As the case involving Sam Bankman-Fried (SBF) and his cryptocurrency exchange FTX enters its second week, his legal team has sought permission from Judge Lewis Kaplan to cross-examine Gary Wang, the Co-Founder of FTX, about the legal advice he received regarding loans obtained from Alameda Research.

In a letter addressed to Judge Kaplan yesterday (Monday), prosecutors have already questioned Wang about the substantial loans he allegedly received from the hedge fund, which he used for venture investments and to buy a house in the Bahamas. SBF's defense argued that Wang believed these loans were legitimate and had been structured by lawyers. This perspective aims to challenge the idea that these loans were intended to conceal the source of the funds.

Unraveling FTX-Alameda Research Links

In part, the letter read: "On direct examination, the Government questioned Wang about a series of personal loans worth approximately $200-$300 million that he received from Alameda Research to fund venture investments by FTX and to fund his purchase of a house in the Bahamas."

The relationship between FTX and Alameda Research is central to the ongoing criminal case. Prosecutors argued that SBF used funds transferred to Alameda Research as his financial resources. However, SBF maintains his innocence, with his legal team emphasizing that the participation of the company's lawyers in the loan arrangements suggested that he might not have been aware that this was inappropriate.

Prosecutors in the trial have alleged that FTX engaged in deceptive practices, funneling customers' funds directly into a bank account controlled by Alameda Research. This move allegedly misled customers about the whereabouts and usage of their funds, creating a complex web of deception. Unlike regular FTX customers, Alameda Research enjoyed extraordinary privileges, including maintaining a negative balance and making "unlimited withdrawals" from FTX's accounts.

Key Testimony from Caroline Ellison

Caroline Ellison, the former CEO of Alameda Research, will take the stand today (Tuesday). Her testimony holds immense importance in the case against SBF, accused of orchestrating a scheme to misappropriate billions of dollars from FTX customer accounts.

Last week, prosecutors revealed that Alameda Research had access to a line of credit of up to $65 billion, which served as collateral for its bets. This sum exceeded the credit extended to other major investors, raising questions about preferential treatment within FTX. Last week, according to a report by CNN, Wang acknowledged that these advantages were not openly shared with FTX's customers or investors.