Sam Bankman-Fried’s Bahamas arrest is a results of his unchecked vanity

Sam Bankman-Fried, the disgraced founder of the now-bankrupt crypto alternate FTX, maybe might have spent much less time doing media interviews whereas enjoying video video games over the previous few weeks and as a substitute spent extra time Googling extradition treaties. At the very least, he might have spent much less time doing media interviews the place he mentioned he didn’t assume he can be positioned beneath arrest.

In a Twitter Spaces throughout the day on Monday, Bankman-Fried mentioned, “I don’t think I will be arrested,” referring to the scandal that has engulfed his enterprise dealings since November, leaving FTX bankrupt and its clients unable to withdraw funds. Hours later, authorities within the Bahamas, the place Bankman-Fried lives and FTX is predicated, arrested him following felony expenses filed by the US Attorney’s Office of the Southern District of New York. The SEC and CFTC are going after Bankman-Fried, also known as SBF, as properly. After being denied bail by a choose within the Bahamas, he awaits an extradition listening to in jail there set for February 8, 2023.

In the multitude of interviews and Twitter chats Bankman-Fried has accomplished with the media in latest weeks, he’s been cagey however informal in discussing his liabilities within the scenario. “What happens happens. That’s not up to me,” he informed Puck’s Teddy Schleifer in an early December interview, when requested whether or not he thought somebody ought to go to jail over the FTX debacle. When the New York Times’s Andrew Ross Sorkin requested him days earlier whether or not he was involved about potential felony culpability, he replied, after some bumbling, “It sounds weird to say it, but I think the real answer is it’s not what I’m focusing on.”

The hubris is not possible to disregard.

The 30-year-old MIT graduate has squandered the funds of a whole bunch of hundreds of his clients, most of whom are unlikely to see a lot, if any, of their a reimbursement. He’s regularly mentioned he’s sorry and that he “fucked up,” however an oops doesn’t excuse or clarify billions of lacking {dollars}, misused funds, or the intense expenses of fraud towards him. His apologies are additionally in battle with a lot of his actions, earlier than FTX’s collapse and after, as he has continued to solid blame elsewhere for what occurred.

FTX appears to be like to have been fairly the alternative of the secure, upright crypto establishment Bankman-Fried mentioned it was. His refusal to take full duty, even now, speaks to the scale of his ego.

Bankman-Fried’s phrases don’t replicate his actions all through his time at Alameda and FTX

Bankman-Fried spent monumental quantities of cash and private capital to construct up his profile and his model. He slapped FTX’s identify on something he might, together with the Miami Heat’s enviornment, and put his face in advertisements. He solid himself as an excellent do-gooder, making a living hand over fist in crypto in an effort to direct it to the philanthropic endeavors he and others in his inside circle most popular. (Disclosure: This August, Bankman-Fried’s philanthropic household basis, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting undertaking. That undertaking is now on pause.)

All the whereas, he was, allegedly, committing critical crimes, including wire fraud, securities fraud, and cash laundering, and mixing funds of his cryptocurrency alternate, FTX, with these of the buying and selling agency he based, Alameda Research. According to the SEC’s grievance towards Bankman-Fried, “From the inception of FTX, Bankman-Fried diverted FTX customer funds to Alameda, and he continued to do so until FTX’s collapse in November 2022.”

In different phrases, Bankman-Fried’s assertions that he wasn’t conscious of what was happening with FTX and Alameda mixing funds and that the alternate went beneath as a result of he was asleep on the wheel are, if the allegations towards him are to be believed, a lie. “While he spent lavishly on office space and condominiums in The Bahamas, and sank billions of dollars of customer funds into speculative venture investments, Bankman-Fried’s house of cards began to crumble,” the grievance reads.

After positioning himself as the intense and secure face of crypto on Capitol Hill and amongst regulators, Bankman-Fried has additionally been charged with marketing campaign finance violations and allegations that he made extra donations than the permitted quantity, together with by utilizing different folks’s names. It’s a picture of a man who was properly conscious of the principles and guardrails round him — he’s fairly fluent in regulatory converse — and appeared to imagine they didn’t or shouldn’t apply to him.

In an interview with Vox’s Kelsey Piper in November performed by way of Twitter direct message, he declared, “Fuck regulators. They make everything worse.” Those are phrases he may come to remorse because the regulators are actually coming after him. Then once more, given his cavalier angle, who is aware of?

The blame recreation continues

In testimony he was set to ship earlier than a House Financial Services Committee listening to previous to his arrest that was published by Forbes, Bankman-Fried purports to simply accept duty for FTX’s collapse however repeatedly casts blame elsewhere. It begins with the road that’s grow to be typical for Bankman-Fried — “I fucked up” — after which goes on a winding path that swings between accepting fault and abdicating duty.

