Sam Bankman-Fried, co-founder of the FTX cryptocurrency derivatives exchange, leaves a court in New York, US, Thursday, February 16, 2023. Keith/Bloomberg
In the week following FTX’s implosion, many viewed Sam Bankman-Fried as a scandal that had gotten in over his head. However, when the full extent of his crimes became known, a much darker story emerged: Bankmann-Fried was not a misguided young man, but a manipulative liar and narcissist who did not curse his victims. When he leaked his one-time girlfriend’s personal diary The New York Times This month, no one was particularly surprised.
And about his family. As with the FTX founder, recent court revelations mean any initial inclinations to give them the benefit of the doubt are unfounded and naive.
For example, we learned that Joseph Bankman is paying for his son’s gold-plated legal defense with $10 million in Bankman-Fried gifts—money he extorted from FTX customers that, according to the Justice Department, he shouldn’t have spent. While any parent can understand the desire to help a troubled child, Bankman is a law professor who knows what he’s doing isn’t right. It’s also hard to sympathize when you realize that he drained at least a million funds on bad crypto trades.
And then there’s Gabe. Before it all fell apart, Bankman-Fried’s brother was a Democratic politician who ran a nonprofit primarily funded by FTX and was also an evangelist for effective philanthropy—a flim-flam philosophy about helping humanity with money. As my colleague Leo Schwartz reported, Gabe Bankman-Fried wrote a memo proposing the purchase of Nauru, a small island nation in Micronesia:
The memo aims to build a bunker that can be used “in the event that 50%-99.99% of people die”, ensuring that most EAs, or efficient altruists, can survive and “developing sensible controls around human genetic enhancement”.
All for the good of humanity, right? Looks like a great guy. As for Barbara Fried, who along with her husband is a Stanford law professor and one-time rainmaker for the Democratic Party, there are no reports that she has had direct contact with FTX. What can be said now is that she didn’t do a great job of passing on her scholarly research on corporate ethics to her children.
Although only Bankman-Fried was charged, it is worth calling attention to the broader moral decay within his family, whose high social status—based on their Ivy League associations and “correct” political views—helped them mask that rot. Or if you want a simpler analysis, I suggest Leo’s recent observation to the Fortune crypto team, “This family is right out of a bad sitcom.”
Jeff John Roberts
Crypto Wrapper Raslecan Her programmer husband also entered a plea deal for stealing over 100,000 bitcoins. Bitfinex. (Reuters)
CoinbaseIt is winding down its borrowing program that allows customers to post, citing poor demand Bitcoin Collateral for receiving cash loans. (Coindesk)
Celsius Settlements were reached that allowed it to exit bankruptcy by the end of the year, with 78,000 customers receiving a mix of cash and shares in a reorganized company. (WSJ)
DeFi ExchangesIts share of trading volume in January 2022 fell from 7% to 5%, despite predictions of an increase in popularity after the collapse of FTX. (Bloomberg)
The political alarm is over CBDC Boston led the Fed to end research into digital bearer devices that could replicate the anonymity of money. (MIT Tech Review)