodium. Rhodium is used as a catalyst. It is also used as a jewelry material. It's also relatively inexpensive compared to other precious metals.
Palladium – Palladium is an alternative to platinum that's more common but less scarce. It's also less expensive. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
Can I have a gold ETF in a Roth IRA
You may not have this option with a 401(k), however, you might want to consider other options, like an Individual retirement account (IRA).
A traditional IRA allows contributions from both employee and employer. You can also invest in publicly traded businesses by creating an Employee Stock Ownership Plan (ESOP).
An ESOP offers tax benefits because employees can share in the company stock and any profits that it generates. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
An Individual Retirement Annuity (IRA) is also available. With an IRA, you make regular payments to yourself throughout your lifetime and receive income during retirement. Contributions to IRAs can be made without tax.
What are the pros and cons of a gold IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. An IRA is a good choice for those who want a way to save some money but don’t want the tax. However, there are also disadvantages to this type of investment.
To give an example, if your IRA is withdrawn too often, you can lose all your accumulated funds. Also, the IRS may not allow you to make withdrawals from your IRA until you're 59 1/2 years old. You will likely have to pay a penalty fee if you withdraw funds from an IRA.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management costs ranging from $10-50.
If you prefer to keep your money outside a bank, you'll need to purchase insurance. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. It is possible that you will be required to purchase insurance that covers losses of up to $500,000.
If you are considering a Gold IRA, you need to first decide how much of it you would like to use. Some providers limit the amount of gold that you are allowed to own. Some providers allow you to choose your weight.
You will also have to decide whether to purchase futures or physical gold. Futures contracts for gold are less expensive than physical gold. Futures contracts, however, allow for greater flexibility in buying gold. They let you set up a contract that has a specific expiration.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy doesn’t provide theft protection or loss due fire, flood, or earthquake. It does offer coverage for natural disasters. You might consider purchasing additional coverage if your area is at high risk.
In addition to insurance, you'll need to consider the cost of storing your gold. Insurance doesn't cover storage costs. For safekeeping, banks typically charge $25-40 per month.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian is responsible for keeping track of your investments. They also ensure that you adhere to federal regulations. Custodians cannot sell your assets. Instead, they must keep your assets for as long you request.
Once you've chosen the best type of IRA for you, you need to fill in paperwork describing your goals. You must include information about what investments you would like to make (e.g. stocks, bonds and mutual funds). You should also specify how much you want to invest each month.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. The company will then review your application and mail you a letter of confirmation.
A financial planner is a good idea when opening a gold IRA. A financial planner is an expert in investing and can help you choose the right type of IRA for you. You can also reduce your insurance costs by working with them to find lower-cost alternatives.
Is buying gold a good way to save money for retirement?
Although it may not look appealing at first, buying gold for investment is worth considering when you consider the global average gold consumption per year.
Physical bullion bar is the best way to invest in precious metals. But there are many other options for investing in gold. The best thing to do is research all options thoroughly and then make an informed decision based on what you want from your investments.
If you don’t need a safe place for your wealth, then buying shares of mining companies or companies that extract it might be a better alternative. If you need cash flow to finance your investment, then gold stocks could be a good option.
ETFs are an exchange-traded investment that allows you to gain exposure to the market for gold. You hold gold-related securities and not actual gold. These ETFs may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
How Much of Your IRA Should Be Made Up Of Precious Metals
You should remember that precious metals are not only for the wealthy. You don't need to be rich to make an investment in precious metals. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. Stocks in companies that produce precious materials could be purchased. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
No matter what your preference, precious metals will still be of benefit to you. Although they aren’t stocks, they offer the possibility for long-term gains.
And, unlike traditional investments, their prices tend to rise over time. If you decide to make a sale of your investment in the future, you will likely realize more profit than with traditional investments.
What are the advantages of a IRA with a gold component?
A gold IRA has many benefits. It's an investment vehicle that allows you to diversify your portfolio. You have control over how much money goes into each account.
You also have the option to transfer funds from other retirement plans into a IRA. If you are planning to retire early, this makes it easy to transition.
