Sam Bankman-Fried facts for kids
Quick facts for kids
Sam Bankman-Fried
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Bankman-Fried in 2021
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| Born |
Samuel Benjamin Bankman-Fried
March 5, 1992 Stanford, California, U.S.
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| Other names | SBF |
| Education | Massachusetts Institute of Technology (BS) |
| Occupation | Entrepreneur |
| Known for |
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| Criminal status | Incarcerated |
| Parents |
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| Relatives | Linda P. Fried (aunt) Gabriel Bankman-Fried (brother) |
| Conviction(s) |
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| Criminal penalty | 25 years in prison |
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Date apprehended
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August 11, 2023 (22 months ago) |
Samuel Benjamin Bankman-Fried (born March 5, 1992), often called SBF, is an American businessman. He was found guilty of fraud and other crimes in November 2023. Bankman-Fried started a company called FTX, which was a place where people could trade cryptocurrency. He was seen as a "poster boy" for crypto, and FTX grew very big around the world. At one point, he was one of the richest Americans.
Even though Bankman-Fried seemed like a friendly "math nerd," there were big problems at FTX. In November 2022, people started to suspect fraud. Customers quickly took their money out, which caused the company to go bankrupt. On December 12, 2022, Bankman-Fried was arrested in the Bahamas. He was then sent to the United States to face charges. These charges included wire fraud, commodities fraud, securities fraud, and money laundering.
In his trial, United States v. Bankman-Fried, he was found guilty of all seven charges. On March 28, 2024, he was sentenced to 25 years in prison. He was also ordered to give back $11 billion. This trial was a very famous case of white-collar crime in the U.S.
Contents
Early Life and School
Sam Bankman-Fried was born on March 5, 1992, in Stanford, California. His parents, Barbara Fried and Joseph Bankman, are both professors at Stanford Law School. His aunt, Linda P. Fried, is a dean at Columbia University Mailman School of Public Health.
As a high school student, Bankman-Fried went to a special summer program for talented math students. He attended Crystal Springs Uplands School in Hillsborough, California. In 2014, he graduated from the Massachusetts Institute of Technology (MIT). He earned a bachelor's degree in physics and also studied mathematics.
His Business Career
In 2013, Bankman-Fried worked as an intern at a trading company called Jane Street Capital. He traded international ETFs, which are like baskets of investments. After graduating from MIT, he worked there full-time.
In 2017, Bankman-Fried left Jane Street. He then worked briefly at the Centre for Effective Altruism, a group that tries to do the most good possible.
In November 2017, Bankman-Fried helped start a trading company called Alameda Research. By 2021, he owned most of this company. He once made a lot of money by taking advantage of the different prices of bitcoin in Japan and the United States. In 2018, he moved to Hong Kong.
Bankman-Fried started the FTX cryptocurrency exchange in April 2019. It opened for business the next month. In September 2021, Bankman-Fried and other top staff at FTX moved from Hong Kong to the Bahamas. He was listed on Forbes magazine's "30 Under 30" list in 2021. However, he was later added to Forbes' "Hall of Shame" list in 2023.
Views on Helping Others
Bankman-Fried often said he believed in "effective altruism." This idea means trying to do the most good for the world using logic and evidence. He claimed he wanted to "earning to give," which means making a lot of money to donate it to good causes. He said his donations were based on what would help people the most, like reducing big risks such as nuclear war or pandemics.
Bankman-Fried also started a group called Future Fund. This group aimed to support projects that could prevent major global problems. After FTX collapsed, everyone on the Future Fund team resigned.
FTX Goes Bankrupt
In November 2022, the CEO of another crypto company, Binance, announced he would sell his company's holdings of FTT, which was FTX's own cryptocurrency token. This news caused many customers to quickly try and withdraw their money from FTX. FTX could not give everyone their money back, similar to a bank run.
This happened after a report said that most of Alameda Research's money was in FTT. When Binance announced its sale, the price of FTT and other cryptocurrencies dropped a lot.
On November 8, Binance said it might buy FTX because FTX was having money problems. But Binance later decided not to buy FTX. They said it was because FTX had handled customer money badly. After this, Bankman-Fried was no longer a billionaire. Government agencies also started investigating FTX.
On November 11, 2022, FTX, Alameda Research, and over 130 related companies filed for bankruptcy. Reports said that Bankman-Fried had moved at least $4 billion from FTX to Alameda Research without telling anyone. This money included customer funds. It was also said that Alameda owed FTX about $10 billion, which was secured by customer money.
