Sam Bankman-Fried
Samuel Benjamin Bankman-Fried was born on the 5th of March 1992, in Stanford, California. His parents were Barbara Fried and Joseph Bankman, both professors at Stanford Law School. He attended Canada/USA Mathcamp, a summer program for mathematically talented high-school students. This early exposure to advanced mathematics set the stage for his future career. 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. 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 November 2017, following fund injections from billionaire computer programmer Jaan Tallinn and investor Luke Ding, Bankman-Fried and CEA's Tara Hedley cofounded the quantitative trading firm Alameda Research. By 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. On the 8th of December 2021, Bankman-Fried, along with other industry executives, testified before the Committee on Financial Services about regulating the cryptocurrency industry. In September 2021, Bankman-Fried and the entire senior staff of FTX moved from Hong Kong to the Bahamas.
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. 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. On November 8, Zhao announced that Binance had entered into a nonbinding agreement to purchase FTX due to a liquidity crisis at FTX. 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. On the 11th of November 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.
On the 12th of December 2022, Bankman-Fried was arrested shortly after 6:00 p.m. in his apartment complex in New Providence, Bahamas, by the Royal Bahamas Police Force. He was held at Fox Hill Prison in Nassau for ten days before consenting to his extradition from the Bahamas to the United States to face charges. He was allowed to remain free on a $250 million bond, the largest such bond ever set in an American criminal proceeding. Among the conditions was that he would stay at his parents' home in California. On the 3rd of January 2023, Bankman-Fried pled 'not guilty' to fraud and the other charges. Four additional criminal charges levied against Bankman-Fried were announced on the 23rd of February 2023, primarily focused on his making 'more than 300 illegal political donations.' A March 2023 indictment accused Bankman-Fried and others that they had 'directed and caused the transfer' of at least $40 million in cryptocurrency to Chinese government officials.
The trial began on the 3rd of October 2023, at the Daniel Patrick Moynihan United States Courthouse in Manhattan, presided over by Judge Lewis Kaplan. Over a dozen witnesses testified for the prosecution, including FTX executives Caroline Ellison, Gary Wang, and Nishad Singh, as part of plea deals. For his plea bargain, Wang testified that 'with some simple tweaks to computer code,' he helped Alameda Research misappropriate as much as $65 billion from FTX customers and that he 'lied about this to the public.' The case revolved largely around two ways that Alameda was able to access the funds of other FTX customers. The first was the line of credit Alameda had on the exchange. Senior engineers testified that they had added these features at the direction of their CEO. Bankman-Fried contended that he had merely requested something that would prevent erroneous liquidation. He was not aware of the specific solution implemented, he said, although he was aware that Alameda ultimately borrowed 'around $2 billion' this way. The trial ended on the 2nd of November 2023, with the jury pronouncing Bankman-Fried guilty on all seven counts.
On the 28th of March 2024, the court sentenced Bankman-Fried to 25 years in prison. Under provisions of the First Step Act and in conjunction with other time credit programs, Bankman-Fried may actually serve approximately 18 years. The court ordered the defendant to pay the sum of $11.02 billion in forfeiture for engaging in a series of fraudulent actions against customers and investors. Prior to the 11th of August 2023, Bankman-Fried was out on bail and living with his parents under court-ordered restrictions. On the 26th of July 2023, prosecutors alleged witness tampering after Bankman-Fried gave a reporter personal writings of former Alameda Research CEO Caroline Ellison. Three weeks later, on August 11, after Judge Kaplan concluded that witness tampering had likely occurred, he revoked Bankman-Fried's bail; Bankman-Fried was led from the courtroom in handcuffs and remanded into custody at the Metropolitan Detention Center, Brooklyn (MDC Brooklyn). As of late September 2024, he was assigned to the same dormitory-style cell as Sean Combs.
For the 2020 U.S. elections, he contributed $5.2 million to two super PACs that supported the Joe Biden 2020 presidential campaign. Bankman-Fried was the second-largest individual donor to Biden in the 2020 election cycle, after Michael Bloomberg. Contributions were made to both U.S. political parties, with SBF saying he gave an equal amount. For Democrats, Bankman-Fried donated $27 million to Protect Our Future, a Democratic PAC. Public records showed donations to Republican Party campaigns in the 2021, 22 cycle of $262,200, including donations to senators Susan Collins of Maine, Mitt Romney of Utah, Lisa Murkowski of Alaska, and Ben Sasse of Nebraska. Journalist Matthew Kassel says that Bankman-Fried had often donated to politicians who cultivate good Israel, United States relations but concluded 'it is unclear if his backing of pro-Israel candidates was coincidental or motivated by any personal interest in Middle East policy.' In November 2022, Bankman-Fried participated in an interview with Vox writer Kelsey Piper over Twitter private messages. He said that he 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.'
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Common questions
When was Sam Bankman-Fried born and where did he grow up?
Samuel Benjamin Bankman-Fried was born on the 5th of March 1992, in Stanford, California. His parents were Barbara Fried and Joseph Bankman, both professors at Stanford Law School.
What companies did Sam Bankman-Fried found and when did they start operating?
Bankman-Fried cofounded Alameda Research in November 2017 and founded the FTX cryptocurrency derivatives exchange in April 2019. FTX opened for business the following month after its founding date.
Why did FTX collapse and what happened to Sam Bankman-Fried's assets?
FTX collapsed in November 2022 after Binance CEO Changpeng Zhao announced a sale of FTT tokens which triggered customer withdrawals. Anonymous sources stated that Bankman-Fried transferred at least $4 billion from FTX to Alameda Research without disclosure before the bankruptcy declaration on the 11th of November 2022.
How long is the prison sentence given to Sam Bankman-Fried for his crimes?
The court sentenced Sam Bankman-Fried to 25 years in prison on the 28th of March 2024. He may actually serve approximately 18 years due to provisions of the First Step Act and other time credit programs.
Who were the key witnesses against Sam Bankman-Fried during his trial?
Over a dozen witnesses testified for the prosecution including FTX executives Caroline Ellison, Gary Wang, and Nishad Singh. Gary Wang testified that he helped Alameda Research misappropriate as much as $65 billion from FTX customers through simple tweaks to computer code.