Gary Wang, together with Sam Bankman Fried, co-founded FTX in 2018, succeeding in making it one of the market leaders for buying and selling cryptocurrencies.
The company 4 years later would be embroiled in one of the biggest scandals in the cryptocurrency world. Today, SBF and Gary Wang’s company is bankrupt and with it many other related companies.
But who is Gary Wang?
The FTX co-founder graduated from MIT with honors, later worked for Google building systems to aggregate prices on millions of flights. He then later joined with Sam Bankman Fried to launch Alameda Research and FTX.
Most of his fortune was tied up in shares in FTX (16%) and a share of its FTT tokens.
Sources direct with FTX, described Gary Wang as an extremely distant person from the employees’ point of view, in fact, he very often worked from home, neglecting office life and dialogue with employees.
The same source stated that Gary Wang was for Sam Bankman Fried as a weapon to be deployed to solve scheduling problems.
Today, Gary Wang is charged with four counts and will most likely spend several years in jail and with him many members at the top of FTX and Alameda Research.
FTX in check: Gary Wang and Caroline Ellison come to terms with SEC
Association for the purpose of defrauding clients for multiple years, these are the main charges brought by the Securities and Exchange Commission (SEC) against Gary Wang and Caroline Ellison, the co-founder of FTX and the former CEO of Alameda Research, respectively.
Obviously, as many charges follow for both of them, with investigations reportedly still ongoing.
We are talking about really serious charges, which would lead to drastic consequences regarding possible conviction.
“Between 2019 and 2022, Ellison, under the leadership of Bankman-Fried, carried out the scheme through the manipulation of the price of FTT, a security token issued by the crypto exchange, by buying large quantities of it directly on the market to boost the price. FTT was then used as collateral for never disclosed loans of FTX assets to Alameda, a hedge fund owned by Wang and SBF and managed by Ellison. According to SEC allegations, by manipulating the price of FTT, SBF and Ellison inflated the valuation of FTT reserves held by Alameda, which inflated Alameda’s collateral balance sheet and misled investors about FTX’s risk exposure.”
In the document released by the SEC, the two are seen to be involved with very heavy charges and decidedly fraudulent behavior. We are not only talking about active behavior, but we are also talking about omissive behavior, which sees the omission of certain information to investors.
In terms of the motivation for the charges, both the SEC and the CFTC allege that Wang created the software code that allowed Alameda to divert customer funds from FTX, which then allowed Ellison to misappropriate those funds for trading activities conducted with Alameda.
“In addition, the indictment alleges that, from at least May 2019 through November 2022, Bankman-Fried obtained billions of dollars in funding from investors by falsely declaring FTX as a secure crypto trading platform with sophisticated risk management to protect clients’ assets, and that Alameda was treated like any other client without any privelege. Meanwhile, Bankman-Fried and Wang improperly transferred FTX assets to Alameda. According to our allegations Ellison and Wang knew or should have known that these statements were false and misleading.”
But the really interesting news lies in the fact that both Ellison and Wang are reportedly cooperating with the investigation conducted by the SEC.
Clearly, the SEC’s goal is to be able to get detailed information on the matter by leveraging the two and their willingness to reduce their sentence.
Apparently, the cooperation has already paid off; in fact, the two were granted bail set at $250,000.
“Until crypto platforms follow the financial securities laws we have tested over time, significant risks to investors will be present. It remains a priority of the SEC to use all the tools at its disposal to bring the industry in line with these rules.”
this is what SEC head Gary Gensler has to say about cryptocurrencies and the environment we are all living in.