Gary Wang, co-founder and former CTO of FTX, is assisting the US government in developing a suite of anti-fraud software tools for cryptocurrency oversight.
This collaboration, stemming from his 2022 plea deal with the Department of Justice (DoJ), aims to bolster crypto exchange transparency and prevent financial fraud.
Gary Wang Partners with US to Build Anti-Fraud Crypto Tools
Wang’s legal team disclosed in a recent court filing that he has been pivotal in building two distinct software tools. The first is to detect potential fraud in public markets, and another dedicated to identifying illegal activities on crypto trading platforms.
His involvement in these projects highlights his efforts to make amends for his role in FTX’s collapse. This is amidst hopes to avoid jail time as he awaits sentencing on November 20.
“Gary is profoundly remorseful and has taken extraordinary steps to assist the Government and others working on behalf of FTX victims. For these reasons and those set forth below, we respectfully request that the Court impose a time-served sentence,” the filing read.
According to Wang’s lawyers, his cooperation extends beyond technology development. It includes critical testimony that contributed to the conviction of Sam Bankman-Fried (SBF), former FTX CEO.
Read more: Who Is Sam Bankman-Fried (SBF), the Infamous FTX Co-Founder?
During the trial, Wang was instrumental in revealing that SBF had allowed his hedge fund, Alameda Research, unfettered access to FTX customer funds via a secret “back door.” This led to millions in unauthorized transfers.
Wang’s testimony depicted how customer funds were unlawfully used to cover Alameda’s trading losses and expenses. This exposed systemic fraud within the collapsed exchange. The collaboration with authorities, therefore, highlights Wang’s attempt to atone for his actions. Based on this, his lawyers urged the court to consider his cooperation when deciding his sentence.
They argue that Wang has been invaluable in clarifying the technical aspects of FTX’s operations for investigators. They also push that his ongoing work with law enforcement has aided regulatory understanding of the crypto market’s vulnerabilities.
However, whether Wang’s collaboration will secure leniency is uncertain. Recent cases cast doubt on this outcome, notably that of Caroline Ellison, former CEO of Alameda Research. Her cooperation included providing testimony against SBF and revealing critical details about FTX’s financial misconduct.
Nevertheless, Ellison got a two-year sentence. This suggests that, while cooperation is taken into account, it does not guarantee leniency in high-profile fraud cases like FTX.
“I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison,” Judge Lewis Kaplan said, highlighting the severity of the crimes involved during Caroline’s sentencing in September.
Meanwhile, efforts to compensate FTX victims are underway. Recently, a US court approved an asset compensation plan aiming to distribute an estimated $14.7 billion to $16.5 billion to creditors. This decision marks a significant step toward financial relief for those affected by FTX’s collapse.
Yet, many creditors have voiced frustration. Among the reasons is the slating of smaller claims for resolution by the end of 2024, while the larger claims face protracted delays. Victims are also concerned that payouts will be based on FTX-era asset values. This will reduce potential recovery as most cryptocurrency values have surged since the exchange’s collapse.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell.
As Wang awaits sentencing, his involvement in the government’s anti-fraud initiative and his cooperation in the FTX trial continue to shape his legal standing. While his attorneys have argued for a prison-free sentence due to his contributions, the ultimate decision lies with the judge.
Like in Ellison’s case, the judge will weigh Wang’s collaboration and testimony against the extent of his involvement in FTX’s downfall.
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