Sam Bankman-Fried facts for kids
Quick facts for kids
Sam Bankman-Fried
|
|
|---|---|
.png)
Bankman-Fried in 2021
|
|
| Born |
Samuel Benjamin Bankman-Fried
March 5, 1992 Stanford, California, U.S.
|
| Other names | SBF "The Crypto King" (prior to arrest and conviction) |
| Education | Massachusetts Institute of Technology (BS) |
| Occupation | Entrepreneur |
| Known for |
|
| Criminal status | Initial bail revoked: Convicted on all charges; sentenced to 25 years in prison |
| Parents |
|
| Relatives | Linda P. Fried (aunt) Gabriel Bankman-Fried (brother) |
| Criminal charge |
|
|
Date apprehended
|
11 August 2023 (14 months ago) |
Samuel Benjamin Bankman-Fried (born March 5, 1992), or SBF, is an American entrepreneur who was convicted of fraud and related crimes in November 2023. Bankman-Fried founded the FTX cryptocurrency exchange and was celebrated as a "poster boy" for crypto. At one point, he was ranked the 41st-richest American in the Forbes 400.
The public persona of Bankman-Fried masked significant problems at FTX, and when evidence of potential fraud began to surface in November 2022, depositors quickly withdrew their assets, forcing the company into bankruptcy. On December 12, 2022, Bankman-Fried was arrested in the Bahamas and extradited to the United States, where he was indicted on seven criminal charges including wire fraud, commodities fraud, securities fraud, money laundering, and campaign finance law violations.
On November 2, 2023, in the case of United States v. Bankman-Fried, he was convicted of all seven counts of fraud, conspiracy, and money laundering. He was sentenced to 25 years in prison on March 28, 2024. The defendant was ordered to pay $11 billion in forfeiture for a series of frauds perpetrated on customers and investors.
Contents
Early life and education
Bankman-Fried was born on March 5, 1992, in Stanford, California. He is the son of Barbara Fried and Joseph Bankman, both professors at Stanford Law School. His aunt Linda P. Fried is the dean of Columbia University Mailman School of Public Health. His younger brother, Gabriel Bankman-Fried (b. c. 1995), previously worked as a legislative assistant, Wall Street trader, and director of the non-profit Guarding Against Pandemics and its associated political action committee, which came under scrutiny by federal investigators after it was discovered that much of the US$35 million on its books had been stolen by his older brother, Sam, from Alameda Research accounts. Both of his parents are also being sued by the new owners of FTX, to return assets Sam had given them, in the form of cash and a home, valued at over $32 million. His parents admit Sam gave them the assets, as gifts, but deny wrongdoing, and are in court to make their case.
Bankman-Fried attended Canada/USA Mathcamp, a summer program for mathematically talented high school students. He attended high school at Crystal Springs Uplands School in Hillsborough, California. He graduated from the Massachusetts Institute of Technology in 2014 with a bachelor's degree in physics and a minor in mathematics. As an MIT student he lived in a coeducational group house called Epsilon Theta.
Career
In the summer of 2013, Bankman-Fried worked as an intern at Jane Street Capital, a proprietary trading firm, trading international ETFs. He returned there to work full-time after graduating from MIT.
In September 2017, Bankman-Fried left Jane Street and moved to Berkeley, California, where he worked briefly at the Centre for Effective Altruism (CEA) as director of development from October to November 2017. In November 2017, following fund injections from billionaire computer programmer Jaan Tallinn and investor Luke Ding, Bankman-Fried and CEA's Tara Hedley (née Mac Aulay) co-founded the quantitative trading firm Alameda Research. As of 2021, Bankman-Fried owned approximately 90 percent of Alameda Research. In January 2018, Bankman-Fried organized an arbitrage trade, moving up to $25 million per day to take advantage of the higher price of bitcoin in Japan compared to the United States. After attending a cryptocurrency conference in Macau in late 2018, he moved to Hong Kong.
Bankman-Fried founded the FTX cryptocurrency derivatives exchange in April 2019; it opened for business the following month. In September 2021, Bankman-Fried and the entire senior staff of FTX moved from Hong Kong to the Bahamas.
Bankman-Fried was included on the 2021 list Forbes 30 Under 30, but was also included on Forbes 2023 Hall of Shame list, featuring ten picks the publication wishes it could take back.
On December 8, 2021, Bankman-Fried, along with other industry executives, testified before the Committee on Financial Services about regulating the cryptocurrency industry. On May 12, 2022, it was disclosed that Emergent Fidelity Technologies Ltd., which was majority owned by Bankman-Fried, had bought 7.6 percent of Robinhood Markets stock. In a November 2022 affidavit before the Eastern Caribbean Supreme Court, and prior to his arrest, Bankman-Fried said he and FTX co-founder Gary Wang together borrowed over $546 million from Alameda Research in order to finance Emergent Fidelity Technologies' purchase of Robinhood Markets stock.