Bankman-Fried stepped down as CEO of FTX on November 11, 2022. He was replaced by John J. Ray III, who had worked on the Enron bankruptcy case.
Arrest and Charges
On December 12, 2022, Bankman-Fried was arrested in New Providence, Bahamas. He was expected to be sent to the United States for trial. His arrest happened the day before he was supposed to speak to a U.S. government committee.
In the U.S., Bankman-Fried was charged with several crimes. These included wire fraud, securities fraud, and money laundering. The Prime Minister of the Bahamas said that both the Bahamas and the U.S. wanted to hold anyone linked to FTX's collapse responsible. Experts said that if found guilty, Bankman-Fried could face many years in prison.
After being held in a prison in the Bahamas for ten days, Bankman-Fried agreed to be sent to the U.S. He was allowed to be free on a very large bond of $250 million. He had to stay at his parents' home in California.
On January 3, 2023, Bankman-Fried said he was "not guilty" of the charges. Later, a judge tightened his bail rules. He was not allowed to contact former FTX employees without lawyers present. This was because the judge thought he might try to influence witnesses.
More charges were added against Bankman-Fried in February 2023. These were mainly about making illegal political donations. In March 2023, he was also accused of sending $40 million in cryptocurrency to Chinese government officials. This was to unfreeze some of Alameda Research's accounts. Some charges, like a campaign finance charge, were later dropped due to agreements with the Bahamas.
His Trial: United States v. Bankman-Fried
The trial began on October 3, 2023, in Manhattan. Judge Lewis A. Kaplan was in charge. Bankman-Fried faced seven charges of fraud and conspiracy. The trial tried to figure out if Bankman-Fried was a clever criminal or just a "math nerd" who made mistakes.
Prosecutors said he "stole billions from thousands of people." They claimed he moved customers' money from FTX to Alameda to pay for investments, loans, real estate, and political donations. His lawyers, however, said he was a young businessman who was in over his head. They argued that mistakes, a market crash, and actions by others caused his companies to fail. They insisted he never meant to commit fraud.
Many witnesses spoke for the prosecution. Three former FTX executives, Caroline Ellison, Gary Wang, and Nishad Singh, testified as part of deals they made with the government. Gary Wang said he helped Alameda Research take about $65 billion from FTX customers. He admitted he "lied about this to the public." Bankman-Fried himself was the main witness for his defense.
The case focused on how Alameda could use FTX customer money. Alameda had a special "line of credit" on the exchange. This credit line was "essentially unlimited," and Alameda did not have to put up collateral. Senior engineers said they added these features because Bankman-Fried told them to. Bankman-Fried said he only wanted to prevent problems and did not know the exact details.
Bankman-Fried also said he did not know about another way Alameda used customer funds. Before FTX had its own bank account, it used Alameda to receive money from customers. Bankman-Fried claimed he thought the money was just held in a bank or sent to FTX. He said he did not know until late 2022 that Alameda had taken $8 billion. Other FTX executives said he might not have known exactly how these funds were handled. But they also said that Bankman-Fried was the only person in charge of both companies.
A lot of attention was given to the difference between what Bankman-Fried said publicly and what was happening privately. For example, he tweeted, "FTX is fine. Assets are fine." An FTX executive later said these statements were false. Bankman-Fried also claimed he only quickly read the "dishonest" financial reports that Alameda's CEO sent to lenders. His defense tried to show that Alameda's CEO acted on her own.
Trial Outcome
The trial ended on November 2, 2023. The jury found Bankman-Fried guilty on all seven charges. His sentencing was set for March 28, 2024. On that day, he was sentenced to 25 years in prison. He was also ordered to pay $11.02 billion in forfeiture for his fraudulent actions.
Second Trial Cancelled
A second trial for Bankman-Fried, involving five more charges like bank fraud, was planned for March 2024. However, prosecutors announced on December 30, 2023, that they would not go ahead with this second trial. They said that the first trial's outcome was enough to resolve the case.
Appeal
On April 11, 2024, Bankman-Fried appealed his conviction and his 25-year prison sentence. This appeal process could take several years. He will try to convince higher courts that the judge made big mistakes that affected his legal rights and made the trial unfair.
