FTX co-founder Gary Wang should not receive prison time, his lawyer argued, pointing to the former executive's cooperation with authorities and saying he did not know the extent of the exchange's crimes.
Wang did not know that the sister firm, Alameda Research, was taking FTX customers' money and learned of the fraud after it "was well underway," according to a sentencing memorandum filed on Wednesday.
Wang is set to be sentenced in a New York court on Nov. 20. Wang is also expecting the birth of his son a week later, on Nov. 27, with his wife, Cheryl Chen, and he works full-time as a software engineer. His current job includes supporting “forensics companies, criminal investigators, and justice professionals who seek to faithfully preserve evidence," according to the memo.
"Cheryl is nine months pregnant, in the process of naturalizing, and has not been able to work," Wang's lawyer said. "A custodial sentence would leave both her and Gary’s soon-to-be-born son without their primary source of financial support."
Wang pleaded guilty in December 2022 to fraud-related charges following the collapse of FTX a month earlier. The exchange subsequently filed for bankruptcy following a liquidity crisis and fraud allegations.
Alameda Research also fell. Former FTX CEO Sam Bankman-Fried was sentenced to nearly 25 years in prison on March 28 and ordered to pay back up to $11 billion in investor and lender losses. He was found guilty in November 2023 of seven criminal counts, including two counts each of wire fraud and conspiracy to commit wire fraud, as well as several counts of conspiracy to commit securities and commodities fraud, among other criminal acts.
Bankman-Fried and Wang had been friends since high school where they met at a summer math camp. Wang was also very trusting of others, according to the memo.
"Tragically, Gary’s compassion and kindheartedness made him trusting to the point of naivete," Wang's lawyer said. "Bankman-Fried preyed on that quality, and Gary’s resulting deference to his judgement. And, for all his undeniable brilliance as a coder, Gary allowed himself to become one of BankmanFried’s pawns."
Wang later went on to testify at Bankman-Fried's trial, where he told the court about special privileges that Bankman-Fried secretly granted Alameda Research's accounts on FTX.
"Crucially, as the Government has acknowledged and the evidence at trial showed, when Gary wrote that code, he had no idea Bankman-Fried would exploit the features to steal customer funds. Bankman-Fried did not even inform Gary (let alone coordinate with him) before the exploitation began," Wang's lawyer said.
Nishad Singh, FTX's former engineering director, was given no prison time but three years of supervised release last month after pleading guilty and cooperating with authorities. Former co-CEO of Alameda Caroline Ellison was sentenced in September to two years in prison for her role after cooperating with prosecutors. Former co-CEO of FTX Digital Markets Ryan Salame began his prison sentence of seven and a half years last month.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.