Adam Yadidie Testifies on FTX $8B Financial Hole

The United States District Court for the Southern District of New York, Adam Yedidia, a former MIT roommate and FTX developer of Sam Bankman-Fried, delivered a compelling testimony on October 5th. Yedidia detailed the alleged $8-billion deficit reported by the crypto exchange FTX before its bankruptcy, shedding light on the intricate connections between the exchange and Alameda Research. Moreover, he highlighted a critical bug in FTX’s code, which, according to his account, ensured that “Alameda’s liabilities did not decrease,” culminating in a staggering financial error.

Yedidia Exposes FTX’s Alleged Financial Misdeeds

Yedidia’s revelations, particularly concerning the interactions between the crypto exchange and Alameda Research, have become a focal point in the allegations of fraud against SBF. His testimony, under the precise questioning of Assistant U.S. Attorney Danielle Sassoon, unveiled that his resignation from FTX was after the discovery that “Alameda had used customer deposits to pay its loans.”

Yedidia claimed that Bankman-Fried preferred using Signal for FTX code discussions. He highlighted their frequent use of the app’s auto-delete feature. SBF stressed the dangers of retaining messages; he believed stored messages posed risks, especially if regulators found negative content. This strategy aimed to protect the company from regulatory backlash.

A notable incident unfolded near a paddle tennis court in The Bahamas, where Yedidia confronted SBF regarding the $8-billion financial discrepancy. Despite the tension, the then-CEO offered reassurances over the situation.

Additionally, Sassoon’s inquiries brought to light Yedidia’s awareness of Bankman-Fried’s interactions with former Alameda Research CEO Caroline Ellison. Yedidia shared a candid conversation in which SBF disclosed a personal encounter with Ellison and sought advice on the prospect of dating her, which Yedidia advised against.

Ellison to Testify Against Bankman-Fried Soon

Ellison plans to testify against Bankman-Fried, following her plea agreement with prosecutors. The overseeing judge, Lewis Kaplan, revoked SBF’s bail in August, following prosecution arguments that he had engaged in witness intimidation against Ellison and others by exposing some of her journals to New York Times reporters.

The trial commenced on October 3rd with jury selection and is anticipated to extend through November. Subsequent witnesses, including Gary Wang, one of the co-founders of FTX, are expected to testify following Yedidia. Prosecutors have also indicated the possibility of calling upon former FTX engineering director Nishad Singh and former FTX chief operating officer Constance Wang.