Author: Jaleel, BlockBeats

SBF trial has entered its second week, facing multiple serious criminal charges. This trial has revealed a series of insider trading and fund misappropriation details, and has brought together three key witnesses once again.

As a co-founder of FTX and SBF's right-hand man, Gary Wang has gained SBF's trust, but today he explicitly stated in court that he hopes to avoid imprisonment by pleading guilty and cooperating with the investigation, although federal prosecutors have made no promises to him. In addition to Gary Wang, a key figure and potential witness in the FTX case is Trabucco, the former co-CEO of Alameda Research, who cleverly avoided this "disaster" by leaving FTX three months before the incident.

During the trial process, the former friendship between these three individuals no longer exists. Their testimonies will be crucial in determining the fate of SBF.

FTX former co-founder E was called as a witness and gave the first full-day testimony during the trial. During the trial, Gary Wang's testimony drew close attention from SBF, who often lowered his head and remained silent, with unnatural body language.

"Every piece of information Gary Wang exposed was like a depth charge exploding, including SBF allowing Alameda unlimited fund withdrawals, Alameda implanting the function of stealing customer funds into the FTX system as early as 2019, and the insurance fund balance disclosed by FTX being generated by a random number generator..."

When SBF learned that Gary Wang and Trabucco were both witnesses, he rubbed his eyes with both hands and couldn't help but recall their meeting thirteen years ago at a high school math camp.

Three genius teenagers meet at a high school elite math camp

In 2010, Mount Holyoke College held a five-week math summer camp. At the time, MIT was training for math competitions, which later helped three people enter MIT's math program in 2011. This is one of the most powerful math programs in the world.

Three young math geniuses: SBF, Gary Wang, and Trabucco, met for the first time here.

Not only SBF, but Trabucco also often recalls the sympathetic teenage years. In an interview in 2020, Trabucco recalled that math competitions helped establish the quick thinking he needed as a trader, while his close friend SBF hardly slept during the math camp.

This diligent quality has been preserved throughout the entrepreneurial process at FTX. We all know that during the startup period, SBF only slept for 4 hours a day and staying overnight in the office was a common occurrence.

At the SBF office in Alameda, image source from the internet

Reunion at MIT, the relationship between the three becomes even closer

Due to their excellent performance in math camps and math competitions, all three of them were admitted to the Massachusetts Institute of Technology (MIT). Trabucco studied mathematics and computer science there, where he learned about Bitcoin and demonstrated his leadership skills by serving as the president of the undergraduate math association.

SBF is pursuing a Bachelor's degree in Physics with a minor in Mathematics. In addition to focusing on academics, SBF has also been involved in various student organizations during their time in school. They joined a fraternity organization called "Epsilon Theta" with approximately 20 members, which often holds various parties on campus such as drinking, solving puzzles, and playing board games.

During his time at MIT, SBF became roommates with Gary Wang and reconnected with Trabucco, further strengthening their relationship. The bond between the three became even closer.

Gary Wang (left three) and SBF (right three) Source: Bloomberg

In 2013, Trabucco graduated from the Massachusetts Institute of Technology and worked for two years at the quantitative trading company Susquehanna International Group, LLP, responsible for handling bond exchange-traded funds. Gary Wang, after obtaining degrees in mathematics and computer science, worked for a period of time at Google. SBF worked at Bankman-Fried's proprietary trading company Jane Street Capital, trading international ETFs, before moving to the Centre for Effective Altruism (CEA) as the Director of Development after four years.

After six years of wandering, Alameda and FTX return

In November 2017, with the support of Jaan Tallinn and philanthropist Luke Ding, Tara Mac Aulay from SBF and CEA jointly founded Alameda Research, a quantitative trading company. At that time, Alameda's daily trading volume in the cryptocurrency market exceeded billions of dollars.

Also in that year, Trabucco left the quantitative trading company Susquehanna and began trading cryptocurrencies, reconnecting with SBF, who founded Alameda in San Francisco. In early 2018, SBF established his own trading strategy, using the price difference between Bitcoin in Japan and the United States for arbitrage, earning up to $25 million per day. After attending a cryptocurrency conference in Macau at the end of 2018, SBF came to Hong Kong and founded the cryptocurrency derivatives trading platform FTX in April 2019.

