The mysteriously disappeared former Alameda CEO, SBF's high school close friend Trabucco, may have always been an important informant in the FTX case

Author: Jaleel, BlockBeats

The 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, bringing together three key witnesses once again.

As the co-founder of FTX and SBF's right-hand man, Gary Wang has earned SBF's trust, but to this day he has clearly stated in court that he hopes to avoid prison by pleading guilty and cooperating with the investigation, even though federal prosecutors have made no guarantees to him. In addition to Gary Wang, another key figure in the FTX case and pending witness is former co-CEO of Alameda Research, Trabucco, who cleverly avoided this "disaster" by leaving three months before FTX's collapse.

As the trial progresses, the former friendship among these three has vanished. Their testimonies will be crucial in determining SBF's fate.

Gary Wang, as a witness, was the first to provide full-day testimony. During the trial, Gary Wang's testimony drew close attention from SBF, who often kept his head down and remained silent, exhibiting unnatural body language.

"SBF allowed Alameda to withdraw funds without limit; as early as 2019, the capability for Alameda to steal customer funds was embedded in the FTX system; the balance of the insurance fund disclosed by FTX was generated by a random number generator…" Each piece of information revealed by Gary Wang hit like a deep-water bomb.

Upon learning that both Gary Wang and Trabucco were on the witness stand, SBF rubbed his eyes, recalling their first meeting thirteen years ago at a high school math camp.

Three Genius Teens Meet at a High School Elite Math Camp

In 2010, a five-week math summer camp was held at Mount Holyoke College, where MIT was training for math competitions that later helped the three enter MIT's math program in 2011, one of the most prestigious math programs in the world.

The three math prodigies—SBF, Gary Wang, and Trabucco—met here for the first time.

Not only SBF, but Trabucco also often reminisces about this cherished youth time. In a 2020 interview, Trabucco recalled that math competitions helped build the quick thinking he needed as a trader, while his close friend SBF hardly slept during the math camp.

This diligent quality persisted throughout their entrepreneurial journey at FTX. We all know that during the startup phase, SBF only slept four hours a day, and staying overnight at the office was "common."

SBF in the Alameda office, image source from the internet

Reuniting at MIT, Their Relationship Grows Closer

Due to their success in the math camp and competitions, all three smoothly entered MIT. Trabucco studied mathematics and computer science, where he learned about Bitcoin and showcased his leadership skills by serving as the president of the undergraduate math association.

SBF pursued a bachelor's degree in physics with a minor in mathematics. Besides focusing on his studies, SBF also participated in various student organizations, joining a fraternity called "Epsilon Theta," which had about 20 members and frequently held parties at the university, such as drinking, solving puzzles, and playing board games.

During his time at MIT, SBF became roommates with Gary Wang and reestablished contact with Trabucco, further strengthening their bond.

Gary Wang (third from left), SBF (third from right), image source: Bloomberg

In 2013, after graduating from MIT, Trabucco worked for two years at the quantitative trading firm Susquehanna International Group, LLP, handling bond exchange-traded funds. After obtaining his degree in mathematics and computer science, Gary Wang briefly worked at Google. SBF worked at Bankman-Fried's proprietary trading firm Jane Street Capital, trading international ETFs. After four years there, SBF transitioned to the Centre for Effective Altruism (CEA) as the development director.

Six Years Later, Returning Due to Alameda and FTX

In November 2017, with funding from Jaan Tallinn and philanthropist Luke Ding, SBF co-founded the quantitative trading firm Alameda Research with Tara Mac Aulay from CEA. At that time, Alameda was trading billions of dollars daily in the cryptocurrency market.

Also in that year, Trabucco left Susquehanna and began trading cryptocurrencies, reconnecting with SBF, who had founded Alameda in San Francisco. By early 2018, SBF had established his trading strategy, arbitraging the price difference of Bitcoin between Japan and the U.S., earning up to $25 million a day. After attending a cryptocurrency conference in Macau at the end of 2018, SBF moved to Hong Kong and founded the cryptocurrency derivatives trading platform FTX in April 2019.

By 2019, the three math prodigies had already transformed. Gary Wang held the title of co-founder and CTO of FTX, while Trabucco joined Alameda as a trader. Six years after graduating from MIT, they reunited due to the birth of Alameda and FTX.

It is well known that Caroline is the CEO of Alameda and has a close relationship with SBF. In an interview with Forbes, Caroline stated that she witnessed the friendship among the three: "I saw SBF's close friends Nishad Singh, Gary Wang, and Sam Trabucco, who joined shortly after. They all held executive positions with SBF and shared a common interest in effective altruism."

While working at FTX, Gary Wang maintained a very low profile. Four former colleagues, who wished to remain anonymous, admitted that Gary Wang was a taciturn person obsessed with programming. A source familiar with Alameda and FTX's operations stated, "From an employee's perspective, Gary was always very distant; he usually didn't appear in the office. He preferred to work from home and was almost the only one allowed to do so. Others always had to stay in the office, but Gary was the exception."

