See inside the $35 million ‘Orchid’ penthouse Sam Bankman-Fried lived in, with floor-to-ceiling ocean views and a rooftop pool<\/h2>\n\n\n\n\n
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- Prosecutors in the criminal trial against Sam Bankman-Fried shared photos of a condo he lived in.<\/li>\n\n\n \n\n
- The prosecutors said the penthouse in the Bahamas was worth about $35 million.<\/li>\n\n\n \n\n
- It has a rooftop pool, a floor-to-ceiling view of the ocean, two spas, and at least six bathrooms.<\/li>\n\n\n<\/ul>\n\n\n\n\n\n
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<\/p>\n\n\nAccess your favorite topics in a personalized feed while you’re on the go. download the app\n\n\n<\/p>\n\n\n\n\nProsecutors pointed to Sam Bankman-Fried’s lavish lifestyle during the criminal trial against the FTX cofounder, sharing photos of the penthouse condo in the Bahamas that Sam Bankman-Fried once lived in, which they said was worth about $35 million.<\/p>\n\n\n\n\n
Bankman-Fried’s lawyers had requested some of the photos of the condo be kept out of evidence, but Judge Lewis Kaplan denied the request.<\/p>\n\n\n\n\n
In the trial, which started Tuesday, Bankman-Fried is being accused of fleecing FTX customers and investors out of billions of dollars, some of which is said to have been used for personal or family-related real-estate purchases, and commingling funds between his cryptocurrency-exchange platform and its affiliated hedge fund, Alameda Research.<\/p>\n\n\n\n\n
Take a look inside the condo where Bankman-Fried and his coworkers spent much of their time.<\/p>\n\n\n\n\n
After Bankman-Fried shifted FTX’s operations to the Bahamas in 2021, he moved into an expensive resort community in Nassau named Albany.<\/h2>\n\n\n\n\n
The 600-acre Albany community was founded by a group of investors that included several celebrities such as Tiger Woods, Will Smith, and Justin Timberlake, Fortune previously reported.<\/p>\n\n\n\n\n
Between 2020 and 2022, Sam Bankman-Fried, his parents, and some of the executives at his companies bought about 19 different properties in the Bahamas, Reuters reported last year.<\/p>\n\n\n\n\n
The publication said the purchases included seven condos at the Albany location, which came to about $72 million in total.<\/p>\n\n\n\n\n
The penthouse Bankman-Fried lived at was in a building in the Albany community named “the Orchid.”<\/h2>\n\n\n\n\n
“Orchid \u2014 the building closest to the ocean, the one with the most sweeping views \u2014 was more subtle,” Michael Lewis wrote in his book on Bankman-Fried, comparing the building with other Albany properties. “It looked nothing like an orchid in any light, but its exterior was wrapped with an aluminum sheath whose pattern was meant to call to mind the tropical flower.”<\/p>\n\n\n\n\n
The property was listed for sale for nearly $40 million the same day FTX filed for bankruptcy last year. But the listing has since been taken down.<\/p>\n\n\n\n\n
Bankman-Fried lived in the condo with several of his coworkers.<\/h2>\n\n\n\n\n
Lewis said Bankman-Fried lived at the condo with Alameda Research CEO Caroline Ellison, who was his on-and-off girlfriend; Gary Wang, his FTX cofounder; Nishad Singh, the FTX engineering director; and his college friend Adam Yedidia.<\/p>\n\n\n\n\n
The author said Bankman-Fried was later “booted” out of the condo by Ellison.<\/p>\n\n\n\n\n
On Wednesday, Yedidia testified that he lived in the condo with nine other people, including Bankman-Fried. Yedidia said the property was bought for about $35 million by Alameda Research at Bankman-Fried’s direction.<\/p>\n\n\n\n\n
The penthouse is 12,000 square feet, and its floor-to-ceiling windows overlook the Albany marina and the Atlantic Ocean.<\/h2>\n\n\n\n\n
The listing said: “Every aspect of the penthouse was meticulously designed with Venetian plaster walls matching Italian marble accents throughout, German engineered doors and windows, and wired throughout for sound,” The Guardia reported.<\/p>\n\n\n\n\n
Inside Sam Bankman-Fried\u2019s Bahamian penthouse after the FTX collapse<\/h2>\n\n\n\n\n
Sam Bankman-Fried\u2019s $US30 million Bahamas penthouse looks like a dorm after the students have left for winter break. The dishwasher is full. Towels are piled in the laundry room. Bat streamers from a Halloween party are still hanging from a doorway. Two boxes of Legos sit on the floor of one bedroom. And then there are the shoes \u2013 dozens of sneakers and heels piled in the foyer, left behind by employees who fled the island of New Providence last month when his cryptocurrency exchange FTX imploded.<\/p>\n\n\n\n\n
