Tag: FTX collapse

The rallying cry of the scorned crypto faithful, which started when FTX spiraled into bankruptcy, has taken on added seriousness after Sam Bankman-Fried was arrested in the Bahamas and charged with eight criminal counts in the US.

“Where is Gary Wang?”

Wang, an ex-Google software engineer, had established a reputation – both internally and outside the firm – as a quiet fixer and the brains behind the FTX crypto empire. Media-shy and prone to work odd hours, the exchange’s co-founder cultivated an aura of mystery that served as a stark contrast to the more high-profile Bankman-Fried.

Wang, like Bankman-Fried, was also once one of the richest twentysomethings on the planet – with a stake in the business worth as much as $1.6 billion in March, according to the Bloomberg Billionaires Index.

He’s still in the Bahamas, according to a person familiar with the matter. And, as Bankman-Fried would tell Vox: “Gary is scared.”

Bankman-Fried’s arrest, made at the request of the US government, underscores the urgency among authorities to crack down on one of the crypto industry’s biggest implosions, which has left some 1 million customers in limbo. Though Bankman-Fried served as the public face of FTX, it was a tight-knit inner circle – him, Wang, Caroline Ellison and Nishad Singh – who are said to have been aware of the decision to use FTX customer money to help Alameda meet its debts. That decision ultimately doomed FTX and strikes at the heart of whether they committed fraud.

Neither Wang nor Singh, both of whom were fired a week after FTX’s bankruptcy, has surfaced in the month after the epic collapse – nor have they been charged. It’s not clear whether either have lawyered up, in contrast with Ellison, who hired Stephanie Avakian, former enforcement division chief at the Securities and Exchange Commission, along with others at WilmerHale.

In the case of Singh, the 27-year-old director of engineering who grew up in California, it’s not even known where he’s currently holed up.

The disappearance act is a departure from the outsized roles they played at FTX, especially as Bankman-Fried became a more public figure advocating for pandemic preparedness and regulatory changes.

“FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals,” John J. Ray III, FTX’s newly appointed chief executive officer, said in prepared remarks to the House Financial Services Committee this week.

Bankman-Fried was charged with criminal counts including conspiracy and wire fraud in an indictment unsealed by a federal court judge in Manhattan Tuesday. The Commodity Futures Trading Commission filed a complaint Tuesday, in which Bankman-Fried was the only listed individual defendant. The Securities and Exchange Commission also targeted just Bankman-Fried.

Wang didn’t respond to phone calls, emails and text messages seeking comment. Singh didn’t respond to emails and Telegram messages requesting comment.

Where’s Gary?

While “Where is Gary Wang?” has become a frequent question on Twitter and Reddit message boards in the wake of FTX’s collapse, it was also what some inside the firm were asking during the chaotic days before the exchange went bust.

Rather than looking to Bankman-Fried’s Twitter ramblings for solace, some employees instead sought reassurance from the actions of Wang and particularly Singh, who was known as an attentive manager.

But, in an ominous sign of what was to come, they were nowhere to be found.

On a Slack channel for urgent engineering issues, messages that would normally get a response in a matter of minutes would go unanswered for a day, according to a person familiar with the matter. As FTX’s general counsel, Ryne Miller, pleaded for Bankman-Fried and other founders to cooperate, Wang would barely respond, according to internal discussions seen by Bloomberg.

“Gary is scared, Nishad is ashamed and guilty,” Bankman-Fried would tell Vox less than a week later, in a conversation he claims wasn’t meant to be public. His biggest mistake, he insisted, was filing for bankruptcy at all.

Perhaps his best shot to fix what he’d done? “Either Gary or Nishad comes back,” he said.

They didn’t. Now Bankman-Fried is being held in custody pending an extradition process, the Bahamas attorney general, Ryan Pinder, said on Monday. The SEC on Tuesday accused him of carrying out a multi-year scheme to defraud investors, with Chair Gary Gensler calling his crypto empire “a house of cards on a foundation of deception.”

Brilliant Coder

Bankman-Fried and Wang, who met at math camp in high school and were roommates at Massachusetts Institute of Technology, remained close at FTX. At one point, after Bankman-Fried hadn’t been seen in the office for a while, he returned and explained to employees that he’d been absent because he just wanted to work alongside Wang, who, unlike him, could code, according to a person familiar with the matter.

Wang is brilliant “beyond belief,” Singh, who was mentored by him and worked with him in Hong Kong on the development of FTX’s exchange, said in a 2020 podcast. A now-deleted blog post celebrating FTX’s first anniversary features a photo of Wang reclined with his feet on his desk, sporting a fleece and jeans in front of six large computer screens.

It’s one of the few pictures available of Wang. He had the second-largest position in FTX.US behind Bankman-Fried, according to court documents, and also the second-biggest stake in Alameda, with about 10 per cent. He also borrowed $224.7 million from the trading house, according to the complaint filed by the SEC.

Bankman-Fried and Wang controlled access to FTX’s digital assets, according to a document filed by Ray. He said the company’s “unacceptable management practices” included the use of software to conceal the misuse of customer funds.

Bankman-Fried disputed that he, Ellison, Singh and Wang decided to use FTX customer funds to cover Alameda’s shortfall, which, if true, could mean they committed fraud. He said the executives held a meeting about whether to extend more credit to Alameda – though the distinction is hard to parse.

“That was the point at which Alameda’s margin position on FTX got, well, it got more leveraged substantially,” Bankman-Fried said in an interview with Bloomberg. “Obviously, in retrospect, we should’ve just said no.”

Kindness King

Other than Bankman-Fried, Wang didn’t seem to have many friends at the company, according to a person familiar with the matter. Singh, a high school friend of Bankman-Fried’s brother who overcame asthma to set a world record for the fastest 100-mile run by a 16-year-old, was more social and well-liked by his colleagues.

“In addition to building out much of our technological infrastructure and managing most of our dev team, his treatment of employees has earned him sole membership in our Slack group ‘Kings of Kindness,'” Bankman-Fried wrote in the FTX blog post.

Singh held a 7.83 per cent stake in the business silo that included FTX.US, which was worth about $572 million in March 2022, and received a $543 million loan from Alameda, according to bankruptcy documents. He was likely one of the five co-workers that Bankman-Fried pegged as a billionaire when asked earlier this year.

Singh had said working at the firms allowed him to make more money to give away – a tenet of the effective altruism movement – and that he was considering working for a charity in the future to “do the right thing” to make the world better.

“Currently, I’m sort of lucky that I can get fulfilled in many ways at this job – one of which is doing something that’s probably pretty good from an effective altruist perspective,” he said in a 2020 podcast.

A former FTX employee said it was shocking to see Singh, who served on the board of the firm’s philanthropic arm, at the center of the implosion. Another described their feelings as more heartbroken than angry that Singh reportedly knew customers funds were used to bail out Alameda.

FTX’s collapse “hit him hard,” Bankman-Fried said of Singh in his Vox interview.

“I mean it hit all of us hard,” he said. “But it hit him HARD.”

If Singh were ashamed and guilty, as Bankman-Fried put it, there are few signs he sought to make amends so far as FTX’s bankruptcy unfolds.

“We had no cooperation of the founders in preparing,” Ryne Miller, FTX’s general counsel, said in response to an issue raised with the company’s bankruptcy process last month, according to internal chat logs. “It was unfortunate.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)