Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
FTX co-founder Gary Wang has avoided prison time after his swift co-operation with prosecutors helped seal the criminal conviction of the crypto exchange’s other founder Sam Bankman-Fried.
At a hearing on Wednesday, judge Lewis Kaplan said Wang “immediately did the right thing” by travelling to the US from the Bahamas soon after FTX’s collapse in 2022 and offering his full assistance to law enforcement and the team overseeing the exchange’s bankruptcy.
He was sentenced to time served, and ordered to forfeit his share of $11bn in illicit gains.
Wang, who was born in China and studied at Massachusetts Institute of Technology (MIT), pleaded guilty to fraud in 2022.
He was one of the star witnesses at Bankman-Fried’s trial, in which he told the jury that FTX was secretly dipping into customer funds just months after the crypto exchange was founded in 2019.
Bankman-Fried was found guilty of fraud and money laundering and sentenced to 25 years in prison.
In short remarks to the court before his sentence was handed down, Wang said: “I am deeply sorry to all the people who were hurt by my actions”. Choking on his words, he added: “I took the easy path, the cowardly path, instead of doing the right thing.”
With the imposition of his sentence on Wednesday, Wang became the second FTX insider-turned-co-operating witness to avoid incarceration, after coder Nishad Singh was last month sentenced to time served due to his assistance in the case against Bankman-Fried.
Caroline Ellison, the former head of FTX’s affiliated trading firm Alameda, who also testified at Bankman-Fried’s trial, was sentenced to two years in prison in September.
In advance of Wang’s sentencing, US prosecutors wrote to Kaplan to laud the FTX coder and former chief technology officer for his “substantial assistance” in the case against Bankman-Fried, and subsequent help with other criminal investigations by the US attorney’s office in Manhattan.
They said that Wang had put “his extraordinary computer programming skills to use in detecting potential fraud in the stock and cryptocurrency markets,” and had “built an interface that the government has begun using for detecting potential fraud by publicly traded companies”.
Prosecutor Nick Roos said in court on Wednesday that there were looming indictments by the US attorney’s office that had been investigated using Wang’s tool.
Wang, who was in November 2022 the first FTX defendant to co-operate with the government, also helped prosecutors untangle the exchange’s complex code and identify the method by which Bankman-Fried was syphoning off customer funds.
Without Wang’s assistance “it would have taken a software expert weeks or even months” to find that backdoor, prosecutor Thane Rehn said earlier this year.
