3.Gary Wang — Direct (Part 1)
411 linesDIRECT EXAMINATION BY MR. ROOS:
GARY WANG: At FTX.
GARY WANG: It's a cryptocurrency trading platform.
GARY WANG: I was chief technical officer.
GARY WANG: Yes. I was the co-founder.
GARY WANG: Yes.
GARY WANG: Wire fraud, securities fraud, and commodities fraud.
GARY WANG: With other people.
GARY WANG: Sam Bankman-Fried, Nishad Singh, and Caroline Ellison.
MR. ROOS: Mr. Wang, do you see any of the people you committed those crimes with in the courtroom today? You can stand up if you need to.
MR. COHEN: Stipulated, your Honor.
GARY WANG: Yes.
GARY WANG: Sam Bankman-Fried.
JUDGE KAPLAN: It will so reflect.
MR. ROOS: Mr. Wang, in general terms for now, what did you do with the defendant that was the wire fraud you were referring to?
GARY WANG: We gave special privileges to Alameda Research on FTX, which allowed it to withdraw unlimited amounts of funds from the platform, and we lied about this to the public.
GARY WANG: It had the ability to, regardless of what was in the account, to withdraw unlimited amounts of money.
GARY WANG: Yes.
MR. ROOS: Okay. We'll come back to it in a minute.
When you say withdrew unlimited amounts of funds, whose funds are you talking about?
GARY WANG: Those of customers.
GARY WANG: Customers of FTX.
GARY WANG: This was a cryptocurrency trading firm.
MR. ROOS: What is a cryptocurrency trading firm? Let me rephrase that.
What did Alameda Research as a cryptocurrency trading firm do?
GARY WANG: It had accounts on various cryptocurrency exchanges and on them it bought and sold cryptocurrency.
GARY WANG: Sam and I.
MR. ROOS: Now you said Alameda Research was given special privileges on FTX. What were you referring to?
GARY WANG: It had the ability to withdraw funds or transfer funds regardless of what it had in its account, even if that would cause the account balance to become negative, and it had a very large line of credit, more than other customers, which allowed it to have——
(The reporter interrupted for clarification)
JUDGE KAPLAN: Mr. Wang, could you kindly slow down and speak at a different rate of speed.
GARY WANG: Yes. A. So one, it had the ability to have negative balances by either transferring funds or withdrawing funds from the platform regardless of what was in its account; it had a very large line of credit which allowed it to have open orders and open positions, essentially without any limit; it had the ability to place orders on the platform slightly faster than other market makers on the platform; and it had——and when customers deposited USD to FTX, some of those went into Alameda's bank account instead.
MR. ROOS: Let me ask you a few follow-up questions about your answer.
So first of all, where did those special advantages exist?
GARY WANG: In the code for FTX.
GARY WANG: In the computer code which——for the FTX platform, the computer code that instructs what the platform should do.
MR. ROOS: You then listed a few advantages, and I just want to take them each in turn.
You said Alameda could have negative balances and make unlimited withdrawals. Did I understand you correctly?
MR. EVERDELL: Objection.
JUDGE KAPLAN: What is the objection?
MR. EVERDELL: He's restating the witness's answer.
JUDGE KAPLAN: I'm sorry?
MR. EVERDELL: He's restating the witness's answer in the question.
JUDGE KAPLAN: Overruled.
BY MR. ROOS:
MR. ROOS: Mr. Wang, I think the first thing you said was Alameda had the ability to have negative balances and make unlimited withdrawals. Did I understand you correctly?
GARY WANG: Yes.
GARY WANG: There——normally, when customers withdraw funds from the platform, they need to have those funds in their account before they can do so, but for Alameda, this was not the case. For Alameda, they can withdraw funds even if that would cause their account balance to become negative as a result of it, as a result of the withdrawal.
GARY WANG: So less than zero. So if they have $10 in their account, they can still——for normal customers, if a customer had $10 in their account, they can only withdraw $10, but for Alameda, this was not the case. They could withdraw a thousand dollars and then afterwards their account would have negative $990 in it.
MR. ROOS: And how much over the course——just generally speaking, how much money over the course of your time at FTX did Alameda withdraw into the negative?
GARY WANG: By the——by the time FTX declared bankruptcy, Alameda had withdrawn $8 billion.
MR. ROOS: Now the second thing I heard you say related to a line of credit. What were you saying there as a special advantage?
