Revisiting Sam Bankman-Fried
[T]he received narrative goes on to say that FTX was run by a dozen or so polyamorous hippie-style geniuses who suffered from ADHD, lived communally in a luxury penthouse in the Bahamas, and had their own doctor-therapist who prescribed amphetamines for their ADHD. The only female in the group I'm aware of was Caroline Ellison, so according to that doctor, there wasn't really that much action. Nevertheless, it was the synergy between Beanbag Boy Bankman-Fried and Queen Caroline that drove the whole enterprise, or something like that. But they let Caroline lose $10 billion in unsupervised trading, and John Ray III says he's nver seen anything like it.
Never underestimate what a beautiful woman can do.
At the time, I was scratching my head: I kept doing web searches on ADHD and came up with discussions like this:
In order for people age 17 and older to be diagnosed with ADHD, 5 or more symptoms of inattention and/or hyperactivity/impulsivity must be present and negatively impacting directly on social and academic/occupational activities.
Among those symptoms listed are:- Makes careless mistakes/lacks attention to detail
- Difficulty with organization, time management, and deadlines
- Avoids tasks requiring sustained mental effort
- Loses things necessary for tasks or activities
- Easily distracted (including unrelated thoughts)
- Forgetful in daily activities
- Procrastinates and puts off tasks until the last moment possible.
How did they even get near a multibillion-dollar cryptocurrency exchange? This raises questions that go far beyond Sam and Caroline, but up to now, nobody has been asking them. The piece I discovered at the link at the top, originally in Fortune but behind a paywall there, at least begins to give some insight:
When a jury convicted Sam Bankman-Fried on seven fraud-related charges, it marked a symbolic end to the biggest scandal in crypto history. But for Bankman-Fried's law professor parents, Joe Bankman and Barbara Fried, the legal ordeal is far from over.
Bankman-Fried's bankrupt FTX exchange, now led by a caretaker CEO, is suing Bankman and Fried to recover a $10 million gift from their son that was paid with corporate funds. More seriously, the parents—Bankman in particular—might face the risk that federal prosecutors charge them for abetting their son's criminal enterprise.
What do you mean, "abet"? Sam himself apparently couldn't even sit still behind a computer screen. Somebody else had to be calling the shots -- in fact, somebody had to create Sam from the start. I can't imagine that he could have been admitted to a highly selective university like MIT based on the admissions standards for applicants from the general public. The story continues,
Long before Bankman-Fried launched his ill-fated crypto empire, his parents enjoyed substantial financial security and cultural status. They live in a house on the immaculate campus of Stanford University at which they hosted gatherings of the Bay Area's academic and political elite, and enjoyed access to the very top ranks of the Democratic party thanks, in part, to Fried’s fundraising prowess.
Given that capability, it sounds as though Prof Bankman was already running a scam not much different from Jeffrey Epstein's philanthropic hustle, in which he bundled so-so donations from his marks to Harvard and MIT and parlayed them via smoke and mirrors into favors and prestige for himself. Sam's Wikipedia entry gives some insight into this environment:
Bankman-Fried was born on March 5, 1992, in Stanford, California. He is the son of Barbara Fried and Joseph Bankman, both professors at Stanford Law School. His aunt Linda P. Fried is the dean of Columbia University Mailman School of Public Health. His younger brother, Gabriel Bankman-Fried (b. c. 1995), is a former legislative assistant, Wall Street trader, and the former director of the non-profit Guarding Against Pandemics and its associated political action committee, which came under scrutiny by Federal investigators after it was discovered that much of the $35 million on its books had been stolen by his older brother, Sam, from Alameda Research accounts.
What we're seeing is a preexisting network of connections, nepotism, and money that could not only place Sam in the highly prestigious and upscale Crystal Springs Uplands School, get him into MIT almost certainly via an admissions category that bypassed the ordinary competitive process, and even assure his graduation with a degree in physics and math. (My surmise has always been that if powerful families can ensure the admission of unpromising offspring to prestige schools, they can just as effectively ensure their graduation.) My view continues to be that Sam, essentially a special-needs child, was entirely the creation of his parents, powerful and prosperous people at the top of the academic food chain, and for the whole of his life, he was groomed for his role as their puppet. The Fortune story continues,
Whether or not Bankman’s role at FTX amounted to abetting in the criminal sense, there is evidence he was directly involved in major decisions at the firm. That evidence includes numerous group chats on the messaging app Signal, produced as evidence at Sam Bankman-Fried’s trial, in which Bankman participated during a time frame up to and including the exchange’s collapse.
. . . There is also the balance sheet itself, which listed obscure tokens that had little real-world value and included surreal entries like “Hidden, poorly internally labeled ‘fiat@’ account.” If Bankman had seen it—which seems plausible, given his role as lawyer and close advisor to the firm—it’s hard to fathom how he could accept the validity of such a document, which would have received a failing grade from a high school accounting teacher.
As for Bankman’s precise role at FTX, it was amorphous like everything else at the company his son ran as a personal fiefdom. The only formal documentation about its corporate structure, drawn up by an executive and published on the dust jacket of Michael Lewis’s book about Bankman-Fried, lists Bankman as a direct report to his son.
Well, that's the org chart, which says nothing about who's really calling the shots. Should Profs Bankman and Fried ever stand trial, we may possibly learn more about how that layer of the power elite actually works.