The story of Gary Wang's glory and fall, revealed the genius Chinese programmer who personally forged the butcher knife for FTX
A generation of genius programmersGary WangIt was famous for a while, but such a sharp bloodthirsty sword was used in the wrong place and ended up in a sloppy end.FTXThe trial is still ongoing. What is the final outcome of SBF and Gary's trial? Let's wait and see.
Original article by Giovanni Chen
On October 3, the bankruptcy case of the FTX exchange, which was once the second largest in the world, was officially heard in New York. The judge and SBF on the scene went head-to-head with numerous witnesses. Various testimonies and statements reviewed the details of how SBF operated FTX, unraveling the internal mystery of this cryptocurrency exchange, which once had the second highest trading volume and a market capitalization of 32 billion US dollars.
On the day of the trial, Gary Wang, Caroline Ellison, and Trabucco, the company's closest heavyweights to SBF appeared on the witness stand at the same time. One of the Chinese faces attracted the attention of all media and the public. The glasses-wearing, slightly reserved, and well-mannered witness was FTX's co-founder, CTO Gary Wang.
Gary Wang's exports were a surprise; he personally revealed FTX andAlamedaThe relationship does have a back door：
SBF allows Alameda to withdraw funds from FTX indefinitely, and Gary personally wrote Alameda's ability to steal customer funds in the FTX system in 2019 as CTO. Also, Alameda can trade with more funds than she actually has in her account. This intangible gave Alameda the privilege of misappropriating user assets and making unlimited transactions.
When FTX crashed, Alameda increased its credit line to an exaggerated $65 billion, and Alameda even directly withdrew $8 billion from the FTX platform. This $8 billion is exactly the funding gap in FTX's corporate account, coming from FTX customers.
Furthermore, the real insurance fund balance announced by FTX (a trade guarantee fund that guarantees the risk of a trader's counterparty being liquidated) was fraudulent. It was generated by a random number generator. The amount did not match the database, and the real number was lower than the number generated. This revealed FTX's own fraud in external financial statements and responses to audits.
Seeing that his former most important “comrade” testified in court and revealed some shocking data and information, SBF's body kept shaking. He rubbed his eyes violently with his hands to try to calm down, and his eyes were full of despair.
Who is Gary Wang?
According to Gary's own statement, as the co-founder of FTX, with an annual salary of $200,000, and owns 17% of FTX and 10% of Alameda, he is second only to SBF. In FTX's operations, SBF is responsible for company strategy, PR, and communications, while Gary focuses on coding.
According to FTX and Alameda's equity value, Gary, 28, became the richest person under 30 with a net worth of $5.9 billion on the new Forbes Rich List in April 2022.
As the most mysterious billionaire executive, Gary usually has a mysterious personality. He rarely appears in public. There are only a few online photos. Even his company colleagues often don't see him for a long time, and even his LinkedIn photos only have a background.
Gary and SBF know each other
According to online data, Gary was born in China and immigrated to New Jersey with his parents at age 8. He excelled in his studies since childhood, showing great talent and interest in mathematics and programming.
In 2010, he participated in a high school math competition and happened to meet SBF and Trabucco (another FTX executive). The three participated in the math summer camp training organized by the Massachusetts Institute of Technology (MIT). All three successfully entered the MIT math major. Trabucco and Gary studied for a bachelor's degree in mathematics and computers, while SBF studied for a bachelor's degree in physics.
SBF and Gary gradually built trust in college. They were roommates for three years. Outside of their studies, they often played games and did puzzles together. In my free time, I also attend Epsilon Theta's fraternity together. Gary has a quiet and restrained personality. Many people find Gary difficult to communicate with and not get along well with, but SBF has observed Gary's personality and abilities over the years, and is particularly aware of Gary's talent in programming and mathematics (Gary has won the MIT programming competition).
“A lot of people keep their distance from Gary when they think they can't get along, but I don't. I think Gary doesn't want to deliberately stay out of this world, he's very smart, and he can free up time to think about some very difficult questions.” SBF recalled it this way.
After many years of studying, they formed a deep friendship with peers. After graduation, SBF went to Wall Street's trading fund Jane Street to work as a transaction, and Gary went to Google to develop Google Flights, an integrated engine for ticket prices.
