FTX Co-Founder & SBF Friend Gary Wang Testifies
6 Oct 2023 by Rory Kejerko 3 min read
FTX Co-Founder & SBF Friend Gary Wang Testifies

As previous reports on the now in-progress Sam Bankman-Fried (SBF) and FTX trial have discussed, the specific fate of its disgraced crypto exchange founder may largely rely on the testimonies given by those closest to him.

Gary Wang - an FTX co-founder who pleaded guilty to his involvement in the company’s fraudulent activities back in December - was the first to testify in court yesterday, wherein he confirmed that SBF and his ‘inner circle’ of workers committed fraud. 

Wang’s most poignant comments mainly referred to Alameda Research, the SBF-founded crypto trading firm that was also a closely-tied sister company to FTX. Further, when talking about Alameda’s access to customer deposits on both its own platform and FTX, he stated that “we allowed Alameda to withdraw unlimited funds”. 

In going into more detail, Wang explained how the cohort of FTX and Alameda executives were using FTX’s fast order-execution powers to get through Alameda’s large line of credit. Here it could also withdraw unlimited funds, as well as carry negative balances. 

When it comes to the numbers involved, Wang said that by the time FTX had fallen, Alameda had withdrawn $8 billion worth of funds from FTX, and had drawn $65 billion from its line of credit. Further, these figures would’ve contrasted massively with other market makers that typically had lines of credit in the single or double-digit millions (i.e. not billions). 

When it comes to Wang’s own rewards, he disclosed that he was on a $200,000 annual salary whilst holding 17% equity in FTX. In comparison, he stated that SBF owned ‘like 65%’ of FTX and 90% of Alameda (with Wang taking the other 10%). 

In addition, FTX’s lucrative withdrawal measures meant that Wang was allowed to take $200,000 from the company to build a house, as well as a humble $300 million to use for investing in other startups. 

Wang had been friends with SBF since high school, where despite helping set-up and run the mammoth crypto entity, he kept a much lower profile in comparison to his fellow co-founder. This was largely due to their designated roles, as whilst SBF handled public-facing duties such as lobbying and media events, Wang solely focused on coding. 

Back in December 2022, Wang and Caroline Ellison - the ex-girlfriend of SBF who will play a very interesting role in the case when testifying - both pleaded guilty to their involvement in FTX's illicit activities. More specifically, this entailed the pair working with SBF to:

“Artificially prop up the value of FTT, which served as collateral for undisclosed loans that Alameda took out from FTX pursuant to its undisclosed, and virtually unlimited, line of credit. By surreptitiously siphoning FTX’s customer funds onto the books of Alameda, defendants hid the very real risks that FTX’s investors and customers faced”- Sanjay Wadhwa, Deputy Director of the Securities and Exchange Commission’s (SEC) Division of Enforcement.

Wang was unable to complete his testimony as the court was adjourned before it ended. This means that prosecutors - such as US Attorney Thane Rehn - will be able to continue prodding him today. 

Although Caroline Ellison is the one we’re all waiting for, another person to testify yesterday was Matt Huang, a managing partner at venture capital firm Paradigm. Here Huang stated that his firm - which has now essentially ‘zeroed’ through its FTX-involvement - would’ve never invested $278 million in SBF’s companies if it had known what was going on. 

That being said, he also claimed that Paradigm had raised concerns over FTX's ‘unique governance structure,’ and that itself - among other investors - had asked for a seat on the FTX board. In response, SBF told a stone-cold lie by telling Paradigm that Alameda Research wasn’t receiving any preferable treatment on FTX. 

Want More Cutting-Edge Crypto News? 

Follow Us: X TikTok Instagram Telegram LinkedIn 

Sign up to our newsletter at the bottom of the page

Check Out Our Top 10 Crypto Currencies of 2023

This article is intended for educational purposes and is not financial advice.