\u201cIt\u2019s been an interesting few weeks,\u201d Bankman-Fried says in a chipper tone as he greets me. It\u2019s a muggy Saturday afternoon, eight days after FTX filed for bankruptcy. He\u2019s shoeless, in white gym socks, a red T-shirt and wrinkled khaki shorts. His standard uniform.<\/p>\n\n\n\n\n
<\/p>\n\n\n\n\n
This isn\u2019t part of the typical tour Bankman-Fried gave to the many reporters who came to tell the tale of the boy-genius-crypto-billionaire who slept on a beanbag chair next to his desk and only got rich so he could give it all away, and it\u2019s easy to see why. The apartment is at the top of one of the luxury condo buildings that border a marina in a gated community called Albany. Outside, deckhands buff the stanchions of a 200-foot yacht owned by a fracking billionaire. A bronze replica of Wall Street\u2019s Charging Bull<\/em> statue stands on the lawn, which is as manicured as the residents. I feel like I\u2019ve crash-landed on an alien planet populated solely by the very rich and the people who work for them.<\/p>\n\n\n\n\n
Bankman-Fried leads me down a marble-floored hallway to a small bedroom, where he perches on a plush brown couch. Always known for being jittery, he taps his foot so hard it rattles a coffee table, smacks gum and rubs his index finger with his thumb like he\u2019s twirling an invisible fidget spinner. But he seems almost cheerful as he explains why he\u2019s invited me into his 1120-square-metre bolthole, against the advice of his lawyers, even as investigators from the US Department of Justice probe whether he used customers\u2019 funds to prop up his hedge fund, a crime that could send him to prison for years. (Spoiler alert: it sure looks like he did.)<\/p>\n\n\n\n\n
Bright red flags<\/h2>\n\n\n\n\n
\u201cWhat I\u2019m focusing on is what I can do, right now, to try and make things as right as possible,\u201d Bankman-Fried says. \u201cI can\u2019t do that if I\u2019m just focused on covering my ass.\u201d<\/p>\n\n\n\n\n
But he seems to be doing just that, with me here and all along the apology tour he\u2019ll later embark on, which will include a video appearance at a New York Times<\/em> conference and an interview on Good Morning America<\/em>. He\u2019s been trying to blame his firm\u2019s failure on a hazy combination of comically poor bookkeeping, wildly misjudged risks and complete ignorance of what his hedge fund was doing. In other words, an alumnus of both MIT and the elite Wall Street trading firm Jane Street is arguing that he was just dumb with the numbers \u2013 not pulling a conscious fraud. Talking in detail to journalists about what\u2019s certain to be the subject of extensive litigation seems like an unusual strategy, but it makes sense: The press helped him create his only-honest-man-in-crypto image, so why not use them to talk his way out of trouble?<\/p>\n\n\n\n\n
He doesn\u2019t say so, but one reason he might be willing to speak with me is that I\u2019m one of the reporters who helped build him up. After spending two days at FTX\u2019s offices in February, I flew past the bright red flags at his company \u2013 its lack of corporate governance, the ties to his Alameda Research hedge fund, its profligate spending on marketing, the fact that it operated largely outside US jurisdiction. I wrote a story focused on whether Bankman-Fried would follow through on his plans to donate huge sums to charity and his connections to an unusual philanthropic movement called effective altruism.<\/p>\n\n\n\n\n
It wasn\u2019t the most embarrassingly puffy of the many puff pieces that came out about him. (\u201cAfter my interview with SBF, I was convinced: I was talking to a future trillionaire,\u201d one writer said in an article commissioned by a venture capital firm.) But my tone wasn\u2019t entirely dissimilar. \u201cBankman-Fried is a thought experiment from a college philosophy seminar come to life,\u201d I wrote. \u201cShould someone who wants to save the world first amass as much money and power as possible, or will the pursuit corrupt him along the way?\u201d Now it seems pretty clear that a better question would\u2019ve been whether the business was a scam from the start.<\/p>\n\n\n\n\n
