Unveiling the FTX Empire’s ‘Second-in-Command’ The Glorious and Falling Journey of Chinese Genius Programmer Gary Wang

Unveiling the FTX Empire's 'Second-in-Command' The Rise and Fall Journey of Chinese Prodigy Programmer, Gary Wang

Original Title: “Revealing the Rise and Fall of Chinese Genius Programmer Gary Wang, who Forged the Slaughter Knife for FTX”

Original Author: Giovanni Chen, Invited Author of Meta Era

On October 3rd, the official trial of the bankruptcy case of FTX, once the second largest exchange in the world, took place in New York. The judge, SBF, and a group of witnesses clashed at the scene, with shocking revelations about the details of how SBF manipulated FTX, exposing the internal mysterious operations of this cryptocurrency exchange, which was once ranked second in trading volume and had a market value of up to 32 billion dollars.

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On the day of the trial, the heavyweight figures closest to SBF within the company, Gary Wang, Caroline Ellison, and Trabucco, all appeared as witnesses. Among them, the face of a Chinese man attracted the attention of all media and the public. This witness, wearing glasses and appearing slightly introverted and courteous, is none other than Gary Wang, co-founder and CTO of FTX.

Gary Wang came forward with explosive information, personally revealing that there was indeed a backdoor relationship between FTX and Alameda:

SBF allowed Alameda unlimited access to withdraw funds from FTX. In 2019, as the CTO, Gary personally wrote the function for Alameda to steal customer funds within the FTX system. Moreover, Alameda can trade with more funds than what is actually in their account. This invisible privilege gave Alameda the ability to embezzle user assets and trade without limits.

When FTX collapsed, Alameda increased its credit limit to an exaggerated 650 billion dollars, and Alameda even directly withdrew 8 billion dollars from the FTX platform. This 8 billion dollars happened to be the shortfall in FTX’s company account, which came from FTX customers.

In addition, the real balance of the insurance fund disclosed by FTX (which ensures trading counterparty liquidation risk for traders) 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 deception in FTX’s external financial reports and its response to audits.

Seeing his once most important “comrade-in-arms” testify in court and reveal shocking data and information, SBF’s body couldn’t stop trembling. He vigorously wiped his eyes, trying to calm down, but his eyes were filled with despair.

Who is Gary Wang?

According to Gary himself, as the co-founder of FTX, he earns a salary of $200,000 and holds 17% equity in FTX and 10% equity in Alameda, making him the second-in-command after SBF. In FTX’s operations, SBF is responsible for company strategy, public relations, and communication, while Gary focuses on coding.

Based on the equity value of FTX and Alameda, in April 2022, in the new Forbes billionaire list, the 28-year-old Gary became the richest person under 30 with a net worth of $5.9 billion.

As the most mysterious billionaire executive, Gary is usually mysterious in character, rarely appearing in public. There are only a few photos of him online, and even his colleagues often can’t see him for a long time, even on LinkedIn, where there is only a silhouette photo of him.

The acquaintance and understanding between Gary and SBF

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 an early age, especially showing high talent and interest in mathematics and programming.

In 2010, he participated in a high school math competition and coincidentally met SBF and Trabucco (another executive of FTX). The three of them participated in a math summer camp training organized by the Massachusetts Institute of Technology (MIT). All three successfully entered the math program at MIT, with Trabucco and Gary pursuing a Bachelor’s degree 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 besides studying, they often played games and solved puzzles together. In their free time, they also participated in the Epsilon Theta fraternity together. Gary is introverted and silent in character, and many people find it difficult to communicate and get along with him. However, after observing Gary for many years, SBF deeply understands his character and abilities, especially his natural talent in programming and mathematics (Gary has won the MIT programming competition).

“Many people think that Gary is difficult to get along with and keep their distance from him, but I don’t. I believe that Gary doesn’t want to deliberately distance himself from this world. He is very smart, and he can make time to think about difficult problems,” SBF recalled.

Their many years of studying together forged a deep camaraderie. After graduation, SBF went to work as a trader at Jane Street, a trading fund on Wall Street, while Gary joined Google to develop the integrated pricing engine for Google flights.

