FTX fake insurance fund figures

The fraud was in the code

The jury got a taste of code review as they examined a falsified “insurance fund” and the infamous FTX → Alameda Research “backdoor”.

Molly WhiteMolly White

I suspect we'll see some more juicy stuff come out of this case, but the 'insurance fund' that FTX bragged so much about being basically a random number generated off the back of daily trading volume is hilarious. It summarises the whole grift perfectly.

Code snippets shown to the jury demonstrated how Nishad Singh wrote some code that would update the insurance fund amount by adding to it the daily trading volume, multiplied by a randomish number around 7,500, and dividing it by a billion, thus making it appear as though the website was referencing a real account balance that was fluctuating as the exchange added funds or withdrew from it to cover losses. In reality, it was all made up.

Read the rest on Molly White's newsletter above, it's a laugh.