Sex, Signal messages and sabotaging FTX’s code: SBF criminal trial

Two of Sam Bankman-Fried’s former friends from MIT, who also worked at crypto exchange FTX while living with the company’s founder in the Bahamas, took the stand in a Manhattan courtroom this week to testify against their former classmate, confidant, and boss — a man who allegedly ran a crypto empire that defrauded thousands of customers out of billions of dollars.

Gary Wang, the lesser-known co-founder of FTX, was asked by Assistant U.S. Attorney Nicolas Roos on Thursday, “Did you commit financial crimes while working at FTX?”

“Yes,” responded Wang. He said that his crimes, including wire and commodities fraud, were carried out with the help of Bankman-Fried, FTX ex-engineering head Nishad Singh and Caroline Ellison, who ran sister hedge fund Alameda Research and had been Bankman-Fried’s girlfriend.

“Mr. Wang, do you see any of the people you committed those crimes with in the courtroom today?” Roos continued.

Wang, dressed in an oversized and wrinkled suit with a red tie and glasses, awkwardly stood up and looked around the courtroom before responding, “Yes.”

“Who do you see?” asked Roos.

“Sam Bankman-Fried,” he said.

The trial, set to last six weeks, will resume on Tuesday with key testimony expected from Ellison, who is considered the prosecution’s star witness, having already pleaded guilty to multiple charges. Bankman-Fried faces seven federal charges, including wire fraud, securities fraud and money laundering, that could put him in prison for the rest of his life.

Thus far, Bankman-Fried, 31, has remained mostly quiet in court intently listening to witnesses and at times writing notes to his attorneys. But as Wang testified against him, Bankman-Fried looked visibly upset, shifting his gaze from his former friend to the ground, and at one point putting his head in his hands.

Wang, 30, was technology chief for FTX, which spiraled into bankruptcy in November. He spoke so fast that U.S. District Judge Lewis Kaplan and the prosecutor both stopped him at points to ask that he slow his pace.

Much of Wang’s testimony on Friday focused on the final days at FTX before the entire operation imploded, including reports in the media detailing Alameda’s business practices and its troubling ties to FTX.

Wang said that in response to the reporting an emergency meeting was called between Bankman-Fried, Wang and Singh, to discuss shutting down Alameda. He said they ultimately decided against such a move, because he and Bankman-Fried were aware that Alameda had no way to repay the roughly $14 billion hole in its books.

Prosecutors took the jury through a series of tweets, beginning on Nov. 7. Posts came from the company blaming bank hours for slow withdrawals, while Bankman-Fried tweeted from his personal account, assuring customers that all was fine.

“FTX was not fine and assets were not fine,” Wang testified.

On Nov. 12, after FTX declared bankruptcy, Bankman-Fried asked Wang to drive with him to the Bahamas Securities Commission for a meeting. On the drive, Bankman-Fried told Wang to transfer assets to Bahamian liquidators because he believed they would allow him to maintain control of the company. Wang said he wasn’t in the meeting with the securities authority, though Bankman-Fried’s dad was present.

Wang said he returned to the U.S. and met with prosecutors the next day. He faces up to 50 years in prison when he faces a judge for sentencing following this trial. He told jurors he signed a six-page cooperation agreement that requires him to meet with prosecutors, answer their questions truthfully and turn over evidence.

For months, Bankman-Fried has known that Wang and Ellison, who were integral members of his personal and professional inner circles, had turned on him. Both pleaded guilty in December and have since been cooperating with the U.S. attorney’s office in Manhattan.

Wang’s testimony, which stretched into Friday, was given under a cooperation agreement with the government. Ellison is expected to take the stand under a similar arrangement.

Born in China, Wang moved to the U.S. at age 7, and grew up in Minnesota before going to the Massachusetts Institute of Technology to study math and computer science. He worked at Google after college.

Adam Yedidia, who was the prosecution’s second witness on Wednesday, continued his testimony on Thursday. Yedidia met Bankman-Fried in college at MIT, and the pair remained close friends.

One of Yedidia’s responsibilities was fixing the bug in the code that gave Alameda preferential treatment. In June 2022, he submitted a report to Bankman-Fried on Signal that showed $8 billion in customer money held in an internal database tracking the cash wired to an Alameda account called “fiat at ftx.com” was missing.

Yedidia said he and Bankman-Fried spoke about it at the pickleball court at the resort in Nassau, Bahamas. He asked his boss if things were OK. He was concerned because it “seemed like a lot of money” from FTX customers was at risk.

“Sam said, we were bulletproof last year. We aren’t bulletproof this year,” Yedidia testified.

Yedidia said he asked when they would be bulletproof again.

Bankman-Fried said he wasn’t sure, but it may be six months to three years. Yedidia said Bankman-Fried appeared “worried or nervous,” which he said was atypical. Still, Yedidia said he trusted Bankman-Fried and Ellison to “handle the situation.”

On cross-examination, Christian Everdell, Bankman-Fried’s attorney, focused on how Yedidia was the one responsible for developing and reviewing the code.

He asked about the long hours employees worked and Yedidia’s concern for Wang being near burnout. That resulted in Yedidia instituting a rule to not wake Wang at night for bug fixes because he needed sleep.

Everdell also drilled Yedidia on his high level of compensation in his less than two years at FTX. His base salary was between $175,000 and $200,000, but he received multiple bonuses of more than $12 million in cash and company equity. 

Yedidia said he’s now teaching math — geometry and algebra — at a high school. He invested most of the millions he earned as bonuses back into FTX, and his equity stake is now worthless.

As FTX was failing, Yedidia said he was by Bankman-Fried’s side. He highlighted a Signal exchange in November 2022, during which he wrote, “I love you Sam. I’m not going anywhere.” He said he wrote the message because so many people had left.

When asked what changed, Yedidia said he learned that FTX customer deposits had been used to pay loans to creditors. He said Alameda’s actions seemed “flagrantly wrong.”

Yedidia’s testimony ended on a fiery note, which was later struck from the record. He was asked why he had lost faith in FTX and resigned.

“FTX defrauded all its customers,” he said.