“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.”
FTX’s insurance fund balance was a random number dressed up to look like an account. An allow_negative flag let Alameda withdraw without funds and never get liquidated. Its credit line went from a few million to $1 billion to about $65 billion. Bankman-Fried told Congress the fund had paid out $9.5 million in three years, while one MobileCoin exploit cost several hundred million. The fraud passed code review.