Another FTX Fraudster Walks as Judge, Prosecutors Gush Over Cooperation

• FTX co-founder Gary Wang has avoided prison time.
• Prosecutors and the judge asserted that Wang deserved credit.
• Several onlookers had a different view.

Two years later, courts and restructuring officers continue to pick apart the carcass that was once Sam Bankman-Fried ‘s crypto empire, FTX. Among these efforts has been bringing all those involved in the years-long fraud to book.

In the past few hours, this process came to an end as Gary Wang, the former FTX CTO and the only one in Bankman-Fried’s inner circle indicted in the case who had yet to face sentencing, finally did. The outcome was, however, far from what those closest to the wreckage of the crypto exchange’s collapse had hoped for.

FTX’s Gary Wang Gets a Slap on the Wrist

FTX co-founder Gary Wang has avoided prison time. On Wednesday, November 20, Judge Lewis Kaplan issued Wang a sentence of “time served,” implying that the FTX co-founder did not have to spend any time in prison. This sentence was given with a condition of three years of supervised release. The ruling makes Wang the second FTX executive to be let off the hook after former FTX chief engineer Nishad Singh .

Wang’s sentence is a far cry from the maximum 50-year sentence for the crimes alleged in the complaint against him. For context, he pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud. 

The sentence came as prosecutors and even the judge had nothing but glowing remarks to offer about Wang over his cooperation with the government.

Glowing Remarks

"He decyphered [sic] half the case for us on the first day of his cooperation. He showed how the code allowed money to be misappropriated and his conversations with Sam Bankman-Fried and Nishad Singh. Mr. Wang is entirely unique, only he could do it," Assistant US Attorney Nicolas Roos told the court per Inner City Press' account of proceedings.

Roos is referring to the code that exempted Alameda Research from liquidations on FTX and allowed the trading desk unfettered withdrawals from the exchange, which were sometimes taken from the exchange’s customers’ accounts. In sworn testimony in October 2023 , Wang told the court that he and Nishad Singh implemented this code from the very beginning of FTX in 2019 under the instruction of Sam Bankman-Fried.

Further lauding Wang’s contributions to the untangling of the FTX web of fraud, Roos tipped the former FTX CTO as “the easiest cooperator” he had ever worked with. Roos also reiterated statements from Wang’s lawyer that in his free time, he had developed software that was aiding the government to fish out fraud in the stock market and was creating something similar for crypto.

"He [Gary Wang] deserves special credit," Roos surmised, a view Judge Kaplan appeared to share.

“You’re entitled to a world of credit for facing up to your responsibility,” Kaplan declared, speaking to Wang as he issued his ruling, according to Reuters .

“The period of your culpability was in comparison to the periods of the culpability of the other defendants in this case extremely small,” he added.

Those in the broader crypto community were, however, not as enthused about Wang’s sentence as the judge and the prosecutors. This reaction is understandable, as FTX’s collapse led to the loss of about $8 billion in customer assets, eroded trust in crypto in Washington, and triggered other bankruptcies.

“A Joke”

Sunil Kavuri, a British investor who lost about $2 million in the FTX collapse, bashed the ruling as “a joke,” responding to another FTX creditor who argued that Wang’s sentence did not feel like justice.

Sharing a similar view , prominent crypto lawyer John Deaton implied that the recent ruling did not offer sufficient deterrence to fraudsters. 

"We need an SEC & DOJ that protects consumers and retail investors. We do that by implementing a ZERO TOLERANCE for fraudsters, thieves and criminals. We should throw the book at them and prosecute them to the maximum, while fostering innovation and rewarding the good guys," he wrote in response to the ruling.

On the Flipside 

• Other former FTX and Alameda executives, Sam Bankman-Fried, Caroline Ellison, and Ryan Salame, got sentenced to 25 years, two years, and seven and a half years in prison, respectively.

Why This Matters

Gary Wang’s sentencing brings the FTX fraud litigation process to a close after two long years.

Read this for more on FTX’s collapse:
FTX Group Files for Bankruptcy, Sam Bankman-Fried Resigns as CEO

Learn more about Coinbase’s decision to delist WBTC:
Coinbase to Delist WBTC in Escalation of Tokenized Bitcoin Land Grab