Sam Bankman-Fried went from crypto whiz to alleged criminal.
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Sam Bankman-Fried catapulted into a crypto billionaire, but it took just one day for most of his fortune to be wiped out.
He was extradited to the US and released on $250 million bail on December 22.
On February 23, he was hit with 4 additional criminal charges, bringing the total number of criminal charges against him to 12.
Just months ago, Sam Bankman-Fried was a 30-year-old with a mop of brown hair and enough clout to go by his initials, SBF. He had a cryptocurrency exchange called FTX, a trading firm called Alameda Research, and $15.6 billion to his name, according to estimates from Bloomberg.
Here's how SBF went from crypto's poster child to its greatest cautionary tale:
Bankman-Fried grew up in Silicon Valley as the son of two Stanford Law professors.
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He spent his childhood playing games like chess and bridge. His brother, Gabe, told Insider, "playing games growing up, his inclination is if a board game is fun, you should play two simultaneous games at once with a timer."
A chess board
Bankman-Fried studied physics at Massachusetts Institute of Technology where he juggled several extracurriculars alongside his academics. "I worked like an hour and a half a day in total and had trouble getting places on time," Bankman-Fried told Insider. "I was a really negligent student."
During college, Bankman-Fried began honing his moral compass. He became especially interested in effective altruism, a philosophical movement that uses calculations to understand how people can use their time, money, and resources to best help others.
Orbon Alija/ Getty Images
After college, Bankman-Fried went to work for the global trading firm, Jane Street. That's where he learned the art of arbitrage— a form of trading in which traders buy an asset for a low price in one market and sell it for higher in another market.
Photo by Alex Wong/Getty Images
During his three years at Jane Street, Bankman-Fried would give away half of his salary to animal-welfare groups and effective altruism charities, according to Bloomberg. He left to work for MacAskill's Centre for Effective Altruism, set up by William MacAskill, one of the leaders of the effective altruism movement.
Catherine Falls Commercial/ Getty Images
By 2017, crypto was booming, and people were trading on private exchanges. Bankman-Fried noticed that some coins were selling for higher prices on some exchanges than others. He realized he could use his arbitrage skills to exploit the gaps in prices.
The gap in bitcoin prices between Asian and Western exchanges eventually became known as the Kimchi Premium.
Gontabunta/Shutterstock
By October of 2017, Bankman-Fried had set up his own crypto trading firm, Alameda Research, in Berkeley, California. His Alameda colleagues told Insider that he was adept at finding ways to move faster than other traders.
At its peak, Alameda was moving almost $15 million a day between markets, according to Bloomberg. Bankman-Fried soon earned the nickname "the Moby Dick of crypto whales" for the waves he was making in the crypto industry.
EyesWideOpen/Getty Images
In 2018, he abruptly moved Alameda's team to Hong Kong, after realizing how lax the rules were compared to the United States. "I think we're losing $50,000 a day by not working out of Hong Kong instead of Berkeley," one of his colleagues who spoke to Insider recalled him saying.
Victoria harbour, Hong Kong
As Bankman-Fried continued to rack up money from trading, his ambitions grew, too. He began entertaining thoughts of building an alternative to what he called the "shitshow exchanges" he was trading in between the years of 2017 and 2018.
FTX Official/YouTube
By the start of 2019, Bankman-Fried and his team were fervently working towards building their own crypto exchange. After four months coding, they launched FTX in May.
Maskot
FTX was a win. The platform boasted cost-effective features like low-trading fees and offered several types of coins for traders to bet on. FTX even allowed traders to swap cash as collateral for coins.
Sam Bankman-Fried.
FTX
In 2020, Bankman-Fried also opened a small US branch of FTX. He had designs of eventually taking a major slice of the U.S. crypto market and began lobbying Congress for new crypto rules a few times a year. He's also donated millions to pro-crypto super PAC, GMI PAC, according to Politico.
Tom Williams/Getty Images
In September 2021, Bankman-Fried decided to move FTX's operations to the Bahamas. It was just a flight away from Miami, but the platform could still operate outside of the SEC's purview.
Damianos Sotheby’s International Realty
FTX only takes a minor cut of every trade, but by 2020, an average of $1 billion was being traded daily on the platform, according to Bloomberg. In 2021 alone, Bankman-Fried raked in a profit of $350 million from FTX, and another $1 billion from Alameda, according to Bloomberg.
Rafael Henrique/SOPA Images/LightRocket via Getty Images
Major investors like SoftBank Vision Fund, Tiger Global, Sequoia Capital, and BlackRock placed bets on FTX in funding rounds. By early 2022, FTX and its U.S. operations were valued by investors at a combined $40 billion, according to Forbes.
