Who is Gary Wang? FTX Co-founder and SBF Ally Flips in Plea Deal

Zixiao “Gary” Wang and Caroline Ellison, the two executives in Sam Bankman-Fried’s now fallen crypto exchange FTX, have pleaded guilty to federal charges including wire fraud, securities fraud and commodities fraud in exchange for leniency.

The US Attorney Damian Williams, of the Southern District of New York, said Wang and Ellison were cooperating in the continuing investigation into FTX and SBF. The Securities and Exchange Commission (SEC) has also charged the two executives for their roles in a multiyear scheme to defraud equity investors in the crypto exchange.

Ellison is alleged to have helped manipulate the price of FTX-issued token FTT, which served as a collateral for undisclosed loans from FTX customers’ assets to Alameda, while Wang created software code to allow the sister firm to divert FTX customers’ funds that Ellison used for Alameda’s trading activity.

If convicted, Ellison faces up to 110 years in prison, and Wang 50 years.

Played an Active Role

SEC chair Gary Gensler, in a statement, alleged that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT to prop up the value of their house of cards. “We further allege that Ellison and Wang played an active role in a scheme to misuse FTX customer assets to prop up Alameda and to post collateral for margin trading. When FTT and the rest of the house of cards collapsed, Bankman-Fried, Ellison and Wang left investors holding the bag.”

Moreover, Ellison and SBF had began to liquidate Alameda Research’s investments to stave off a collapse of the FTT token price. FTX executives were surprised that Bitcoin’s price had not fallen more. Wang coded FTX in a way that allowed Alameda to maintain an unlimited line of credit. He built exceptions in FTX that allowed the sister firm to have unfair advantages, like quicker execution times and exemption from auto-liquidation.

Gensler believes that until crypto platforms comply with time-tested securities laws, risks to investors will persist. “It remains a priority for SEC to use all of our available tools to bring the industry into compliance.”

FTX Top Executive Sounded Alarm of Collapse

Ryan Salame, FTX Bahamas co-CEO, is said to have alerted authorities about the firm’s fall and potential wrongdoing. He revealed that customer funds were being used to cover losses at Alameda Research on November 9. Salame, who worked for Alameda between 2019 and 2021 before joining FTX Digital Markets, as per court documents said SBF, Gary Wang and engineer Nishad Singh were the only employees that could have transferred assets held by FTX at the sister firm.