Who’s Sam Bankman-Fried, the onetime crypto mogul dealing with many years in jail? By Reuters


By Luc Cohen

NEW YORK (Reuters) – A number of years after graduating from faculty, Sam Bankman-Fried grew nervous he was not taking sufficient dangers. 

So the son of two Stanford Legislation College professors give up his Wall Road job and in 2017 began a cryptocurrency hedge fund, setting off a sequence of occasions that can culminate on Thursday together with his sentencing over what federal prosecutors have known as one of many largest monetary frauds in U.S. historical past.

Prosecutors are searching for 40 to 50 years behind bars for 32-year-old Bankman-Fried, whereas his protection attorneys have argued he ought to obtain lower than 5-1/4 years. 

Two years after launching a hedge fund, Alameda Analysis, Bankman-Fried based FTX in 2019, an alternate that permit customers purchase and promote digital belongings comparable to bitcoin. Cryptocurrency valuations surged, propelling Bankman-Fried to a internet value of $26 billion by October 2021, based on Forbes journal, earlier than he turned 30 – the twenty fifth richest particular person in America. 

He parlayed that wealth into political clout, changing into one of many largest donors to Democratic candidates and causes forward of the 2022 U.S. midterm elections. Based mostly in an costly Bahamas resort group, Bankman-Fried grew to become identified for his mop of unkempt curly hair and for carrying rumpled shorts, even when entertaining dignitaries together with Invoice Clinton.

In a cryptocurrency sector stricken by hacks and cash laundering, Bankman-Fried employed celebrities together with NFL quarterback Tom Brady and comic Larry David to function in commercials portraying FTX as protected. He publicly backed efforts to control crypto.

However prosecutors say his laid-back demeanor and cultivation of a accountable picture hid his years-long embezzlement of buyer funds. They contend the theft got here to a head in 2022, when crypto costs swooned and he used FTX funds to plug losses at Alameda.

A jury discovered him responsible on seven counts of fraud and conspiracy on Nov. 2, following a monthlong trial in Manhattan federal court docket.

Three former members of his inside circle, who pleaded responsible and agreed to cooperate with prosecutors, testified towards him and painted an unflattering portrait of his character, detailing cases wherein he snapped angrily at colleagues and advised his quirky persona was principally an act.

“He understood the principles, however determined they didn’t apply to him,” prosecutors wrote of their March 15 sentencing memorandum. “He knew what society deemed unlawful and unethical, however disregarded that based mostly on a pernicious megalomania guided by the defendant’s personal values and sense of superiority.”

Bankman-Fried pleaded not responsible and has vowed to enchantment his conviction and sentence. Testifying in his personal protection at trial, the Massachusetts Institute of Expertise graduate acknowledged insufficient danger administration, however denied stealing funds. 

He stated he made errors, comparable to not implementing a danger administration crew, that harmed FTX clients and staff. However he stated he by no means meant to defraud anybody or steal clients’ cash. 

“We thought that we’d be capable to construct the very best product in the marketplace,” Bankman-Fried testified on Oct. 27. “It turned out mainly the other of that.”

SOUGHT TO AVOID ‘COMFORTABLE’ PATH

Bankman-Fried had little crypto expertise earlier than founding Alameda, which initially made cash by exploiting variations in costs in digital tokens between the USA and Asia. A physics main at MIT, he advised an FTX podcast that he didn’t apply himself in lessons and didn’t know what to do together with his life for many of faculty.

However he grew throughout these years in a motion often known as efficient altruism, which inspires gifted younger individuals seeking to make a mark on the world to give attention to incomes cash and giving it away to worthy causes. That led him to take a job as a quantitative dealer at Jane Road, however he started to doubt whether or not he was incomes all he might.

“If I actually suppose that I ought to be making an attempt to maximise anticipated values, that in all probability implies considerably riskier methods than what appears intuitively proper,” he stated within the June 4, 2020, podcast. “I ought to be cautious to not fall prey to making an attempt to decide on a cushty path.”

He introduced on Gary Wang, an previous good friend from math camp, and later Caroline Ellison, a fellow efficient altruist from Jane Road and Bankman-Fried’s ex-girlfriend. Each would be a part of him within the Bahamas, the place they shared a $30 million penthouse with different Alameda and FTX executives, together with Nishad Singh.

Wang, Ellison and Singh every pleaded responsible and testified towards Bankman-Fried at trial. They haven’t but been sentenced.

Bankman-Fried was jailed in mid-August, after U.S. District Choose Lewis Kaplan revoked his bail for doubtless making an attempt to tamper with witnesses at the very least twice – together with by sharing Ellison’s personal writings with a New York Occasions reporter. 

In a letter to Kaplan, Bankman-Fried’s psychiatrist George Lerner wrote that his affected person is on the autism spectrum. Bankman-Fried’s father, the legislation professor Joseph Bankman, wrote that his son lengthy struggled with making eye contact and responding to social cues, however that the media didn’t care whereas FTX was thriving.

“As soon as the corporate crashed and his wealth was gone, individuals grew to become much less forgiving, and have interpreted these similar traits … as an indication of disrespect, evasion or mendacity,” Bankman wrote. 





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