Sam Bankman Fried is the CEO of the FTX exchange, which was crashing towards the end of 2022. Also known as the acronym SBF, the American entrepreneur faces up to 115 years in prison if found guilty of all eight crimes.
Who is SBF?
Sam Bankman Fried, with his full name Samuel Benjamin Bankman-Fried or abbreviated SBF, was born on March 5, 1992. He is an American entrepreneur, investor, and so-called swindler. Bankman-Fried was the founder and CEO of cryptocurrency exchange FTX and associated trading firm Alameda Research, both of which suffered a high-profile collapse in late 2022 that resulted in chapter 11 bankruptcy.
Prior to the collapse of FTX, Bankman-Fried was named the 41st richest American on the Forbes 400 and the 60th richest person in the world by the World’s Billionaires. His wealth peaked at $26 billion in net worth. By November 11, 2022, in the midst of FTX’s bankruptcy, the Bloomberg Billionaires Index thought his net worth had dropped to zero. Before his fortune flew away, Bankman-Fried was a major donor of US political campaigns, donating openly to Democratic candidates and secretly to Republicans, in addition to claiming to spend nearly $1 billion in the 2024 US presidential election.
On December 12, 2022, SBF was arrested in the Bahamas and subsequently extradited to the United States. An indictment against him before the U.S. District Court for the Southern District of New York was filed Dec. 13, uncovering eight charges including wire fraud, commodity fraud, securities fraud, money laundering and campaign finance law violations; Bankman-Fried faces up to 115 years in prison if found guilty of all eight crimes. In February 2023, 4 additional fees were announced. He was released on 22 December on a $250 million bail, provided his family resided in his California home.
Sam Bankman Fried Life
Bankman-Fried was born on March 5, 1992 on the campus of Stanford University to a Jewish family. He is the son of Barbara Fried, a professor at Stanford Law School, and Joseph Bankman. His aunt, Linda P. Fried, is dean of Columbia University’s Postman School of Public Health. Her brother, Gabriel Bankman-Fried, is a former Wall Street trader and former director of the nonprofit Pandemic Protection and associated organization.
SBF participated in Canada/USA Mathcamp, a summer program for high school students gifted in mathematics. He attended high school at Crystal Springs Uplands School in Hillsborough, California. She graduated from the Massachusetts Institute of Technology in 2014 with a bachelor’s degree in physics and a minor in mathematics. As an MIT student, she lived in a mixed group house called Epsilon Theta.
In the summer of 2013, Bankman-Fried worked as an intern at Jane Street Capital, a proprietary trading firm that trades international ETFs. After graduating from MIT, she returned to work there full-time.
In September 2017, she left Jane Street and moved to Berkeley, where she briefly worked as director of development at the Center for Effect Altruism from October to November 2017. She founded Alameda in November 2017. As of 2021, Bankman-Fried owned approximately 90 percent of Alameda Research. In January 2018, he held an arbitrage trade that went up to $25 million per day to take advantage of the higher Bitcoin price in Japan compared to the US. He moved to Hong Kong in late 2018 after attending a cryptocurrency conference in Macau.
SBF founded FTX, a cryptocurrency derivatives exchange, in April 2019; opened for business the following month. On December 8, 2021, he, along with other industry executives, testified before the Financial Services Committee on regulating the cryptocurrency industry. On May 12, 2022, it was announced that Emergent Fidelity Technologies Ltd., majority owned by Bankman-Fried, acquired 7.6 percent of Robinhood Markets shares. In a statement before the Eastern Caribbean Supreme Court in November 2022, prior to his arrest, Bankman-Fried received $546 million from Alameda Research to fund the acquisition of Emergent Fidelity Technologies’ Robinhood Markets stake by him and FTX co-founder Gary Wang. He said he borrowed money on it.
In September 2022, SBF’s advisors reportedly made proposals on his behalf to fund Elon Musk’s acquisition of Twitter. Investment banker Michael Grimes wrote that Bankman-Fried would be willing to commit up to $5 billion, according to messages posted as part of the lawsuit filed between Twitter and Musk during Twitter’s acquisition of Twitter on April 25, 2022. No investment actually materialized when Musk completed the purchase. Bankman-Fried has invested more than $500 million in venture capital firms, including $200 million in Sequoia Capital, which is itself an FTX investor. Sequoia posted a “shining” profile of Bankman-Fried and later on lifted after the solvency crisis.
Bankruptcy of FTX
In November 2022, Binance CEO Changpeng Zhao announced on Twitter that his firm plans to sell FTT, the token of FTX. Binance received $529 million worth of FTT as part of its stake sale in FTX in 2021. Zhao posted his tweet shortly after a report from CoinDesk stating that Bankman-Fried’s trading company, Alameda, owns a large portion of its assets. Bloomberg and TechCrunch reported that any sale by Binance will likely have a huge impact on FTT’s price due to the token’s low trading volume. Zhao’s pending sale announcement and disagreements between Zhao and Bankman-Fried caused the prices of FTT and other cryptocurrencies to plummet. Recently, Zhao had criticized Bankman-Fried’s lobbying efforts.
On November 8, Zhao announced that Binance has signed a non-binding agreement to acquire FTX due to the liquidity crisis in FTX. Zhao stated that Binance will complete its due diligence soon and that all crypto exchanges should avoid using tokens as collateral. He also wrote that he expects FTT to be “quite volatile in the coming days as things develop.” On the day of the announcement, FTT lost 80 percent of its value. On November 9, The Wall Street Journal reported that Binance has decided not to buy FTX. Binance cited reports of FTX mishandling of client funds and FTX’s pending investigations as reasons the firm did not follow through on the deal. In the midst of the crisis, Bankman-Fried was no longer a billionaire, according to the Bloomberg Billionaires Index. The very next day, Bloomberg reported that the Securities and Exchange Commission and the Commodity Futures Trading Commission were investigating the nature of FTX and its links to other assets of Bankman-Fried.
On November 11, 2022, FTX, Alameda Research, and more than 130 related entities declared bankruptcy.
Anonymous sources quoted by Reuters stated that, in early 2022, SBF transferred at least $4 billion from FTX to Alameda Research without any explanation to insiders or the public. Sources said the money transferred included client funds and was ostensibly backed by shares of FTT and Robinhood. An anonymous source quoted by the Wall Street Journal stated that Bankman-Fried disclosed that Alameda owed approximately $10 billion to FTX; Caroline Ellison, CEO of Alameda Research, told employees that she was aware of Bankman-Fried’s loan of customers’ money to Alameda to help FTX meet its obligations.
SBF stepped down as CEO of FTX on November 11 and was replaced by John J. Ray III, known for his role in Enron’s bankruptcy and restructuring. FTX and related entities filed for bankruptcy in Delaware the same day. On November 12, one day after FTX declared bankruptcy, Sam Bankman-Fried was interrogated by the Royal Bahamas Police Force. On November 17, Ray stated in his affidavit to the bankruptcy court that Alameda Research had lent SBF $1 billion, according to the firm’s records.
