Gary Wang Says He And Sam Bankman-Fried Committed Financial Crimes, ''Lied About'' Alameda Research Funding

Gary Wang Says He And Sam Bankman-Fried Committed Financial Crimes, ”Lied About” Alameda Research Funding

Updated: 06 October 2023

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Gary Wang said he, fellow co-founder Sam Bankman-Fried and other executives committed financial crimes while running the collapsed crypto exchange FTX and its affiliate, Alameda Research.

“We gave special privileges to Alameda Research to allow it to withdraw unlimited funds from FTX and lied about it,” Wang said while testifying in Bankman-Fried’s trial for fraud and conspiracy in New York on October 5..

Wang said he had committed securities fraud, commodities fraud, and wire fraud together with Bankman-Fried, former Alameda CEO Caroline Ellison, and former FTX engineering executive Nishad Singh. Wang, Ellison, and Singh pleaded guilty for their actions shortly after Bankman-Fried was taken into custody and are cooperating with prosecutors.

Gary Wang: Chief Technology Officer.
AUSA: Did you commit crimes at FTX?
Gary Wang: Yes. With Nishad Singh, Caroline Ellison and Sam Bankman-Fried.
AUSA: Is that him over there?
[A pause…]Gary Wang: Yes.

— Inner City Press (@innercitypress) October 5, 2023

Alameda had other privileges that included access to a large amount of borrowed money, faster order processing on FTX’s platform, and the freedom to withdraw funds without restrictions, he said.

Alameda had a $65 billion line of credit, significantly higher than typical large businesses, usually in the single to double-digit millions. The company had accumulated a debt of $8 billion with FTX before the exchange’s downfall, Wang said.

Wang stated that the “unlimited funds” came from FTX customers. They used a special code in customer transactions to direct the funds to Alameda.

AUSA: What was the wire fraud?
Gary Wang: We allowed Alameda to withdraw unlimited funds.
Judge Kaplan: Mr. Wang, could you slow down?
[Some had said Gary Wang couldn't or wouldn't speak. But he's speaking, and fast]
— Inner City Press (@innercitypress) October 5, 2023

From Coding to Courtroom

Wang, FTX’s former CTO, said he was responsible for creating and inspecting the code. Although Bankman-Fried did not code, he instructed him and other developers on what to include. They occasionally discussed differences of opinion, but ultimately, the final decision rested with Bankman-fried.

“Sometimes we talked [disagreements] out, but in the end, it’s Sam’s decision,” Wang said. These internal financial privileges were not made public, Wang said.

Wang said that Bankman-Fried owned 90% of Alameda, while he held a 10% stake. Bankman-Fried was the majority owner of FTX holding with a 65% stake, while Wang owned 17% of the company, he said. Singh owned 5% of FTX, he added.

Wang also mentioned that Alameda provided him with a loan of approximately $200 million to $300 million during his time at the companies. The money was not deposited into his personal bank account but used for investments made by FTX in other companies.

Bankman-Fried Didn’t Want Alameda Name Associated With Crypto

Wang also revealed the reasoning behind Alameda’s unique name. Bankman-Fried’s choice of “Alameda” was inspired by Alameda County in California, while “Research” was added to sound prestigious and conventional. The choice of name was also to avoid any direct association with cryptocurrency terminology.

Bankman-Fried believed it would be easier to open bank accounts, secure rental leases, attract investors, and engage in other business activities with a more conventional company name, Wang said.

Prosecutors showed a video clip of Bankman-Fried from April 2021 on a podcast, where he discussed the reasoning behind the name “Alameda.” He said, “If we named our company Shitcoin Day Trader’s Inc., no one would do business [with us].”

AUSA: Here's an interview with SBF
[Plays it: SBF saying, "Don't name it 'Shit Coin Daytraders Inc.' No one doesn't like research.]AUSA: What were you doing?
Gary Wang: Coding.
AUSA: What was the ownership breakdown of Alameda?
Gary Wang: Sam had 90%, I had 10%.

— Inner City Press (@innercitypress) October 5, 2023

Prosecutors at the trial anticipate that Wang will continue testifying on Friday morning, wrapping up by midday. Ellison and Singh are also set to testify against Sam Bankman-Fried, with the trial projected to conclude in November.