Monday, July 15

‘One of the Most Hated People in the World’: Sam Bankman-Fried’s 250 Pages of Justifications

At the end of a 15,000-word Twitter thread he never posted, Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, offered a blunt assessment of his predicament.

“I’m broke and wearing an ankle monitor and one of the most hated people in the world,” he wrote. “There will probably never be anything I can do to make my lifetime impact net positive.”

He added: “And the truth is that I did what I thought was right.”

After Mr. Bankman-Fried was arrested, charged with fraud over FTX’s collapse and placed in home detention in December, he wrote hundreds of pages of sometimes rambling self-justifications, ranging from childhood memories to mathematical calculations.

In a draft of his unsent posts, which he formatted as a series of tweets spanning roughly 70 typed pages, he criticized some of his closest colleagues, interspersing his arguments with photos from his high school years and stock images of popcorn and a garden maze. Every few pages, a key moment in the narrative is accompanied with a link to a music video by Alicia Keys, Katy Perry or Rihanna.

Once a prolific poster on Twitter, now known as X, Mr. Bankman-Fried, 31, labeled the thread “a draft of a draft of a draft of an idea” and included links to 29 other files about FTX. One document, titled “Inception V2,” is a lengthy attack on the company’s bankruptcy lawyers, featuring a screenshot from the 2010 Christopher Nolan movie. A separate link pulls up a spreadsheet listing Mr. Bankman-Fried’s Amazon orders from 2021.

The roughly 250 pages of documents, which have not been previously reported, provide a window into Mr. Bankman-Fried’s mind-set during the eight months he spent in home detention before a judge revoked his bail in August. The writings also offer new details about his possible legal defense beyond what his lawyers have revealed in court, shedding light on how he may justify his actions when his trial starts on Oct. 3.

Prosecutors have charged Mr. Bankman-Fried with orchestrating a scheme to funnel FTX customer funds to a hedge fund he founded, Alameda Research, so that his companies could make venture capital investments, buy real estate and donate to politicians. He has pleaded not guilty and faces decades in prison if convicted.

During his house arrest, Mr. Bankman-Fried sent the documents to Tiffany Fong, a social media influencer who has a YouTube channel about the crypto industry. Ms. Fong shared them with The New York Times.

“He liked that I don’t work for anybody,” she said. “He thinks I can just sort of come to my own conclusions.”

A representative for Mr. Bankman-Fried declined to comment.

In several documents, Mr. Bankman-Fried blamed Caroline Ellison, his former girlfriend and onetime lieutenant, for helping to cause FTX’s implosion. He described her as ill equipped for the job he gave her as head of Alameda, claiming she had cried during a meeting with him and refused to institute trading strategies that would have protected his businesses from a market crash.

“She continually avoided talking about risk management — dodging my suggestions — until it was too late,” he wrote in a document titled “Alameda’s Failure to Hedge.” “Every time that I reached out with suggestions, it just made her feel worse. I’m sure that being exes didn’t help.”

In the Twitter draft, Mr. Bankman-Fried also criticized Sam Trabucco, who was co-chief executive of Alameda. Mr. Trabucco and Ms. Ellison didn’t get along, the document said. And while Mr. Trabucco had good instincts for risk management, Mr. Bankman-Fried wrote, he “was in the process of quiet quitting” by late 2021.

Mr. Trabucco preferred to spend his time “going on dates with a ton of guys while sailing around the world on a boat,” Mr. Bankman-Fried wrote. Then he linked to a music video, “Cheers (Drink to That)” by Rihanna.

Ms. Ellison and two of Mr. Bankman-Fried’s other top advisers have pleaded guilty to fraud charges and agreed to testify against him. A fourth pleaded guilty this month without promising to cooperate. Mr. Trabucco has not been charged with any wrongdoing.

Lawyers for Mr. Trabucco and Ms. Ellison declined to comment.

Once hailed as a trustworthy force in the loosely regulated world of crypto, FTX imploded in November, costing customers billions of dollars and devastating the industry. After his arrest, Mr. Bankman-Fried was granted bail and allowed to live with his parents, who are longtime law professors at Stanford, in their home in Palo Alto, Calif. They got a German shepherd named Sandor to act as his guard dog.

For months, Mr. Bankman-Fried entertained guests like the author Michael Lewis, who is finishing a book about him, as well as several reporters.

