An FTX lawyer told Delaware's bankruptcy court that SBF ordered FTX co-founder Gary Wang to open a secret backdoor to let Alameda borrow $65B of clients' money
- Bankruptcy lawyers said Sam Bankman-Fried's Alameda had access to a $65 billion credit line from FTX.
Context & Ripple Effects
This disclosure turns what had been piecemeal admissions into an alleged mechanism. Since the [[a:984931|November bankruptcy filing revealed Alameda loaned SBF over $3.3B and token holdings worth just $659K]], reporting has established that SBF himself told investors Alameda owed FTX ~$10B funded by customer money, and that Caroline Ellison admitted to staff she, SBF, and two executives knew about the lending. What the FTX lawyer adds in Delaware court is how it worked technically: a hidden backdoor Gary Wang built at SBF's direction.
First-order effects
- SBF and Gary Wang now face a specific, documented allegation — ordering and building code that gave Alameda a $65B credit line on client funds — rather than generalized commingling claims.
- Creditors gain a clearer theory of recovery: the estate can trace withdrawals through a single engineered channel instead of untangling diffuse transfers.
Second-order effects
- Cooperating insiders become the government's path up the chain — consistent with the CFTC settlements reached with Ellison and Wang, which trade their testimony for leniency against SBF.
- Every major exchange now inherits the burden of proving customer assets are not reachable by an affiliated trading desk, as FTX's collapse made the failure mode concrete for regulators and counterparties alike.
Third-order effects
- If the pattern holds, exchange governance structurally separates custody from trading affiliates — with segregation enforced by auditors and courts rather than founder assurances, and bankruptcy estates recouping losses slowly (the estate has flagged a first creditor payment from an $11.4B cash hoard while paying advisers nearly $948M).
The trend: Crypto exchange failures are converting informal founder-controlled lending into court-adjudicated custody rules, with insider cooperation and estate recoveries setting the template for the next insolvency.