In summary
- FTX co-founder Gary Wang avoided prison after being sentenced to time served and three years of supervised release for his role in the collapse of FTX.
- Wang was key in the case against Sam Bankman-Fried, testifying about the diversion of funds and special privileges granted to Alameda Research at FTX.
- He pleaded guilty to four counts of fraud and conspiracy, and his cooperation was key to the investigation. Bankman-Fried was sentenced to 25 years in prison.
FTX co-founder Gary Wang avoided prison on Wednesday, after being sentenced to time served and three years of supervised release for his role in the collapse of the Cryptocurrency exchange.
“You did the right thing,” U.S. District Judge Lewis Kaplan told Wang, according to a post on Twitter (aka X) by Inner City Press. “I don’t think I need to say much about the extent of your cooperation. You are entitled to great credit.”
Wang, who met FTX co-founder and former CEO Sam Bankman-Fried at a high school math camp, served as a key witness in Bankman-Fried’s criminal case. Just over a year ago, Wang testified about how billions of dollars in client funds were siphoned off the exchange by FTX’s sister trading firm, Alameda Research, using an unlimited line of credit.
At the same time, Wang revealed changes to FTX’s codebase that granted special privileges to Alameda, such as an “allow_negative” balance feature. That allowed Alameda to make unlimited withdrawals from FTX, including assets lent by the exchange.
Along with former Alameda CEO Caroline Ellison, Wang betrayed Bankman-Fried following the exchange’s demise two years ago. Both agreed to cooperate with prosecutors’ investigation into the exchange’s collapse, pleading guilty at first in hopes of receiving a lighter sentence. At the time, Wang pleaded guilty to four felony counts of fraud and conspiracy.
On Tuesday, Assistant US Attorney Nicolas Roos described Wang’s cooperation as critical. Calling Wang one of the easiest collaborators he has worked with, Roos noted that Wang also created an impressive tool for detecting fraud at FTX, according to Inner City Press.
Bankman-Fried was sentenced to 25 years in prison in March after being found guilty of seven counts of fraud, money laundering and conspiracy. The former cryptocurrency mogul has since filed an appeal, arguing that he was “presumed guilty” before his high-stakes trial.
Wang is the latest member of Bankman-Fried’s inner circle to face Judge Kaplan for sentencing. In September, Ellison received a two-year prison sentence while agreeing to forfeit $11 billion, while FTX engineering chief Nishad Singh avoided prison time in October.
During the sentencing of Bankman-Fried’s inner circle, cooperation with prosecutors was considered by Judge Kaplan as a significant factor. Meanwhile, Ryan Salame, co-CEO of FTX Digital Markets, who never testified, was sentenced in May to seven and a half years.
According to Inner City Press, Wang has left the cryptocurrency industry behind and is expecting her first child. At the same time, the FTX co-founder expressed a sense of remorse for his involvement in the exchange, apologizing during Wednesday’s hearing.
“I am deeply sorry to all FTX clients and investors who trusted us,” he said. “There are so many things I could have done.”
Edited by Andrew Hayward
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