The rise and fall of Gary Wang, the Chinese genius programmer who personally forged the blade for FTX

Author: Giovanni Chen, Meta Era

On October 3, the bankruptcy case of FTX, once the second-largest exchange in the world, officially opened in New York. The judge, SBF, and a number of witnesses clashed sharply, revealing shocking details. Various testimonies and statements recounted how SBF operated FTX, uncovering the internal mysterious operations of this cryptocurrency exchange, which once ranked second in trading volume and had a market value of up to $32 billion.

On the day of the hearing, key figures closest to SBF, Gary Wang, Caroline Ellison, and Trabucco, appeared in the witness stand. One witness, who attracted the attention of all media and the public, was the bespectacled, somewhat introverted, and refined co-founder and CTO of FTX, Gary Wang.

Gary Wang's testimony was explosive; he personally revealed that there was indeed a backdoor in the relationship between FTX and Alameda:

1. SBF allowed Alameda to withdraw unlimited funds from FTX. In 2019, Gary, as CTO, personally wrote a function in the FTX system that enabled Alameda to steal customer funds. Moreover, Alameda could trade with more funds than it actually had in its account. This effectively granted Alameda the privilege to misappropriate user assets and trade without limits.
2. At the time of FTX's collapse, Alameda increased its credit limit to an outrageous $65 billion, even directly withdrawing $8 billion from the FTX platform. This $8 billion was precisely the funding gap in FTX's company account, coming from FTX customers.
3. Additionally, the actual balance of the insurance fund disclosed by FTX (a fund that ensures traders against liquidation risks) was fabricated. It was generated by a random number generator, with amounts that did not match the database; the real figures were lower than the generated numbers, revealing deceptive practices in FTX's financial statements and audits.

Seeing his once most important "comrade" testify and expose shocking data and information, SBF trembled uncontrollably, rubbing his eyes in an attempt to calm down, his gaze filled with despair.

Who is Gary Wang?

According to Gary's own statement, as a co-founder of FTX, he earned an annual salary of $200,000 and held 17% equity in FTX and 10% in Alameda, making him the second-in-command after SBF. In the operation of FTX, SBF was responsible for company strategy, public relations, and communication, while Gary focused on coding.

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

As the most mysterious billionaire executive, Gary has a secretive personality, rarely appearing in public, with very few photos online. Even his colleagues often go long periods without seeing him, and even his LinkedIn photo is just a silhouette.

Gary and SBF's Acquaintance

According to online information, Gary was born in China and immigrated to New Jersey with his parents at the age of 8. He excelled academically from a young age, especially showing high talent and interest in mathematics and programming.

In 2010, he participated in a high school math competition, where he met SBF and Trabucco (another FTX executive). The three attended a math summer camp organized by MIT, and all successfully entered MIT's mathematics program. Trabucco and Gary pursued bachelor's degrees in mathematics and computer science, while SBF studied for a bachelor's degree in physics.

SBF and Gary gradually built trust during their university years, rooming together for three years. In their spare time, they often played games and solved puzzles together. They also participated in the Epsilon Theta fraternity. Gary's reserved personality led many to find him difficult to communicate with, but SBF, through years of observation, understood Gary's character and abilities, especially his talent in programming and mathematics (Gary had won an MIT programming competition).

"Many people think Gary is hard to get along with and keep their distance, but I don't. I believe Gary doesn't want to deliberately distance himself from the world; he's very smart, and he can take the time to think about some very difficult problems," SBF recalled.

Their years of academic experience forged a deep friendship. After graduation, SBF went to Wall Street to work for the trading fund Jane Street, while Gary joined Google to develop the flight price aggregation engine Google Flights.

In November 2017, SBF founded the quantitative trading company Alameda Research in San Francisco, focusing on quantitative trading in the cryptocurrency market. Immediately, SBF thought of Gary, who was working at Google. He flew to Boston to persuade Gary to join Alameda: "Your talent in trading will surely succeed; the cryptocurrency market is filled with countless new opportunities. Let's create something together!" SBF vividly described his ambitions and aspirations to Gary.