GARY WANG: Alameda had a large line of credit to act as collateral for their positions and orders on their account. So normally when a customer places an order or opens a position on FTX, they need——that position needs to be collateralized by some funds that they've deposited onto their accounts, but for Alameda, they have——this was not the case because they had a very——they had a $65 billion line of credit on their platform.
GARY WANG: For——normally, for large market makers, it's usually in the single- to double-digit millions.
GARY WANG: 65 billion, with a B.
JUDGE KAPLAN: Excuse me, Mr. Roos. I just want to make sure what the witness said.
You said normally, for large makers, it's in the single- to double-digit——did you say millions or billions?
GARY WANG: Millions, with an M.
JUDGE KAPLAN: Okay. Thank you. So the reporter will correct the record.
BY MR. ROOS:
MR. ROOS: So just to be clear, for larger customers, it was millions, as the judge just asked you, and was it millions or billions for Alameda?
GARY WANG: Billions for Alameda.
GARY WANG: No.
GARY WANG: I implemented some of these features——some of these features I implemented, and some of these features I used others' implementation of.
GARY WANG: On Sam's.
GARY WANG: It withdrew so much that FTX was not able to repay customers who were trying to withdraw.
GARY WANG: Assets from the platform. Combination of USD and cryptocurrency.
GARY WANG: Yeah, of $8 billion.
GARY WANG: FTX declared bankruptcy.
MR. ROOS: You mentioned that you committed financial crimes at FTX. Have you pled guilty to those crimes?
GARY WANG: Yes.
GARY WANG: Yes.
MR. ROOS: So we're going to come back to that further. But first, I just want to take a step back and talk to you a little bit about your background.
Where did you grow up?
GARY WANG: I was born in China, then moved to the US when I was 7, and then I grew up in Minnesota.
GARY WANG: Yes.
GARY WANG: At MIT.
GARY WANG: Math and computer science.
GARY WANG: We met at summer camp when I was in high school.
GARY WANG: Yes.
GARY WANG: At college. We lived in the same living group and we were friends, and we were roommates for a while.
MR. ROOS: Mr. Bianco, can we please show just the witness for identification Government Exhibit 1804.
GARY WANG: Yes.
GARY WANG: It's a picture of me and Sam.
MR. EVERDELL: No objection.
JUDGE KAPLAN: Received.
(Government's Exhibit 1804 received in evidence)
JUDGE KAPLAN: Yes.
BY MR. ROOS:
GARY WANG: Shows me and Sam.
GARY WANG: From college.
GARY WANG: I worked at Google for a couple years.
GARY WANG: Yes.
GARY WANG: In fall of 2017.
GARY WANG: 30.
GARY WANG: 24.
GARY WANG: He came up to Boston for a weekend, talked——and he talked to me about starting a cryptocurrency trading firm with him.
GARY WANG: Alameda Research.
GARY WANG: In Berkeley, California.
MR. ROOS: You said Alameda——early in your testimony you said Alameda Research was a cryptocurrency trading firm. How did that work?
GARY WANG: So it had accounts on various cryptocurrency trading sites and it deposited funds under those sites and it would buy and sell cryptocurrency, so it would buy them at a low price, sell them at a higher price, and make money that way.
GARY WANG: Sam did.
GARY WANG: Alameda because we were located in Alameda County, California; and Research because it sounds prestigious and it doesn't mention cryptocurrency.
GARY WANG: He said that it makes it easier to do business if——if the name doesn't mention trading with cryptocurrency, that it would be easier to get bank accounts or to get office leases and things like that.
MR. ROOS: And the government at this time offers Government Exhibit 917 pursuant to the stipulation which is already in evidence as Government Exhibit 2000.
Mr. Bianco, before we do that, it has to be admitted.
JUDGE KAPLAN: Received.
(Government's Exhibit 917 received in evidence)
MR. ROOS: And the stipulation states in relevant part that Government Exhibit 917 is an excerpt from a Blockworks podcast interview with Samuel Bankman-Fried on April 1, 2021. With the Court's permission, can we play Government Exhibit 917 for the witness and the jury.
JUDGE KAPLAN: Yes.
(Video played)
BY MR. ROOS:
MR. ROOS: Mr. Wang, how did those comments you just heard compare to the things that Mr. Bankman-Fried said to you at the time you were starting Alameda Research?
GARY WANG: They agree with each other.
GARY WANG: Sam did.
GARY WANG: I was doing software, so I was doing coding.
GARY WANG: So writing computer code.
