Gary Wang's Naivety Allowed Him To Be Repeatedly Manipulated by Bankman-Fried

The last co-conspirator of the FTX scam, Gary Wang, is currently waiting for his sentencing. Wang's lawyers are requesting leniency from the federal judge, seeking for a non-prison sentence similar to the one recently granted to FTX's former engineering chief Nishad Singh.

In his memo, Wang has painted himself as a naive man believing in the goodness of everyone around him, especially his childhood friend Bankman-Fried. Wang admitted that his greatest crime was that he believed in Bankman-Fried's lies again and again, only to realise at the very end that he was deceived and manipulated by a friend he trusted all along.

A strong friendship that was forged since childhood

Wang and Bankman-Fried share a long history as close friends and colleagues, first meeting at a math camp during their teenage years and later becoming fraternity brothers at MIT. They went on to work together at Alameda Research and eventually co-founded FTX, where Wang served as CTO and Bankman-Fried as CEO.

This friendship and trust that Wang had built with Bankman-Fried would prove to be his greatest archilles heels, leading him to be deceived and manipulated by Bankman-Fried again and again.

Wang's biggest crime is trusting Bankman-Fried's lies

In a memo to the Manhattan federal court, Wang's attorney, IIan Graff argued that Wang of all people should be granted no prison because unlike all the other co-conspirators, Wang was the only one who didn't actively participate in the scam.

He also argues that Wang was naive and was completely in the dark of the Scheme's details, unlike Bankman-Fried, Caroline Ellison and Singh who actively participated in the deception. Wang just believed in the goodness of everyone around him.

His lawyers said that lacking the financial knowledge and know how, Wang again and again trusted in the lies that Bankman-Fried told him.

At the very start, Wang was instructed Bankman-Fried to code a feature that Bankman-Fried explained was necessary for enabling FTX employees to carry out their bookkeeping purposes. But Bankman-Fried deliberately hid the fact that this exact feature would also allow Alameda to tap into FTX customer assets. Bankman-Fried also wasn't informed when the transfer began.

In late 2019, Wang noticed that Alameda's negative balance has reached $200 million, exceeding FTX's revenue of roughly $150 million. Wang was quick to point out this discrepancy to Bankman-Fried, who shot down Wang's concern by insisting that Wang had made a calculation error. Bankman-Fried told Wang that he had failed to take into account the value of Alameda's FTT holdings.

Lacking the financial knowledge and trusting full in his friend, Wang brushed this incident off.

Making the same mistake of overtrusting a friend

The second incident occurred when Bankman-Fried asked Wang to increase Alameda's line of credit, stating that as an FTX market maker, Alameda was having issues placing order because it didn't have enough collateral.

Bankman-Fried repeatedly instructed Wang "to ensure that Alameda's account was never liquidated on FTX.

Again trusting Bankman-Fried because of his lack of expertise in the matter, Wang carried out his duties his order as a coder for the company and complied to Bankman-Fried's orders.

Gary finally realised he was played after discovering that Almeda has accessed around $3 billion in customer funds. Wang discovered all these by himself, while Bankman-Fried and Ellison tried their best to hide the truth from him.

Through his accounts, it seemed like Wang was just doing his job as a coder and following the instructions that were given to him. There were also many times when he sensed something was wrong, but lacking the know how of the financial world he could only trust his friend who sadly used that against him.

Wang lawyers drew the similarities to Singh's case, where both individuals had minimal involvement in the crime compared to the other FTX executives like Sam Bankman-Fried and Caroline Ellison. They argued that if the courts decided imprison its clients after setting Singh free, it would lead to an unwarranted sentencing disparity.

Wang fighting fraud as a victim himself

Wang's lawyers also highlighted personal factors, including how the former CTO has attempted to rebuild his life since the FTX fiasco. He began a new job at an imaging technology company where he worked with the government to build software to detect financial fraud in public market.

Wang also claim that he wants nothing more than to be a good husband and father. Wang and his wife are expecting the birth of their first child just days after his scheduled sentencing. Wang is also continuing his work with government authorities and other stakeholders to help recover funds for FTX victims and reduce the risk of future fraud.

The 31-year-old pleaded guilty in 2022 to federal charges tied to a scheme to defraud investors. His admission came shortly after FTX's dramatic collapse and was part of a deal he reached with prosecutors to cooperate in the investigation.

Wang's testimony was a crucial part of Bankman Fried, with the former CTO taking a stand in 2023 to admit his role in the FTX's operations.