In 2019, three young mathematical geniuses had already undergone a transformation. Gary Wang held the titles of co-founder and CTO at FTX, while Trabucco joined Alameda as a trader. Six years after graduating from MIT, they reunited with the birth of Alameda and FTX.

As we all know, Caroline is the CEO of Alameda and has a close relationship with SBF. In an interview with Forbes, Caroline mentioned witnessing the friendship between SBF and his close friends Nishad Singh, Gary Wang, and Sam Trabucco. They all serve in executive positions with SBF and share a common interest in effective altruism.

During his time at FTX, Gary Wang has always been very low-key. Four former colleagues of Gary Wang, who declined to be named, have admitted that he is a quiet and programming-obsessed person. A source familiar with Alameda and FTX's business said, "From an employee's perspective, Gary is always very distant and he usually doesn't show up in the office. He likes to work from home and he is almost the only one who can work from home. Others always have to stay in the office, but Gary is always an exception."

Gary Wang, who has a net worth of nearly $5 billion, is very protective of his identity. The only visible photo of him is a back view, and no front-facing photos were found when he was included in the Forbes 400 list of wealthiest individuals. It wasn't until he was arrested last year that his appearance became known to the public.

Unlike Gary Wang's low-key style, Trabucco, a risk quant trader with a background in quantitative analysis, is reported by multiple sources to be a passionate poker player and gambler in private. He openly boasted that he was banned from three casinos for counting cards at the blackjack table due to his superior skills. Trabucco also stated on social media in January 2021 that he applies poker and casino strategies in trading: "Doing it right is a poker term, which means when your odds are the best... you want to bet more."

This is indeed consistent with his trading style in Alameda. As a quantitative trader, Trabucco advocated high-risk cryptocurrency trading in Alameda.

In addition, Trabucco is also a crossword puzzle enthusiast and has been a constructor for The New York Times crossword puzzles. According to a previous episode of the FTX podcast, as of 2020, Trabucco ranked eighth among all constructors for The New York Times crossword puzzles.

Sam Trabucco social media, image source from the internet

The good times didn't last long. Shortly after the reunion of the three, on August 25, 2022, Trebucco posted a long tweet titled "happiness" on social media, bidding farewell to Alameda.

Last year, when SBF announced that Caroline and I would serve as co-CEOs of Alameda, our goal was to make our titles reflect reality - we had both been serving as CEOs for some time and we wanted our external image to reflect that. He stated that he had reached a certain stage in his life where he had to prioritize other things and could no longer have a strong daily presence at Alameda. Caroline will continue to serve as the sole CEO, while he will remain as an advisor to accompany Alameda.

"Alameda is the most growth-oriented time of my life"

"Alameda is a great place, and the problems we solve here are still the most interesting I know of, and the team is still the most impressive team I know of. It's a great environment with a lot to do, and work can easily become your life. For a long time, I enjoyed it. Over the years, I can't think of anything more valuable than giving myself to Alameda. To be honest, being a part of it is stimulating, even though it's difficult, tiring, and consuming."

My time in Alameda was the most formative time of my life. I learned how to think, discovered how far I could push myself, and had incredible experiences fighting alongside lifelong friends in the trenches, often coming out victorious. I will miss it all - I really will.

After ten months as the CEO of Alameda Alliance, Trebucco has chosen to leave. Although he is reluctant, he feels very happy. "Recently, I am really happy. I have spent a lot of time traveling, visiting friends and family, studying myself, and so on. I also bought a boat, which is cool. I need to relax, and I am really, really happy."

FTX bankruptcy application form file, image source from the internet

In March 2022, Alameda made a $2.51 million transaction with the American Yacht Group to purchase a 52-foot yacht, which was recorded in the bankruptcy application.

Sam Trabucco on a yacht (pictured right), image source from the internet

Driving his yacht named "Soak My Deck", Trebucco began his sea voyage in the following months.

We all know what happened in November 2022. The news broke that FTX customer funds had been misappropriated to AlamedaResearch, leading to a severe shortage of funds for FTX.

During the three-day period, the market value of assets held by Alameda Research sharply declined, leaving a significant funding gap. Meanwhile, FTX experienced a run on its funds. CZ sold his holdings of FTT tokens (which Alameda Research holds in large quantities), and for the following days, approximately $4 billion in customer withdrawals were made daily.

