Article Author: Meta Era invited author Giovanni Chen
On October 3, the bankruptcy case of FTX, once the world's second-largest exchange, was officially heard in New York. The judge, SBF, and a group of witnesses confronted each other at the scene, revealing a lot of sensational information. Various testimonies and statements reviewed the various details of how SBF operated FTX, uncovering the internal mysterious operations of this once second-ranked exchange with a market value of up to $32 billion in the cryptocurrency market.
On the day of the trial, the heavyweight figures closest to SBF within the company, Gary Wang, Caroline Ellison, and Trabucco, appeared in the witness stand at the same time. Among them, a Chinese face attracted the attention of all media and the public. The witness, who wore glasses and appeared somewhat introverted and polite, was none other than Gary Wang, the co-founder and CTO of FTX.
Gary Wang revealed some sensational information, personally disclosing the existence of a backdoor relationship between FTX and Alameda:
SBF allowed Alameda to withdraw funds from FTX without limit. In 2019, as the CTO, Gary personally wrote the function for Alameda to steal customer funds within the FTX system. Additionally, Alameda could trade with more funds than it actually owned in its account, giving Alameda the invisible privilege of misappropriating user assets and unlimited trading.
When FTX collapsed, Alameda increased its credit limit to an exaggerated $650 billion. Alameda even directly withdrew $8 billion from the FTX platform. This $8 billion happened to be the fund gap in FTX's company account, coming from FTX customers.
Furthermore, the real balance of the insurance fund disclosed by FTX (ensuring the clearing risk of traders' counterparts) was falsified. It was generated by a random number generator, and the amount did not match the database. The actual number was lower than the generated number, revealing the deceptive behavior of FTX's external financial statements and response to audits.
Seeing his once most important "comrade" testify in court and reveal shocking data and information, SBF's body trembled incessantly. He rubbed his eyes vigorously, trying to calm down, his eyes filled with despair.
Who is Gary Wang?
According to Gary's own statement, he is the co-founder of FTX, with an annual salary of $200,000, and owns 17% of FTX's shares and 10% of Alameda's shares, making him the second most important figure after SBF. Based on the equity value of FTX and Alameda, in April 2022, the 28-year-old Gary became the richest person under 30 with a net worth of $5.9 billion, according to the Forbes rich list.
As the most mysterious billionaire executive, Gary is usually reserved and rarely appears in public. There are few photos of him online, and even his colleagues often don't see him for a long time. Even his LinkedIn profile only has a silhouette photo.
Gary and SBF's Acquaintance
According to online information, Gary was born in China and immigrated to New Jersey, USA with his parents after the age of 8. He excelled in his studies from a young age, especially demonstrating high talent and interest in mathematics and programming.
In 2010, he participated in a high school mathematics competition and met SBF and Trabucco (another executive of FTX). The three of them attended a mathematics summer camp organized by the Massachusetts Institute of Technology (MIT) and all successfully entered the mathematics program at MIT. Trabucco and Gary pursued bachelor's degrees in mathematics and computer science, while SBF pursued a bachelor's degree in physics.
SBF and Gary gradually built trust during their college years. They were roommates for three years, and in addition to studying, they often played games and solved puzzles together. In their free time, they also joined the Epsilon Theta fraternity together. Gary was quiet and introverted, and many people found it difficult to communicate and get along with him. However, after observing Gary for many years, SBF deeply understood Gary's personality and abilities, especially his talent in programming and mathematics (Gary had won the MIT programming competition).
"Many people think Gary is difficult to get along with and keep their distance from him, but I won't. I think Gary doesn't want to deliberately distance himself from this world. He is very smart, and he can take the time to think about very difficult problems," SBF recalled.
Their years of studying together forged a deep friendship, and after graduation, SBF went to work in trading at the Jane Street hedge fund on Wall Street, while Gary went to Google to develop the flight price integration engine, Google Flights.
In November 2017, SBF founded the quantitative trading company Alameda Research in San Francisco, focusing on quantitative trading in the cryptocurrency market. At the first opportunity, SBF thought of Gary, who was working at Google, and immediately flew to Boston to persuade Gary to join Alameda: "Your talent in trading will definitely work. The cryptocurrency market is full of countless new opportunities. Let's create them together!" SBF vividly described his ambitions and aspirations to Gary.