The best thing is that investing in gold IRAs doesn't require any special skills. They're available at most banks and brokerage firms. You don't have to worry about penalties or fees when withdrawing money.
But there are downsides. Gold has historically been volatile. So it's essential to understand why you're investing in gold. Is it for growth or safety? Is it for security or long-term planning? Only once you know, that will you be able to make an informed decision.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. A single ounce isn't enough to cover all of your needs. Depending upon what you plan to do, you could need several ounces.
You don't have to buy a lot of gold if your goal is to sell it. You can even live with just one ounce. You won't be capable of buying anything else with these funds.
Should You Invest in gold for Retirement?
The answer will depend on how many dollars you have saved so far and whether you had gold as an investment option at the time. You can invest in both options if you aren't sure which option is best for you.
Not only is it a safe investment but gold can also provide potential returns. It's a great investment for retirees.
Although most investments promise a fixed rate of return, gold is more volatile than others. Therefore, its value is subject to change over time.
This doesn't mean that you should not invest in gold. You should just factor the fluctuations into any overall portfolio.
Another benefit of gold is that it's a tangible asset. Unlike stocks and bonds, gold is easier to store. It can also be carried.
You can always access your gold as long as it is kept safe. There are no storage charges for holding physical gold.
Investing in gold can help protect against inflation. It's a great way to hedge against rising prices, as gold prices tend to increase along with other commodities.
It's also a good idea to have a portion your savings invested in something which isn't losing value. Gold rises in the face of a falling stock market.
Another benefit to investing in gold? You can always sell it. As with stocks, your position can be liquidated whenever you require cash. You don't even need to wait for your retirement.
If you do decide to invest in gold, make sure to diversify your holdings. Don't place all your eggs in the same basket.
You shouldn't buy too little at once. Start with a few ounces. Continue adding more as necessary.
Remember, the goal here isn't to get rich quickly. It's not to get rich quickly, but to accumulate enough wealth to no longer need Social Security benefits.
Even though gold is not the best investment, it could be an excellent addition to any retirement plan.
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Do you want to keep your IRA gold at home? It's not exactly legal – WSJ
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
The best way online to buy gold or silver
First, understand the basics of gold. Gold is a precious metallic similar to Platinum. Because of its resistance to corrosion and durability, it is very rare. It's difficult to use, so most people prefer purchasing jewelry made from it rather than actual bars.
There are two types of gold coins available today – one type is legal tender, while the other is called bullion. Legal tender coins are minted for circulation in a country and usually include denominations like $1, $5, $10, etc.
Bullion coins are minted for investment purposes only, and their values increase over time due to inflation.
They are not exchangeable in any currency exchange system. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. Each dollar spent by the buyer is worth 1 gram.
You should also know where to buy your gold. If you want to purchase gold directly from a dealer, then a few options are available. First, your local currency shop is a good place to start. You can also try going through a reputable website like eBay. You can also purchase gold through private online sellers.
Individuals selling gold at wholesale prices and retail prices are known as private sellers. Private sellers charge a 10% to 15% commission per transaction. This means that you will get less back from a private seller than if you sell it through a coin shop or on eBay. This option is often a great choice for investing gold as it allows you more control over its price.
Another way to buy gold is by investing in physical gold. While physical gold is easier than paper certificates to store, you still need to make sure it is safe. It is important to keep your physical gold safe in an impenetrable box such as a vault, safety deposit box or other secure container.
You can either visit a bank, pawnshop or bank to buy gold. A bank can offer you a loan for the amount that you need to buy gold. The pawnshop is a small business that allows customers to borrow money to buy items. Banks often charge higher interest rates then pawnshops.
A third way to buy gold? Simply ask someone else! Selling gold is simple too. Set up a simple account with GoldMoney.com and you will start receiving payments instantly.
By: Jamie Redman
Title: FTX Co-Founder Gary Wang Reveals Alleged Misuse of Client Funds by CEO Sam Bankman-Fried
Sourced From: news.bitcoin.com/bankman-frieds-house-of-cards-ftx-co-founder-gary-wang-spills-the-beans-on-alleged-misuse-of-client-funds/
Published Date: Fri, 06 Oct 2023 23:30:44 +0000