"The larger yacht has sunk"

On November 12th, FTX filed for bankruptcy restructuring, and the larger yacht owned by Trebucco sank, causing a huge impact on the cryptocurrency market. To this day, the industry is still under the influence and shadow of the FTX bankruptcy.

SBF described the event based on his memory, stating that he was not involved in the management of Alameda and did not fully understand the key events: "I founded Alameda Research in 2017, which is a private cryptocurrency trading company. In 2019, I founded FTX International, a non-US cryptocurrency trading platform for non-US residents. At that time, I began to transition from my role at Alameda Research to FTX. In 2020, I founded FTX.US, a US cryptocurrency trading platform that does indeed accept US users."

When reconstructing the events of 2021-2022, I relied on memory and inference, as I did not have a complete understanding of these events during many key moments, and I am unable to obtain relevant data now to confirm or deny my guesses. Especially in the past year, I have not been managing Alameda Research.

After that crash, as far as I know, Alameda had about $11 billion in assets and about $11 billion in liabilities, including its positions in FTX. However, many of the assets had low liquidity and could not be sold quickly. I believe that about $3 billion of the assets were highly liquid, leaving a liquidity shortfall of about $8 billion.

This has put tremendous pressure on FTX and forced the exchange to require additional margin from clients holding positions. Alameda Research was unable to provide sufficient liquid assets to cover the margin call, resulting in a default by FTX International and an inability to meet client withdrawal requests.

SBF was taken to court, image source from the internet

In December 2022, SBF was arrested in the Bahamas. In the days leading up to his arrest, SBF expressed regret during an interview for disappearing from the media after the incident, stating that he could have done more. He repeatedly emphasized his remorse, saying "I messed up," and indicating that he wanted to "actively solve customers' problems." SBF, who has always claimed to be a follower of "effective altruism," said he is still trying to do things that are beneficial to the future of the world and deeply regrets messing things up for himself.

Man who withdrew completely before FTX bankruptcy

Trabucco's resignation timing was quite clever, just over two months before SBF's encryption empire filed for bankruptcy and lost $8 billion in customer funds, making him the lucky man who escaped before FTX went bankrupt.

However, Caroline, another CEO who has been sticking to Alameda, was not so lucky. She has been fiercely criticized by many cryptocurrency supporters, accusing her of being the culprit of Alameda's collapse. However, in the sharp criticism, there are also a group of people who defend her.

A supporter of Caroline claimed that many people who defend Caroline have gathered on the peer-to-peer platform Urbit created by computer scientist Curtis Yarvin. They believe that Caroline is a scapegoat and claim that former Trabucco is the mastermind behind the internal collapse of Alameda.

According to researcher Niklas Polk from Nansen, "The potential loan provided by FTX to assist Alameda was likely a response to the significant losses and/or lack of liquidity that Alameda was experiencing at the time. Our data points indicate that such a loan may have occurred as early as the collapse of 3AC in June, approximately two months before Trabucco resigned," added Niklas Polk.

Netizen "Meme" hinted that Sam Trabucco was "watching from the other side" in the FTX case, and the source of the picture is from the Internet.

Trabucco did not respond to requests for comment on this matter. Amidst the chaos at FTX, Trabucco had previously posted two related tweets on Twitter:

On November 6th, Trabucco retweeted Caroline's tweet with his own words: "CZ, if you want to minimize the impact of the market on your FTT sales, Alameda would be happy to buy it all from you at a price of $22 today!" Two days later on November 8th, Trabucco wrote on Twitter: "Love to everyone - I believe the past few days have been dark for many, and I hope the road ahead is brighter."

Since then, Trabucco has disappeared into the crowd and has not appeared in the public eye, whether online or in reality.

"The smartest person in the room", where is Trabucco?

There are community members searching for his whereabouts on social media, frequently asking "Where is Trabucco?" and even offering a reward.

Rainbow Runner (@RRunner144) said: "Friendly reminder, Trabucco can still walk and sail for free on the yacht you paid for through the FTX Ponzi scheme. Anyone who can find a 53-foot Suenos with hull number VHS53A3JK122 will receive bonus points. I indirectly paid for the cost of this boat and am happy to know where it is."

However, some people have pointed out that, apart from briefly mentioning his relationship with Alameda, Trabucco has not been named in any official indictment, nor has he been accused of any wrongdoing. It is possible that he has been cooperating with the FBI for some time and may be living as a free man.

