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(Bloomberg) — They’d come a long way together, from teenage mathletes to MIT frat brothers to crypto billionaires.

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Now the feds were closing in on both — and one was going to turn on the other.

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“We can make this work,” Sam Bankman-Fried said over Signal, an encrypted messaging app. 

Gary Wang didn’t reply.

The time: mid-November, days after FTX collapsed. The place: a $40 million penthouse in the Caribbean — last stop, US authorities say, on a trail of lies stretching back to the very beginning of the men’s FTX cryptocurrency empire. 

Wang, FTX’s software savant and ultimate secret-keeper, was holed up in one of the five bedrooms of the oceanfront aerie where he worked with Bankman-Fried and eight others. He emerged, with two lawyers who’d flown in from New York beside him. Wang dropped the news he was leaving.

“I sort of said, ‘Have you fully made up your mind or do you want to talk about it?’” Bankman-Fried recalled of his final conversation with Wang, in an interview at his parents’ California home. “He said he had made up his mind and that was that.”

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What Wang didn’t say was that he was going to flip on his friend, FTX’s famous, and now infamous, front man.

Those final moments in Nassau — Bankman-Fried’s urgent Signal message would follow — marked a turning point for both men. Their break will go down as a signature moment in the spectacular rise and even more spectacular fall of FTX, once one of the world’s largest cryptocurrency exchanges.

For a decade and a half, nearly all their adult lives, Bankman-Fried and Wang traced an arc of mind-blowing success together. Bankman-Fried sold himself as the crypto wunderkind willing to spend billions to save humanity. Wang worked in the shadows — largely a mystery to the wider world.

Interviews with people close to Wang in high school, college and at FTX, and analysis of hundreds of pages of documents related to the unfolding legal drama, fill in crucial gaps. Given the legal peril, former FTX employees spoke on the condition that they not be named. Wang’s attorney, Ilan Graff, declined to comment.

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As Bankman-Fried shot to worldwide fame, Wang seemed to live life on the edge of every crowd — smiling, nodding, going along — before retreating once more into the solitude of his brilliant mind.

Now Bankman-Fried and Wang, friends since their teens, are pitted against each other. They’re offering dueling accounts of the FTX fiasco and of who’s ultimately to blame. The co-founders’ yin-yang relationship, and questions of just who might have controlled whom, have been thrust to the center of the FTX story.

Wang and Caroline Ellison, former head of FTX’s Alameda Research trading arm, have pleaded guilty to a range of federal charges. They’re cooperating with prosecutors in hopes of receiving lighter sentences. 

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Wang also has advised the team shepherding FTX through its bankruptcy, answering questions about the inner workings of the exchange with his lawyer’s involvement, according to three people familiar with the matter.

Bankman-Fried, out of jail on a $250 million bail package but confined to his parents’ home with an electronic monitor strapped to his ankle, has maintained his innocence. He has pleaded not guilty and is due to face trial in October.

Even more than Ellison, Bankman-Fried’s on-again, off-again girlfriend, Wang can offer a more intricate account of what really happened at FTX, company insiders say.

And yet all this time, despite the tabloid headlines, Wang has remained something of an enigma.

“It was a huge shock,” said Tommy Tang, who was co-president of math club with Wang in their New Jersey high school. “It’s really wild to find out your classmate was worth several billion dollars and is now facing years in prison.”

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Bankman-Fried, known the world over as SBF, has characterized himself as a “trash” coder. Wang, by contrast, had been impressing classmates with his programming skills since his school days. He was viewed by colleagues as the quiet genius of FTX, a solitary magician who worked strange hours and ignored social cues and Slack messages.

Their unusual friendship bound FTX together from the start. One former colleague likened the shy Wang to a pair of mechanical arms that Bankman-Fried could manipulate at will. Employees wondered if Wang, the wizard behind the curtain, might one day pose a risk to the entire enterprise. If anything happened to Wang, these people worried, the whole thing might collapse like a house of cards.

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Collapse it did, on Nov. 11, into Chapter 11 bankruptcy. The shock waves are still reverberating.

“A cooperator like Gary Wang is incredibly valuable to the government,” said Mark Kasten, a lawyer at Buchanan Ingersoll & Rooney. “I would assume SBF has felt the walls closing in.”

Mathcamp

Bankman-Fried and Wang’s early relationship started with a math problem that involved, of all things, a group of liars.

They didn’t know each other at the time. The problem was part of their individual applications to the Canada/USA Mathcamp, a five-week summer program for mathematically talented high-school students that they attended in 2008. That year, when they crossed paths at the camp for the first time, the program was held at Reed College, a small, offbeat school in Portland, Oregon, where Steve Jobs studied calligraphy for a time.

