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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Sam Bankman-Fried spent most of the breaks throughout his trial in New York sitting alone on the defence desk flanked by two hulking federal marshals. However on the day he was because of testify, he stood up and walked to the witness stand early. An official informed him to step down and wait to be referred to as.
The 31-year-old former billionaire, who faces a long time in jail after being convicted of fraud and cash laundering, has at all times been desirous to spin his personal story. However within the twenty sixth ground Manhattan courtroom, he watched in silence as his closest mates and former girlfriend took the stand to present a damning account of his gorgeous rise and fall.
Prosecutors mentioned he “secretly” took “billions out the again door” at his FTX crypto change to fund reckless spending by his personal buying and selling agency, resulting in FTX’s collapse final November with an $8bn gap in its steadiness sheet. “The defendant was motivated by greed and ambition,” prosecutor Nick Roos mentioned. “Hundreds of individuals misplaced billions of {dollars} . . . as a result of he needed more cash to do no matter he needed with . . . Let the proof prevail over his storytelling.”
Bankman-Fried’s defence lawyer mentioned prosecutors engaged in misleading storytelling of their very own. “They wrote him into this film as a villain, a nasty man,” mentioned Mark Cohen. “What the federal government saved leaving out of its film was the ‘why’.”
After lower than 5 hours, the jury discovered he had prison intent. However we’ll by no means know what was in Bankman-Fried’s thoughts. Natalie Tien, his former assistant and spokesperson, mentioned neither aspect’s arguments fitted the person she knew. “He did lie, he did take the cash, however I don’t suppose it was about greed,” she mentioned. “I feel he was aiming to play a extra vital position, an even bigger sport in his thoughts, and was taking these actions to attain that purpose. Maybe he genuinely thought it was for the higher good.”
Bankman-Fried was the poster boy for crypto’s push into the mainstream, welcomed on Capitol Hill and profitable backing from prime buyers together with Sequoia and BlackRock. The FTX fraud has grow to be the last word indictment of the crypto bubble and the hazards of largely unregulated firms dealing with billions of {dollars} for hundreds of thousands of shoppers. Talking after the late night verdict, district legal professional Damian Williams mentioned Bankman-Fried had tried to make himself “king of crypto”.
The son of two eminent Stanford legislation professors, Joseph Bankman and Barbara Fried, who sat grim-faced in courtroom, Bankman-Fried attended the identical Palo Alto personal faculty as Steve Jobs’s son. He studied on the Massachusetts Institute of Expertise, and took a job at Jane Avenue Capital earlier than quitting to use Wall Avenue buying and selling logic to crypto along with his personal personal buying and selling agency Alameda Analysis.
His best success got here after founding FTX in 2019, simply earlier than the increase in cryptocurrencies through the pandemic. His imaginative and prescient of a high-tech future for finance received FTX round $2bn in enterprise capital backing at a peak valuation of $40bn. Bankman-Fried’s pitch satisfied buyers regardless of enjoying video video games on most of his calls with them. This grew to become a part of his legend, alongside along with his frizzy hair, cargo shorts and the beanbag he slept on subsequent to his desk.
He and 9 workers lived in a $30mn Bahamas penthouse with an orchid-shaped pool. He watched the 2022 Tremendous Bowl — and a multimillion greenback FTX industrial starring Larry David — in a field with Katy Perry, Orlando Bloom and Kate Hudson.
However behind the scenes, FTX had loaned billions to Alameda, fuelling the buying and selling agency’s more and more wild bets on rising crypto costs. The crypto crash crushed these leveraged investments, and left Alameda unable to pay again FTX, wiping out buyer deposits. Prosecutors say the “limitless borrowing” amounted to “limitless stealing”.
The trial left unanswered questions. Why would a younger billionaire, operating the world’s most profitable start-up, threat illicitly borrowing billions to fund dangerous crypto trades? Practically absent from the courtroom was Bankman-Fried’s philanthropy, which was key to how he bought his story. He claimed his enterprise empire was an engine to feed cash to charities tackling existential threats to humanity — from rogue AI to future pandemics.
Caroline Ellison, his former girlfriend and CEO at Alameda, who has pleaded responsible to fraud, gave the clearest view into his mind. Bankman-Fried, she mentioned, believed in taking any gamble if he had a knife-edge benefit in likelihood. “He thought that the one ethical rule that mattered was doing no matter would . . . primarily . . . create the best good for the best quantity,” she testified. He didn’t suppose “guidelines like don’t lie and don’t steal” had been justified.
On the stand, Bankman-Fried’s narrative powers had been hemmed in by authorized procedures. The choose had commented in courtroom that robbing a financial institution after which enjoying the lottery continues to be against the law (even for those who intend to win, pay again the financial institution and donate the earnings). Bankman-Fried tried to persuade the jury that he thought Alameda was allowed to do “something” with the borrowed cash, whether or not to “purchase muffins” or “pay enterprise bills”, and that he merely misjudged the dimensions and threat of the borrowing till it was too late.
It was a closing check for crypto’s grasp storyteller, and it failed. Within the midst of a gruelling cross examination, through which Bankman-Fried mentioned he ‘didn’t recall’ greater than 140 instances, prosecutor Danielle Sassoon requested him: “Mr Bankman-Fried, would you agree that you understand how to inform a very good story?”
He paused: “I don’t know. It will depend on what metric you employ.”