I tell Bankman-Fried I want to talk about the decisions that led to FTX\u2019s collapse, and why he took them. Earlier in the week, in late-night DM exchanges with a Vox<\/em> reporter and on a phone call with a YouTuber, he made comments that many interpreted as an admission that everything he said was a lie. (\u201cSo the ethics stuff, mostly a front?\u201d the Vox<\/em> reporter asked. \u201cYeah,\u201d Bankman-Fried replied.) He\u2019d spoken so cynically about his motivations that to many it seemed like a comic book character was pulling off his mask to reveal the villain who\u2019d been hiding there all along.<\/p>\n\n\n\n\n
<\/p>\n\n\n\n\n
I set out on this visit with a different working theory. Maybe I was feeling the tug of my past reporting, but I still didn\u2019t think the talk about charity was all made up. Since he was a teenager, Bankman-Fried has described himself as utilitarian \u2013 following the philosophy that the correct action is the one likely to result in the greatest good for the greatest number of people. He said his endgame was making and donating enough money to prevent pandemics and stop runaway artificial intelligence from destroying humanity. Faced with a crisis, and believing he was the hero of his own sci-fi movie, he might\u2019ve thought it was right to make a crazy, even illegal, gamble to save his company.<\/p>\n\n\n\n\n
To be clear, if that\u2019s what happened, it\u2019s the logic of a megalomaniac, not a martyr. The money wasn\u2019t his to gamble with, and \u201cthe ends justify the means\u201d is a clich\u00e9 of bad ethics. But if it\u2019s what he believed, he might still think he\u2019d made the right decision, even if it didn\u2019t work out. It seemed to me that\u2019s what he meant when he messaged Vox<\/em>, \u201cThe worst quadrant is sketchy + lose. The best is win + . \u201d I want to probe that, in part because it might get him to talk more candidly about what had happened to his customers\u2019 money.<\/p>\n\n\n\n\n
Miscalculating the odds<\/h2>\n\n\n\n\n
I decide to approach the topic gingerly, on terms I think he\u2019ll relate to, as it seems he\u2019s in less of a crime-confess-y mood. He\u2019s said he likes to evaluate decisions in terms of expected value \u2013 the odds of success times the likely payoff \u2013 so I begin by asking: \u201cShould I judge you by your impact, or by the expected value of your decision?\u201d<\/p>\n\n\n\n\n
\u201cWhen all is said and done, what matters is your actual realised impact. Like, that\u2019s what actually matters to the world,\u201d he says. \u201cBut, obviously, there\u2019s luck.\u201d<\/p>\n\n\n\n\n
That\u2019s the in I\u2019m looking for. For the next 11 hours \u2013 with breaks for fundraising calls and a very awkward dinner \u2013 I try to get him to tell me exactly what he meant. He denies that he\u2019s committed fraud or lied to anyone and blames FTX\u2019s failure on his sloppiness and inattention. But at points it seems like he\u2019s saying he got un<\/em>lucky, or miscalculated the odds.<\/p>\n\n\n\n\n
Bankman-Fried tells me he\u2019s still got a chance to raise $US8 billion to save his company. He seems delusional, or committed to pretending this is still an error he can fix, and either way, the few supporters remaining at his penthouse seem unlikely to set him straight. The grim scene reminds me a bit of the end of Scarface<\/em>, with Tony Montana holed up in his mansion, semi-incoherent, his unknown enemies sneaking closer. But instead of mountains of cocaine, Bankman-Fried is clinging to spreadsheet tabs filled with wildly optimistic cryptocurrency valuations.<\/p>\n\n\n\n\n
Think of FTX like an offshore casino. Customers sent in money, then gambled on the price of hundreds of cryptocurrencies \u2013 not just Bitcoin or Ether, but more obscure coins. In crypto slang, the latter are called shitcoins because almost no one knows what they\u2019re for. But in the past few years, otherwise respectable people, from retired dentists to heads of state, convinced themselves that these coins were the future of finance. Or at least that enough other people might think so to make the price go up. Bankman-Fried\u2019s casino was growing so fast that earlier this year some of Silicon Valley\u2019s top venture capitalists invested in it at a $US32 billion valuation.<\/p>\n\n\n\n\n
