They’d come a good distance collectively, from teenage mathletes to MIT frat brothers to crypto billionaires.
Now the Fed is closing in on each — and one was going to activate the opposite.
“We will make this work,” Sam Bankman-Fried mentioned over Sign, an encrypted messaging app.
Gary Wang didn’t reply.
The time: mid-November, days after FTX collapsed. The place: a $40 million penthouse within the Caribbean — final cease, US authorities say, on a path of lies stretching again to the very starting of the lads’s FTX cryptocurrency empire.
Wang, FTX’s software program savant and supreme secret-keeper, was holed up in one of many 5 bedrooms of the oceanfront aerie the place he labored with Bankman-Fried and eight others. He emerged, with two legal professionals who had flown in from New York beside him. Wang dropped the information he was leaving.
“I kind of mentioned, ‘Have you ever absolutely made up your thoughts or do you need to discuss it?’” Bankman-Fried recalled of his ultimate dialog with Wang, in an interview at his dad and mom’ California residence. “He mentioned he had made up his thoughts and that was that.”
What Wang didn’t say was that he was going to flip on his pal, FTX’s well-known, and now notorious, entrance man.
These ultimate moments in Nassau — Bankman-Fried’s pressing Sign message would comply with — marked a turning level for each males. Their break will go down as a signature second within the spectacular rise and much more spectacular fall of FTX, as soon as one of many world’s largest cryptocurrency exchanges.
Success for over a decade
For a decade and a half, practically all their grownup lives, Bankman-Fried and Wang traced an arc of mind-blowing success collectively. Bankman-Fried offered himself because the crypto wunderkind prepared to spend billions to avoid wasting humanity. Wang labored within the shadows — largely a thriller to the broader world.
Interviews with folks near Wang in highschool, faculty and at FTX, and evaluation of lots of of pages of paperwork associated to the unfolding authorized drama, fill in essential gaps. Given the authorized peril, former FTX staff spoke on the situation that they not be named. Wang’s legal professional, Ilan Graff, declined to remark.
As Bankman-Fried shot to worldwide fame, Wang appeared to stay life on the sting of each crowd — smiling, nodding, going alongside — earlier than retreating as soon as extra into the solitude of his sensible thoughts.
Now Bankman-Fried and Wang, buddies since their teenagers, are pitted in opposition to one another. They’re providing dueling accounts of the FTX fiasco and of who’s finally accountable. The co-founders’ yin-yang relationship, and questions of simply who might need managed whom, have been thrust to the middle of the FTX story.
Chapter expenses
Wang and Caroline Ellison, former head of FTX’s Alameda Analysis buying and selling arm, have pleaded responsible to a vary of federal expenses. They’re cooperating with prosecutors in hopes of receiving lighter sentences.
Wang additionally has suggested the workforce shepherding FTX by means of its chapter, answering questions in regards to the inside workings of the trade together with his lawyer’s involvement, in line with three folks accustomed to the matter.
Bankman-Fried, out of jail on a $250 million bail bundle however confined to his dad and mom’ residence with an digital monitor strapped to his ankle, has maintained his innocence. He has pleaded not responsible and is because of face trial in October.
Much more than Ellison, Bankman-Fried’s on-again, off-again girlfriend, Wang can provide a extra intricate account of what actually occurred at FTX, firm insiders say.
And but all this time, regardless of the tabloid headlines, Wang has remained one thing of an enigma.
“It was an enormous shock,” mentioned Tommy Tang, who was co-president of math membership with Wang of their New Jersey highschool. “It’s actually wild to seek out out your classmate was value a number of billion {dollars} and is now going through years in jail.”
Bankman-Fried, recognized the world over as SBF, has characterised himself as a “trash” coder. Wang, against this, had been impressing classmates together with his programming expertise since his faculty days. He was seen by colleagues because the quiet genius of FTX, a solitary magician who labored unusual hours and ignored social cues and Slack messages.
Their uncommon friendship sure FTX collectively from the beginning. One former colleague likened the shy Wang to a pair of mechanical arms that Bankman-Fried may manipulate at will. Staff questioned if Wang, the wizard backstage, may someday pose a threat to your complete enterprise. If something occurred to Wang, these folks nervous, the entire thing may collapse like a home of playing cards.
Collapse it did, on Novermber 11 , into Chapter 11 chapter. The shock waves are nonetheless reverberating.
“A cooperator like Gary Wang is extremely useful to the federal government,” mentioned Mark Kasten, a lawyer at Buchanan Ingersoll & Rooney. “I’d assume SBF has felt the partitions closing in.”
Math camp
Bankman-Fried and Wang’s early relationship began with a math drawback that concerned, of all issues, a bunch of liars.
They didn’t know one another on the time. The issue was a part of their particular person functions to the Canada/USA Mathcamp, a five-week summer time program for mathematically gifted high-school college students that they attended in 2008. That yr, after they crossed paths on the camp for the primary time, this system was held at Reed Faculty, a small, offbeat faculty in Portland, Oregon, the place Steve Jobs studied calligraphy for a time.
