How Sam Bankman-Fried's parents enabled his criminal empire

A question that has come up repeatedly in the FTX scandal has been the role of Sam Bankman-Fried’s parents. Namely, how could such respectable people—Stanford law professors famous for their sense of ethics—have raised a sociopath who stole billions of dollars under the guise of altruism? As it turns out, they were Bankman-Fried’s primary accomplices.

As a scorching cover story in BusinessWeek reveals, Barbara Fried and Joseph Bankman didn’t just raise a criminal, but actively took part in running FTX and enjoying the spoils of the fraud. They regularly turned up in the company’s offices and were included on important emails, and, most critically, flexed their prestige to open doors in Silicon Valley and Democratic power circles for their son. Meanwhile, these two advocates for the poor helped themselves to a $16 million luxury villa in the Bahamas and $10 million in cash—paid for by FTX customers.

While both parents were complicit, Bankman-Fried’s father had the most direct role, drawing on his experience as a famous tax lawyer to help devise the offshore corporate entities as well as “FTT, the made-up currency Bankman-Fried issued when he launched his crypto exchange and the flimsy asset on which a Jenga tower of imagined wealth would sit.”

Ironically, Bankman-Fried reportedly plans to invoke an “advice of counsel” defense at his trial next month—basically saying it was his lawyers who led him astray. If that’s the case, it feels like it may be only a matter of time until his dad, who provided that advice, faces criminal jeopardy. Here is how BusinessWeek summed up the matter:

“He participated in a number of decisions—including the launch of FTX, the creation of FTT, the company’s courtship of politicians and the dealings with regulators in the Bahamas—that have been criticized by regulators and prosecutors as potentially illegal. Bankman also was involved in the hiring of Friedberg, FTX’s general counsel, who’s been accused of enabling the fraud and working to cover up efforts to expose it, including by paying off potential whistleblowers.”

The BusinessWeek article is devastating in its critique of Bankman-Fried’s sleazy parents, but also of the broader community of Stanford University that swaddles its nepo babies in extreme privilege, and spins questionable behavior—like playing League of Legends during board meetings—as evidence of genius. It’s hard not to conclude there is moral rot at the school. In recent years, its leading figures have included not just Barbara Fried and Sam Bankman but Theranos fraudster Elizabeth Holmes and a university president who recently resigned for faking scientific data.

These are just some of the revelations from the BusinessWeek article, which may be the best account of FTX to date. It’s well worth reading in full.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

A Russian facing criminal charges in Washington, D.C., for running a crypto money laundering operation is trying an unusual defense tactic: dismissing Chainalysis evidence as "junk science." (Bloomberg)

Crypto firm Genesis, which lost billions from 3AC's collapse, is shutting down all of its trading operations, including overseas derivatives. (PYMNTS)

Deutsche Bank announced it will for the first time custody customers' crypto assets, including Bitcoin and tokenized versions of stocks. (Reuters)

Singapore adopted more conservative crypto policies after FTX's collapse but still remains crypto-friendly overall, Binance's CEO told a conference hosted at the island nation. (Bloomberg)

In 70 pages worth of unpublished tweets, Sam Bankman-Fried whined that he is one of the most hated people in the world and that he believed what he did was right. (NYT)