At the end of a 15,000-word Twitter thread that he never posted, Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, gave 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 positively impact my lifetime.”
He added: “And the truth is that I did what I thought was right.”
After Mr. Bankman-Fried was arrested, charged with fraud in the FTX collapse and sentenced to house arrest 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 about 70 typed pages, he criticized some of his closest colleagues and mixed his arguments with photos from his high school days and archival images of popcorn and a garden labyrinth. Every few pages, a key moment in the narrative is accompanied by a link to a music video by Alicia Keys, Katy Perry or Rihanna.
Mr. Bankman-Fried, 31, once a prolific Twitter poster now known as A document titled “Inception V2” is a lengthy attack on the company’s bankruptcy lawyers and includes a screenshot from the 2010 Christopher Nolan film. A separate link provides a spreadsheet of Mr. Bankman-Fried’s Amazon orders from the Year 2021 called.
The roughly 250 pages of documents, which have not been previously reported, provide a glimpse into Mr. Bankman-Fried’s mindset during the eight months he spent in home confinement before a judge revoked his bail in August. The writings also provide new details about his potential legal defense, beyond what his lawyers revealed in court, and shed light on how he might justify his actions when his trial begins Oct. 3.
Prosecutors have accused Mr. Bankman-Fried of 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 pleaded not guilty and faces decades in prison if convicted.
While under house arrest, Mr. Bankman-Fried sent the documents Tiffany Fong, a social media influencer who runs a YouTube channel about the crypto industry. Ms. Fong told the New York Times.
“He liked the fact that I didn’t work for anyone,” she said. “He thinks I can just 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 former lieutenant, for contributing to FTX’s implosion. He described her as ill-equipped for the job he gave her as head of Alameda, claiming she cried during a meeting with him and refused to implement trading strategies that would have protected his companies from a market crash.
“She continually avoided talking about risk management — and dodged my suggestions — until it was too late,” he wrote in a document titled “Alameda’s Failure to Hedge.” “Every time I made suggestions to her, she only got worse. I’m sure being exes didn’t help.”
In the Twitter draft, Mr. Bankman-Fried also criticized Sam Trabucco, Alameda’s co-chief executive. Mr. Trabucco and Ms. Ellison did not get along, the document said. And although Mr. Trabucco had a good sense of risk management, by the end of 2021 he was “quietly giving up,” according to Bankman-Fried.
Mr. Trabucco preferred to spend his time “going on dates with a bunch of guys while sailing around the world on a boat,” Mr. Bankman-Fried wrote. He then linked to a music video, “Cheers (Drink to That)” by Rihanna.
Ms. Ellison and two other top advisers to Mr. Bankman-Fried 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 accused of any wrongdoing.
Lawyers for Mr. Trabucco and Ms. Ellison declined to comment.
Once hailed as a trusted force in the loosely regulated world of cryptocurrencies, FTX imploded in November, costing customers billions of dollars and destroying the industry. After his arrest, Mr. Bankman-Fried was released on bail and allowed to live with his parents, longtime law professors at Stanford University, at their home in Palo Alto, California. They hired a German Shepherd named Sandor as a guard dog.
For months, Mr. Bankman-Fried entertained guests such as author Michael Lewis, who is completing a book about him, and several reporters.
Few people had as much access as Ms. Fong, the influencer who had developed an online relationship with Mr. Bankman-Fried before FTX failed. Ms. Fong visited him at his parents’ house more than 10 times, she said, and recorded conversations with him that she may later 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 chess board and sometimes slept on the couch. Most days, she said, he worked on his legal defense and recorded thoughts about the case on hundreds of pages of Google Docs. Mr. Bankman-Fried also told her that his family would set up a pickleball court for him in the yard.
Mr. Bankman-Fried gave the documents to Ms. Fong at the end of January. It wasn’t clear what he expected from her. Ms Fong, who lost money in the collapse of crypto firm Celsius Network, said she felt sorry for FTX’s victims and was skeptical of many of Mr Bankman-Fried’s claims. She sent a document to a former Alameda engineer, Aditya Baradwajwho responded to her with a point-by-point rebuttal to Mr. Bankman-Fried, noting that Alameda’s coverage would have been “irrelevant” if FTX had not misused customer funds.
In the draft Twitter thread, Mr. Bankman-Fried traced the growth of his companies from his childhood in Palo Alto to the penthouse he bought in the Bahamas near FTX headquarters. He recalled meeting Mr. Trabucco at a math camp where his future colleague would sneak out after curfew to bake cheesecake brownies, and he described his early admiration for Ms. Ellison, calling her “insanely smart.” He also included several personal photos, including one showing him wearing a shirt Mr. Trabucco bought him in high school.
A picture of Mr. Bankman-Fried from high school that he included in the draft of an unpublished Twitter thread, along with a handful of personal photos from his youth.
In another section, Mr. Bankman-Fried posted a link to a document he wrote in 2019, “Tonight We Are Young,” a report on a conference in Taiwan where he met Changpeng Zhao, known as CZ, the founder of the Cryptocurrency, Binance interacted exchange. (He also added a link to Fun’s “We Are Young” music video.)
“Tonight was about alcohol, women, lasers and loud, blaring music, but there was a strange microclimate that seemed to follow me,” Mr. Bankman-Fried wrote. “I walked past CZ a few more times, and each time he broke eye contact with his eye candy and hugged me: people thought a lot about us.”
In November, Mr. Zhao’s posts sparked a run on deposits that contributed to FTX’s implosion. A Binance representative did not respond to a request for comment.
Some of Mr. Bankman-Fried’s documents go into detail about the arguments his lawyers made in court. In filings titled “Inception V2,” “Inception V3,” and “Inception Evidence,” Mr. Bankman-Fried alleged that Sullivan & Cromwell, the law firm that oversaw FTX’s bankruptcy, constructed the narrative that he had misused user funds .
“They played it incredibly well,” he wrote. “If it weren’t destructive to almost everything that matters to me in life, I would take my hat off to them.”
A spokesman for Sullivan & Cromwell declined to comment. Prosecutors have argued that Mr. Bankman-Fried’s claims about the company amounted to “innuendo.”
In several documents, Mr. Bankman-Fried also analyzed his history with Ms. Ellison, writing that their relationship “ended the way most of my relationships end.”
“They want more intimacy, commitment and public visibility than I do,” he wrote in the thread, “and I feel claustrophobic.”
In another document, he said Ms. Ellison refused to hedge Alameda’s aggressive trading strategy despite his urging. He recalled once sending her a message that was “the meanest thing I’ve ever said to her.” (He said he no longer had a recording of the message.)
“If Alameda had hedged, it would have remained solvent and would have prevented the whole unfortunate story,” he wrote.
His concerns about Alameda increased in the spring of 2022, Mr. Bankman-Fried wrote in the Twitter draft, as he was packing for a trip to Washington. A group of employees, including Ms. Ellison, frantically discussed a possible deficit in the company’s accounts. Mr. Bankman-Fried was only half-engaged, he wrote, but heard enough to realize that the conversation centered on an account called fiat@ — the vehicle that regulators say FTX executives used to hold customer funds redirect to other projects.
“I had heard that name before, but I never knew exactly what it was,” he wrote.
When she pleaded guilty, Ms. Ellison said she and Mr. Bankman-Fried conspired to shore up Alameda’s finances with customer money. He denied misuse of the funds.
“Generally speaking, I don’t lie,” he wrote in a document titled “Truth.” “I believe that pretty strongly.”
Source : www.nytimes.com