LLater today, a man who just turned 32 will be brought before a Manhattan judge. He had been convicted of a massive fraud and he knew he was going to jail. The only question is how long. If the U.S. government gets its way, he won’t show up before his 80th birthday.
This was Sam Bankman Freed’s final humiliation. Judges, politicians, and the world’s media will declare him one of the greatest liars in American history. They will note how he built a digital currency, or cryptocurrency, market worth about $32 billion in three years and made himself the world’s richest man under 30. But this is not enough. He spends some $8 billion of his clients’ savings on luxury homes, venture capital and other things he likes.
But please keep this in mind. The groups who came yesterday to bury the billionaire praised him unreservedly and took as much of his cash as they could. While running against Donald Trump in 2020, Joe Biden received about $5 million from Bankman-Fried. He is not alone. Mitt Romney, Cory Booker, Paul Ryan, Nancy Pelosi: They and many other Democrats and Republicans collectively received tens of millions of dollars.
The payroll that powers Bankman-Fried’s trading exchange FTX also includes celebrities and sports stars, from Larry David (who reportedly received $10 million for an ad) to Gisele Gisele Bündchen and her then-partner, tennis quarterback Tom Brady, player Naomi Osaka and basketball legend Shaquille O’Neal. If these high rollers had the slightest qualms about taking huge sums of money from a young man who came from nowhere to lead a business in a tax haven, there was nothing stopping them from taking his money.
Spend less than a minute on Google and you’ll see photos of Tony Blair and Bill Clinton at a conference organized by Bankman-Fried . At his invitation, the two politicians flew to the Bahamas, a financier’s paradise.Wearing dark suits, they sit stiffly on stage while the prodigy slouches Wearing a dirty T-shirt and shorts. He may not be half their age, but there’s no doubt who’s in charge and who’s footing the bill. It was the spring of 2022, just months after Bankman-Fried was arrested and extradited to the United States.
Before that, the billionaire dined with Jeff Bezos and Leonardo DiCaprio. He hobnobbed with pop stars. After the meeting, Katy Perry posted on Instagram: “I’m quitting music to be an intern at @ftx_official ok.” He became a business magazine cover star and a regular on US TV shows. The profiles paint him as an idiot savant who sleeps on a bean bag next to his desk and works in a container of day-old chickpea korma.
The $40 million penthouse where he actually lives, overlooking a marina filled with yachts, doesn’t leave much space to describe his upbringing as the son of two Stanford law professors who spent time together before M.I.T. He was sent to a private technical school. Who wants boring old facts when you can live the American Dream?
They managed to raise the money after he was arrested and bail was set at an almost impossible $250 million. Much has been made of how he amassed this fortune but gave it away following a philosophy known as “effective altruism.” One astute reporter did the math and noted: “So far, he has donated less to charity than he spent on the naming rights to the Miami Heat arena.”
This wasn’t just the hypocrisy of someone who just wanted his next paycheck, it helped him create wealth. Some of the people who poured millions of dollars into FTX are some of the biggest names in finance. One of the Silicon Valley firms, Sequoia Capital, not only provided funding but also published a nearly 14,000-word biography of Bankman-Fried. After a few weeks, things didn’t go well and the article was taken down. But in its usual generosity, the network has archived it. One of the most striking is how Sequoia partners met Bankman-Fried over Zoom. They asked him what he thought about the future of FTX.
The article noted that instead of focusing on the interview, Bankman-Fried was playing a video game. He put it succinctly: “I want FTX to be a place where you can do whatever you want with your next dollar. You can buy Bitcoin. You can send money in any currency to any friend anywhere in the world. You You can buy a banana.”
Then, the article recorded: “Suddenly, the chat window on the Sequoia side of Zoom lit up, and the partners were terrified.”
“I love this founder,” one partner wrote… “YES!!!” exclaimed a second time.
Another excitedly responded: “I’m a 10 out of 10.”
A boy with a pudding face in baggy shorts said he wanted to buy a banana with online currency, and some of the greatest minds in finance went crazy. Remember: Keir Starmer and Rachel Reeves believe it’s the same thermal clothing geniuses who will fund our new green industry.
If you hear echoes of Jay Gatsby in these stories, it’s no accident. The Great Gatsby was published in 1925, during one of the largest financial bubbles in world history. When Wall Street went bankrupt in 1929, economist John Kenneth Galbraith, writing his fascinating history, The Great Crash of 1929, analyzed how prosperous societies condoned the same financial crimes. The crimes were later hauled to court. He called it “corruption.”
“In good times, people are relaxed, easy to trust, and money is plentiful,” he wrote. “But although there is a lot of money, there are always many people who need more. In this case, the incidence of corruption increases, the detection rate decreases, and corruption increases rapidly.”
When the crash came, everything changed. “People look at money with a narrow, suspicious eye. The person dealing with it is considered dishonest until he proves otherwise…Corruption shrinks.”
As Galbraith made clear, financial crime is not just committed by nefarious masterminds. They are sanctioned by all societies that believe in them—until they don’t. Bankman-Fried began losing face in the summer of 2022, not long after U.S. interest rates began to rise.
In many ways, his story is the story of how an entire decade of cheap money and high hopes for a new economic paradigm was squandered. His sins are his own to atone for. But his shame is a shame to a larger financial and political establishment. The old conservatives spent years waiting for a new savior to emerge and rescue them from the doldrums of the banking collapse. When a boy pulled up in a beat-up Corolla, they got in without asking too many questions.