In November 2017, SBF founded Alameda Research, a quantitative trading company in San Francisco to focus on quantitative trading in the cryptocurrency market. For the first time, SBF thought of Gary, who works at Google. He immediately flew to Boston and convinced Gary to join Alameda: “Your talent will definitely work to make transactions. The cryptocurrency market is full of new opportunities. Let's create together!” SBF vividly describes Gary's ambitions and ambitions.
Gary decided that his job at Google really didn't feel challenged, so he accepted SBF's invitation to San Francisco.
They often fight side by side, Gary writes code day and night, SBF often sleeps at the company, and the two only sleep 4-5 hours a day.
Gary Wang's quantification program
In the beginning, SBF used its own funds to run Alameda, trading mainstream coins and altcoins, but the performance was poor, and even lost up to $500,000 a day.
But after Gary joined Alameda, after a long period of searching, the team decided that the trading strategy was to use the Bitcoin spread between Japan, the US, and South Korea to arbitrage. In the most critical part, Gary wrote the entire quantitative procedure for Alameda to quickly arbitrage in different trading markets. As long as the price difference between exchanges is captured and executed quickly, this set of procedures can complete a risk-free arbitrage operation. Using this method, SBF also received $170 million in financing from investors. Alameda's daily trading volume once exceeded several billion US dollars, and the daily revenue can reach an astonishing 25 million US dollars.
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 an exchange CryptonBTC in a month. Although the product wasn't made later, SBF knows that if Gary were to write the contract exchange program, he could complete it within a month, and the quality would be better than any exchange on the market. Gary is an uncompromising programming genius.
However, a common problem with contract exchanges at the time was that when a customer's position experienced loss and additional security deposit was required, the exchange would first ask the customer to add a security deposit. If the market changes too fast, the exchange will first bear this portion of the loss of capital.
In later contract exchange codes, Gary invented a new clearing engine mechanism that can monitor customer positions in seconds and execute liquidation immediately when the customer's security deposit is insufficient, thus protecting the exchange's funds. Although this feature is annoying to traders, it solves a key problem that has plagued many exchanges for a long time. After Gary added a clearing mechanism to FTX, Binance, Kraken, and other exchanges followed suit to develop this feature.
Gary's Cross Margin
Furthermore, in general contract transactions, users need collateral for corresponding assets to borrow, which lacks financial flexibility. In response, Gary developed a “cross-margin” function for FTX, which allows users to use multiple digital assets to jointly collateral a transaction. This feature was later introduced by other contract exchanges.
SBF's Bloodthirsty Sword
In fact, as SBF's “second-in-command”, Gary isn't just a great programmer; he's also a top product manager! Gary can even independently develop products leading the competition based on market requirements. Nishad Singh is FTX's engineering director, but is more of an engineer's coordination, and the core products are often developed by Gary alone.
Meanwhile, Gary will be responsible for core requests for some of SBF's special programs, and only Gary and SBF have permission to use and view; FTX's engineering team doesn't even know all of the programs Gary wrote.This includes the “negative balance allowed” that Alameda can transfer assets from FTX function, This procedure gives Alameda unlimited access to FTX clients' funds.
The fall of the FTX core team
Under SBF and Gary's leadership, FTX achieved the second highest global trading volume with a market capitalization of $32 billion. However, in November 2022, FTX crashed in a week, and owed more than 10 billion US dollars in debt to more than 1 million creditors, which can be called the virtual currency world's Lehman moment.
FTX's core team all lived in a penthouse in the Bahamas, and the police arrested all FTX core personnel, including Gary, at the time of the incident.
The once unsurpassed SBF said, “I have a 5% chance of being elected President of the United States in the future,” and now it has become a “liar” that everyone calls out.
Meanwhile, the heart of the genius programmer Gary also suffered, and he admitted it in December 2022Including wire fraud, commodity fraud, securities fraud, etc.All crimes, imminentFacing 50 years in prison. Currently, Gary is seeking to cooperate in testifying in court to mitigate the sentence.
Gary Wang, a genius programmer of a generation, was also famous for a while, but such a sharp, bloodthirsty sword was used in the wrong place and ended in a sloppy end.
Meanwhile, the FTX trial is still ongoing. What is the final outcome of SBF and Gary's trial? Let's wait and see.
