FTX co-founder Gary Wang agreed to cooperate in Sam Bankman-Fried case in his first meeting with prosecutors: 'I thought I was likely to be charged'
It took less than a week after FTX's dramatic implosion for Gary Wang to agree to testify against his friend Sam Bankman-Fried.
REUTERS/Jane Rosenberg
- Gary Wang agreed to cooperate with prosecutors in his first meeting with them.
- He told jurors at Sam Bankman-Fried's trial that he knew what they did at FTX was wrong.
- "I thought I was likely to be charged and I wanted to get a shorter prison sentence," he testified Friday.
Gary Wang and Sam Bankman-Fried had known each other for years. The two met at a math camp in their high school years and later lived together while attending MIT before co-founding FTX, the cryptocurrency exchange.
It took only six days after FTX's bankruptcy for Wang to tell federal prosecutors he wanted to cooperate with their criminal investigation into his friend.
"I thought I was likely to be charged and I wanted to get a shorter prison sentence," Wang, FTX's chief technology officer at the time of its implosion, testified in Manhattan federal court on Friday in Bankman-Fried's criminal trial.
On the witness stand, the 30-year-old Wang detailed his experience working with Bankman-Fried at FTX and explained how deeply its funds were commingled with Alameda Research.
FTX collapsed after it was revealed that Alameda — a cryptocurrency hedge fund that Bankman-Fried also controlled — had taken enormous losses on risky bets with funds from ordinary FTX customers. Prosecutors accused Bankman-Fried of fraud, money laundering, and conspiracy.
The cryptocurrency exchange declared bankruptcy on November 10, 2022, and its servers were shut down the next morning. Wang testified that he spent November 11 and 12 dealing with regulators in the Bahamas, where FTX was based, and working with US-based lawyers to identify assets in different accounts that could be restored to customers and any other creditors.
Chelsea Jia Feng/Insider
Wang returned to the US from the Bahamas on November 13, meeting with the FBI and prosecutors on November 17. At the very first meeting, he said he would cooperate with the prosecutors' criminal investigation, he testified. He met with investigators more than a dozen times in the past year, he said.
In December 2022, he pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud.
One of his co-conspirators, he said on the witness stand Friday, was his FTX co-founder Bankman-Fried.
A few days after Wang's plea, Bankman-Fried was extradited from the Bahamas to the US, where he pleaded not guilty to the charges against him.
On Friday, Wang said he wanted to cooperate with prosecutors because he knew what he did at FTX was wrong. FTX had lied to customers when it told them their deposits were safe, he said. In reality, those funds were used by Alameda Research.
"Customers did not agree for us to use their funds," Wang said.
Wang testified that on the same day in the summer of 2019 when Bankman-Fried publically claimed that Alameda Research, a cryptocurrency trading firm, got the same treatment as any other FTX customer, FTX actually rolled out a new coding feature that allowed Alameda an unlimited line of credit of $65 billion. Few other customers had a line of credit with FTX at all, and none of them had unlimited credit.
Wang faces a maximum sentence of 50 years in prison. His cooperation agreement doesn't include a guarantee of a lower sentence, which will ultimately be determined by a judge. He said he hoped he'd get a sentence of zero years behind bars.