The problem surfaced last month. After a rival crypto-casino kingpin raised concerns about FTX on Twitter, customers rushed to cash in their chips. But when Bankman-Fried\u2019s casino opened the vault, their money wasn\u2019t there. According to multiple news reports citing people familiar with the matter, it had been secretly lent to Bankman-Fried\u2019s hedge fund, which had lost it in some mix of bad bets, insane spending and perhaps something even sketchier. John Ray III, the lawyer who\u2019s now chief executive officer of the bankrupt exchange, has alleged in court that FTX covered up the loans using secret software.<\/p>\n\n\n\n\n
Bankman-Fried denies this again to me. Returning to the framework of expected value, I ask him if the decisions he made were correct.<\/p>\n\n\n\n\n
\u201cI think that I\u2019ve made a lot of plus-EV decisions and a few very large boneheaded decisions,\u201d he says. \u201cCertainly in retrospect, those very large decisions were very bad, and may end up overwhelming everything else.\u201d<\/p>\n\n\n\n\n
The chain of events, in his telling, started about four years ago. Bankman-Fried was in Hong Kong, where he\u2019d moved from Berkeley, California, with a small group of friends from the effective-altruism community. Together they ran a successful startup crypto hedge fund, Alameda Research. (The name itself was an early example of his casual attitude toward rules \u2013 it was chosen to avoid scrutiny from banks, which frequently closed its accounts. \u201cIf we named our company like, Shitcoin Daytraders Inc, they\u2019d probably just reject us,\u201d Bankman-Fried told a podcaster in 2021. \u201cBut, I mean, no one doesn\u2019t like research.\u201c)<\/p>\n\n\n\n\n
\u2018It obviously ended up backfiring\u2019<\/h2>\n\n\n\n\n
The fund had made millions of dollars exploiting inefficiencies across cryptocurrency exchanges. (Ex-employees, even those otherwise critical of Bankman-Fried, have said this is true, though some have said Alameda then lost some of that money because of bad trades and mismanagement.) Bankman-Fried and his friends began considering starting their own exchange \u2013 what would become FTX.<\/p>\n\n\n\n\n
The way Bankman-Fried later described this decision reveals his attitude toward risk. He estimated there was an 80 per cent chance the exchange would fail to attract enough customers. But he\u2019s said one should always take a bet, even a long-shot one, if the expected value is positive, calling this stance \u201crisk neutral.\u201d But it actually meant he would take risks that to a normal person sound insane. \u201cAs an individual, to make a bet where it\u2019s like, \u2018I\u2019m going to gamble my $US10 billion and either get $US20 billion or $0, with equal probability,\u2019 would be madness,\u201d Rob Wiblin, host of an effective-altruism podcast, said to Bankman-Fried in April. \u201cBut from an altruistic point of view, it\u2019s not so crazy.\u201d<\/p>\n\n\n\n\n
\u201cCompletely agree,\u201d Bankman-Fried replied. He told another interviewer that he\u2019d make a bet described as a chance of \u201c51 per cent you double the earth out somewhere else, 49 per cent it all disappears.\u201d<\/p>\n\n\n\n\n
Bankman-Fried and his friends jump-started FTX by having Alameda provide liquidity. It was a huge conflict of interest. Imagine if the top executives at an online poker site also entered its high-stakes tournaments \u2013 the temptation to cheat by peeking at other players\u2019 cards would be huge. But Bankman-Fried assured customers that Alameda would play by the same rules as everyone else, and enough people came to trade that FTX took off. \u201cHaving Alameda provide liquidity on FTX early on was the right decision because I think that helped make FTX a great product for users, even though it obviously ended up backfiring,\u201d Bankman-Fried tells me.<\/p>\n\n\n\n\n
Part of FTX\u2019s appeal was that it was mostly a derivatives exchange, which allowed customers to trade \u201con margin,\u201d meaning with borrowed money. That\u2019s a key to his defence. Bankman-Fried argues no one should be surprised that big traders on FTX, including Alameda, were borrowing from the exchange, and that his fund\u2019s position just somehow got out of hand.<\/p>\n\n\n\n\n
