FTX co-founder: FTX customer balances equal hot wallet assets, but there are additional $8 billion in liabilities

ChainCatcher news, according to The Block, FTX co-founder Gary Wang testified in the SBF trial that in November 2022, the customer balances at FTX matched the assets held in the hot wallet, with one significant exception: a hidden liability of $8 billion named "fiat@".

As customers began withdrawing assets from FTX in November 2022, SBF asked Gary Wang to calculate how much money Alameda Research needed to deposit into the exchange to cover the outflows. Wang testified on the fourth day of the SBF trial, under direct questioning from government prosecutors, that excluding Alameda Research's accounts, the total customer balances at FTX matched the assets in FTX's hot wallet. However, unbeknownst to him, there were issues with his calculations.

He testified that he only got the full picture when SBF asked him if he included "our Korean friends" in his calculations. Wang was confused and sought confirmation from another former FTX executive, Nishad Singh, who told Wang that "Korean friends" actually referred to the $8 billion "fiat@" hole at the core of FTX's collapse.

The fiat@ account balance in FTX's internal database had been reallocated to an account named "seoyuncharles88@gmail.com," which was granted special privileges so that Alameda Research would not have to pay interest on the credit line. Wang also confirmed that SBF was aware that FTX's financial situation was more transparent to the public and investors, while Alameda's financial situation was not.