Time in Prison
Before August 11, 2023, Bankman-Fried was out on bail and living with his parents. On July 26, 2023, prosecutors said he tried to influence a witness. Three weeks later, on August 11, the judge agreed that witness tampering likely happened. He took away Bankman-Fried's bail, and Bankman-Fried was sent to the Metropolitan Detention Center, Brooklyn prison.
In prison, his lawyers said he was not getting a vegan diet. They also said his medications for ADHD and depression were running low. They argued he could not prepare for his trial by eating only bread, water, and peanut butter. By November 2023, he was reportedly getting a vegetarian diet and his medicines. He was also said to be trading packets of mackerel from the prison store for services from other prisoners, like haircuts. After his sentencing, Bankman-Fried asked to stay at the Brooklyn prison while he appeals his case.
Donations
Political Donations
Before 2021
Before 2019, Bankman-Fried had only given a small donation to a political campaign in 2010. For the 2020 U.S. elections, he gave $5.2 million to groups that supported Joe Biden. He was the second-largest individual donor to Biden's campaign in 2020.
2021–2022
Bankman-Fried gave money to both major U.S. political parties. He said he gave an equal amount to each. For Democrats, he donated $27 million to a group called Protect Our Future. Public records show he gave $990,000 to Democratic candidates and $38.8 million to other groups during this time.
He also donated to Republican Party campaigns, giving $262,200. He said his donations to Republicans were "dark," meaning they were kept secret. He said this was because the press was "super liberal," and he wanted to keep these donations private.
2022 U.S. Midterm Elections
Bankman-Fried was the second-largest individual donor to Democratic causes for the 2022 U.S. elections, giving $39.8 million. He said in February 2022 that his political donations were not meant to influence crypto laws. However, his company FTX was suggesting ideas to lawmakers at the time. He said he wanted the Commodity Futures Trading Commission to have a bigger role in regulating crypto. This agency is known for having more relaxed rules for the industry compared to others.
Bankman-Fried pushed for new crypto rules through a proposed law. This law was seen as good for FTX but bad for other parts of the crypto industry. In May 2022, he said he planned to spend "over $100 million" in the 2024 presidential election, possibly even $1 billion. He later said this was a "dumb quote." However, a book claimed that Bankman-Fried had looked into whether he could legally pay Donald Trump $5 billion not to run for president in 2024.
After the FTX scandal, many politicians and groups who received donations from Bankman-Fried and other FTX executives started donating equal amounts to charities.
Efforts to Get Donations Back
In December 2022, FTX's new leaders started trying to get back the donations that had been given to politicians, famous people, and charities. This was part of the bankruptcy process. The company said it planned to "require the return of such payments." Experts believed it would be easier to get back money given to politicians and charities.
By April 2023, $7.3 billion of the original $8 billion missing funds had been recovered. In October 2023, FTX and its related companies proposed a plan to pay back customers. They estimated that customers would get back over 90% of their money worldwide.
Personal Life
Bankman-Fried is vegan. He grew up in a Jewish family. In mid-2021, he reportedly lived with about 10 roommates in a large house in the Bahamas. This house was bought by another FTX co-CEO. After FTX collapsed, the house was put up for sale for nearly $40 million.
Bankman-Fried had a relationship with Alameda Research CEO Caroline Ellison for about six months. She testified against him in court in October 2023. She claimed that his messy hair and clothes were part of a "well calculated" image he wanted to show. She said he believed his appearance helped him get higher bonuses at his old job and was an "important part" of FTX's image. In court, he appeared with trimmed hair and a grey suit.
Bankman-Fried once played the video game League of Legends during a phone call where he was trying to get money for FTX. The investors were very impressed, and one called it an amazing meeting. Afterward, they invested over $200 million in FTX. However, a newspaper later said his "win ratios" in the game were "average-to-bad."
Throughout his legal problems, Bankman-Fried's parents supported him. His mother, Barbara Fried, said in an email that the actions of the prosecutors were like "McCarthyite" and a "relentless pursuit of total destruction." After Bankman-Fried was put in prison during his trial, his parents took turns traveling from California to visit him. His mother wrote a letter to the judge in February 2024, asking for a lighter sentence. She said Bankman-Fried would face extreme danger in prison because he has "trouble responding appropriately to many social cues."
Images for kids
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Daniel Patrick Moynihan U.S. Courthouse
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Bankman-Fried at the Metropolitan Detention Center in 2023
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See also
In Spanish: Sam Bankman-Fried para niños
