Gary Wang, the enigmatic co-founder and CTO of the defunct cryptocurrency exchange FTX, appeared as a witness during the ongoing criminal trial of Sam Bankman-Fried, which has now reached its third day.
The CEO and co-founder of FTX, Sam Bankman-Fried, took on the prominent public role.
As per the recent Sam Bankman-Fried news, Wang said he remained in the shadows until Sam Bankman Fried was jailed, and the exchange eventually fell.
Wang explained to the court that he primarily focused on coding. He highlighted the contrast between his role and Bankman-Fried’s involvement in media interactions, lobbying, and investor relations.
Gary Wang’s background: Wire fraud confession and Charges on Sam Bankman-Fried
Wang pursued his education at the Massachusetts Institute of Technology and had prior experience working at Google.
Wang co-founded the crypto hedge fund Alameda Research and disclosed during the trial that he held a 10% ownership stake in the fund, with Sam Bankman-Fried owning the remaining 90%, as reported by Inner City Press.
When questioned about the hedge fund’s name, the prosecution asked, “Why ‘Research’?” Wang replied, “Sam said it would be easier to get a bank account.”
Gary Wang, along with Caroline Ellison, former co-CEO of Alameda Research, and Nishad Singh, FTX’s director of engineering and co-founder, entered a guilty plea for wire fraud and other charges.
Meanwhile, seven charges, including wire fraud and conspiracy to commit money laundering, have been put on Sam Bankman Fried.
When questioned about the wire fraud, Wang explained, “We allowed Alameda to withdraw unlimited funds,” clarifying that these unique privileges were encoded into the system.
Profiles, Development, and Disclosures
According to a profile by The Block, Gary Wang was known for his reticence and had a strong connection with Sam Bankman-Fried and Ellison. In contrast, Bankman-Fried, who admitted, “I don’t code. I’m trash. I have not written any of FTX’s code base,” didn’t have a coding background.
FTX, established in May 2019, initially had a minimal development team composed of just two developers. However, by late 2021, according to CEO of FTX Sam Bankman-Fried in an interview with Insider, the team expanded to 10 to 25 developers responsible for the exchange and its subsidiaries.
This limited team size potentially contributed to fewer individuals discovering the backdoor implemented by Wang and other trusted members of Bankman-Fried’s inner circle.
Earlier in the day, Adam Yedidia, a close friend of Sam Bankman-Fried and a former FTX engineer testified that he found a bug in FTX’s code that incorrectly displayed Alameda Research’s liabilities as $16 billion.
After fixing the bug, Yedidia realized that Alameda owed $8 billion in debt. When asked what prompted his resignation, Yedidia replied, “I learned that Alameda had used customer deposits to pay its loans.”
Alameda’s debt revelation while Sam Bankman-Fried jailed
Matt Huang, an investor at Paradigm venture firm, provided testimony on Sam Bankman Fried news.
He discussed Paradigm’s investment in FTX and how Bankman-Fried misled them regarding the exchange’s “best-in-class” liquidation engine.
This engine is crucial for trading as it enforces position closures when traders don’t meet margin requirements. It was revealed during bankruptcy filings in November that Alameda was exempt from these protocols.
When asked if he had been informed that Alameda was exempt from the liquidation engine, the prosecution, Huang replied, “No.”
Judge Kaplan was frustrated by repetitive defense questions in the trial
Throughout the day, US District Judge Lewis Kaplan seemed frustrated with the defense’s repetitive line of questioning.
He instructed Christian Everdell, one of Bankman-Fried’s lawyers, to limit such repetition before a court recess. Additionally, the judge frequently upheld the prosecution’s objections with a ” sustained response,” indicating his approval of those objections.
Judge Kaplan acknowledged the concern about repetition and remarked, “I’m sure the jury would appreciate anything you can do on repetition,” in response to the prosecution’s observation that they were running over time, even though it was only the second day of witness testimonies.
The questioning of Gary Wang is set to continue tomorrow.