Achi news desk-
A few years after graduating from college, Sam Bankman-Fried worried that he wasn’t taking enough risks.
So the son of two Stanford Law School professors quit his Wall Street job and in 2017 started a cryptocurrency hedge fund, setting off a chain of events that will culminate Thursday with his sentencing for what federal prosecutors called it one of the biggest financial frauds in it. history of the United States.
Prosecutors are seeking 40 to 50 years behind bars for 32-year-old Bankman-Fried, while his defense lawyers have argued he should receive less than 5-1/4 years.
Two years after launching a hedge fund, Alameda Research founded Bankman-Fried FTX in 2019, an exchange that lets users buy and sell digital assets like bitcoin. Cryptocurrency valuations soared, propelling Bankman-Fried to a net worth of $26 billion by October 2021, according to Forbes magazine, before he turned 30 – the 25th richest person in America.
He parlayed that wealth into political power, becoming one of the biggest donors to Democratic candidates and causes ahead of the US midterm elections in 2022. Located in an expensive resort community in the Bahamas, Bankman-Fried became well known for his unkempt mop of curly hair and for wearing wrinkled shorts, even when entertaining dignitaries including Bill Clinton.
In a cryptocurrency sector plagued by hacks and money laundering, Bankman-Fried hired celebrities including NFL quarterback Tom Brady and comedian Larry David to appear in ads portraying FTX as safe. He publicly supported efforts to regulate crypto.
But prosecutors say his relaxed demeanor and cultivated responsible image hid his theft of customers’ money for years. They argue that the theft ended in 2022, when crypto prices dropped and FTX used money to cover losses in Alameda.
A jury found him guilty on seven counts of fraud and conspiracy on November 2, following a month-long trial in Manhattan federal court.
Three former members of his inner circle, who pleaded guilty and agreed to cooperate with prosecutors, testified against him and painted a disturbing portrait of his character, detailing instances where he angrily snapped at colleagues and suggests that his peculiar persona is mostly an act.
“He understood the rules, but decided they did not apply to him,” prosecutors wrote in their sentencing memorandum on March 15. “He knew what society considered illegal and unethical, but dismissed it on the basis of megalomania appalling and driven by the defendant’s own values ​​and sense of superiority.”
Bankman-Fried pleaded not guilty and has promised to appeal against his conviction and sentence. Testifying in his own defense at trial, the Massachusetts Institute of Technology graduate acknowledged inadequate risk management, but denied stealing money.
He said he made mistakes, such as not implementing a risk management team, which harmed FTX’s customers and employees. But he said he never intended to defraud anyone or steal customers’ money.
“We thought maybe we could build the best product on the market,” Bankman-Fried testified on Oct. 27. “Basically, it was the opposite.”
‘COMFORTABLE’ PATH AVOIDED
Bankman-Fried had very little crypto experience before founding Alameda, which initially made money by exploiting price differences in digital tokens between the US and Asia. A physics major at MIT, he told the FTX podcast that he didn’t apply himself in classes and didn’t know what to do with his life for most of college.
But his interest grew during those years in a movement known as effective altruism, which encourages talented young people who are looking to make a mark on the world to focus on earning money and donating it to worthy causes. That led him to take a job as a quantity trader in Jane Street, but he began to doubt whether he was earning all he could.
“If I really think I should be trying to maximize expected values, that probably suggests much riskier strategies than what seems very intuitive,” he said in a podcast Jun 4, 2020. “I should be careful not to fall prey to trying to choose a comfortable path.”
He brought on Gary Wang, an old friend from math camp, and later Caroline Ellison, an effective fellow extravert from Jane Street and Bankman-Fried’s ex-girlfriend. The two would join him in the Bahamas, where they shared a $30 million penthouse with other Alameda and FTX executives, including Nishad Singh.
Wang, Ellison and Singh each pleaded guilty and testified against Bankman-Fried at trial. They have not yet been sentenced.
Bankman-Fried was jailed in mid-August, after US District Judge Lewis Kaplan revoked his bail for allegedly attempting to tamper with witnesses at least twice – including by sharing Ellison’s private writings with a New York reporter Times.
In a letter to Kaplan, Bankman-Fried’s psychiatrist, George Lerner, wrote that his patient was on the autism spectrum. Bankman-Fried’s father, law professor Joseph Bankman, wrote that his son had long struggled to make eye contact and respond to social cues, but that the media didn’t care while FTX thrived.
“Once the company collapsed and its wealth was gone, people became less forgiving, and they interpreted these same characteristics… as a sign of disrespect, evasion or lying,” Bankman wrote.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)
