Ex-Bankman-Fried Ally Gary Wang Avoids Prison Over FTX Fraud

(Bloomberg) — FTX co-founder Gary Wang has been spared from prison over his role in the multibillion dollar fraud at the cryptocurrency exchange after prosecutors praised his early cooperation in the case.

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Wang, whose assistance helped convict the orchestrator of the fraud, Sam Bankman-Fried, was sentenced to time served Wednesday by US District Judge Lewis A. Kaplan in Manhattan.

The judge said Wang, 31, had done the right thing for both himself and the country by cooperating so quickly to help unravel one of the biggest financial frauds in US history. Kaplan appeared taken aback by the prosecution’s strong advocacy for Wang.

“I’ve never seen anything quite like what happened here,” the judge said, adding that Wang is “entitled to a world of credit.”

After FTX imploded in late 2022, Wang was the first cooperator through the door at the US Attorney’s Office and went above and beyond to help investigators, his lawyers and the government pointed out. Wang, whose wife is expecting their first child this month, even built a software program to help the Justice Department detect fraud in financial markets.

Bankman-Fried is serving 25 years in prison after a jury found him guilty of orchestrating the yearslong fraud that allowed customer funds to be diverted to sister hedge fund Alameda Research. From there, money was spent on luxury real estate, campaign donations and risky investments.

“I profoundly regret my choices,” Wang said during brief remarks at the hearing, becoming emotional at times. “Nothing I do will ever be able to make up for those choices.”

Wang said he wished to remain free so he could continue helping FTX’s bankruptcy estate and provide for his family.

MIT, Math Camp

Wang was ordered to forfeit more than $11 billion — the same amount for all the defendants. According to a judgment filed after the sentencing, Wang has already satisfied the order by agreeing to liquidate his Vanguard and Coinbase accounts and give the proceeds to the US. Wang also agreed to give up any interest in the more than $600 million in proceeds seized from a Robinhood Markets account affiliated with Bankman-Fried and FTX nearly two years ago.

Wang and Bankman-Fried had been friends for years, having met at math camp as teenagers before joining the same fraternity at the Massachusetts Institute of Technology. Bankman-Fried enticed Wang to leave his job as a software engineer at Google and help him build Alameda Research. In a few years the men would become young billionaires after launching FTX, one of the biggest crypto exchanges in the world.

Assistant US Attorney Nicolas Roos said after Wang’s remarks that the former executive was unlike any other cooperator he had worked with. He said Wang saved the government years of work by immediately unwinding the FTX code early in the investigation, allowing the case to proceed quickly.

‘Sanskrit’ FTX Code

“He came in and deciphered basically half the case in the first day,” Roos said. “He has this incredibly unique skill-set,” the prosecutor said, adding that the FTX code was like “Sanskrit” that only an expert like Wang could have understood.

Roos added that Wang became aware of the fraud late and wasn’t culpable for a long period. It “would have been easy” for someone like Wang, with a limited role in a fraud, to choose to fight the charges, the prosecutor said.

Wang’s lawyer Ilan Graff declined to comment on the sentence. During the hearing, Graff told the judge that Wang spent his time at FTX “sitting at his computer” working diligently while others at the company “mingled with celebrities.”

Wang “did not knowingly create the back door” in FTX’s code that was used for the fraud.

Wang’s lawyers had asked the judge not to impose a prison sentence, seeking to distance their client from the other former company executives who cut deals with the government. Prosecutors didn’t recommend a sentence and instead pointed to his cooperation as a grounds for leniency.

Unlike the other co-conspirators, Wang did not lie to customers, lenders or investors and didn’t spend customer money on himself, his lawyers argued. He used his first year’s income working with Bankman-Fried to pay off his parents’ mortgage and flew economy while his colleagues traveled by private jet.

The other executives have met with mixed results when sentenced by Kaplan.

Ellison Sentence

Former Alameda Research CEO — and Bankman-Fried’s one-time girlfriend — Caroline Ellison was sentenced to two years in prison in September despite Kaplan praising her cooperation with prosecutors as “remarkable.”

Ryan Salame, who led FTX’s Bahamas subsidiary, is currently serving seven and a half years in prison. While he pleaded guilty to taking part in a sprawling campaign-finance scheme, he didn’t agree to testify against Bankman-Fried.

Former FTX chief engineer Nishad Singh, who like Wang and Ellison did testify, avoided prison and was sentenced to three years of supervised release.

(Updates with judge ordering forfeiture of $11 billion in ninth paragraph.)