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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| Parents |
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| Relatives | Linda P. Fried (aunt) Gabriel Bankman-Fried (brother) |
| Criminal information | |
| Status | Incarcerated at Federal Correctional Institution, Terminal Island |
| 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 |
Samuel Benjamin Bankman-Fried (born March 5, 1992), also known as SBF, is an American entrepreneur. He became famous for starting the cryptocurrency exchange FTX. At one point, he was one of the richest people in America.
Many people saw him as a star in the world of crypto, which is a type of digital money. However, in November 2022, his company FTX suddenly collapsed. It was discovered that billions of dollars of customer money was missing. This led to his arrest and a major trial.
In 2023, a court found Bankman-Fried guilty of fraud and other crimes. This means he was found to have lied and misused money that belonged to his customers. In March 2024, he was sentenced to 25 years in prison. His story is one of the biggest cases of financial crime in recent history.
Contents
Early Life and Education
Sam Bankman-Fried was born on March 5, 1992, in Stanford, California. His parents, Barbara Fried and Joseph Bankman, were both professors at Stanford Law School. He grew up in a family that valued education and achievement. His younger brother, Gabriel, worked in politics and on Wall Street.
As a teenager, Bankman-Fried was very good at math. He went to a special summer camp for talented math students. After high school, he attended the Massachusetts Institute of Technology (MIT), one of the top universities for science and technology. He graduated in 2014 with a degree in physics.
Career Beginnings
After college, Bankman-Fried worked at a trading firm called Jane Street Capital. There, he learned about trading on financial markets. In 2017, he left his job and started his own company, Alameda Research.
Alameda Research was a quantitative trading firm, which means it used complex computer programs to make trades with cryptocurrencies like bitcoin. Bankman-Fried owned about 90% of the company. He was very successful at finding ways to make money from small differences in crypto prices around the world.
Founding FTX
In 2019, Bankman-Fried founded FTX, an exchange where people could buy and sell cryptocurrencies. The company grew very quickly and became one of the biggest crypto exchanges in the world. In 2021, he and his team moved the company's headquarters from Hong Kong to the Bahamas.
FTX's success made Bankman-Fried a billionaire. He became a well-known figure, even testifying before the U.S. Congress about the crypto industry. He also invested in other companies, including the stock trading app Robinhood Markets and the artificial intelligence company Anthropic.
FTX's Sudden Collapse
In November 2022, the public began to worry about FTX's financial health. A news report from CoinDesk showed that Bankman-Fried's other company, Alameda Research, held a large amount of FTX's own crypto token, FTT. This was risky because if the value of FTT dropped, both companies could be in trouble.
The head of a rival crypto exchange, Binance, announced he would sell all of his company's FTT tokens. This caused panic among FTX customers, who rushed to withdraw their money. This is similar to a bank run, where too many people try to take their money out at once.
FTX did not have enough money to pay everyone back. The company had a "liquidity crisis," meaning it ran out of cash. On November 11, 2022, FTX, Alameda Research, and over 130 related companies filed for bankruptcy.
It was later revealed that Bankman-Fried had secretly moved billions of dollars of customer funds from FTX to Alameda Research. Alameda used this money for risky investments and to pay off its own debts. Bankman-Fried resigned as CEO of FTX on the same day the company went bankrupt.
Arrest and Trial
On December 12, 2022, Bankman-Fried was arrested in the Bahamas and sent to the United States to face charges. He was accused of seven crimes, including fraud and conspiracy.
The trial, called United States v. Bankman-Fried, began in October 2023. Prosecutors argued that Bankman-Fried knowingly stole billions of dollars from his customers. They said he used the money for personal gain, including buying property and making large political donations.
Several of his former top executives, including Caroline Ellison and Gary Wang, testified against him. They admitted to helping him move the customer funds and lying to the public.
Bankman-Fried's defense lawyers argued that he was a young entrepreneur who made big mistakes but never intended to steal from anyone. They said he was overwhelmed by his companies' rapid growth. Bankman-Fried himself testified, denying that he knew about many of the problems at his companies.
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Guilty Verdict and Sentencing
On November 2, 2023, the jury found Bankman-Fried guilty on all seven counts. The trial lasted about a month.
On March 28, 2024, a judge sentenced him to 25 years in prison. The judge also ordered him to forfeit $11 billion, which is the amount of money he was found to have gained from his crimes. Bankman-Fried appealed his conviction in April 2024, but the appeal process could take years.
Political and Charitable Donations
Bankman-Fried was a major political donor. He gave millions of dollars to both the Democratic and Republican parties. In the 2020 U.S. elections, he was the second-largest individual donor to Joe Biden's campaign.
He claimed his donations were part of his belief in "effective altruism," a philosophy about doing the most good possible. He said he wanted to earn a lot of money so he could give it away to important causes, like preventing future pandemics.
However, after FTX collapsed, it was revealed that much of the money he donated was stolen from customers. Many politicians and charities who received money from him later donated an equal amount to other causes to distance themselves from the scandal.
Personal Life
Bankman-Fried is a vegan. He was known for his casual appearance, often wearing shorts and a t-shirt, and for his messy hair. During his trial, his ex-girlfriend and former colleague, Caroline Ellison, testified that his look was a calculated part of his public image.
He was also known for playing the video game League of Legends, sometimes even during important business meetings. While living in the Bahamas, he shared a luxury penthouse with about 10 of his coworkers.
After his arrest, Bankman-Fried was held in a detention center in Brooklyn, New York. Following his sentencing, he was moved to a federal prison in Los Angeles.
See also
In Spanish: Sam Bankman-Fried para niños