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

In contrast to Gary Wang's low profile, multiple reports indicate that Trabucco, a quantitative analyst with a background in risk assessment, is a passionate poker enthusiast and gambler in private. He publicly boasted that he was banned from three casinos for counting cards at blackjack tables. Trabucco also stated on social media in January 2021 that he applied poker and casino strategies in trading: "Doing it well is a poker term that refers to when your odds are best… you want to bet more."

This indeed aligns with his trading style at Alameda. As a quantitative trader, Trabucco implemented high-risk cryptocurrency trading at Alameda.

Additionally, Trabucco is a crossword puzzle constructor 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 crossword constructors for The New York Times.

Sam Trabucco on social media, image source from the internet

A former employee stated that Trabucco is a conservative person in private but very dedicated while working at Alameda. However, he showed great enthusiasm for trading, data, and strategy games.

Trabucco's interests and work style share many similarities with SBF, the founder of FTX. Both adhere to a high-risk trading philosophy and are fond of various intellectual games, which seems to have laid the foundation for their collaborative relationship. In October 2021, Trabucco was appointed co-CEO of Alameda, leading the company alongside Caroline. "For us, it's good to have two people who can take ultimate responsibility for things," Caroline once said.

In 2020, Trabucco purchased a four-bedroom house in Wells, Maine, for $500,000, reportedly where his parents now reside. The following year, he bought a luxurious 3,800-square-foot apartment in San Francisco for nearly $9 million, which offers views of the Golden Gate Bridge.

Parting Ways at a Crucial Crossroad

However, the good times didn't last long. Shortly after their reunion, on August 25, 2022, Trabucco posted a long farewell tweet titled "happiness" on social media, bidding goodbye to Alameda.

"Last year, when SBF announced that Caroline and I would serve as co-CEOs of Alameda, our goal was to make the title reflect reality—it's been a while since we both held the CEO title, and we wanted our external image to reflect that we achieved it." He stated that he had reached a stage in life where he needed to prioritize other matters and could no longer maintain a strong daily presence at Alameda. Caroline would continue as the sole CEO, while he would remain as an advisor.

"Alameda was the most formative time of my life"

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

My time at Alameda was the most formative time of my life. I learned how to think, discovered how far I could push myself, and had the incredible experience of being in the trenches with lifelong friends, and we often won. I will miss all of this—I really will."

Choosing to leave after ten months as co-CEO of Alameda, Trabucco felt happy despite the reluctance: "Recently, I've really been happy, spending a lot of time traveling, visiting friends and family, and exploring myself, etc. I even bought a boat, which is cool. I need to relax, and I'm really, really happy."

FTX bankruptcy filing document, image source from the internet

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

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

Driving the yacht named "Soak My Deck," Trabucco began his maritime journey in the following months.

We all know what happened in November 2022, when news broke of FTX customer funds being misappropriated to Alameda Research, leading to a severe liquidity crisis at FTX.

In just three days, the market value of the assets held by Alameda Research plummeted, leaving a significant funding gap. Meanwhile, FTX experienced a bank run. CZ sold his holdings of FTT tokens (which Alameda held in large quantities), leading to daily customer withdrawals of about $4 billion over the following days.

"That bigger yacht sank"

On November 12, FTX filed for bankruptcy, and that larger yacht sank, causing a massive shock to the cryptocurrency market, which still feels the impact and shadow of the FTX collapse today.

SBF described the events based on his memory, stating that he was not managing Alameda and did not fully understand the key events: "I founded Alameda Research in 2017, a private cryptocurrency trading company. In 2019, I founded FTX International, a cryptocurrency trading platform serving non-U.S. customers. At that time, I began transitioning from my role at Alameda Research to FTX. I founded FTX.US in 2020, a cryptocurrency trading platform that indeed accepts U.S. users.

When recounting the events of 2021-2022, I relied on memory and inference, as I was not fully aware of many key events when they occurred, and I cannot access relevant data now to confirm or deny my current speculations. In particular, I have not been managing Alameda Research over the past year.

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

This put immense pressure on FTX and forced the exchange to require margin calls from customers holding positions. Alameda Research could not provide sufficient liquid assets for its margin calls, leading to defaults on FTX International, which in turn could not meet customer withdrawal requests."

SBF being 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 interviews for disappearing from the media after the incident, stating he could have done more. He repeatedly emphasized his remorse, stating, "I messed up," indicating his desire to "actively resolve customer issues." SBF, who has always claimed to be a follower of "effective altruism," stated that he is still trying to do things beneficial for the future of the world and feels deep regret for messing things up.

The Man Who Exited Before FTX's Bankruptcy

Trabucco's timing of departure was quite clever, leaving just over two months before SBF's crypto empire filed for bankruptcy and lost $8 billion in customer funds, fortunate enough to be the man who exited before FTX's collapse.

In contrast, Caroline, the other co-CEO who remained at Alameda, was not so lucky, facing fierce criticism from many cryptocurrency supporters who blamed her as the culprit behind Alameda's downfall. However, amidst the sharp criticism, there were also those who defended her.

One of Caroline's supporters stated that many who defended her gathered on the peer-to-peer platform Urbit, created by computer scientist Curtis Yarvin, believing Caroline was a scapegoat and claiming that former Trabucco was the real mastermind behind Alameda's internal collapse.