Few people had as much access as Ms. Fong, the influencer, who had struck up an online rapport with Mr. Bankman-Fried before FTX failed. Ms. Fong visited him at his parents’ home more than 10 times, she said, and recorded conversations with him that she may eventually release.

During house arrest, Mr. Bankman-Fried spent much of his time in the study, Ms. Fong said, where he played computer games, set up a chessboard and sometimes slept on the couch. Most days, she said, he worked on his legal defense, recording thoughts about the case on hundreds of pages of Google documents. Mr. Bankman-Fried also told her that his family was installing a pickleball court for him in the yard.

Mr. Bankman-Fried gave Ms. Fong the documents in late January. It was not clear what he expected her to do with them. Ms. Fong, who lost money in the collapse of the crypto company Celsius Network, said she sympathized with FTX’s victims and was skeptical of many of Mr. Bankman-Fried’s claims. She sent one document to a former Alameda engineer, Aditya Baradwaj, who responded to her with a point-by-point rebuttal to Mr. Bankman-Fried, noting that Alameda’s hedging would have been “irrelevant” if FTX hadn’t misused customer money.

In the draft Twitter thread, Mr. Bankman-Fried traced the growth of his businesses from his childhood in Palo Alto to the penthouse he bought in the Bahamas near FTX’s headquarters. He recalled meeting Mr. Trabucco at a math camp, where his future colleague sneaked out after curfew to bake cheesecake brownies, and he described his early admiration for Ms. Ellison, calling her “wicked smart.” He also inserted some personal photos, including one that shows him holding a shirt that Mr. Trabucco had bought him in high school.

An image of Mr. Bankman-Fried from high school that he included with a handful of personal photos from his youth in the draft of an unpublished Twitter thread.

In another section, Mr. Bankman-Fried posted a link to a document he wrote in 2019, “Tonight We Are Young,” an account of a conference in Taiwan where he interacted with Changpeng Zhao, known as CZ, the founder of the Binance crypto exchange. (He also included a link to the “We Are Young” music video by Fun.)

“Tonight was a night about booze and women and lasers and loud, booming music, but there was an odd microclimate that seemed to follow me,” Mr. Bankman-Fried wrote. “I walked by CZ a few more times, and each time he broke eye contact with his eye candy and embraced me: People were thinking about us, a lot.”

In November, Mr. Zhao’s posts set off a run on deposits that helped prompt FTX’s implosion. A Binance representative did not respond to a request for comment.

Some of Mr. Bankman-Fried’s documents elaborate on arguments that his lawyers have made in court. In files titled “Inception V2,” “Inception V3” and “Inception Evidence,” Mr. Bankman-Fried claimed that Sullivan & Cromwell, the law firm overseeing FTX’s bankruptcy, constructed the narrative that he misappropriated user funds.

“They’ve played it incredibly well,” he wrote. “Were it not destructive to just about everything I care about in life, I would tip my cap to them.”

A Sullivan & Cromwell spokesman declined to comment. Prosecutors have argued that Mr. Bankman-Fried’s claims about the firm amount to “innuendo.”

Across several documents, Mr. Bankman-Fried also dissected his history with Ms. Ellison, writing that their relationship ended “the same way most of my relationships end.”

“They want more intimacy and commitment and public visibility than I do,” he wrote in the thread, “and I feel claustrophobic.”

In another document, he said Ms. Ellison had refused to hedge Alameda’s aggressive trading strategy, despite his urging. At one point, he recalled, he sent her a message that amounted to “the meanest thing I’ve ever said to her.” (He said he no longer had a record of the message.)

“If Alameda had hedged, it would have remained solvent and prevented the entire unhappy story,” he wrote.

His concerns about Alameda heightened in spring 2022 as he packed for a trip to Washington, Mr. Bankman-Fried wrote in the Twitter draft. A group of employees including Ms. Ellison was frantically discussing a possible deficit in the firm’s accounts. Mr. Bankman-Fried was only half-engaged, he wrote, but had heard enough to realize that the conversation centered on an account labeled fiat@ — the vehicle that regulators have said FTX executives used to redirect customer funds into other projects.

“I had heard that name before, but I’d never really known exactly what it was,” he wrote.

When she pleaded guilty, Ms. Ellison said she and Mr. Bankman-Fried had conspired to shore up Alameda’s finances with customer money. He has denied misusing the funds.

“As a general matter, I don’t lie,” he wrote in a document titled “Truth.” “It’s something that I believe fairly strongly in.”