\u201cEveryone was borrowing and lending,\u201d he says. \u201cThat\u2019s been its calling card.\u201d But FTX\u2019s normal margin system, crypto traders tell me, would never have permitted anyone to accumulate a debt that looked like Alameda\u2019s. When I ask if Alameda had to follow the same margin rules as other traders, he admits the fund did not. \u201cThere was more leeway,\u201d he says.<\/p>\n\n\n\n\n
That wouldn\u2019t have been so important had Alameda stuck to its original trading strategy of relatively low-risk arbitrage trades. But in 2020 and 2021, as Bankman-Fried became the face of FTX, a major political donor and a favourite of Silicon Valley, Alameda faced more competition in that market-making business. It shifted its strategy to, essentially, gambling on shitcoins.<\/p>\n\n\n\n\n
As Caroline Ellison, then Alameda\u2019s co-CEO, explained in a March 2021 post on Twitter: \u201cThe way to really make money is figure out when the market is going to go up and get balls long before that,\u201d she wrote, adding that she\u2019d learned the strategy from the classic market-manipulation memoir, Reminiscences of a Stock Operator.<\/em> Her co-CEO said in another tweet that a profitable strategy was buying Dogecoin because Elon Musk tweeted about it.<\/p>\n\n\n\n\n
The reason they were bragging about what sounded like a high schooler\u2019s tactics was that it was working better than anyone knew. When we spoke in February 2022, Bankman-Fried told me that Alameda had made $US1 billion the previous year. He now says that was Alameda\u2019s arbitrage profits. On top of that, its shitcoins gained tens of billions of dollars of value, at least on paper. \u201cIf you mark everything to market, I do believe at one point my net worth got to $US100 billion,\u201d Bankman-Fried says.<\/p>\n\n\n\n\n
The gambler<\/h2>\n\n\n\n\n
Any trader would know this wasn\u2019t nearly as good as it sounded. The large pile of tokens couldn\u2019t be turned into cash without crashing the market. Much of it was even made of tokens that Bankman-Fried and his friends had spun up themselves, such as FTT, Serum or Maps \u2013 the official currency of a nonsensical crypto-meets-mapping app \u2013 or were closely affiliated with, like Solana. While Bankman-Fried acknowledges the pile was worth something less than $US100 billion \u2013 maybe he\u2019d mark it down a third, he says \u2013 he maintains that he could have extracted quite a lot of real money from his holdings.<\/p>\n\n\n\n\n
But he didn\u2019t. Instead, Alameda borrowed billions of dollars from other crypto lenders \u2013 not FTX \u2013 and sunk them into more crypto bets. Publicly, Bankman-Fried presented himself as an ethical operator and called for regulation to rein in crypto\u2019s worst excesses. But through his hedge fund, he\u2019d actually become the market\u2019s most degenerate gambler. I ask him why, if he really thought he could sell the tokens, he didn\u2019t. \u201cWhy not, like, take some risk off?\u201d<\/p>\n\n\n\n\n
\u201cOK. In retrospect, absolutely. That would\u2019ve been the right, like, unambiguously the right thing to do,\u201d he says. \u201cBut also it was just, like, hilariously well-capitalised.\u201d<\/p>\n\n\n\n\n
Near the peak of the great shitcoin boom, in April 2022, FTX hosted a lavish conference at a resort and casino in Nassau. It was Bankman-Fried\u2019s coming out party. He got to share the stage with quarterback Tom Brady. Also there: former British Prime Minister Tony Blair and ex-President Bill Clinton, who extended a fatherly hand when the young crypto executive seemed nervous. The author Michael Lewis, who\u2019s working on a book about Bankman-Fried, praised him in a fawning interview onstage. \u201cYou\u2019re breaking land speed records. And I don\u2019t think people are really noticing what\u2019s happened, just how dramatic the revolution has become,\u201d Lewis said, asking when crypto would take over Wall Street.<\/p>\n\n\n\n\n
The next month, the crypto crash began. It started when a popular set of coins called Terra and Luna collapsed, wiping out $US60 billion. Terra and Luna were almost openly a Ponzi scheme, but some of the biggest crypto funds had invested in them with borrowed money and went bankrupt. This made the lenders who\u2019d lent billions of dollars to Alameda nervous. They asked Alameda to repay the loans, with real money. It needed billions of dollars, fast, or it would go bust.<\/p>\n\n\n\n\n
