Sam Bankman-Fried and his Co-conspirators stole $16.4 million from FTX and Alameda Research: A Close-Knit Community
As disgraced FTX founder Sam Bankman-Fried gears up for the start of his trial on Tuesday, two people close to him are now facing legal trouble of their own: his parents.
For almost a year, Bankman-Fried’s mom and dad, both of whom are well-respected professors at Stanford Law School, have accompanied their son to pretrial proceedings at a courthouse in Manhattan.
In The Bahamas, the company allegedly bought them a $16.4 million house. After Bankman expressed dissatisfaction with his $200,000 FTX salary, his son wired a $10 million cash gift to his parents, which FTX lawyers say came from Alameda Research, a crypto hedge fund Bankman-Fried founded.
The civil suit against Sam Bankman-Fried’s parents alleges they helped run their son’s crypto empire, and that for their work — some official, some unofficial — they were handsomely rewarded.
“Bankman-Fried and his co-conspirators stole billions of dollars from FTX customers,” Williams explained to reporters, shortly after Bankman-Fried was arrested last December. “He used that money for his personal benefit, including to make personal investments, and to cover expenses and debts of his hedge fund, Alameda Research.”
Having spent more than three decades on the Stanford faculty, Bankman and Fried have become institutions in their own right — important figures and beloved members of a close-knit community. They have won a lot of awards and are close friends with many of their colleagues.
In an email, Robert Gordon, who has known the couple since the 1980s, said, “Anyone who knows Barbara Fried and Joe Bankman well will believe it absurd to think that they were engaged in self-dealing — since for many years they have given generously of their time and money to good causes.”
He is a practicing therapist and has a doctorate in psychology. He continues to have an affiliation with a practice called the Pacific Anxiety Group in Northern California, which says Bankman specializes “in the treatment of anxiety, depression, and adjustments in both teens and adults.”
In 2015, he said he didn’t intend to quit his day job. “But my scholarship and policy were venturing into behavioral psychology and the law, and I wanted to understand more about human behavior.”
A Conversation with Michaele Bankman on Planet Money and Why We Think Criminals Are Either Left or Right – An Interview with Henrico Bankman
Bankman was a guest on NPR’s Planet Money in 2017, and he came across as quick-witted and incredibly passionate about tax reform. Bankman had a joke about his clothes. He said his pants were damaged and his cuffs were damaged.
He told the law school graduates in 2008 that he loves explaining things. “I love taking something opaque and make it seem a little less opaque.”
She was an undergrad and graduate student at Harvard University in the 1970s and 1980s, when influential philosophers John Rawls and Robert Nozick were on the faculty, and throughout her career, Fried has grappled with their ideas about free will.
In her writings, she has mentioned how society treats criminals. She argued that everybody is ultimately compromised in the article “Beyond Blame”.
Fried wrote in the Boston Review “The truth is that we are all at best compromised agents, regardless of biology, social circumstance or brute luck.” “Tellingly, the more information people have about the context of the crime, the person who committed it, and the circumstances he or she came from, the more nuanced are their views of moral responsibility.”
“One unanticipated joy of writing fiction has been the opportunity it has offered me to escape from myself, and reimagine the world through the lives and eyes of others,” she notes on her personal website.
Politics became another passion project, and in recent years, she co-founded a nonprofit organization called Mind the Gap, which was described in a Vox article as “a secretive group led by Stanford University academics” that “has unleashed millions of dollars in political spending from Silicon Valley.”
Sam Bankman-Fried, a Stanford University professor, was born and raised in the Bahamas, but became a professor when he retired
Not long ago, Sam Bankman-Fried was described as “crypto’s golden boy.” The founder of FTX has been the poster boy for everything wrong with cryptocurrencies, and he faces the prospect of spending the rest of his life in prison.
Ahead of the 2022 midterm elections, Bankman-Fried personally donated around $40 million to political candidates, committees, campaigns and causes, which made him one of the most powerful donors in the United States.
Bankman-Fried was accused of violating campaign finance laws by using straw donors to make political contributions.
Joseph Bankman and Barbara Fried live in what has been widely described as a modest house on the Stanford University campus, but their lives changed as FTX grew, along with their son’s wealth, according to FTX’s lawyers.
