At that time, everyone loved him. But in retrospect, if you look a little closer, the signs that something was wrong were always there
As Sam Bankman-Fried himself has admitted, six years ago he didn't know much about cryptocurrencies. But he understood that this market represented a great opportunity. And so, almost overnight, he found himself with a $23 billion fortune. Only Mark Zuckerberg had managed to become so rich at such a young age.
But as it turned out, the “king” of crypto was naked. Now 31, Bankman-Fried has just been found guilty of seven counts of fraud and conspiracy involving his companies, FTX and Alameda Research.
Sam Bankman-Fried was photographed next to famous stars, financed – with stolen money, as it turned out – politicians, enjoyed a luxurious lifestyle, made his friends rich and was described as the “next Warren Buffett”, with the largest international publications making every his statement big news.
At that time, everyone loved him. But in retrospect, if you look a little more closely, the signs that something was wrong were always there.
“I am, and have been for most of my adult life, sad,” read the speech Bankman-Fried had prepared to deliver to the US Congress, before his arrest changed his plans.
< p>Indeed, in photos from the height of his success, Bankman-Fried always looked uncomfortable, like he was embarrassed, like he'd rather be playing video games, even with Gisele Bundchen standing by his side, notes New York Times. Everyone insisted he was a genius, the entrepreneur who would create the future. Maybe inside, he knew the truth.
As the trial made clear, FTX and Alameda were run by a group of unrelated young people who lacked the requisite knowledge, maturity or patience. Those who had some morals and sensed that something was wrong soon left, leaving behind a core group that sank deeper into trouble.
“When I started working at Alameda, I don't think I would have believed you if you told me I would send false statements to our banks or steal clients' money, but over time, those were things I felt comfortable doing,” he testified. Caroline Ellison, Bankman-Fried's colleague and sometime partner, is on trial.
When Ellison started working for Alameda, it was a time when people started to believe that blockchain would change everything – somehow. Silicon Valley was pouring billions into crypto and rushing to invest in people like Bankman-Fried, early entrants who seemed to understand what few understood.
Sequoia Capital, a leading venture capital firm that has invested in companies like Apple, Airbnb, Instagram and WhatsApp, she was practically begging Bankman-Fried to take her money.
And when the FTX founder did, Sequoia threw a party for Bankman -Fried hosted by Adam Fisher, a Silicon Valley writer who soon became a fan of S.B.F., as he was then called.
“After my interview with S.B.F., I was convinced: I was talking to a future trillionaire,” Fisher wrote. “FTX's Competitive Advantage? Ethical behavior”.
But FTX collapsed less than two months after the interview was published. Sequoia wrote off the $214 million it had invested.
How did Sam Bankman-Fried manage to fool everyone? Like any self-respecting Silicon Valley entrepreneur, he promised to make the world a better place.
As he said, he had thought that he could help humanity. His plan? To get incredibly rich very quickly and then give away all those billions, according to the principles of “effective altruism”. The details didn't matter. “He's a crusader, dedicated to making as much money as possible (he doesn't care how), just to give it away (he doesn't really know to whom or when),” Forbes wrote about him in 2021.
During the trial, it emerged that Bankman-Fried had spent $15 million to travel on private jets while living with his friends from FTX in a $35 million penthouse. Not very altruistic.
However, he himself tried to warn the world. “There are more Ponzi scams, per capita, in crypto than anywhere else,” he told the Financial Times in May 2022.
But no one was listening. Investors, clients and journalists believed they were seeing this genius everyone was talking about. How could it be anything else, after all. His parents were law professors at Stanford.
“If there's one place I won't mess with, it's going to be FTX,” said Shark Tank star Kevin O'Leary.
But as it turned out in the trial, these law professors were also “dazzled” by their son's wealth. Sam had gifted them a $16 million house, $10 million in cash and more.