There are two different versions of what happened next. Two people with knowledge of the matter told me that Ellison, by then the sole head of Alameda, had told her side of the story to her staff amid the crisis. Ellison said that she, Bankman-Fried and his two top lieutenants \u2013 Gary Wang and Nishad Singh \u2013 had discussed the shortfall. Instead of admitting Alameda\u2019s failure, they decided to use FTX customer funds to cover it, according to the people. If that\u2019s true, all four executives would\u2019ve knowingly committed fraud. (Ellison, Wang and Singh didn\u2019t respond to messages seeking comment.)<\/p>\n\n\n\n\n
When I put this to Bankman-Fried, he screws up his eyes, furrows his eyebrows, puts his hands in his hair and thinks for a few seconds.<\/p>\n\n\n\n\n
\u201cSo, it\u2019s not how I remember what happened,\u201d Bankman-Fried says. But he surprises me by acknowledging that there had been a meeting, post-Luna crash, where they debated what to do about Alameda\u2019s debts. The way he tells it, he was packing for a trip to DC and \u201conly kibitzing on parts of the discussion\u201d. It didn\u2019t seem like a crisis, he says. It was a matter of extending a bit more credit to a fund that already traded on margin and still had a pile of collateral worth way more than enough to cover the loan. (Although the pile of collateral was largely shitcoins.)<\/p>\n\n\n\n\n
\u201cThat was the point at which Alameda\u2019s margin position on FTX got, well, it got more leveraged substantially,\u201d he says. \u201cObviously, in retrospect, we should\u2019ve just said no. I sort of didn\u2019t realise then how large the position had gotten.\u201d<\/p>\n\n\n\n\n
\u201cYou were all aware there was a chance this would not work,\u201d I say.<\/p>\n\n\n\n\n
\u201cThat\u2019s right,\u201d he says. \u201cBut I thought that the risk was substantially smaller.\u201d<\/p>\n\n\n\n\n
I try to imagine what he could\u2019ve been thinking. If FTX had liquidated Alameda\u2019s position, the fund would\u2019ve gone bankrupt, and even if the exchange didn\u2019t take direct losses, customers would\u2019ve lost confidence in it. Bankman-Fried points out that the companies that lent money to Alameda might have failed, too, causing a hard-to-predict cascade of events.<\/p>\n\n\n\n\n
\u201cNow let\u2019s say you don\u2019t margin call Alameda,\u201d I posit. \u201cMaybe you think there\u2019s like a 70 per cent chance everything will be OK, it\u2019ll all work out?\u201d<\/p>\n\n\n\n\n
\u201cYes, but also in the cases where it didn\u2019t work out, I thought the downside was not nearly as high as it was,\u201d he says. \u201cI thought that there was the risk of a much smaller hole. I thought it was going to be manageable.\u201d<\/p>\n\n\n\n\n
The missing $US8 billion<\/h2>\n\n\n\n\n
Bankman-Fried pulls out his laptop (an Acer Predator) and opens a spreadsheet to show what he meant. It\u2019s similar to the balance sheet he reportedly showed investors when he was seeking a last-minute bailout, which he says consolidated FTX and Alameda\u2019s positions because by then the fund had defaulted on its debt. On one line \u2013 labelled \u201cWhat I *thought*\u201d \u2013 he lists $US8.9 billion in debts and way more than enough money to pay them: $US9 billion in liquid assets, $US15.4 billion in \u201cless liquid\u201d assets and $US3.2 billion in \u201cilliquid\u201d ones. He tells me this was more or less the position he was considering when he had the meeting with the other executives.<\/p>\n\n\n\n\n
\u201cIt looks naively to me like, you know, there\u2019s still some significant liabilities out there, but, like, we should be able to cover it,\u201d he says.<\/p>\n\n\n\n\n
\u201cSo what\u2019s the problem, then?\u201d<\/p>\n\n\n\n\n
Bankman-Fried points to another place on the spreadsheet, which he says shows the actual truth of the situation at the time of the meeting. This one shows similar numbers, but with $US8 billion less liquid assets.<\/p>\n\n\n\n\n
\u201cWhat\u2019s the difference between these two rows here?\u201d he asks.<\/p>\n\n\n\n\n
\u201cYou didn\u2019t have $US8 billion in cash that you thought you had,\u201d I say.<\/p>\n\n\n\n\n
\u201cThat\u2019s correct. Yes.\u201d<\/p>\n\n\n\n\n
\u201cYou misplaced $US8 billion?\u201d I ask.<\/p>\n\n\n\n\n