Cryptocurrency KOL IamNomad (@IamNomad) stated on social media: "Trabucco is a whistleblower who is protected by the US government. Please prove me wrong."

Recently, there was also a post on Riddit asking about Trabucco's whereabouts, and many people in the comments shared the same opinion. The content in the link is not translated and is preserved as is.

The netizen named "btc_clueless" said: "I thought he was the first person to make an accusation against SBF. The dirt on his shoes is minimal: he left FTX before the shit hit the fan, and he was never part of the core circle. He must know that Alameda has unlimited credit on FTX. Or maybe he doesn't know about the expansion event, because Alameda had good liquidity before Luna crashed and didn't need to dig deep into FTX user funds? There are many unknowns."

The netizen with the ID name "DrinkYourWater69" also speculated: "He may be on some inconspicuous island. I bet he turned on them early, told the FBI everything he knew to protect himself and get a lot of benefits."

But whether it's "He knew EVERYTHING but was willing to walk away" or has long been cooperating with the FBI, this crossword enthusiast who is good at making crossword games has the ability to take ten steps at a time, and is obviously the smartest person in the FTX and Alameda room. Community members also pointed out the naming of the yacht "Soak My Deck", which is a hint that this crossword enthusiast already knew that FTX and Alameda had problems.

"If you ask me what I learned in Alameda, it's how to make the right decisions, which is correct for me," Trabucco said when he left Alameda. In the SBF trial, Trabucco was listed as a witness but has not yet appeared in court.

After the trial, we will eventually go our separate ways in despair.

After being arrested for 9 months and 20 days, SBF appeared in court on October 3rd local time. The prosecutor will charge him with deliberately deceiving customers and business partners, including thousands of pages of evidence such as internal documents and recorded content.

During the first week of the SBF trial, Gary Wang played the most important witness role and gave a lot of testimony. Gary Wang, who pleaded guilty in December 2022, admitted to crimes such as wire fraud, commodity fraud, and securities fraud, and could face up to 50 years in prison. He can only hope to avoid imprisonment by cooperating with the investigation in court, although federal prosecutors have not made any promises to him.

Wang testified that the functionality required for Alameda to steal customer funds had been implanted in FTX's computer system as early as 2019. In addition, Alameda was granted three privileges compared to other customers on FTX. Alameda was allowed to trade with more funds than it actually owned in its account. As Wang previously testified, Alameda could withdraw unlimited funds from FTX.

Furthermore, the credit limit of Alameda was increased to $65.3 billion. This feature was later utilized to extract fiat and cryptocurrency worth $8 billion, exceeding the amount held by the trading company in its account - roughly the same shortfall faced by FTX when it failed to meet customer withdrawal requests in November last year. Wang clarified that the additional funds came from FTX customers who did not explicitly choose to lend their funds.

Related reading: "SBF Trial Week One: FTX Co-Founder Testifies, Revealing Alameda's Insider Trading with FTX".

Gary Wang in front of the court, source: Bloomberg

During the second week of the trial, Caroline contributed a lot of testimony: "Despite publicly distancing herself from Alameda and claiming she did not manage the company, SBF instructed her on how to handle the FTT tokens held by Alameda and its venture capital, as well as other important business decisions, instructing Alameda to borrow as much as possible. This is something he often talks about. SBF once said he wanted to buy more (FTT)... because he didn't want any of our loans to be at risk, and putting FTT tokens on the balance sheet could be misleading."

Related reading: "What did SBF's ex-girlfriend reveal in court?"

In her testimony, Caroline also mentioned Trabucco. The US Assistant Prosecutor asked Caroline, "How did the defendant respond when Binance said they would buy back? Who participated in the discussion and where?" "Otherwise, Binance will get into trouble," Caroline said, "At the Hong Kong office at the time, SBF, Trabucco, and I participated in the discussion. Trabucco was still the co-CEO of Alameda at the time."

Will the next witness after Caroline be Trabucco, who has not spoken for almost a year? Many people are looking forward to it. But it is almost predictable that Trabucco's testimony will also point to SBF. Unlike the outcome of SBF and Gary Wang, Trabucco left before FTX went bankrupt and is considered by many to eventually gain freedom.

Thirteen years ago, three brilliant teenage boys who participated in the high school elite math camp with great enthusiasm, perhaps could not have predicted the outcome they would face today.

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