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April 2, 2024 – 12:27 PM PDT
NEW YORK (Reuters) – U.S. prosecutors were able to charge FTX founder Sam Bankman-Fried shortly after the cryptocurrency exchange’s collapse in part because they secured the cooperation of its chief software engineer, one of the prosecutors said on Tuesday.
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Speaking five days after Bankman-Fried was sentenced to 25 years in prison, Assistant U.S. Attorney Thane Rehn said former FTX Chief Technology Officer Gary Wang’s assistance was key to helping investigators understand how Bankman-Fried stole $8 billion in customer funds.
“Without that, would we have found it? Probably,” Rehn said at a discussion hosted by law firm Wilson Sonsini. “But it would have taken a software expert weeks or even months.”
Jurors in Manhattan found Bankman-Fried, 32, guilty last November on seven counts of fraud and conspiracy, in what prosecutors termed one of the biggest financial frauds in U.S. history.
Bankman-Fried is expected to appeal his conviction, after testifying that he made mistakes in managing risk but never intended to steal funds. He had been arrested in December 2022, just one month after FTX’s collapse and bankruptcy.
Rehn’s comments highlighted the importance of the government’s three main cooperating witnesses – Wang, former FTX engineering chief Nishad Singh, and Caroline Ellison, the former chief executive of Bankman-Fried’s Alameda Research hedge fund. Each pleaded guilty to fraud and testified against their former boss at his month-long trial.
In his testimony, Wang said Bankman-Fried asked him to change FTX software code to let Alameda withdraw unlimited funds from the exchange.
Rehn said Wang showed prosecutors code from his laptop shortly after FTX collapsed.
“This case moved at lightning speed,” U.S. Attorney Damian Williams told reporters after Bankman-Fried’s conviction.
Prosecutors are expected to recommend that the trial judge, U.S. District Judge Lewis Kaplan, take Wang’s, Singh’s and Ellison’s cooperating into account when sentencing them.
Wang testified that he hopes to avoid prison. His lawyer, Ilan Graff, declined to comment.
Bankman-Fried’s spokesman Mark Botnick declined to comment.
Reporting by Luc Cohen in New York Editing by Bill Berkrot