Issei Kato/Reuters
At his peak, Bankman-Fried's own net worth was $26 billion, according to Bloomberg.
FTX
He's allocated that wealth towards sponsorships, funding political leaders, and furthering his moral agenda.
SALT NY
He suddenly emerged as a major political donor in 2020 and spent over $10 million backing Joe Biden's presidential campaign, according to Politico. But Bankman-Fried actually made his political first donation back in 2010 to Democratic Senator Michael Bennet of Colorado, Politico reported.
AP Photo/Matt Slocum, File
He spent over $40 million on campaigns in 2022, according to Federal Election Committee filings reviewed by Politico.
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He's made donations on both sides of the political aisle though the majority of his funding has skewed towards Democratic leaders. The Los Angeles Times reported that Bankman-Fried has given $1 million to the Senate Majority PAC and $6 million to the House Majority PAC— two super PACs that are dedicated to keeping Congress in the hands of Democrats. He also funded Protect Our Future, a Super PAC that focuses exclusively on Democratic House primaries, according to Politico.
OsakaWayne Studios/ Getty Images
He's made COVID-19 prevention a top issue as the principle funder of Guarding Against Pandemics, a nonprofit run by his brother Gabe, according to Politico.
A fundraiser for Guarding Against Pandemics.
Bryan Metzger/Insider
Bankman-Fried has said his donations are about furthering his larger belief in effective altruism. He told Bloomberg that he would eventually only keep 1% of his income or a minimum of $100,000 a year.
Lam Yik/Bloomberg via Getty Images
His simple lifestyle, too, follows the ideas of effective altruism. He drives a Toyota Corolla, lives with roommates, and is vegan.
The 2020 Toyota Corolla.
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At the same time, he's funneled money into flashy corporate sponsorships. His most notable is acquiring naming rights for the Miami Heat's arena which will cost him about $135 million over 19 years, according to Bloomberg.
Mike Ehrmann/Getty Images
He also spent about $30 million airing an ad in the 2022 Super Bowl with the comedian Larry David, according to Bloomberg.
FTX commercial starring Larry David
FTX
Through FTX, Bankman-Fried has also forged deals with major basketball teams like the Washington Wizards and Golden State Warriors. FTX has also struck deals with individual athletes like basketball player Steph Curry and quarterback Tom Brady.
Steph Curry in FTX commercial
FTX
Bankman-Fried seemed unstoppable— until he wasn't. In early November, the crypto publication CoinDesk reported a leaked balance sheet that showed that Alameda Research was on unstable grounds.
OLIVIER DOULIERY/AFP via Getty Images
The report revealed that most of Alameda's assets were tied up in FTX's in-house token, FTT. With the broader crypto market already reeling, traders began worrying about a sudden drop in the value of FTT.
SOPA Images / Contributor/ Getty Images
Changpeng Zhao, who runs Binance, FTX's rival exchange, announced shortly after that Binance would be selling its holdings of FTT. With that traders across the board began rushing to withdraw their own holdings off of FTX's platform. Bankman-Fried had no choice but to ask Binance to bail FTX out.
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By November 9, Binance had walked away from the deal. Bankman-Fried's own assets dropped 94% and his net worth plummeted to around $1 billion, according to Bloomberg.
Horacio Villalobos/CorbisAlex Wong/Getty Images
On November 11, FTX announced Bankman-Fried was resigning as CEO but would help "assist in an orderly transition" to new CEO John J. Ray III.
OLIVIER DOULIERY/AFP via Getty Images
Ray has held several senior executives roles at other companies in the past, including at Enron to lead its turnaround efforts.
Having failed to secure a bailout, FTX, Alameda Research, and 130 additional affiliated companies have started voluntary Chapter 11 bankruptcy proceedings.
OLIVIER DOULIERY/AFP via Getty Images
"The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders," said new CEO Ray. "The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency."
As part of FTX's bankruptcy proceedings, the new CEO said he'd never "seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information" as what happened with the company.
The logo of FTX is seen at the entrance of the FTX Arena in Miami, Florida, US.
On November 22, the first day of FTX's bankruptcy hearing, the company's lawyer said one of its US branches bought almost $300 million worth of Bahamian real estate.
Sam Bankman-Fried and a Bahamas government building in Nassau.
Tom Williams/CQ-Roll Call, Inc via Getty Images; Walter Bibikow/Getty Images
"Based on preliminary investigations, most of those real estate purchases related to homes and vacation properties that were used by senior executives of the company," James Bromley, a restructuring partner at Sullivan & Cromwell who is on FTX's bankruptcy team, said.
Bankman-Fried showed up for an interview on November 30 with Andrew Ross Sorkin at the DealBook Summit in a segment called "What Happened?"