Gary felt that he couldn't feel challenged in his job at Google, so he accepted SBF's invitation to come to San Francisco.
They often fought side by side, with Gary coding day and night, and SBF often sleeping in the office. They only slept 4-5 hours a day.
Gary Wang's Quantitative Program
Initially, SBF operated Alameda with his own funds, trading mainstream and altcoins, but the performance was poor, with losses as high as $500,000 per day.
However, after Gary joined Alameda, the team, after a long period of trial and error, determined a trading strategy to arbitrage the price differences between Bitcoin in Japan, the United States, and South Korea. In the most critical part, Gary wrote the entire quantitative program for Alameda, used to quickly arbitrage between different trading markets. As long as this program captured the price difference between exchanges and executed it quickly, it could complete a risk-free arbitrage operation. With this method, SBF obtained $170 million in financing from investors, and Alameda's daily trading volume once exceeded tens of billions of dollars, with daily income reaching an astonishing $25 million.
Gary Wang's Liquidation Engine
However, this was not the beginning of everything. As early as 2018, SBF asked Gary to write a program for a Bitcoin exchange, and Gary completed a CryptonBTC exchange in just one month. Although it did not become a product later, SBF knew that if he asked Gary to write a contract exchange program, he could complete it within a month and the quality would be better than any exchange program on the market. Gary was an undisputed programming genius.
At that time, the problem with contract exchanges was that when a client's position experienced losses and needed to add margin, the exchange would first ask the client to add margin. If the market changed too quickly, the exchange would bear the loss of these funds first.
In the later contract exchange code, Gary invented a new liquidation engine mechanism that could monitor client positions in seconds and immediately execute liquidation when the client's margin was insufficient, thereby protecting the exchange's funds. Although this feature made traders feel annoyed, it solved a key problem that had long plagued many exchanges. After Gary added the liquidation mechanism to FTX, Binance, Kraken, and other exchanges followed suit in developing this feature.
Gary's Cross-Margin
In addition, in regular contract trading, users need to have corresponding assets as collateral for borrowing, lacking flexibility in funds. In response to this, Gary developed the "cross-margin" feature for FTX, allowing users to use multiple digital assets as collateral for a single trade. This feature was later introduced by other contract exchanges.
SBF's Bloodthirsty Sword
In fact, as the "right-hand man" who helped SBF achieve great success, Gary is not just an excellent programmer, but also a top-notch product manager! Gary can even develop products that outperform competitors based on market demand alone. Nishad Singh is the engineering manager at FTX, but the most core products are often developed solely by Gary, with more coordination from engineers.
At the same time, Gary is responsible for some special core requests from SBF, and only Gary and SBF have permission to use and view them. The FTX engineering team doesn't even know all the programs Gary has written. This includes the "allow negative balance" feature that allows Alameda to transfer assets from FTX, a program that allows Alameda to use FTX customer funds without restrictions.
The Fall of FTX's Core Team
Under the leadership of SBF and Gary, FTX became the world's second-largest exchange by trading volume, with a market value of up to $32 billion. However, in November 2022, FTX collapsed within a week, owing over $100 billion in debt to more than 1 million creditors, marking a Lehman moment in the virtual currency world.
The core team of FTX all lived in a top-floor apartment in the Bahamas. When the incident occurred, the police raided the apartment and detained all the core members of FTX, including Gary.
Once invincible, SBF said, "I have a 5% chance of being elected President of the United States in the future," but now he has become a "fraudster" who everyone is calling out.
At the same time, the inner turmoil of the genius programmer Gary is also intense. In December 2022, he admitted to all crimes, including wire fraud, commodity fraud, and securities fraud, and is facing 50 years in prison. Currently, Gary is seeking to cooperate and testify in court to reduce his sentence.
The once-renowned genius programmer Gary Wang, but such a sharp and bloodthirsty sword was used in the wrong place, leading to a hasty conclusion.
Meanwhile, the trial of FTX is ongoing. What will be the final outcome for SBF and Gary? Let's wait and see.
References:
[1] Michael Lewis (2023), "Going Infinite: The Rise and Fall of a New Tycoon"
[2] https://www.dlnews.com/articles/people-culture/meet-ftx-founder-gary-wang-who-testified-against-sbf/
[3] https://www.theblockbeats.info/news/46105?search=1
[4] https://www.odaily.news/post/5183190
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