Bankman-Fried repeats his remorse that FTX filed for Chapter 11 chapter and laments that the corporate, which is now being run by John J. Ray III, who helped handle Enron after its 2001 collapse, has rebuffed his affords to assist repair the catastrophe he created. He claims he would have been in a position to “easily collect some pieces of the data” FTX has been unable to search out. In a Trump-esque vogue, he at instances displays an “I alone can fix it” angle — despite the fact that in different moments of this saga, when handy, he’s been very cautious to notice that on sure objects he wasn’t paying consideration.

Bankman-Fried says that he’s nonetheless conscious of “billions of dollars of serious offers for financing” to make clients “substantially whole,” however that may require the corporate be restarted as an alternate. It’s not clear who these affords are supposedly from. And then, his testimony but once more locations blame elsewhere for these magic, mysterious new funds not showing. “I admit I am not optimistic about some parts of the process,” he says. “I have not myself witnessed any progress by Mr. Ray’s team toward raising substantial funds or restarting the exchange.”

Ray has been reducing and candid in his evaluation of what occurred with FTX as he learns extra particulars. In his testimony earlier than the House Financial Services Committee on Tuesday, December 13 (the listening to Bankman-Fried was additionally supposed to seem at), Ray mentioned that FTX went on a $5 billion “spending binge” in late 2021 via 2022, and that loans and different funds over $1 billion have been made to insiders. He mentioned that FTX’s collapse stemmed from the “absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or the controls that are necessary for a company that is entrusted with other people’s money or assets.” Ray additionally mentioned on the House listening to that FTX used QuickBooks for accounting. There was, he says, “no sophistication” and an “absence of any management” at FTX.

Many of Bankman-Fried’s phrases and actions in latest weeks have been on the very least petty and sometimes borderline delusional. He’s taken swipes at Binance, the competitor that partly spurred FTX’s collapse, accusing its CEO of mendacity and claiming the corporate, which briefly entertained shopping for FTX, by no means meant to go forward with the deal. (Bankman-Fried apart, Binance is dealing with troubles of its personal.)

In his ready testimony, he says FTX’s new management is “destructive.” He appears to solid Ray and others as racist, declaring their transfer to grab belongings from FTX out of the Bahamas and to the United States equates “malign intent and incompetence on the part of other races, cultures, and governments” that may be “considered deeply offensive if directed at American minorities.”

Maybe he thought he might get away with this as a result of that’s usually how issues work

In retrospect, it’s arduous not to take a look at Bankman-Fried now and marvel how he was in a position to pull all of this off. The reply is solely that he was allowed to.

He managed to boost $2 billion from traders, together with large names like Sequoia, Tiger Global, and SoftBank, who it will seem didn’t look very intently beneath the hood. He was the topic of a number of largely flattering profiles that marveled at his schlubby look and obvious dedication to the efficient altruism philosophy and philanthropic causes. Media shops proceed to notice that his dad and mom are Stanford legislation professors and that he grew up in good, rich, liberal circles, as if that upbringing has some kind of necessary which means.

Given all of this, it is sensible why Bankman-Fried actually earlier than and even now has displayed such audacity in his enterprise choices and private actions. If you inform all people you’re superior and have completely obtained this, and all people round you is continually reinforcing that you simply’re superior and have completely obtained this, you may very properly be inclined to associate with it. If the principles have by no means utilized to you, why would they begin now? You obtain wunderkind standing, and also you discover no one round you is absolutely kicking the tires on how you bought there, so that you roll with it — even when that possibly includes doing a little alleged large crimes.

What lies forward for Bankman-Fried is unclear. He seems to be in a variety of bother, and he’ll have a crew of most likely superb legal professionals to defend him in courtroom (although how a lot he’ll heed their recommendation is an open query). At the very least, he’ll most likely have to relax on the media interviews and tweeting for some time. Though given his love for talking with the press — and the press’s love for talking with him — it will probably not be the final time we’ll hear from him.

Perhaps the larger query to ask past Bankman-Fried himself is how he was in a position to obtain such standing within the first place, to show such vanity with out ever worrying it will come earlier than a fall. Maybe the scarier factor is that guys like this get away with stuff like this on a regular basis. There may be an SBF 2.0 lurking across the nook, however extra probably, there are a couple of hiding in plain sight proper now.

Update, December 13, 7 pm ET: This story has been up to date with information of Bankman-Fried’s bail denial and extradition listening to.