Levine claimed that the fraud was not in how the money ended up at Alameda, but in how FTX claimed to be safe. I think that’s wrong since the “allow_negative” flag looks fraudulent in itself. It just looks like something you’d use to implement embezzlement in computer code.
For what it’s worth, Levine’s account of what the prosecution is trying to claim in the trial also seems wrong. He claims that the prosecution agrees with him, but their opening statement in the trial sounds much more like the version of the story he claims is wrong than the version he claims is correct.
Alameda had secret access to FTX assets. Once Alameda had it, the defendant could spend it as he pleased. How did he do it? Two ways. First, customers sometimes deposits dollars on FTX, the company would tell them it was in their accounts.
But it never made it to FTX. He set up a bank account linked to Alameda. He lied to a bank to set up an Alameda bank account. Then he lied to the customers. He took billions of dollars, the customers had no way to know.
Here’s the second way. He took customers’ crypto. Accounts that hold crypto are called digital wallets. He gave Alameda the ability to withdraw—he made sure it was written right into the computer code.
The fact that Levine is wrong is made even clearer in Ellison’s testimony. Again from @innercitypress:
AUSA: What makes you guilty?
Ellison: Alameda took several billions of dollars from FTX customers and used it for investments.
Note that she said “Alameda took several billions of dollars from FTX customers” is what makes her guilty, not “FTX lied to customers about how good their risk engine was.”
Levine claimed that the fraud was not in how the money ended up at Alameda, but in how FTX claimed to be safe. I think that’s wrong since the “allow_negative” flag looks fraudulent in itself. It just looks like something you’d use to implement embezzlement in computer code.
For what it’s worth, Levine’s account of what the prosecution is trying to claim in the trial also seems wrong. He claims that the prosecution agrees with him, but their opening statement in the trial sounds much more like the version of the story he claims is wrong than the version he claims is correct.
See, for example, the prosecution’s opening statements (summarized by @innercitypress):
The fact that Levine is wrong is made even clearer in Ellison’s testimony. Again from @innercitypress:
Note that she said “Alameda took several billions of dollars from FTX customers” is what makes her guilty, not “FTX lied to customers about how good their risk engine was.”