Bankman-Fried was 16. Wang was 15. Right here’s the maths drawback:
There are 26 college students at Logic Camp; 18 of them at all times inform the reality and the opposite 8 at all times lie. After all, everybody on the camp is aware of who’s who. In the future, n campers are sitting in a circle. Every of them says: “Precisely certainly one of my two neighbors is a liar.’” For what values of n > 2 is that this doable?
(The reply: Integers from 3 by means of 8, and multiples of three from 9 to 24. For full credit score they wanted to show no different answer labored.)
The 2 arrived at Reed that summer time from what appeared like completely different worlds. Bankman-Fried was rising up on the palm-fringed campus of California’s Stanford College, the place his dad and mom have been legislation faculty professors. Wang had emigrated to the US from China on the age of 8. He was coming from the suburb of Cherry Hill, New Jersey, east of Philadelphia. His father had moved the household there after an preliminary stint in Minnesota.
As a clumsy teen at Cherry Hill Excessive Faculty East, Wang appeared like simply the kind of numbers-loving hyper-achiever who may find yourself at a brainiac mill like MIT. His 2011 yearbook offers a glimpse of him as a teen. Along with math membership — the place he was nicknamed Hector, in a nod to the good Trojan warrior from Greek mythology — Wang joined chemistry membership and the chess workforce, and performed violin within the symphony orchestra.
By sophomore yr, he was finding out multi-variable calculus. He threw himself into the USA Computing Olympiad.
Tang, the maths membership co-president, recalled that in his downtime Wang additionally loved Mafia, a celebration sport involving hidden identities, the place just a few gamers attempt to “kill off” the others earlier than getting caught.
In hindsight, the quote below Wang’s 2011 yearbook picture appears nearly prophetic. It’s from Douglas Adams, creator of the cult science-fiction comedy “The Hitchhiker’s Information to the Galaxy”:
A studying expertise is a kind of issues that claims, “You realize that factor you simply did? Don’t try this.”
Cherry Hill East’s pupil newspaper, Eastside On-line, revealed extra particulars in a multipart sequence referred to as The Wang Recordsdata. It seems to be the one outlet that any member of the Wang household has spoken to since FTX imploded.
Gary’s father advised Eastside On-line that his son at all times was a trusting particular person.
“I felt like we lived in two completely different worlds,” Wang mentioned of his son. “He was very naive, believing everybody round him was good.”
After Reed, Wang overlapped at math camp with Sam Trabucco, who would grow to be co-head of Alameda. Wang, Trabucco and Bankman-Fried all attended collectively in 2010, this time at Mount Holyoke Faculty, in rural western Massachusetts.
Campers formulated their very own schedules, selecting from classes on Bernoulli numbers, isometries of Euclidean house and “why infinity is bizarre.” Programs have been ranked by issue on a scale of 1 to 4 chili peppers.
“Mathcamp is superb, in that it’s a radical sense of freedom,” mentioned Marisa Debowsky, government director of this system. “There aren’t any guidelines, past being a very good citizen of the group.”
It wasn’t all planar algebra. A fellow camper recalled Wang and a pal sneaking into the kitchen after curfew to whip up cheesecake brownies.
MIT Days
A logical subsequent step for 2 vivid younger math whizzes: the Massachusetts Institute of Expertise. Bankman-Fried landed there in 2010; Wang, a yr youthful, in 2011. They rapidly reconnected.
Each pledged Epsilon Theta, which stands out in MIT’s hard-partying frat scene. First, ET is co-ed. Second, it prohibits alcohol in shared areas. Thetans stay collectively in a yellow colonial revival mansion in suburban Brookline, Massachussetts. Members sleep quasi-dormitory type — a close-quarters association that may later be repeated, albeit in excessive type, on the two buddies’ penthouse, The Orchid, in Nassau.
ET isn’t precisely Animal Home. Social life tends much less towards beer pong than to video games resembling Magic: The Gathering, sq. dancing and Nerf blaster fights. Spring 2023 rush allotted time to Fermi issues and jigsaw puzzles.
Wang and Bankman-Fried ended up rooming collectively for 3 years. At MIT, lastly, Wang was in his component, majoring in math and pc science, and collaborating in an intensive robotics competitors. Individuals who know him say the college appeared like the correct match for him and he started to open up.
Even then, Wang discovered himself in Bankman-Fried’s formidable shadow. The 2 teamed up in 2014 for the annual Battlecode contest, a programming competitors. Their workforce was referred to as The Vegan Police, an obvious reference to a personality within the 2010 romantic-action comedy “Scott Pilgrim vs. the World.”
A video of the competition posted on YouTube reveals Bankman-Fried led The Vegan Police onto the stage, grabbed the mic and talked the viewers by means of the workforce mission. Wang, in a grey hoodie and rectangular glasses, grinned sheepishly off to the facet.
The Rise of FTX
After MIT, Wang promptly landed a job as a software program engineer at Google. Earlier than lengthy, Bankman-Fried, who’d ended up on the Wall Road quant store Jane Road, was reaching out once more.