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Bankman-Fried was 16. Wang was 15. Here’s the math problem:

There are 26 students at Logic Camp; 18 of them always tell the truth and the other 8 always lie. Of course, everyone at the camp knows who is who. One day, n campers are sitting in a circle. Each of them says: “Exactly one of my two neighbors is a liar.’” For what values of n > 2 is this possible?

(The answer: Integers from 3 through 8, and multiples of 3 from 9 to 24. For full credit they needed to prove no other solution worked.)

The two arrived at Reed that summer from what seemed like different worlds. Bankman-Fried was growing up on the palm-fringed campus of California’s Stanford University, where his parents were law school professors. Wang had emigrated to the US from China at the age of 8. He was coming from the suburb of Cherry Hill, New Jersey, east of Philadelphia. His father had moved the family there after an initial stint in Minnesota.

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As an awkward teen at Cherry Hill High School East, Wang seemed like just the sort of numbers-loving hyper-achiever who might end up at a brainiac mill like MIT. His 2011 yearbook provides a glimpse of him as a teen. In addition to math club — where he was nicknamed Hector, in a nod to the great Trojan warrior from Greek mythology — Wang joined chemistry club and the chess team, and played violin in the symphony orchestra. 

By sophomore year, he was studying multi-variable calculus. He threw himself into the USA Computing Olympiad.

Tang, the math club co-president, recalled that in his downtime Wang also enjoyed Mafia, a party game involving hidden identities, where a few players try to “kill off” the others before getting caught. 

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In hindsight, the quote under Wang’s 2011 yearbook photo seems almost prophetic. It’s from Douglas Adams, author of the cult science-fiction comedy “The Hitchhiker’s Guide to the Galaxy”:

A learning experience is one of those things that says, “You know that thing you just did? Don’t do that.”

Cherry Hill East’s student newspaper, Eastside Online, published additional details in a multipart series called The Wang Files. It appears to be the only outlet that any member of the Wang family has spoken to since FTX imploded. (The family declined to be interviewed by Bloomberg News.)

Gary’s father told Eastside Online that his son always was a trusting person.

“I felt like we lived in two different worlds,” Wang said of his son. “He was very naive, believing everyone around him was good.”

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After Reed, Wang overlapped at math camp with Sam Trabucco, who would become co-head of Alameda. Wang, Trabucco and Bankman-Fried all attended together in 2010, this time at Mount Holyoke College, in rural western Massachusetts.

Campers formulated their own schedules, choosing from sessions on Bernoulli numbers, isometries of Euclidean space and “why infinity is weird.” Courses were ranked by difficulty on a scale of one to four chili peppers. 

“Mathcamp is amazing, in that it’s a radical sense of freedom,” said Marisa Debowsky, executive director of the program. “There are no rules, beyond being a good citizen of the community.”

It wasn’t all planar algebra. A fellow camper recalled Wang and a friend sneaking into the kitchen after curfew to whip up cheesecake brownies.

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MIT Days

A logical next step for two bright young math whizzes: the Massachusetts Institute of Technology. Bankman-Fried landed there in 2010; Wang, a year younger, in 2011. They quickly reconnected.

Both pledged Epsilon Theta, which stands out in MIT’s hard-partying frat scene. First, ET is co-ed. Second, it prohibits alcohol in shared areas. Thetans live together in a yellow colonial revival mansion in suburban Brookline, Massachussetts. Members sleep quasi-dormitory style — a close-quarters arrangement that would later be repeated, albeit in high style, at the two friends’ penthouse, The Orchid, in Nassau.

ET isn’t exactly Animal House. Social life tends less toward beer pong than to games such as Magic: The Gathering, square dancing and Nerf blaster fights. Spring 2023 rush allotted time to Fermi problems and jigsaw puzzles.

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Wang and Bankman-Fried ended up rooming together for three years. At MIT, finally, Wang was in his element, majoring in math and computer science, and taking part in an intensive robotics competition. People who know him say the school seemed like the right fit for him and he began to open up.

Even then, Wang found himself in Bankman-Fried’s formidable shadow. The two teamed up in 2014 for the annual Battlecode contest, a programming competition. Their team was called The Vegan Police, an apparent reference to a character in the 2010 romantic-action comedy “Scott Pilgrim vs. the World.”

A video of the contest posted on YouTube shows Bankman-Fried led The Vegan Police onto the stage, grabbed the mic and talked the audience through the team project. Wang, in a gray hoodie and rectangular glasses, grinned sheepishly off to the side.

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The Rise of FTX

After MIT, Wang promptly landed a job as a software engineer at Google. Before long, Bankman-Fried, who’d ended up at the Wall Street quant shop Jane Street, was reaching out again.