MR. ROOS: All right. Could we show the witness and the jury what's already in evidence as Government Exhibit 1801.
GARY WANG: Me.
GARY WANG: From 2018.
GARY WANG: At Alameda.
GARY WANG: Yes.
GARY WANG: He was another developer. He was another coder at the company.
MR. ROOS: May we please show the witness what's in evidence as Government Exhibit 1803. The witness and the jury.
GARY WANG: Nishad.
GARY WANG: Also roughly 2018.
GARY WANG: Yes.
GARY WANG: She was a trader.
GARY WANG: He was a coder.
GARY WANG: She came up with trading strategies for the company and then watched and supervised the execution of those trades either by the automated system or manually.
MR. ROOS: Mr. Bianco, can you show the witness and the jury Government Exhibit 1802, which is in evidence.
GARY WANG: Caroline.
GARY WANG: Yes.
GARY WANG: Also from 2018.
GARY WANG: Sam and I.
GARY WANG: Sam owned 90 percent, I owned 10 percent.
GARY WANG: Yes.
GARY WANG: It's a description of the ownership breakdown for Alameda Research.
MR. EVERDELL: No objection.
JUDGE KAPLAN: Received.
(Government's Exhibit 67 received in evidence)
JUDGE KAPLAN: Yes.
BY MR. ROOS:
GARY WANG: It's a description of the ownership breakdown for Alameda.
GARY WANG: That I owned 10 percent of the company and Sam owned 90 percent of the company.
GARY WANG: Yes.
GARY WANG: Sam did.
MR. ROOS: Did the ownership percentages as indicated on this document——withdrawn.
This document says at the top that it's dated January 30, 2020. Did the ownership percentages of Alameda ever change over the entirety of the time you were an owner of it?
GARY WANG: No.
GARY WANG: From 2017 until——unclear, unclear what the current ownership status is.
GARY WANG: Yes.
GARY WANG: No.
GARY WANG: No.
MR. ROOS: So from this time until November 2022, Samuel Bankman-Fried continued to own 90 percent of the company.
GARY WANG: Yes.
MR. ROOS: You said Alameda Research would buy and sell cryptocurrency. Where did it get the money to do that?
GARY WANG: So initially some of the funds came from Sam personally, and then the——and then the remaining came from various lenders.
GARY WANG: So various investment firms or other people's money would lend money to Alameda at an interest rate and then Alameda would use that to do trading.
GARY WANG: Yes.
GARY WANG: FTX.
GARY WANG: Stands for Futures Exchange.
GARY WANG: Yes.
GARY WANG: The screenshot of FTX's home page from 2019.
MR. ROOS: Government offers Exhibit 5715——I'm sorry. The government offers Government Exhibit 1567.
MR. EVERDELL: No objection.
JUDGE KAPLAN: Received.
(Government's Exhibit 1567 received in evidence)
JUDGE KAPLAN: Yes, sir.
BY MR. ROOS:
GARY WANG: The screenshot of the ftx.com home page from 2019.
MR. ROOS: So let me ask you some questions about the FTX exchange. You said it was a place people could buy and sell cryptocurrency; is that right?
GARY WANG: Yes.
GARY WANG: There was a large set of cryptocurrency, but such as Bitcoin, Ethereum, Ripple, and USDC.
MR. ROOS: In addition to allowing users to buy and sell cryptocurrency, what were some of the other things that users could do on the website?
GARY WANG: They could buy and sell, they could trade various futures.
GARY WANG: It's a——it's a contract where you can either be——you can either buy it or if you buy——or you can short or sell it, short it, and at some future——at some particular future date, depending upon what future it is, based on what——so for example, for a Bitcoin future, you would have a——it would be a future on Bitcoin and it would settle at some particular date in the future, and at that future time, whoever shorts the future pays whoever is long on the future, whatever the price of Bitcoin is on that date.
MR. ROOS: I think some people maybe have heard of shorting a stock. How does shorting a stock compare to one of these Bitcoin futures?
GARY WANG: It's the same concept, where you can either be long or be short on the future, but if you think the price of Bitcoin is going to go up, you can buy or become long on the future, and if you think the price of Bitcoin is going to go down, you can short or sell the future.
MR. ROOS: Mr. Wang, if I can just ask you to go particularly slow here because it can be a little more complicated, okay?
GARY WANG: Yup.
MR. ROOS: All right. So with the futures, what are the two——what are the parties trading? The two users on the exchange, what are they trading when they're trading a future?