\u201cMisaccounted,\u201d Bankman-Fried says, sounding almost proud of his explanation. Sometimes, he says, customers would wire money to Alameda Research instead of sending it directly to FTX. (Some banks were more willing to work with the hedge fund than the exchange, for some reason.) He claims that somehow, FTX\u2019s internal accounting system double-counted this money, essentially crediting it to both the exchange and the fund.<\/p>\n\n\n\n\n
That still doesn\u2019t explain why the money was gone. \u201cWhere did the $US8 billion go?\u201d I ask.<\/p>\n\n\n\n\n
To answer, Bankman-Fried creates a new tab on the spreadsheet and starts typing. He lists Alameda and FTX\u2019s biggest cash flows. One of the biggest expenses is paying a net $US2.5 billion to Binance, a rival, to buy out its investment in FTX. He also lists $US250 million for real estate, $US1.5 billion for expenses, $US4 billion for venture capital investments, $US1.5 billion for acquisitions and $US1 billion labelled \u201cf—ups.\u201d Even accounting for both firms\u2019 profits, and all the venture capital money raised by FTX, it tallies to negative $US6.5 billion.<\/p>\n\n\n\n\n
Bankman-Fried is telling me that the billions of dollars customers wired to Alameda is gone simply because the companies spent way more than they made. He claims he paid so little attention to his expenses that he didn\u2019t realise he was spending more than he was taking in. \u201cI was real lazy about this mental math,\u201d the former physics major says. He creates another column in his spreadsheet and types in much lower numbers to show what he thought he was spending at the time.<\/p>\n\n\n\n\n
It seems to me like he is, without saying it exactly, blaming his underlings for FTX\u2019s failure, especially Ellison, the head of Alameda. The two had dated and lived together at times. She was part of Bankman-Fried\u2019s Future Fund, which was supposed to distribute FTX and Alameda\u2019s earnings to effective-altruist-approved causes. It seems unlikely she would\u2019ve blown billions of dollars without asking. \u201cPeople might take, like, the TLDR as, like, it was my ex-girlfriend\u2019s fault,\u201d I tell him. \u201cThat is sort of what you\u2019re saying.\u201d<\/p>\n\n\n\n\n
\u201cI think the biggest failure was that it wasn\u2019t entirely clear whose fault it was,\u201d he says.<\/p>\n\n\n\n\n
Bankman-Fried tells me he has to make a call. After a while, the sun goes down and I\u2019m hungry. I\u2019m allowed to join a group of Bankman-Fried\u2019s supporters for dinner, as long as I don\u2019t mention their names.<\/p>\n\n\n\n\n
With the curtains drawn, the living room looks considerably less grand than it does in pictures. I\u2019ve been told that FTX employees gathered here amid the crisis, while Bankman-Fried worked in another apartment. Addled by stress and sleep deprivation, they wept and hugged one another. Most didn\u2019t say goodbye as they left the island, one by one. Many flew back to their childhood homes to be with their parents.<\/p>\n\n\n\n\n
The supporters at the dinner tell me they feel like the press has been unfair. They say that Bankman-Fried and his friends weren\u2019t the polyamorous partiers the tabloids have portrayed and that they did little besides work. Earlier in the week, a Bahamian man who\u2019d served as FTX\u2019s round-the-clock chauffeur and gofer also told me the reports weren\u2019t true. \u201cPeople make it seem like this big Wolf of Wall Street<\/em> thing,\u201d he said. \u201cBro, it was a bunch of nerds.\u201d<\/p>\n\n\n\n\n
By the time I finish my plate of off-the-record rice and beans, Bankman-Fried is free again. We return to the study. He\u2019s barefoot now, having balled up his gym socks and stuffed them behind a couch cushion. He lies on the couch, his computer on his lap. The light from the screen casts shadows of his curls on his forehead.<\/p>\n\n\n\n\n
I notice a skin-coloured patch on his arm. He tells me it\u2019s a transdermal antidepressant, selegiline. I ask if he\u2019s using it as a performance enhancer or to treat depression. \u201cNothing\u2019s binary,\u201d he says. \u201cBut I\u2019ve been borderline depressed for my whole life.\u201d He adds that he also sometimes takes Adderall \u2013 \u201c10 milligrams at a time, a few times a day\u201d \u2013 as did some of his colleagues, but that talk of drug use is overblown. \u201cI don\u2019t think that was the problem,\u201d he says.<\/p>\n\n\n\n\n
