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FTX Used a Random Number Generator for Insurance Balance, Report Reveals

2 mins
Updated by Kyle Baird
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In Brief

  • BitMEX Research alleges FTX's insurance balance was generated by a random number generator, not actual data.
  • FTX co-founder Gary Wang admits during trial that public insurance balance fund numbers weren't accurate.
  • Wang explains the displayed numbers are manipulated by multiplying and dividing by a random figure, not actual data.
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BitMEX Research has revealed transcript excerpts from the fourth day of disgraced FTX founder Sam Bankman-Fried’s (SBF) fraud trial. It suggests that FTX’s insurance balance was different from the public perception.

FTX co-founder Gary Wang is currently testifying and making allegations that the numbers for FTX’s insurance fund were highly inaccurate.

FTX Insurance Data Generated Through Complex Math

In a post on X (formerly Twitter), BitMEX Research alleged that FTX’s insurance balance was “produced by a random number generator.”

Random number generators (RNGs) find their primary application in gambling and statistical sampling. This is where the objective is to generate random outcomes. However, using RNGs in the creation of insurance balances or bank account balances constitutes fraud.

During the SBF trial, Wang testified and openly acknowledged that the numbers provided to the public were incorrect.

When Judge Lewis Kaplan asked about the accuracy of the numbers regarding the disclosure of the insurance fund to the public, Wang disclosed that it was indeed inaccurate:

“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.”

Furthermore, Kaplan questioned why the database numbers are different from the public reports. Wang responded, admitting that it came from a page on the website claiming to show what was in the insurance fund. However, he revealed it was allegedly “calculated separately.”

SBF Trial Continues Amidst Ongoing Drama

Wang explains that the numbers undergo multiplication and division to arrive at the final result presented to the public.

“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.”

BeInCrypto recently reported that Judge Kaplan had requested Wang to speak more slowly during a testimony hearing last week.

When questioned about wire fraud, Wang allegedly admitted that Alameda Research had access to “unlimited funds” from FTX.

On October 3, SBF’s trial kicked off and is set to continue through to mid-November. Despite multiple unsuccessful attempts to secure his release for better trial preparation, SBF has remained under house arrest since August.

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.