The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The US was so concerned that Bahamian authorities would not arrest Sam Bankman-Fried unless his “precise location” was known that they enlisted his FTX co-founder to identify the hideaway.

The fears of US law enforcement and prosecutors surrounding the FTX chief’s late 2022 detention have only emerged now in the sentencing submissions for Gary Wang, the crypto exchange’s co-founder, who yesterday escaped prison time over the fraud that led to its multi-billion dollar collapse.

The US attorney’s office for New York’s southern district, which prosecuted Mr Bankman-Fried and Mr Wang, revealed in its submission that the latter was called upon to identify the FTX chief’s location based on the “backdrop” to his Internet interviews after it became clear he was no longer staying at Albany’s high-end Orchid penthouse.

“Wang provided important information about Bankman-Fried’s location prior to Bankman-Fried’s arrest,” US prosecutors told the New York court. “Following FTX’s bankruptcy, there was uncertainty as to where Bankman-Fried was residing in The Bahamas. Bankman-Fried appeared in several televised interviews, and the backdrop did not appear to be the penthouse apartment that Bankman-Fried had once lived in.

“Without precise location information, the [US] government was concerned that authorities in The Bahamas would not arrest Bankman-Fried. Wang was able to identify Bankman-Fried’s location. Specifically, the government provided Wang with several still photographs of Bankman-Fried’s televised appearances in November and December 2022. From those Wang correctly identified the apartment Bankman-Fried was living in, leading to Bankman-Fried’s arrest.”

These events were confirmed in the account given by Mr Wang and his own attorneys, which specified: “In the days and hours before Bankman-Fried’s December 12, 2022, arrest, Gary reviewed a series of photographs of Bankman-Fried, drawn from the media appearances Bankman-Fried was then regularly conducting.

“By identifying the specific apartment and room from which Bankman-Fried was broadcasting, Gary helped the government co-ordinate with Bahamian authorities to ensure Bankman-Fried’s arrest proceeded smoothly and safely.”

The documents, which have been obtained by Tribune Business, also reveal how Mr Wang had to obtain “emergency” travel documents from the US embassy in Nassau in the days immediately following FTX’s collapse because the Royal Bahamas Police Force failed to deliver on promises that it would return his passport. 

His swift departure from The Bahamas was deemed vital to assisting the New York prosecutors and federal law enforcement with their investigation in FTX’s implosion and Mr Bankman-Fried. “Despite Bahamian authorities advising Gary that he was entitled to have his passport returned, Bahamian law enforcement was repeatedly unavailable for days when his local counsel attempted to retrieve it,” his submissions asserted.

Recalling Mr Wang’s trial testimony about “difficulty getting the passport back from the Bahamian police”, where he said “I was told that they were cancelling the interview, and I was going to get my passport back”, the sentencing memorandum added: “Accordingly, Gary had to present himself at the US embassy and request an emergency passport.

“Gary could easily have used these challenges to delay his co-operation and wait to see how the government’s investigation developed. But he did not. Gary wanted to do the right thing and to start doing it as soon as he possibly could. So, having finally secured a passport on November 16, 2022, Gary took the earliest available flight, landed at JFK late that night, and showed up for his first proffer the very next day.”

These events were also confirmed by US prosecutors, who told the New York court: “On November 13, 2022, counsel for Wang contacted the government about co-operating with its investigation. On November 14, Wang’s counsel informed the government that Wang wished to leave The Bahamas to travel to New York and meet with the government.

“There was, however, a problem: Authorities in The Bahamas had made Wang surrender his passport. Although he had been advised that he would be getting the passport back, there were unexplained delays in it being returned. To get Wang out of The Bahamas, the Government arranged for him to go to the US embassy, request an emergency passport and leave the country.

“While Wang began proffering less than a week after the company’s collapse, it appears his co-operation would have started even sooner but for the fact that he was detained in The Bahamas by being deprived of his passport,” prosecutors added.

“It took intervention by the government to get Wang out of The Bahamas, and he began proffering the morning after he returned to the United States.”  The sentencing submissions also detailed how Mr Wang was excluded from discussions with the Securities Commission over the transfer of digital assets belonging to FTX’s clients to the Bahamian regulator to protect them hackers.

“Gary described Bankman-Fried’s last-ditch efforts to transfer FTX assets to The Bahamas, whose regulators Bankman-Fried perceived as ‘more likely to let him stay in control of the company, compared to the US’,” Mr Wang’s sentencing submissions asserted.

“As with so much of FTX’s management to that point, Gary was excluded from the substantive discussions about the transfer and left waiting outside while ‘[Bankman-Fried] and his lawyers and his dad went and met with B[aha]mian regulators’. Following that meeting, Gary honoured Bahamian regulators’ directive that he transfer assets to Bahamian wallets.

“Having been excluded from Bankman-Fried and his father’s meeting with Bahamian regulators, and played no role in Bankman-Fried’s apparent 11th-hour effort to regain control of FTX, Gary understood this transfer to be compelled by Bahamian law. [He] was not present for the Bahamian regulator meeting and transferred the assets at issue only after being directed to do so by the regulators.”

US prosecutors, in their version of events, informed the New York court: “On November 11, 2022, FTX declared bankruptcy. On November 12, Bankman-Fried asked Wang to drive with him to the Bahamas Securities Commission. During the drive, Bankman-Fried expressed a preference for transferring FTX’s remaining assets to Bahamas regulators or liquidators.

“Bankman-Fried preferred authorities in The Bahamas because ‘they seemed friendly and seemed willing to let him stay in control of the company’. After arriving at the Bahamas Securities Commission, Bankman-Fried, his father and attorneys met with the regulators while Wang was left outside to wait.

“After his meeting with the regulators, Bankman-Fried told Wang that the regulators were ‘going to order us to transfer the assets ... to The Bahamas’. Bankman-Fried, Wang and the Bahamas regulators went back to FTX’s office. The US bankruptcy estate’s attorneys told Bankman-Fried that he should not transfer any funds that were the subject of the bankruptcy, but he told Wang to ‘ignore the instructions and continue transferring the funds’.”

The Bahamas was the first jurisdiction to act by petitioning the Supreme Court to appoint provisional liquidators for FTX Digital Markets, the Bahamian subsidiary, on November 11, 2022. This removed the company from Mr Bankman-Fried’s control, and the digital assets transfer was also approved by the Supreme Court to protect clients by preventing their theft or loss.

Mr Wang has also received backing from former FTX employees who lost everything as a result of the crypto exchange’s collapse. Jingjing Sun, in a character reference, wrote: “I fully understand that his actions caused significant harm to many, including my own family. In September 2021, we gave up our US permanent residency and sold our homes to move to The Bahamas, eager to be part of the FTX vision.

“Just over a year later, in November 2022, our finances, reputation and family relationships were left in ruins. Despite this, Gary has since expressed remorse in court and fully co-operated with the investigation. I believe his apology is sincere and that his regret is genuine.”