Michael M. Santiago/Getty Images
Bankman-Fried said he's not focused on worrying about being held criminally liable for FTX's collapse, and that instead he wants to "help" the millions of customers and stakeholders who lost their money.
He appeared virtually from the Bahamas, and said he's "thought about" coming back to the US — denying that the reason he hasn't returned is because of fears of being arrested.
He denied reports of improper drug use and "wild parties" with his employees.
Sam Bankman-Fried speaks with Andrew Ross Sorkin during The New York Times DealBook Summit in New York City on November 30, 2022.
Michael M. Santiago/Getty Images
During his appearance at the DealBook Summit, Bankman-Fried told Sorkin that drugs he took were "totally on-label," and were prescribed to him for "focus and concentration."
He also said he doesn't know what happened to the $100 million stake he had in Twitter. Elon Musk previously disputed a Semafor report that said he invited Bankman-Fried to roll over his public Twitter shares into a stake in the now private company.
Tom Williams/CQ-Roll Call Inc via Getty Images; Carina Johansen/Getty Images
Against the advice of his lawyers, Bankman-Fried also spoke to other news publications.
Sam Bankman-Fried speaks onstage during the first annual Moonlight Gala benefitting CARE - Children With Special Needs - hosted by Michael Cayre, Roy Nachum and MegaMoon Museum at Casa Cipriani on June 23, 2022 in New York City.
Craig Barritt/Getty Images for CARE For Special Children
In addition to appearing at the DealBook Summit, Bankman-Fried has done interviews with Intelligencer and Good Morning America, and had his conversation with a Vox reporter, who is also a "longtime friend," published. At the DealBook Summit, Bankman-Fried said he "stupidly forgot" his friend "was also a reporter."
He also said at the summit that his lawyers don't want him talking, but, "I have a duty to talk to people... I have a duty to do everything I can to try and do what's right."
Bankman-Fried appeared on Good Morning America on December 1. He could've prevented FTX's implosion if he'd spent "an hour a day" on risk management.
Sam Bankman-Fried dines with Anthony Scaramucci and Kevin O'Leary and others at the SALT NY Conference
"The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law," Bahamian Prime Minister Philip Davis said in a press release.
Legal experts told Insider that prosecutors in the US can extradite Bankman-Fried back to the US once he faces criminal charges from the US government.
It's "likely" authorities in the US are going to request Bankman-Fried's extradition, Sen. Ryan Pinder KC, attorney general of the Bahamas, said in a statement.
Hours before his arrest, Bankman-Fried was doing an interview in Twitter Spaces with Unusual Whales, and said he didn't "believe" he would be arrested if he returned to the US.
During the interview, he was playing a video game called "Storybook Brawl" — a game his now collapsed company, FTX, acquired in March.
Hours after his arrest, the US Securities and Exchange Commission announced it would file charges against Bankman-Fried in relation "to his violations of securities laws."
Sam Bankman-Fried, FTX CEO, at a digital assets hearing in 2021.
Jabin Botsford/The Washington Post via Getty Images
"We commend our law enforcement partners for securing the arrest of Sam Bankman-Fried on federal criminal charges," Gurbir Grewal, the enforcement director for the SEC, wrote in a Twitter statement.
The SEC alleges Bankman-Fried violated the Securities Act through misusing FTX customer funds for his own benefits, and not being transparent about debts with investors.
Bankman-Fried was "orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform's customer funds for his own personal benefit and to help grow his crypto empire," the SEC said in its filing against him.
Bankman-Fried was formally charged with 8 criminal charges by US federal prosecutors in New York. The charges were unsealed on December 13.
WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States."
Alex Wong/Getty Images
Charges include fraud for allegedly using funds from FTX to support his hedge fund Alameda Research, wire fraud, conspiracy charges to commit securities fraud, money laundering, and defrauding the US, and violating campaign finance laws.
On December 13, Bankman-Fried appeared in court in the Bahamas with his parents. Bankman-Fried indicated that he would not be waiving his rights to challenge his extradition to the United States. The judge denied him bail and initially remanded him to custody until February 2023.
The Nassau, Bahamas, courthouse where FTX founder Sam Bankman-Fried appeared after his arrest on December 13, 2022
Bankman-Fried spent nine days at Fox Hill— a prison in the Bahamas— playing crossword puzzles, reading newspapers, and eating vegan food, according to Bloomberg.
Fox Hill is known to be overcrowded and have unsanitary conditions, reports from human rights organizations allege.
Reuters
An acting commissioner of corrections in the Bahamas said Bankman-Fried was "receiving no special treatment than any other inmate."
