Sam Bankman-Fried, the Icarus of crypto, was convicted on seven counts of fraud and conspiracy on Thursday night after a trial that produced 10 million pages of documents and only a few hours of jury deliberations. As always, it’s probably best to start at the beginning.
As a boy coming of age in the rarest quarters of the achievement class, he grew up in a family that viewed the celebration of birthdays and holidays as an easily forgotten inefficiencies. From such a childhood emerged an adult who worked 22 hours a day and subjected any interaction with another person to a cost-benefit calculation, often causing him to cancel meetings and other obligations at the last minute. Had to do it, because, as Michael Lewis writes in his book “Going Infinite” about the rise and fall of Mr. Bankman-Fried, “he had done some math in his head that proved you weren’t worth the time. “
From the beginning, the decision to let Mr. Bankman-Fried testify in the federal trial in which he was accused of some of the most serious acts of financial fraud in the country’s history seemed like a self-defeating proposition. Ostensibly unimpressed by physical beauty, art, novels, fashion, religion, and hot food, he was also an avowed hater of Shakespeare (“one-dimensional” characters, “illogical plot,” “obvious endings”), who emotionally The apostle was confused by judgments, challenging any attempts to place him somewhere on the continuum of human relativity.
What would a jury of his peers possibly look like? Or, in the specific absence of it, what will 12 ordinary people see as they sit and stand on the other side of the witness stand? Prosecutors had hoped they would see Mr Bankman-Fried, a 31-year-old boy, instead of an adult man steeped in self-contradiction and capable of committing crimes, someone whose teenage excitement and distractions had led him to Earned billions. Dollars worth of helpless, innocent errors. In the end, the jury saw only the duplicitous adult.
Among the many paradoxes associated with the case was the idea that a man so hostile to the perceived value of the image and story would so carefully and perversely draw attention to himself.
FTX, the cryptocurrency exchange that briefly made Mr. Bankman-Fried the world’s richest person under 30, before it completely collapsed, with no chief financial officer, no human resources or compliance department, no There was no board of directors. But it employed a public relations manager who spent his time arranging the interviews so readily granted by Mr Bankman-Fried. In these conversations, he created a perception of himself in the public mind as a crude radical utilitarian, a Corolla-driving expert who cared about money only to the extent that he was willing to give it all away.
In the case of the government that arrogance laid the foundation for the practice of other, more meaningful forms of disloyalty and deception. “You didn’t cut your hair because you were busy and lazy?” the prosecutor, Danielle Sassoon, asked the defendant in her cross-examination. His question was rhetorical.
She employed this strategy repeatedly – asking Mr. Bankman-Fried whether he said X or Y, eliciting an ambiguous response and then having to prove that he said what he claimed. Which he couldn’t really remember. During this particular sequence, she offered a statement in which she revealed that it was “important” to the business for people to think “I look crazy.” He further told the court that when Anthony Scaramucci, one of Mr Bankman-Fried’s investors, asked him to wear a suit, Mr Bankman-Fried responded that the T-shirts were important to his “brand”.
Pitted against other notorious investors whose fortunes have landed them in Lower Manhattan federal court, Mr. Bankman-Fried particularly stands out for these commitments to self-promotion. Michael Milken, best known for his role in creating junk bonds in the 1980s and his subsequent prison sentence on fraud and racketeering charges, was an extremely private man who avoided publicity, as did tax evasion cases. Time is probably advisable for anyone. ,
Later, Bernie Madoff, who owned at least two wedding rings and wore whatever vintage watch he had from his collection, tended to fade into the landscape of the Wall Street establishment. He avoided the social scenes of the Upper East Side and Palm Beach as resolutely as Mr. Bankman-fried pursued the company of Tom Brady and Katy Perry.
Without expertise in Wall Street jargon – backstop liquidity providers, clawback prevention – the case against Mr Bankman-Fried may seem incredibly complex. At one point, Judge Lewis A. Kaplan interrupted a discussion of a risk engine, which had reported troubling results a few years earlier, to clarify that the “risk engine” was not actually a person.
In fact, the fraud that Mr. Bankman-Fried committed was simple and exactly what Bernie Madoff had been doing all along: moving around and repurposing other people’s assets for his own use. .
The key difference relates to credentials and lineage and how they were set in motion. Mr. Madoff, a law-school dropout from Queens who got his start in penny stock trading — like Jordan Belfort, the self-described “Wolf of Wall Street” — might not have recognized any other path to becoming rich beyond hustleing. . But Mr. Bankman-Fried, a graduate of MIT, a brilliant student of mathematics and physics, who grew up in the center of technocracy, the son of Stanford Law School professors, missed out on the same shell game even though so many people had so much to offer. There are other roads available for that.
His defense was essentially based on the assumption that mistakes were made, chief among them that he managed risk poorly but never intended to do anything wrong. However much attention Mr. Bankman-Fried paid to his fiction, he paid less attention to his actual product.
As is the case with many high-profile criminal cases, the actions and motives of the accused may never be fully understood. But it is also true that these cases often highlight broader cultural truths. Mr. Bankman-Fried spoke on the stand, as he does in life, in a high, thin and childlike voice.
It’s easy to compare her presentation to its dramatic opposite, the deep, manly voice of Elizabeth Holmes who felt she needed to impress to be taken seriously as a young ambitious woman in Silicon Valley. Ms. Holmes filled her board of directors with prominent veterans. For Mr Bankman-Fried, it was apparently fine to declare everyone over the age of 45 “worthless” and to look and sound like a 13-year-old boy, even if he had the chance to speak with Bill Clinton and Tony Blair. Got it.
Like child actors, who are pushed toward maturity at an early age and who often suffer the consequences years later, Mr. Bankman-Fried was brought up as the intellectual counterpart of his parents and his circle. Once, when he was young and a friend of the family explained that something was too complicated for him and his brother to understand, Mr. Bankman-Fried’s father took the friend aside And told him that he and his wife do not talk to their children like that. While a normal adolescence might expose you to a fair amount of risk, Mr. Bankman-Fried had no normal adolescence.
What emerged later in his professional life, as the endless coverage of him made clear, which perhaps had always been lost, was an insatiable appetite for risk. Almost no financial bet can seem dangerous. Seen from a distance, it may seem like an addiction. Now, perhaps he may have been forced to give it up after all.