Gary felt that his work at Google lacked challenges, so he accepted SBF's invitation to come to San Francisco.

They often fought side by side, with Gary coding day and night, while SBF frequently slept at the office, both getting only 4-5 hours of sleep each day.

Gary Wang's Quantitative Program

Initially, SBF operated Alameda with his own funds, trading mainstream coins and altcoins, but the performance was poor, with daily losses reaching as high as $500,000.

However, after Gary joined Alameda, the team, after a long period of exploration, determined a trading strategy that utilized arbitrage opportunities between Bitcoin prices in Japan, the United States, and South Korea. In the most critical aspect, Gary wrote the entire quantitative program for Alameda, designed to quickly exploit arbitrage opportunities across different trading markets. This program could complete a risk-free arbitrage operation as long as it captured price differences between exchanges and executed quickly. With this method, SBF secured $170 million in funding from investors, and Alameda's daily trading volume once exceeded several billion dollars, with daily revenues reaching an astonishing $25 million.

Gary Wang's Liquidation Engine

However, this was not the beginning of everything. As early as 2018, SBF had asked Gary to write a program for a Bitcoin exchange, and Gary completed a trading platform called CryptonBTC in a month. Although it was never turned into a product, SBF knew that if Gary were to write a contract trading platform program, he could complete it in a month and that it would be of better quality than any exchange on the market. Gary was a true programming genius.

However, a common issue with contract exchanges at the time was that when clients' positions incurred losses and needed to add margin, the exchange would first ask clients to add margin. If the market changed too quickly, the exchange would have to bear the loss of that portion of funds.

In the later code for contract exchanges, Gary invented a new liquidation engine mechanism that could monitor client positions on a second-by-second basis, executing liquidations immediately when clients' margins were insufficient, thus protecting the exchange's funds. Although this feature annoyed traders, it solved a key problem that had long troubled many exchanges. After Gary added the liquidation mechanism to FTX, Binance, Kraken, and other exchanges also followed suit in developing this feature.

Gary's Cross-Margin

Additionally, in general contract trading, users need to have corresponding assets as collateral for borrowing, which lacks flexibility in funding. To address 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 later adopted by other contract exchanges.

SBF's Bloodthirsty Blade

In fact, as SBF's right-hand man, Gary was not just an excellent programmer; he was also a top-notch product manager! Gary could independently develop products that outperformed competitors based on market demand. Nishad Singh was the engineering head at FTX, but he mostly coordinated engineers; the core products were often developed solely by Gary.

At the same time, Gary was responsible for some of SBF's special program requests, which only he and SBF had the authority to use and view. The engineering team at FTX was even unaware of all the programs Gary wrote. This included the "allow negative balance" feature that enabled Alameda to transfer assets from FTX, allowing Alameda to use FTX customers' funds without restrictions.

The Fall of FTX's Core Team

Under the leadership of SBF and Gary, FTX achieved the second-highest trading volume globally, with a market value of $32 billion. However, in November 2022, FTX collapsed in just one week, owing over $10 billion to more than a million creditors, marking a Lehman moment in the cryptocurrency world.

The core team of FTX all lived in a penthouse apartment in the Bahamas, and when the incident occurred, the police came to seize all core personnel, including Gary.

Once invincible, SBF stated, "I have a 5% chance of being elected President of the United States," but now he has become a "fraud" that everyone denounces.

Meanwhile, the genius programmer Gary is also suffering internally. In December 2022, he admitted to all charges, including wire fraud, commodity fraud, and securities fraud, and is facing 50 years in prison. Currently, Gary is seeking to cooperate with the court to testify in order to reduce his sentence.

Once a renowned genius programmer, Gary Wang's sharp bloodthirsty blade has been used in the wrong place, leading to a hasty conclusion.

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

References: [1] Michael Lewis (2023), Going Infinite: The Rise and Fall of a New Tycoon [2] https://www.dlnews.com/articles/people-culture/meet-ftx-founder-gary-wang-who-testified-against-sbf/ [3] https://www.theblockbeats.info/news/46105?search=1 [4] https://www.odaily.news/post/5183190