Who Is Sam Bankman Fried?

Bankman-Fried was born in 1992 on the Stanford University campus to a Jewish household. He is the son of Stanford Law School professors Barbara Fried and Joseph Bankman. Let’s see just who Sam Bankman Fried is.

Family background

Born on March 6, 1992, Samuel Benjamin Bankman-Fried, often identified by his initials SBF, is an American businessman, investor, and former billionaire. Bankman-Fried was the founder and CEO of the cryptocurrency trading company Alameda Research as well as the FTX exchange. Late in 2022, a crisis at FTX caused the native cryptocurrency of FTX, FTT, to crash. Bankman-Fried stepped down as CEO of FTX during the crisis and declared he would scale back operations at Alameda Research. FTX then filed for Chapter 11 bankruptcy.

The pinnacle of Bankman-Fried’s wealth was $26 billion. His projected net worth in October 2022 was $10.5 billion. However, according to the Bloomberg Billionaires Index, on November 8, 2022, during FTX’s solvency crisis, his net worth was estimated to have decreased by 94 percent in a day to $991.5 million, representing the greatest one-day drop in the index’s history. The Bloomberg Billionaires Index determined that Bankman-Fried has no substantial wealth as of November 11, 2022.

Before his riches vanished in November 2022, Bankman-Fried gave generously to political causes and had tens of millions set aside for the 2024 election.

Bankman-Fried was detained in the Bahamas on December 12, 2022, pending extradition to the United States. On December 13, an indictment against him was unsealed in the United States District Court for the Southern District of New York, showing a variety of counts for offenses such as wire fraud, commodities fraud, securities fraud, money laundering, and campaign finance law violations. If convicted on all eight counts, Bankman-Fried faces up to 115 years in prison.

Early life and education

Bankman-Fried was born in 1992 on the Stanford University campus to a Jewish household. He is the son of Stanford Law School professors Barbara Fried and Joseph Bankman. Linda P. Fried, his aunt, is the dean of Columbia University’s Mailman School of Public Health. Gabriel Bankman-Fried, his brother, is a former Wall Street trader and former director of the non-profit Guarding Against Pandemics as well as its related political action committee.

Bankman-Fried participated in the Canada/USA Mathcamp, a summer program for academically gifted high school students. He went to Crystal Springs Uplands School in Hillsborough, California for high school. Bankman-Fried attended the Massachusetts Institute of Technology from 2010 to 2014. He lived in Epsilon Theta, a coeducational group home. He earned a bachelor’s degree in physics with a minor in mathematics in 2014.

Career

Bankman-Fried interned at Jane Street Capital, a proprietary trading firm, in the summer of 2013, trading foreign ETFs. After graduating from MIT, he returned to work there full-time.

Bankman-Fried moved away from Jane Street in September 2017 and settled in Berkeley. From October to November of that year, he served as the director of development for the Centre for Effective Altruism. With Tara Mac Aulay from the Centre of Effective Altruism, he co-founded Alameda Research, a quantitative trading company, in November 2017. Bankman-Fried held over 90% of Alameda Research as of 2021. Bankman-Fried set up an arbitrage trade in January 2018 to profit from the higher price of bitcoin in Japan compared to the United States, moving up to $25 million a day. He relocated to Hong Kong after going to a cryptocurrency conference in Macau in late 2018.

In April 2019, Bankman-Fried created FTX, a cryptocurrency derivatives exchange, which went live the following month. Bankman-Fried, along with other sector executives, testified before the Committee on Financial Services on December 8, 2021, about regulating the cryptocurrency industry. Emergent Fidelity Technologies Ltd., which is mainly owned by Bankman-Fried, purchased 7.6 percent of Robinhood Markets Inc. stock on May 12, 2022.

In September 2022, it was reported that Bankman-Fried’s advisors had offered to help pay Elon Musk’s purchase of Twitter on his behalf. According to texts published as part of the dispute between Twitter and Musk after the latter’s takeover of Twitter, investment banker Michael Grimes stated on April 25, 2022, that Bankman-Fried would be willing to commit up to $5 billion. Bankman-Fried made over $500 million in venture capital investments, including $200 million in Sequoia Capital. Sequoia released a “glowing” profile of Bankman-Fried, which it later withdrew after the FTX solvency crisis became public.

Effective altruism

Bankman-Fried publicly promoted effective altruism and claimed to be pursuing an altruistic profession of earning to give. He is a member of Giving What We Can and has stated that he intends to give away the vast majority of his wealth to worthy causes throughout the course of his life. For this goal, he established the FTX Future Fund, which featured William MacAskill, one of the architects of the effective altruism movement. Following the demise of FTX, the entire crew quit. By September 1, 2022, the Future Fund had committed $160 million in philanthropic grants and investments.In November 2022, Bankman-Fried remarked that the humanitarian appearance he and his company showed was not sincere, and was a “dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us”.

Solvency crisis at FTX

Binance CEO Changpeng Zhao disclosed on Twitter in November 2022 that his company intended to liquidate its shares of FTT, FTX’s token. FTT worth $529 million was handed to Binance as compensation for the sale of its FTX equity in 2021. Zhao tweeted shortly after CoinDesk reported that the majority of Bankman-Fried’s trading company Alameda’s holdings were in FTT. According to Bloomberg and TechCrunch, the limited trading volume of FTT would make any sale by Binance likely have an excessive effect on the token’s price. The price of FTT and other cryptocurrencies dropped as a result of Zhao’s disclosure of the impending sale and arguments with Bankman-Fried on Twitter. Zhao has recently questioned Bankman-Fried’s lobbying activities.

Due to a liquidity crisis at FTX, Zhao said on November 8 that Binance and FTX had made a non-binding agreement for Binance to buy FTX. Zhao said that all cryptocurrency exchanges should refrain from utilizing tokens as collateral and that Binance would shortly finish its due diligence. As events progressed, he added that he anticipated FTT to be “highly volatile in the coming days as things develop” FTT dropped 80% of its value the day the announcement was made. The Wall Street Journal reported on November 9 that Binance has opted against buying FTX. Binance stated that the company would not proceed with the acquisition due to reports that FTX had misused customer funds and ongoing investigations into the company. According to the Bloomberg Billionaires Index, Bankman-Fried was no longer a billionaire during the financial crisis. The Securities and Exchange Commission and Commodity Futures Trading Commission were looking into FTX and the specifics of its relationships to Bankman-Fried’s other interests, according to a story from Bloomberg the very following day.

According to unnamed sources cited by Reuters, Bankman-Fried transferred at least $4 billion from FTX to Alameda Research earlier in 2022 without informing insiders or the general public. According to the sources, the assets transferred comprised user funds and were secured by Robinhood shares and FTT. According to a source who asked to remain unnamed and was cited by the Wall Street Journal, Bankman-Fried disclosed that Alameda owed FTX around $10 billion, which was secured by client cash held by FTX at the time it had $16 billion in customer assets. The Wall Street Journal quoted unnamed sources when reporting that Caroline Ellison, the CEO of Alameda Research, informed staff that Bankman-Fried was aware that FTX had loaned money from its clients to Alameda in order to assist it in meeting its obligations.