By now the broad outlines of what followed are well known: the early days in Berkeley, where the two co-founded Alameda, with Tara Mac Aulay, in a three-bedroom apartment; their move to Hong Kong, where FTX took flight; and their shift to Nassau, where FTX raced to giddy heights, with a value of $32 billion, its name emblazoned on a Miami sports stadium and the comedian Larry David starring in its Super Bowl ad.

This standard account omits at least one key event.

Shortly after Alameda was established, Bankman-Fried and Mac Aulay fell out over what Mac Aulay characterized as questionable ethics and weak risk management. 

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According to Bankman-Fried, Wang stood by his old camp buddy, cementing his position as SBF’s trusted partner and lieutenant. Mac Aulay and several others left to form a rival firm in the UK called Lantern Ventures. (Mac Aulay didn’t respond to requests for an interview.)

“Ultimately I sided with Gary and I should have done so much earlier,” Bankman-Fried said.

At FTX, Wang set about designing the architecture of the crypto exchange. Among other things, he created almost single-handedly a “liquidation engine” that would automatically close customer accounts that were running up big losses. Regulators allege Alameda was exempt, and could effectively take unlimited money from FTX as a result. Wang also developed a “cross-margin” feature that enabled customers to use any cryptocurrency in their accounts as collateral for other crypto purchases. 

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When some complained that Wang’s outsize role was creating bottlenecks, Bankman-Fried defended him. Questioned about whether Wang might pose a “key man” risk to FTX — whether the fate of the entire enterprise might hinge on Wang — Bankman-Fried batted the concerns away.

SBF, a prolific tweeter, portrayed himself as a 24/7 workaholic. A year before FTX collapsed, he posted a picture of himself sprawled on the beanbag where he catnapped so his “mind stays in work mode.” 

Wang, by contrast, is a social-media ghost. One of the few photos of him available online shows him seated before six computer screens. His feet are up, his head turned away from the camera. Colleagues said he often arrived at the office at 5 pm or later, and worked through the night.

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The Final Days

The empire Bankman-Fried and Wang built was once compared to those of financial titans like J.P. Morgan and Warren Buffett. It fell apart in less than a week.

On Nov. 11, Bankman-Fried resigned as CEO. He and Wang worked through that Friday and into the early hours of Saturday after a hack that apparently had spirited $372 million out of FTX’s Bahamas-based offshoot, according to sworn testimony Bankman-Fried later provided. Over the next 24 hours, the two transferred a chunk of FTX’s remaining assets into the hands of Bahamian authorities.

By that Monday, Nov. 14, Wang had been locked out of FTX’s internal systems. He sent a list of digital assets he couldn’t reach to the Bahamas Securities Commission. It was around this time Wang left The Orchid. 

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Bankman-Fried said Wang emerged from the discussion with his lawyers and said he was leaving in five minutes.  He thought he and Wang were on the same page with “the right next steps for customers”.

“All of the sudden that snapped into he was leaving that day, back to the US and implicitly mostly stopped working,” Bankman-Fried said.

In a follow-up text message, SBF appeared to suggest that Wang could stay and work with Bahamian regulators and a local liquidator. 

“They’re all on board,” Bankman-Fried messaged over Signal shortly before 4 p.m. on Nov. 15, according to a copy of the text seen by Bloomberg — but it went unanswered.

FTX lawyers initially blamed Wang for trying to block efforts to recover billions of dollars of customer money. Wang pointed at Bankman-Fried. He told US prosecutors that Bankman-Fried was trying to stall and delay bankruptcy, in hopes that the Bahamas would go easy on FTX and maybe, just maybe, let Bankman-Fried regain control.

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And so, the finger-pointing continues. At a December hearing in federal court in lower Manhattan, Wang pleaded guilty to charges including wire fraud and conspiracy to commit commodities fraud. The FTX super-coder has testified that between 2019 and 2022 he’d been directed to alter FTX’s code. He said he made the changes knowing they would give Alameda “special privileges.”

The full extent of the betrayal dawned on Bankman-Fried only after he was arrested on Dec. 12 and confined to the notorious Fox Hill prison in Nassau. There he read a diplomatic cable attached to the US request for his arrest.

The note, a copy of which was reviewed by Bloomberg News, referred to two cooperating witnesses, CC-1 and CC-2. Both were said to be FTX software developers.

CC-1, the diplomatic note reads, told prosecutors that Bankman-Fried had ordered changes to the computer code at the core of FTX. The switch would enable Ellison’s Alameda Research to borrow client money from FTX — a claim central to prosecutors’ case that FTX embezzled billions.

CC-1 also claimed Alameda was raiding FTX customer accounts as far back as 2020. Bankman-Fried assured the witness that the tactic was “okay.”

Reading the cable from the US, Bankman-Fried realized who CC-1 was: Gary Wang. —With Gillian Tan