In September 2022, it was reported that Bankman-Fried's advisors had offered on his behalf to help fund Elon Musk's purchase of Twitter. According to messages released as part of the lawsuit between Twitter and Musk during the latter's acquisition of Twitter, on April 25, 2022, investment banker Michael Grimes wrote that Bankman-Fried would be willing to commit up to $5 billion. No investment actually took place when Musk finalized the acquisition. Bankman-Fried invested $500 million in Anthropic and more than $500 million in venture capital firms, including $200 million in Sequoia Capital, itself an investor in FTX. Sequoia published a "glowing" profile of Bankman-Fried, which it subsequently removed after the solvency crisis at FTX.
In July 2023, allegations emerged that Bankman-Fried had considered "purchasing" the island country of Nauru to use as a bunker in the event of an apocalyptic event, in what has been described as a "misguided and sometimes dystopian" project.
Views on charity and market regulation
Bankman-Fried has publicly stated he supports effective altruism, contending that he was pursuing "earning to give" as an "altruistic career." He claimed to make donations "not based on personal interest but on the projects that are proven by data to be the most effective at helping people," such as those that reduced existential risks like nuclear war, pandemics, artificial intelligence, and threats to American democracy.
Bankman-Fried is the founder of Future Fund, whose team included Scottish philosopher and author William MacAskill, one of the founders of the effective altruism movement. After the collapse of FTX, all members of Future Fund simultaneously resigned. As of September 1, 2022, Future Fund stated it had committed around $160 million to 110 non-profits.
The stated reason for FTX's relocation to the Bahamas was the friendly regulatory environment, and Bankman-Fried openly discussed paying off the country's $9 billion national debt. In November 2022, Bankman-Fried participated in an interview with Vox writer Kelsey Piper over Twitter private messages. He said that his and his company's advocacy for crypto regulation was not sincere and was "just PR", adding that regulators "make everything worse" and "don't protect customers at all". On his "ethics stuff", he agreed it was "mostly a front" and described ethics as a "dumb game we woke Westerners play where we say all the right shibboleths and so everyone likes us". He later claimed to have been referring to ESG, CSR, and greenwashing, as opposed to effective altruism, bed nets, and pandemic prevention.
Bankruptcy of FTX
In November 2022, Binance CEO Changpeng Zhao revealed on Twitter that his firm intended to sell its holdings of FTT, FTX's token, which triggered a spike in customer withdrawals from FTX that FTX was unable to fulfill. Binance received $529 million worth of FTT as part of a sale of its equity in FTX in 2021. Zhao published his tweet soon after a report from CoinDesk stating that the bulk of the holdings of Alameda, Bankman-Fried's trading firm, were in FTT. Bloomberg and TechCrunch reported that any sale by Binance would likely have an outsized impact on FTT's price because of the token's low trading volume. The announcement by Zhao of the pending sale and disputes between Zhao and Bankman-Fried on Twitter led to a decline in the price of FTT and other cryptocurrencies. Shortly before, Zhao had criticized Bankman-Fried's lobbying efforts.
On November 8, Zhao announced that Binance had entered into a non-binding agreement to purchase FTX due to a liquidity crisis at FTX. Zhao stated that Binance would complete due diligence soon and that all crypto exchanges should avoid using tokens as collateral. He also wrote that he expected FTT to be "highly volatile in the coming days as things develop". On the day of the announcement, FTT lost 80 percent of its value. On November 9, The Wall Street Journal reported that Binance had decided not to acquire FTX. Binance cited reports of FTX's mishandling of customer funds and pending investigations of FTX as the reasons the firm would not pursue the deal. Amid the crisis, Bankman-Fried was no longer a billionaire, according to the Bloomberg Billionaires Index. The very next day, Bloomberg reported that the Securities and Exchange Commission and Commodity Futures Trading Commission were investigating FTX and the nature of its connections to Bankman-Fried's other holdings.
On November 11, 2022, FTX, Alameda Research, and more than 130 associated legal entities declared bankruptcy.
Anonymous sources cited by Reuters stated that, earlier in 2022, Bankman-Fried had transferred at least $4 billion from FTX to Alameda Research without any disclosure to the companies' insiders or the public. The sources said that the money transferred included customer funds and that it was ostensibly backed by FTT and shares in Robinhood. An anonymous source cited by The Wall Street Journal stated that Bankman-Fried had disclosed that Alameda owed FTX about $10 billion, which was secured through customer funds held by FTX when FTX had, at the time, $16 billion in customer assets. According to anonymous sources cited by The Wall Street Journal, the Chief Executive of Alameda Research, Caroline Ellison, told employees that Bankman-Fried was aware that FTX had lent its customers' money to Alameda to help it meet its liabilities.
Bankman-Fried resigned as CEO of FTX on November 11, 2022, and was immediately replaced by John J. Ray III, who from 2004 to 2009 had chaired the effort to recover Enron assets for creditors through litigation against numerous banks in the Enron Bankruptcy case. FTX and related entities filed for bankruptcy in Delaware on the same day.
Personal life
Bankman-Fried is vegan. He was raised in a Jewish family.
Alameda Research CEO Caroline Ellison was romantically involved with Bankman-Fried until their final split on April 15, 2022.
See also
In Spanish: Sam Bankman-Fried para niños