In November 2017, SBF founded Alameda research, a quantitative trading company focused on the cryptocurrency market, in San Francisco. Without wasting any time, SBF thought of Gary, who was working at Google, and immediately flew to Boston to convince him to join Alameda: “Your talent for trading is unquestionable, and the cryptocurrency market is full of countless new opportunities. Let’s create something together!” SBF vividly described his ambitions and aspirations to Gary.

Gary felt that his job at Google lacked challenges, so he accepted SBF’s invitation and came to San Francisco.

They fought side by side frequently, with Gary tirelessly writing code day and night, and SBF often sleeping at the company. They only slept for 4-5 hours each day.

Gary Wang’s Quantitative Program

Initially, SBF operated Alameda with its own capital, trading mainstream and altcoins. However, the performance was poor, with losses reaching up to $500,000 per day.

But after Gary joined Alameda, the team spent a long time exploring and eventually settled on a trading strategy of arbitraging the price differences between Japan, the United States, and South Korea regarding Bitcoin. In the most crucial aspect, Gary wrote the entire quantitative program for Alameda, which was used to quickly arbitrage between different trading markets. As long as the program identified the price differences between exchanges and executed the trades swiftly, it could complete a risk-free arbitrage operation. With this tool, SBF secured a $170 million financing from investors. At one point, Alameda’s daily trading volume exceeded billions of dollars, and daily revenue reached a staggering $25 million.

Gary Wang’s Liquidation Engine

However, this wasn’t where it all began. As early as 2018, SBF asked Gary to write a program for a Bitcoin exchange, and in just one month, Gary completed CryptonBTC. Although it didn’t become a product in the end, SBF knew very well that if he asked Gary to write a contract exchange program, he could finish it in a month and with better quality than any other exchange in the market. Gary is an undisputed programming genius.

But the problem that contract exchanges generally faced at that time was that when a client’s position suffered losses and needed to add margin, the exchange would first ask the client to add margin. If the market changes too quickly, the exchange would bear the loss of funds first.

In the later code of the contract exchange, Gary invented a new clearing engine mechanism that can monitor client positions in seconds. When the client’s margin is insufficient, liquidation is executed immediately, thereby protecting the exchange’s funds. Although this feature annoys traders, it solves a key problem that has long plagued many exchanges. After Gary introduced the liquidation mechanism for FTX, Binance, Kraken, and other exchanges also followed suit in developing this feature.

Gary’s Cross Margin

In addition, in general contract trading, users need to have corresponding assets as collateral for borrowing, lacking the flexibility of 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 subsequently introduced by other contract exchanges.

SBF’s Bloody Sword

In fact, as SBF’s “second-in-command” who helped achieve great success, Gary is not just an excellent programmer, he is also a top product manager! Gary can even develop products that surpass competitors solely based on market demand. Nishad Singh is FTX’s engineering manager, but he coordinates more with the engineers, while the core products are often developed solely by Gary.

At the same time, Gary is responsible for the core requests of some special programs for SBF, and only Gary and SBF have permission to use and view them. FTX’s engineering team doesn’t even know all the programs written by Gary. This includes the “allow negative balance” feature that allows Alameda to transfer assets from FTX, which allows Alameda to use FTX clients’ funds without restrictions.

The Downfall of FTX’s Core Team

Under the leadership of SBF and Gary, FTX became the second-largest global trading volume with a market capitalization of $32 billion. However, in November 2022, FTX collapsed in just one week, owing over $100 billion in debt to more than one million creditors, marking a virtual currency world’s Lehman moment.

All members of FTX’s core team lived in a top-floor apartment in the Bahamas, and at the time of the incident, the police confiscated all the core personnel of FTX, including Gary.

The once invincible SBF said: “I have a 5% chance of becoming the President of the United States in the future”, but now he has become a “fraud” that everyone is calling out.

At the same time, the brilliant programmer Gary is also going through inner turmoil. In December 2022, he admitted to all crimes, including wire fraud, commodity fraud, and securities fraud, and is facing 50 years of imprisonment. Currently, Gary is seeking to cooperate as a witness in court to lighten his sentence.

The once brilliant programmer Gary Wang also had his moment of fame, but this sharp bloodthirsty sword was used in the wrong place, resulting in a hasty ending.

Meanwhile, the trial of FTX is still ongoing. What will be the final verdict for SBF and Gary? Let’s wait and see.

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