I tell Bankman-Fried my theory about his motivation, sidestepping the question of whether he misappropriated customer funds. Bankman-Fried denies that his world-saving goals made him willing to take giant gambles. As we talk more, it seems like he\u2019s saying he made some kind of bet but hadn\u2019t calculated the expected value properly.<\/p>\n\n\n\n\n
\u201cI was comfortable taking the risk that, like, I may end up kind of falling flat,\u201d he says, staring at his computer screen, where he had pulled up a game and was leading an army of cartoon knights and fairies into battle. \u201cBut what actually happened was disastrously bad and, like, no significant chance of that happening would\u2019ve made sense to risk, and that was a f—up. Like, that was a mass miscalculation in downside.\u201d<\/p>\n\n\n\n\n
I read Bankman-Fried a post by Will MacAskill, one of the founders of the effective-altruism movement. He recruited Bankman-Fried into it when he was a junior at MIT and this year had joined the board of Bankman-Fried\u2019s Future Fund. On November 11, MacAskill wrote on Twitter that Bankman-Fried had betrayed him. \u201cFor years, the EA community has emphasised the importance of integrity, honesty and the respect of common-sense moral constraints,\u201d MacAskill wrote. \u201cIf customer funds were misused, then Sam did not listen; he must have thought he was above such considerations.\u201d<\/p>\n\n\n\n\n
Bankman-Fried closes his eyes and pushes his toes against one arm of the couch, clenching the other arm with his hands. \u201cThat\u2019s not how I view what happened,\u201d he says. \u201cBut I did f— up. I think really what I want to say is, like, I\u2019m really f—ing sorry. By far the worst thing about this is that it will tarnish the reputation of people who are dedicated to doing nothing but what they thought was best for the world.\u201d Bankman-Fried trails off. On his computer screen, his army casts spells and swings swords unattended.<\/p>\n\n\n\n\n
I ask what he\u2019d say to people who are comparing him to the most famous Ponzi schemer of recent times. \u201cBernie Madoff also said he had good intentions and gave a lot to charity,\u201d I say.<\/p>\n\n\n\n\n
\u201cFTX was a legitimate, profitable, thriving business. And I f—ed up by, like, allowing a margin position to get too big on it. One that endangered the platform. It was a completely unnecessary and unforced error, which like maybe I got super unlucky on, but, like, that was my bad.\u201d<\/p>\n\n\n\n\n
\u201cIt f—ing sucks,\u201d he adds. \u201cBut it wasn\u2019t inherent to what the business was. It was just a f—up. A huge f—up.\u201d<\/p>\n\n\n\n\n
To me, it doesn\u2019t really seem like a f—up. Even if I believe that he misplaced and accidentally spent $US8 billion, he\u2019s already told me that Alameda had been allowed to violate FTX\u2019s margin rules. This wasn\u2019t some little technical thing. He was so proud of FTX\u2019s margining system that he\u2019d been lobbying regulators for it to be used on US exchanges instead of traditional safeguards. In May, Bankman-Fried himself said on Twitter that exchanges should never extend credit to a fund and put other customers\u2019 assets at risk. He wrote that the idea an exchange would even have that discretion was \u201cscary.\u201d I read him the tweets and ask: \u201cIsn\u2019t that, like, exactly what you did, right around that time?\u201d<\/p>\n\n\n\n\n
\u201cYeah, I guess that\u2019s kind of fair,\u201d he says. Then he seems to claim that this was evidence the rules he was lobbying for were a good idea. \u201cI think this is one of the things that would have stopped.\u201d<\/p>\n\n\n\n\n
\u201cYou had a rule on your platform. You didn\u2019t follow it,\u201d I say.<\/p>\n\n\n\n\n
By now it\u2019s past midnight, and \u2013 operating without the benefit of any prescription stimulants \u2013 I\u2019m worn out. I ask Bankman-Fried if I can see the apartment\u2019s deck before I leave. Outside, crickets chirp as we stand by the pool. The marina is dark, lit only by the spotlights of yachts. As I say goodbye, Bankman-Fried bites into a burger bun and starts talking about potential bailouts with one of his supporters.<\/p>\n\n\n\n\n
With Annie Massa and Gillian Tan<\/em><\/p>\n\n\n]]><\/p>\n","protected":false},"excerpt":{"rendered":"
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