According to researcher Niklas Polk from Nansen, "The potential loans FTX provided to rescue Alameda were likely a response to Alameda suffering significant losses and/or severe liquidity shortages at that time." "Our data points suggest that such loans may have occurred as early as June when 3AC collapsed, about two months before Trabucco resigned," Niklas Polk added.

A meme suggests Sam Trabucco was "watching from the sidelines" during the FTX case, image source from the internet

Trabucco did not respond to requests for comment on this matter. Amidst the chaos at FTX, Trabucco tweeted two related posts:

On November 6, Trabucco retweeted Caroline's tweet with his own words: "CZ, if you want to minimize the market impact of your FTT sales, Alameda would be happy to buy everything from you at $22 today!" Two days later, on November 8, Trabucco tweeted: "Much 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 vanished from public view, both online and in reality.

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

Community members have been searching for his whereabouts on social media, frequently asking "Where is Trabucco?" and even offering rewards.

Rainbow Runner (@RRunner144) stated: "Friendly reminder, Trabucco can still walk and sail freely on the yacht you paid for through the FTX Ponzi scheme. Anyone who can find a 53-foot Suenos with hull number VHS53 A3 JK122 will earn reward points. I indirectly paid for that boat and would love to know where it is."

However, some pointed out that Trabucco has not been named in any official indictment, nor has he been accused of any wrongdoing, perhaps indicating that he has already cooperated with the FBI and is likely living as a free man.

Crypto KOL IamNomad (@IamNomad) stated on social media: "Trabucco is a whistleblower, protected by U.S. authorities. Prove me wrong."

Recently, a post on Reddit also inquired about Trabucco's whereabouts, with many comments expressing similar views.

A user named "btc_clueless" said: "I thought he was the first to testify against SBF. His shoes have the least dirt: he left FTX before the shit hit the fan and was never part of the core circle. He must know that Alameda had unlimited credit on FTX. Or maybe he didn't know the extent of the events because Alameda had good liquidity before Luna collapsed and didn't need to dig deep into FTX user funds? There are many unknowns."

A user named "DrinkYourWater69" also speculated: "He might be on some inconspicuous island. I bet he flipped early and told the FBI everything he knew to protect himself and gain a lot of benefits."

But whether "He knew EVERYTHING but was willing to walk away" or he had already cooperated with the FBI, this crossword enthusiast with a knack for strategy clearly possesses the ability to think several steps ahead, making him the smartest person in the room of FTX and Alameda. Some community members pointed out that the yacht's name "Soak My Deck" hints that this crossword enthusiast was already aware of the issues with FTX and Alameda.

"If I were to say what I learned at Alameda, it would be how to make the right decisions, which is right for me." When leaving Alameda, Trabucco once said. In this SBF trial, Trabucco is on the witness stand but has yet to appear.

After the Courtroom Showdown, Each Will Face Their Own Downfall

On October 3, local time, SBF appeared in court for trial, 9 months and 20 days after his arrest. Prosecutors charged him with deliberately deceiving customers and business partners, with thousands of pages of evidence including internal documents and recordings.

In the first week of the SBF trial, Gary Wang played the most important witness role, providing substantial testimony. Gary Wang, who pleaded guilty in December 2022, admitted to charges of wire fraud, commodities fraud, and securities fraud, potentially facing up to 50 years in prison. He can only hope to avoid prison by cooperating with the investigation in court, even though federal prosecutors have made no guarantees to him.

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

Additionally, Alameda's credit limit was increased to $65.3 billion. This functionality was later exploited to withdraw $8 billion worth of fiat and cryptocurrency, exceeding the amount the trading firm held in its accounts—roughly the same gap FTX faced when it failed to meet customer withdrawal requests last November. Wang clarified that the additional funds came from FTX customers who had not explicitly chosen to lend their funds.

Gary Wang in front of the court, image source: Bloomberg

In the second week of the trial, Caroline also contributed substantial testimony: "Although SBF publicly distanced himself from Alameda and claimed he did not manage the company, SBF guided her on how to handle the FTT tokens held by Alameda and its venture capital investments, as well as other important business decisions, instructing Alameda to borrow as much money as possible. This was something he often talked 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."

In her testimony, Caroline inevitably mentioned Trabucco. The U.S. assistant prosecutor asked Caroline, "When Binance said they wanted to buy back, how did the defendant respond? Who was involved in this discussion, and where?" "Otherwise, Binance would cause trouble," Caroline said: "At that time, in the Hong Kong office, I, SBF, and Trabucco participated in the discussion. Trabucco was still the co-CEO of Alameda at that time."

Many are eager to see if Trabucco, who has not spoken publicly for nearly a year, will be the next witness after Caroline. However, it is almost certain that Trabucco's testimony will also point to SBF. Unlike SBF and Gary Wang's outcomes, Trabucco, who left before FTX's bankruptcy, is believed by many to ultimately gain his freedom.

Thirteen years ago, the three genius teens who participated in the elite high school math camp could hardly have anticipated that they would end up in such a situation.