In the week’s after FTX’s implosion, many viewed Sam Bankman-Fried as a scamp who had gotten in over his head. As the full extent of his crimes became known, however, a much darker story emerged: Bankman-Fried was not a misguided young man, but a manipulative liar and narcissist who did not give a damn whom he hurt. When he leaked his one-time girlfriend’s personal diary to the New York Times this month, no one was particularly surprised.
Then there is the matter of his family. As with the FTX founder himself, recent court revelations have meant that any initial inclinations to give them the benefit of the doubt were ill-founded and naive.
We learned, for instance, that Joseph Bankman has been paying for his son’s gold-plated legal defense with $10 million gifted to him by Bankman-Fried—money looted from FTX customers and that he should not be spending, according to the Justice Department. While any parent can understand the urge to help a child in trouble, Bankman is a law professor who knows what he’s doing isn’t right. It’s also hard to sympathize upon learning he blew at least a million of the funds on bad crypto trades.
Then there is Gabe. Before it all came crumbling down, Bankman-Fried’s brother was a Democratic politico who ran a nonprofit funded primarily by FTX and was also an evangelist for effective altruism—the flim-flam philosophy that purported to be about helping humanity with money. As my colleague Leo Schwartz reported, Gabe Bankman-Fried wrote a memo proposing to buy Nauru, a tiny nation island in Micronesia:
“The goal, according to the memo, would be to build a bunker that could be used in the event that ‘50%-99.99% of people die,’ with the aim of ensuring that most EAs, or effective altruists, can survive, as well as to develop ‘sensible regulation around human genetic enhancement, and build a lab there…Probably there are other things it’s useful to do with a sovereign country, too.'”
All for the good of humanity, huh? Sounds like a great guy. As for Barbara Fried, a law professor at Stanford with her husband and a one-time rainmaker for the Democratic party, there are no reports of her being directly involved with FTX. All that can be said for now is she didn’t do a great job of drawing on her scholarly research on corporate ethics to guide her sons.
While only Bankman-Fried has been charged, it’s worth calling attention to the broader moral rot within his family, and how much their high social status—based on their Ivy League associations and “correct” political views—helped them conceal that rot. Or if you want a simpler analysis, I suggest Leo’s recent observation to the Fortune Crypto team that “this family is out of bad sitcom.”
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
Crypto rapper Razzlekahn and her programmer husband reached a plea deal over the theft of more than 100,000 Bitcoins from Bitfinex. (Reuters)
Coinbase, citing poor demand, is winding down its Borrow program that let customers post Bitcoin collateral to receive cash loans. (CoinDesk)
Celsius reached settlements that will allow it to exit bankruptcy by the end of the year, with 78,000 customers receiving a mix of cash and shares in a restructured company. (WSJ)
DeFi exchanges' share of trading volume has fallen to 5% from 7% in January of 2022 despite predictions they would grow in popularity after the collapse of FTX. (Bloomberg)
Political alarmism over CBDCs led the Boston Fed to end its research into digital bearer instruments that could replicate the anonymity of cash. (MIT Tech Review)
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