Sam Bankman-Fried, Icarus of cryptocurrencies, was found guilty of seven counts of fraud and conspiracy Thursday night after a trial that generated 10 million pages of documents and just a few hours of jury deliberation. As always, it may be best to start from the beginning.
As a child coming of age in the most exclusive reaches of the achievement class, he grew up in a family that viewed celebrating birthdays and holidays as an inefficiency that was easily forgotten. From that childhood emerged an adult who worked 22 hours a day and subjected the prospect of any interaction with another person to a cost-benefit calculation that frequently led him to cancel meetings and other obligations at the last minute, because, as Michael Lewis writes In Going Infinite, his book about the rise and fall of Bankman-Fried, he had done some mental calculations that showed you weren’t worth his time.
From the beginning, the decision to have Bankman-Fried testify in the federal trial that accused him of some of the most serious acts of financial fraud in the country’s history seemed like a counterproductive proposition. Ostentatiously unfazed by physical beauty, art, novels, fashion, religion, and hot food, he also openly hated Shakespeare (“one-dimensional” characters, “illogical plots,” “obvious endings”) who was baffled by decisions driven emotionally. , defying any effort to place it anywhere on a continuum of human relatability.
What would a jury of your peers possibly be like? Or, in the specific absence of that, what would 12 ordinary people see when they were sitting on the other side of the witness stand? The prosecution hoped they would see a grown man, immersed in self-contradiction and capable of committing crimes, rather than the 31-year-old Mr. Bankman-Fried appeared to be, someone whose adolescent enthusiasm and absentmindedness earned him thousands of dollars. millions. of dollars in innocent and hapless mistakes. In the end, the jury only saw the deceitful adult.
Among the many paradoxes surrounding the case was the idea that someone so antagonistic to the perceived value of the image and the story would have paid such careful and perversely winning attention to his own.
FTX, the cryptocurrency exchange that briefly made Bankman-Fried the richest person under 30 in the world before completely collapsing, had no chief financial officer, no human resources or compliance departments, and no board of directors. . But she employed a public relations manager who dedicated her time to arranging the interviews Bankman-Fried gave so freely. In these conversations, he shaped the public’s perception of him as a radical utilitarian, a Corolla-driving savant who cared about money only to the extent that he wanted to give it all away.
Implicit in the government’s case was the insincerity of that presumption and the basis it laid for the practice of other, more significant forms of deception. “Did you not cut your hair because you were busy and lazy?” prosecutor Danielle Sassoon asked the defendant under cross-examination of her. Her question was rhetorical.
She would deploy this tactic repeatedly: asking Mr. Bankman-Fried if he said x or y, finding a vague answer, and then proving that he had said what he said he couldn’t really remember. During this particular sequence, she presented a statement he had made revealing that it was “important” to the business that people “think I look crazy.” She further informed the courtroom that when Anthony Scaramucci, one of Bankman-Fried’s investors, told her to put on a suit, Bankman-Fried responded that the shirts were crucial to her “brand.”
Compared to other notorious investors whose fate landed them in a Lower Manhattan federal court, Bankman-Fried stands out particularly for these commitments to self-promotion. Michael Milken, known for his role in creating junk bonds in the 1980s and the prison sentence on fraud and racketeering charges that followed, was an extremely private person who avoided publicity, as is probably wise to do when tax evasion is addressed. .
Later, Bernie Madoff, who owned at least two wedding rings and paired them with whatever vintage watches he wore from his collection, dressed to fade into the landscape of the Wall Street establishment. He avoided the social scenes of the Upper East Side and Palm Beach as persistently as Bankman-Fried pursued the company of Tom Brady and Katy Perry.
To those without experience in Wall Street jargon (backup liquidity provider, recovery prevention), the case against Bankman-Fried might seem incredibly complicated. At one point, Judge Lewis A. Kaplan interrupted a discussion about a risk engine that a few years earlier had failed with troubling results, to clarify that the “risk engine” was not, in fact, a person.
In reality, the fraud Bankman-Fried orchestrated was simple and very similar to what Bernie Madoff had been doing all along: trading and repurposing other people’s assets for his own use.
The significant difference has to do with credentials and pedigree and how they were put in place. Madoff, a Queens law school dropout who started trading penny stocks (like Jordan Belfort, the self-described “wolf of Wall Street”), may not have identified any path to getting rich beyond hustling. But Bankman-Fried, an MIT graduate, a gifted student of mathematics and physics who grew up in the heart of technocracy, the son of Stanford Law School professors, nevertheless resorted to the same game of tricks even when there were so many others. paths available to him.
His defense essentially boiled down to the notion that mistakes were made, chief among them that he mishandled the risk but never intended to do anything wrong. As much as Bankman-Fried had paid attention to the narrative of it, he paid less attention to the actual product of it.
As in many high-profile criminal cases, the defendant’s actions and motives may never be fully understood. But it’s also true that these cases often reveal broader cultural truths. Bankman-Fried spoke on the stand, as he does in life, with a high, thin, childlike voice.
Her performance drew easy comparisons to its theatrical opposite: the deep, masculine voice that Elizabeth Holmes felt she needed to affect to be taken seriously as an ambitious young woman in Silicon Valley. Mrs. Holmes filled her board of directors with prominent elders. For Bankman-Fried, it was apparently okay to designate everyone over 45 as “useless” and look and sound like a 13-year-old even when he was speaking alongside Bill Clinton and Tony Blair.
Like child artists pushed toward maturity at a young age and often enduring the consequences years later, Bankman-Fried was raised as an intellectual equal to his parents and their circle. Once, when he was young and a family friend explained to him that something was too complicated for him and his brother to understand, Mr. Bankman-Fried’s father called his friend aside. and told him that he and his wife didn’t talk to their children like that. While a typical adolescence is likely to expose you to a great deal of risk, Mr. Bankman-Fried did not have a typical adolescence.
What emerged later in his professional life, as the endless coverage of him made clear, what had perhaps been sublimated all along was an insatiable appetite for risk. Almost no financial gamble could seem too dangerous. From a distance it might seem like an addiction. Now, he may have finally been forced to resign.