GARY WANG: They're trading the contract.
GARY WANG: So they're essentially exchanging obligation on some future date to transfer the price of one Bitcoin between each other. So if one user buys a Bitcoin future from another user, they're essentially agreeing that at some date in the future whoever sells the future would pay whoever bought the future the price of one Bitcoin.
GARY WANG: From trading fees. So there would be a small fraction of every trade that would go to the platform.
GARY WANG: There were large——there were both large institutions, or large trading firms, and then there were also smaller retail users.
GARY WANG: So either trading——either trading firms or investment firms that make money trade——make money either trading or holding assets.
GARY WANG: So just individuals who would just want to invest in cryptocurrency or bet on the price of cryptocurrency.
GARY WANG: Sam and I.
MR. ROOS: And did the defendant ever say to you why he wanted to start a cryptocurrency exchange?
GARY WANG: He was dissatisfied with the existing cryptocurrency exchanges at the time.
GARY WANG: Sam was.
GARY WANG: No.
GARY WANG: I was responsible for the technology, for the code, for writing the code, for reviewing the code that other people within——or direct——for setting the technical direction of the company.
GARY WANG: He directed that certain features be implemented, so he told us what features that he wanted to add to the——add or change to the website.
GARY WANG: No.
GARY WANG: He told us what things to implement.
GARY WANG: So for example, the rules for how much collateral is needed for certain positions or where things should be placed on the website, or limits on how much——limits on how large positions can be or limits on how much people can deposit, withdraw, things like that.
MR. ROOS: You said a moment ago that your responsibilities were not equal. What responsibilities did the defendant have that were not——that you were not involved with, generally?
GARY WANG: The business aspects, so——and PR, talking to investors, talking to the public——to the media, talking to the public, giving interviews, doing advertisements, raising funds from investors, lobbying and——
MR. ROOS: And in terms of your work on a day-to-day basis, did you do anything besides the coding work you described?
GARY WANG: No.
GARY WANG: To Sam.
MR. ROOS: And you were co-founders. What happened if there was a disagreement between the two of you?
GARY WANG: Sometimes we would talk about it, but in the end, it's Sam decision to make.
GARY WANG: Yes.
GARY WANG: $200,000 a year.
GARY WANG: No.
GARY WANG: I was equity holder for FTX.
GARY WANG: I owned around 17 percent of FTX.
GARY WANG: Around 60, 65 percent.
GARY WANG: Yes.
GARY WANG: So there was Nishad owned I think around 5 percent of the company, and then there were a number of outside investors.
MR. ROOS: Now counting the value of the FTX stock that you owned, was there a time you were a billionaire?
GARY WANG: Yes.
GARY WANG: Yes.
GARY WANG: Sam was.
GARY WANG: I also had some cryptocurrency called Serum when we created that crypto coin——when we created that cryptocurrency, and then I received a number of loans from the company.
GARY WANG: There were loans to invest in——to making investments in various companies that the company wanted to acquire or invest in and that there were——and there was one personal loan.
GARY WANG: So that was for a million dollars, but then I only actually withdrew $200,000 of that from FTX.
GARY WANG: To buy a house.
MR. ROOS: You also mentioned company loans. How much were you loaned——let me start by asking: What company loaned you money?
GARY WANG: Alameda did.
GARY WANG: Yes.
GARY WANG: For various companies that Alameda or FTX wanted to invest in or acquire.
GARY WANG: Either Sam or a round of lawyers at the company.
GARY WANG: I signed the paperwork.
GARY WANG: I was told to.
MR. ROOS: What did you believe the expectation was when you were presented with one of these loans?
GARY WANG: That I would sign it.
GARY WANG: Around 2 or $300 million.
GARY WANG: By Alameda Research.
GARY WANG: As far as I know, it was used to make these investments.
MR. ROOS: Just to be clear, this money that was loaned, the 200 to $300 million that was loaned from Alameda to you, did it ever go into your bank account?
GARY WANG: No.
GARY WANG: As far as I know, it went to the things I was told it was——the things——the places I was told it was going to, which is the various companies we were investing in.
GARY WANG: Sam did.
MR. ROOS: Your Honor, I'm about to switch to another topic. We could stop here or I could start with another topic.
JUDGE KAPLAN: I think we'll stop here.
Ladies and gentlemen, see you tomorrow morning, 9:30.
COURT CLERK: Would the jury please come this way and bring your notebooks with you.
JUDGE KAPLAN: Mr. Wang, you can step out of the room. We'll see you tomorrow too.