The following week, Bankman-Fried agreed to be extradited to the United States. He was flown into New York on December 21.
Bankman-Fried was transported on a plane back to the US.
Bankman-Fried was released on $250 million bail on December 22. He was ordered to surrender his passport and stay with his parents at their home in Palo Alto, California, until the FTX trial. US Magistrate Judge Gabriel W. Gorenstein, who presided over the bail hearing, also ordered an ankle monitor to be placed on Bankman-Fried.
A Sam Bankman-Fried, founder and former CEO of crypto currency exchange FTX, sits after his extradition from The Bahamas with his lawyers Mark Cohen and Christian Everdell at his arraignment hearing in Manhattan federal court in New York City, U.S., December 22, 2022 in this courtroom sketch.
Jane Rosenberg/Reuters
Gorenstein said Bankman-Fried will only be allowed to leave his parents' home for court appearances and with "the permission of pretrial services" for exercise. He also forbade Bankman-Fried from starting new businesses or opening new financial accounts.
By New York law, defendants in criminal cases are not usually responsible for the full bail amount unless they make notable attempts to flee or violate bail conditions.
"I don't think there's any concern of safety or any additional crimes," Gorenstein said. "The defendant has achieved significant notoriety."
Still, Bankman-Fried's parents will be required to secure a lien over their home. Several other unknown "responsible" individuals are required to post funds as well, Gorenstein noted at Thursday's hearing.
Earlier on December 22, Damien Williams, the US attorney for the Southern District of New York, announced that Bankman-Fried's former colleague and onetime girlfriend Caroline Ellison, had pleaded guilty to seven criminal charges and was now cooperating with the prosecutors.
Caroline Ellison
Insider Illustration.
Ellison's agreement means she is waiving any defenses to charges against her. However, she'll very likely serve nowhere near the maximum sentence of 110 years in prison for these charges because of her cooperation.
As part of the deal, Ellison is required to hand over documents, records, and evidence to prosecutors. She'll be required to testify to a grand jury or at court trials when requested. Ellison has also agreed to pay restitution at an amount to be determined by the courts.
Gary Wang, another former colleague of Bankman-Fried, pleaded guilty to fraud charges on Thursday.
In a brief court appearance on January 3, 2023, Bankman-Fried pleaded not guilty to the criminal charges against him. The plea wasn’t a surprise and doesn’t necessarily mean he’ll be fighting the charges. It may be a placeholder while he waits to get a better understanding of the case against him.
Bankman-Fried leaving federal court in Manhattan on January 3, 2023 where he plead not guilty to criminal charges.
In an interview with Puck News published on January 10, Bankman-Fried said “most of the people who I was friends with are not talking to me.”
Sam Bankman-Fried described his lonely daily routine to Puck News in an interview published January 10.
AP Photo/Craig Ruttle
He added, "I don't blame people for wanting to try and avoid getting drawn into the shitshow as best they can."
On January 12, Bankman-Fried launched a newsletter on Substack. In his first post he wrote, "I didn't steal funds, and I certainly didn't stash billions away," Bankman-Fried wrote. "Nearly all of my assets were and still are utilizable to backstop FTX customers." He reiterated other points including the fact that he hasn't run Alameda Research in years.
On January 12, 2023 Sam Bankman-Fried launched his own Substack newsletter.
On February 15, a federal judge unsealed the names of two people sponsoring Bankman-Fried’s $250 million bail, after media organizations including Insider argued the names should be named public.
Bankman-Fried was granted release on $250 million bond in December.
The two people are Larry Kramer, a former dean of Stanford Law School, and Andreas Paepcke, a research scientist at Stanford. Kramer contributed $500,000 and Paepcke contributed $200,000.
Larry Kramer, former dean of Stanford Law School, is one of two people sponsoring Bankman-Fried's bail who's name was released on February 15.
On February 23, federal prosecutors alleged that Bankman-Fried funneled political donations through two executives at FTX as a way to achieve bipartisan influence in Washington DC. Prosecutors said in the filing that Bankman-Fried “did not want to be known as a left-leaning partisan, or to have his name publicly attached to Republican candidates.”
Bankman-Fried funneled money through executives at FTX to improve his standing in D.C., prosecutors alleged on February 23.
om Williams/CQ-Roll Call Inc via Getty Images
Prosecutors also wrote in the filing that Bankman-Fried "perpetuated his campaign finance scheme at least in part to improve his personal standing in Washington, D.C., increase FTX's profile, and curry favor with candidates that could help pass legislation favorable to FTX or Bankman-Fried's personal agenda, including legislation concerning regulatory oversight over FTX and its industry."
The updated indictment brings the number of criminal charges against Bankman-Fried to 12, up from the original 8.
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