Bankman wrote his son in an e-mail message that was quoted in the lawsuit, that they were so touched by the gift. “Mom is announcing retirement, which she would not have done otherwise.”
FTX allegedly paid for the decoration and upkeep of the home in The Bahamas and according to the lawsuit, Bankman allegedly flew on privately-chartered jets, “expensed $1,200 per night hotel stays to the FTX Group, and even appeared in a Super Bowl commercial with Seinfeld writer Larry David months before the FTX Group imploded.”
Bankman and Fried have kept a low profile since the arrest of their son. Fried stepped away from teaching to become an emerita at the law school. Bankman is on leave. Both of them are on the faculty, according to a statement from a person at the school.
Bankman’s former law school friend, Michael Klausner, is now a colleague atStanford and often sees Bankman on campus. Despite what happened over the last year, they still have friends over for dinner.
He said he hoped Sam gets a fair hearing and that the case had been a topic of conversation among him and his colleagues. Many of us don’t like the way the case has been handled.
Fried told The New Yorker, the only media outlet to whom she has spoken since Bankman-Fried’s arrest that “saving Sam is the major project of our lives.”
If a jury finds Bankman-Fried guilty, Judge Lewis Kaplan has discretion over sentencing. He could decide to allow Bankman-Fried to serve a concurrent sentence.
Going Infinite: The Rise and Fall of a New Tycoon, Attorney Michael Lewis, and Sam Bankman-Fried
During FTX’s heyday, the trial showed a hard fall from grace for a tycoon who had befriended several celebrities including Bill Clinton and Gisele Bndchen.
Everything fell apart after reporters and one of Bankman-Fried’s rivals questioned FTX’s business practices. Billions of dollars have gone missing and Damian Williams is the U.S. attorney for the Southern District of New York.
Two financial regulators, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, have brought parallel suits against Bankman-Fried, alleging similar misconduct.
Bankman-Fried violated the terms of his bail and Kaplan sent the former FTX CEO there. He contacted a former colleague using an app that was not endorsed by the court, used a virtual private network without the approval of the court, and gave a reporter private writings by Bankman- Fried’s ex-girlfriend.
Author Michael Lewis shadowed Bankman-Fried for more than a year, for a book called “Going Infinite: The Rise and Fall of a New Tycoon” that hits store shelves on Tuesday.
In an interview with “60 Minutes,” Lewis said he thinks the disgraced crypto mogul “may go mad” if he loses access to the Internet for a long stretch of time.
“If you gave Sam a choice of living in a $39 million penthouse without the internet, or the Metropolitan Detention Center in Brooklyn with the internet, he’d be in jail,” Lewis said.
According to Tarek Helou, a lawyer in private practice who spent more than a decade at the Department of Justice, there is a mantra among federal prosecutors: “Thin to win.”
Source: FTX founder Sam Bankman-Fried’s trial is about to start. Here’s what you need to know
FTX, a New Crypto Company: A Case of Fraud and Corrupt Practices in the New World of Cryptocurrencies
This case is novel because it involves a company that did business in the new world of crypto. The prosecutors will want to make it clear that this is a financial fraud case.
Helou thinks that the Justice Department won’t say what it is about, but that it isn’t about cryptocurrencies. “They’re going to simplify it, and say that it’s just a case about lying and stealing.”
“I didn’t ever try to commit fraud on anyone,” Bankman-Fried told The New York Times days before he was arrested. “Clearly, I made a lot of mistakes that are things I would give anything to be able to do over again.”
FTX was headquartered in The Bahamas, where employees and executives, many of whom were in their 20s, lived together in a $30 million penthouse as they ran a sprawling business.
She pleaded guilty to several fraud counts shortly after Bankman-Fried was arrested last December, and three other executives have also pleaded guilty: Nishad Singh, Gary Wang, and Ryan Salame.
In a recent court filing, prosecutors stated that they would put FTX customers on the stand.
He used the name X on Substack and started a newsletter. Bankman-Fried invited reporters to visit him at his parents’ house when he was placed initially after posting bail, and they had over 1,000 phone calls with them.
It is unusual for a person facing serious charges to talk openly about his case, and that was the reason why the judge revoked Bankman-Fried’s bail in August.
Kaplan has presided over a number of high-profile trials during his time as a judge.
