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Allegations of Fraud Emerge in Sam Bankman Fried’s Trial on FTX’s Insurance Fund in Question

Picture Source: BeInCrypto

The fourth day of the trial for Sam Bankman-Fried, the controversial founder of FTX, has brought shocking revelations about the integrity of the exchange’s insurance fund. FTX co-founder Gary Wang, currently testifying, has made allegations that the reported numbers for FTX’s insurance fund were significantly inaccurate. BitMEX Research has provided insights into this contentious issue, suggesting that FTX’s insurance balance may have been calculated using random number generators (RNGs), raising serious concerns about transparency and trust in the cryptocurrency exchange.

FTX’s Insurance Fund: A Random Number Generator?

BitMEX Research, known for its investigative work in the cryptocurrency space, has raised concerns about the accuracy of FTX’s insurance balance. They allege that FTX’s insurance fund may have been “produced by a random number generator.” RNGs are commonly used in fields like gambling and statistical sampling, where the goal is to generate genuinely random outcomes. However, employing RNGs in the calculation of insurance balances or bank account balances is considered fraudulent and unethical.

Gary Wang’s Testimony

During the ongoing trial, FTX co-founder Gary Wang testified openly about the discrepancies in the reported numbers of the insurance fund. When questioned by Judge Lewis Kaplan about the accuracy of these numbers disclosed to the public, Wang did not mince words. He admitted that the numbers were indeed inaccurate, stating, “For one, there is no FTT in the insurance fund. It’s just the USD number. And, two, the number listed here does not match what was in the database.”

This revelation raised significant concerns about the transparency and credibility of FTX’s operations, as the public’s perception of the insurance fund’s balance was found to be at odds with the actual data.

Discrepancies Between Public Reports and Database Numbers

Judge Kaplan delved further into the matter, questioning why the numbers in the database differed from the public reports. Wang explained that the numbers undergo complex mathematical calculations before being presented to the public. He described the process, saying, “Line 19 it’s taking that number, multiplying it — then multiplies that by a random number that’s around 7500 and then dividing the result by a billion. That’s a number that gets added to the number that shows up on the website.”

This revelation has only added to the intrigue and confusion surrounding FTX’s operations, as the methods used to calculate insurance fund balances appear far from straightforward.

Read More: OpenAI CEO Sam Altman Voices Concerns Over U.S. Government’s Crypto Regulations

Ongoing Drama in SBF Trial

The trial of Sam Bankman-Fried began on October 3 and is set to continue until mid-November. Despite multiple unsuccessful attempts to secure his release for better trial preparation, SBF has remained under house arrest since August. The trial continues to unfold amid a backdrop of significant drama and revelations, leaving many in the cryptocurrency community questioning the legitimacy and transparency of one of the industry’s leading exchanges.

Conclusion

The allegations and revelations surrounding FTX’s insurance fund in Sam Bankman-Fried’s trial have cast a shadow of doubt on the exchange’s credibility. The use of random number generators in determining the insurance fund balance, as well as the disparity between public reports and database numbers, raises critical questions about the transparency and integrity of one of the cryptocurrency world’s prominent players. As the trial continues, the crypto community will be closely watching the developments to see what further insights and revelations emerge.

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