Sam Bankman-Fried spent 2021 and much of 2022 talking himself into the role of a cryptocurrency mogul. A court hearing today will decide whether he has now talked himself from cushy house arrest back into a concrete and steel jail cell.
The immediate trigger for today's hearing in the courtroom of District Judge Lewis A. Kaplan was Bankman-Fried's sharing of the private diary of Caroline Ellison, who Bankman-Fried installed as nominal CEO of FTX and later directly ordered to engage in fraud. Prosecutors claim the goal of the leak was to discredit or intimidate Ellison ahead of the trial, when she is expected to testify as a cooperating witness.
But this is merely the straw that broke the camel's back: Sam Bankman-Fried has been using deceptive arguments and illicit communication channels to manipulate his trial since the moment of FTX's collapse. He appeared on seemingly innumerable interviews and public appearances in the weeks before his arrest.
During his house arrest, he has continued to give interviews proclaiming his innocence. Well before releasing Ellison's diary, he also allegedly reached out to many of those expected to testify against him.
The public statements, at least, would seem fair enough in a nation underpinned by the principle of free speech. But Bankman-Fried has, not to put too fine a point on it, repeatedly lied in his public statements about what happened. At least from the outside, this has created the appearance of a sustained campaign aimed at poisoning the entire pool of potential jurors with a false narrative — though the view from within Bankman-Fried's own head is probably a bit rosier.
Far more alarming, though, have been prosecutors' claims that Bankman-Fried had communicated with former colleagues at Alameda and FTX after his arrest. Given that basically every member of his inner circle has entered a plea deal and agreed to testify against him, a court could reasonably interpret this as witness tampering — an attempt to get them to change their story, whether through intimidation, persuasion or further deception.
This was made even more alarming when it came out that Bankman-Fried had used VPN software, which can obscure a users' internet activity. Bankman-Fried's defense team claimed that was to watch a football game, which … look, whatever. The court didn't buy the NFL Defense either, leading to Bankman-Fried's current situation: he's stuck using a flip phone because the court trusts him so little.
All of which led up to Bankman-Fried's leak of Ellison's private diary to the New York Times. The portions of the diary highlighted by the Times show Ellison at her lowest, unhappy and overwhelmed in her work. This could be leveraged by Bankman-Fried's defense team to offload responsibility for the FTX debacle onto Ellison, including for the collapse of his company, one of several delusional reframings Bankman-Fried tested out in his post-collapse media tour.
It has become increasingly clear as we sift through the rubble of his misdeeds that Sam Bankman-Fried was never remotely as smart as his most gullible boosters claimed. His seemingly uncontrollable instinct to defy sensible, universal legal advice to simply shut the hell up is yet another piece of evidence against his supposed cleverness.
You see, for most of the time since his arrest in the Bahamas in December 2022, Bankman-Fried has been under house arrest at the home of his parents, Barbara Fried and Joseph Bankman. The home borders on the luxurious, stretching to 3,000 square feet and featuring a pool. It's not quite a Bahamian polycule penthouse, but it's probably nicer digs than some FTX victims are enjoying these days. And it's certainly nicer than the jail cell he could return to after today's hearing.
Bankman-Fried's stupidity, though, isn't just in potentially getting himself sent back to the slammer early: He's also likely alienating some of the few friends he and his family have left. His initial bail, remember – the gift that let him return to playing "League of Legends" in his bedroom – came from Stanford University faculty members Larry Kramer and Anthony Paepcke, among others.
Kramer said at the time that he offered to help based entirely on years of friendship with Bankman-Fried's parents, essentially disregarding the specifics of the case. The FTX saga has further exposed how cynical and transactional the entire Stanford milieu is, but there's no specific reason to doubt that characterization.
One way of viewing Sam Bankman-Fried's behavior since being released on bond is as a sign of utter disregard for that generosity and friendship. In return for their loyalty, Bankman-Fried has allegedly violated his bail conditions in the course of seemingly attempting to discredit a former romantic partner (and also employee). While things don't seem likely to go that far, this could have put Kramer and others' bail bond funds at risk of forfeit.
The alleged massive theft of billions of dollars from customers who chose to trust him will always be the defining act of Sam Bankman-Fried's wasted life. But if potential future jurors take one lesson from today's hearing and its circumstances, it should be that he also considers the people closest to him to be utterly disposable if it serves his interests.
– David Z. Morris
@davidzmorris
david.morris@coindesk.com
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