(Jury not present)
JUDGE KAPLAN: Be seated, folks.
Andy is polling the jury with respect to lunch tomorrow, as to whether we get some snacks in for them and have a 20-minute lunch break or whether we go straight through till 2 without a lunch break and stop at 2, and I think he's got another option on his menu. So I should have the result of that in a minute. If anybody has a preference to voice, now would be a good time.
MR. ROOS: So I think our view is, I'm sure as your Honor can tell, we're a little behind where we were hoping to be at the end of the week, and so we certainly favor something that gives the jury more time with the witnesses, hopefully to try to get this guy's testimony finished by the end of the week. But we defer to the Court on snack break versus working through and ending a little earlier.
JUDGE KAPLAN: Yes. Mr. Cohen?
MR. COHEN: We defer to the Court.
JUDGE KAPLAN: Okay. So we'll see what they have to say.
So Mr. Roos, do you want to give me what the program is as we go forward.
JUDGE KAPLAN: Into next week.
JUDGE KAPLAN: Let me find out what Andy says.
COURT CLERK: The jury votes to go straight to 2:00 without taking a lunch break.
JUDGE KAPLAN: Okay. Fine. Without any break at all. I mean, a bathroom break.
COURT CLERK: Yes.
JUDGE KAPLAN: A bathroom break. So no food before 2:00.
Okay. All right. Go ahead, Mr. Roos.
MR. ROOS: So, your Honor, the plan, I think Gary Wang will pick up tomorrow. I think based on that schedule, I'm hopeful that his direct will end about halfway through our time tomorrow. And we had two other witnesses that were Zac Prince and Elan Dekel, and if it's okay with your Honor, we just need to reassess whether those people will be Tuesday witnesses or whether, given the fact that we're now into the next week, we need to make a change. So we could tell your Honor tomorrow morning or something like that.
JUDGE KAPLAN: All right. Is there any revised estimate on the duration of the trial?
MR. ROOS: I don't think so. I think we're a little bit behind, but, you know, these things——we can catch up, and arguably the witnesses are maybe largely on track, jury selection just went a little bit longer, so——
JUDGE KAPLAN: Okay. Mr. Cohen, anything to enlighten me with?
MR. COHEN: No, your Honor. I think we just have to see how things go tomorrow and Tuesday, but I don't have anything to add in terms of timing.
JUDGE KAPLAN: Okay. I think I've sufficiently made my point about cutting out repetition, and I'm sure that the jury will appreciate everything you can accomplish on that because I think they were finding some of it pretty rugged.
MR. COHEN: We understand, your Honor. We may want to be heard on the matter I raised at sidebar, but obviously not today.
JUDGE KAPLAN: And that matter is?
MR. COHEN: The pretrial ruling about certain investor witnesses and customer witnesses, but we don't have to cover that today.
JUDGE KAPLAN: Okay. We will not cover it today.
MR. ROOS: Your Honor, a few just very minor and quick housekeeping matters.
There were I think two or three exhibits yesterday, 420 and I think 427——425 through 427. Your Honor asked about a little like white box at the bottom that said page 6 of 7 and had a 3500 number?
JUDGE KAPLAN: Yes.
MR. ROOS: And that was basically our mistake. Actually the version the Court had and defense had didn't have that. We loaded the 3500 version of it. So anyways, we've corrected it, and assuming nobody has an objection, the version that will go to the jury won't have that confusing——
JUDGE KAPLAN: Will or will not?
MR. ROOS: Will not have the white margin on the bottom.
The other——if the Court's okay with it, yesterday we offered exhibits pursuant to stipulation 2001, which——and those exhibits were admitted. Reviewing the transcript, we don't see that 2001 itself, the stipulation, was admitted, so we could do it in front of the jury if your Honor would like, but we also would just move now to offer 2001.
JUDGE KAPLAN: Do you have a preference, Mr. Cohen?
MR. COHEN: No preference, your Honor.
JUDGE KAPLAN: Okay. 2001 is admitted.
(Government's Exhibit 2001 received in evidence)
JUDGE KAPLAN: Since Andy is out of the room, I charge you, Mr. Roos, with making sure Andy, who is the keeper of the keys——oh, there he is. My goodness. He's always out of the room doing what he has to do. Okay. That's fine. Andy's got it. So we will see you all tomorrow.
COURT CLERK: All rise.
(Adjourned to October 6, 2023, at 9:30 a.m.)