By now the broad outlines of what adopted are well-known: the early days in Berkeley, the place the 2 co-founded Alameda, with Tara Mac Aulay, in a three-bedroom condo; their transfer to Hong Kong, the place FTX took flight; and their shift to Nassau, the place FTX raced to giddy heights, with a price of $32 billion, its title emblazoned on a Miami sports activities stadium and the comic Larry David starring in its Tremendous Bowl advert.
This customary account omits not less than one key occasion.
Shortly after Alameda was established, Bankman-Fried and Mac Aulay fell out over what Mac Aulay characterised as questionable ethics and weak threat administration.
Based on Bankman-Fried, Wang stood by his outdated camp buddy, cementing his place as SBF’s trusted accomplice and lieutenant. Mac Aulay and a number of other others left to type a rival agency within the UK referred to as Lantern Ventures. (Mac Aulay didn’t reply to requests for an interview.)
“In the end I sided with Gary and I ought to have completed a lot earlier,” Bankman-Fried mentioned.
At FTX, Wang set about designing the structure of the crypto trade. Amongst different issues, he created nearly single-handedly a “liquidation engine” that may robotically shut buyer accounts that have been operating up huge losses. Regulators allege Alameda was exempt, and will successfully take limitless cash from FTX because of this. Wang additionally developed a “cross-margin” characteristic that enabled prospects to make use of any cryptocurrency of their accounts as collateral for different crypto purchases.
When some complained that Wang’s outsize position was creating bottlenecks, Bankman-Fried defended him. Questioned about whether or not Wang may pose a “key man” threat to FTX — whether or not the destiny of your complete enterprise may hinge on Wang — Bankman-Fried batted the issues away.
SBF, a prolific tweeter, portrayed himself as a 24/7 workaholic. A yr earlier than FTX collapsed, he posted an image of himself sprawled on the beanbag the place he catnapped so his “thoughts stays in work mode.”
Wang, against this, is a social-media ghost. One of many few photographs of him obtainable on-line reveals him seated earlier than six pc screens. His ft are up, his head turned away from the digital camera. Colleagues mentioned he usually arrived on the workplace at 5 pm or later, and labored by means of the night time.
The Remaining Days
The empire Bankman-Fried and Wang constructed was as soon as in comparison with these of monetary titans like J.P. Morgan and Warren Buffett. It fell aside in lower than per week.
On Novermber 11, Bankman-Fried resigned as CEO. He and Wang labored by means of that Friday and into the early hours of Saturday after a hack that apparently had spirited $372 million out of FTX’s Bahamas-based offshoot, in line with sworn testimony Bankman-Fried later offered. Over the following 24 hours, the 2 transferred a bit of FTX’s remaining property into the palms of Bahamian authorities.
By that Monday, November 14, Wang had been locked out of FTX’s inner techniques. He despatched an inventory of digital property he couldn’t attain to the Bahamas Securities Fee. It was round this time Wang left The Orchid.
Bankman-Fried mentioned Wang emerged from the dialogue together with his legal professionals and mentioned he was leaving in 5 minutes. He thought he and Wang have been on the identical web page with “the correct subsequent steps for patrons”.
“The entire sudden that snapped into he was leaving that day, again to the US and implicitly largely stopped working,” Bankman-Fried mentioned.
In a follow-up textual content message, SBF appeared to recommend that Wang may keep and work with Bahamian regulators and an area liquidator.
“They’re all on board,” Bankman-Fried messaged over Sign shortly earlier than 4 p.m. on November 15, in line with a duplicate of the textual content seen by Bloomberg — however it went unanswered.
Commodities fraud
FTX legal professionals initially blamed Wang for making an attempt to dam efforts to recuperate billions of {dollars} of buyer cash. Wang pointed at Bankman-Fried. He advised US prosecutors that Bankman-Fried was making an attempt to stall and delay chapter, in hopes that the Bahamas would go straightforward on FTX and perhaps, simply perhaps, let Bankman-Fried regain management.
And so, the finger-pointing continues. At a December listening to in federal court docket in decrease Manhattan, Wang pleaded responsible to expenses together with wire fraud and conspiracy to commit commodities fraud. The FTX super-coder has testified that between 2019 and 2022 he’d been directed to change FTX’s code. He mentioned he made the modifications realizing they’d give Alameda “particular privileges.”
The total extent of the betrayal dawned on Bankman-Fried solely after he was arrested on December 12 and confined to the infamous Fox Hill jail in Nassau. There he learn a diplomatic cable connected to the US request for his arrest.
The notice, a duplicate of which was reviewed by Bloomberg Information, referred to 2 cooperating witnesses, CC-1 and CC-2. Each have been mentioned to be FTX software program builders.
CC-1, the diplomatic notice reads, advised prosecutors that Bankman-Fried had ordered modifications to the pc code on the core of FTX. The change would allow Ellison’s Alameda Analysis to borrow shopper cash from FTX — a declare central to prosecutors’ case that FTX embezzled billions.
CC-1 additionally claimed Alameda was raiding FTX buyer accounts way back to 2020. Bankman-Fried assured the witness that the tactic was “okay.”
Studying the cable from the US, Bankman-Fried realized who CC-1 was: Gary Wang. —With Gillian Tan
