Sam Bankman-Fried's saga is odder than ever as new allegations pour in
It feels like something new emerges about Sam Bankman-Fried every day. But this week has been special.
The 31-year-old Bay Area native, alleged mega-fraudster and former Giants blogger is on house arrest at his childhood home in Palo Alto after his parents — former Stanford professors — agreed to put up the house as security for their son’s $250 million bail. He’s awaiting trial for eight criminal charges, including fraud and money laundering, for his actions leading the now-bankrupt cryptocurrency giant FTX and its partner firm, Alameda Research.
In the meantime, he’s been accused of leaking his ex-girlfriend's personal documents and been hit with debtors’ lawsuits packed with wild allegations about his years at the helm of the crypto empire — all in a two-day stretch.
The first salvo came Thursday, with a lawsuit filed against Bankman-Fried, two underlings and FTX's philanthropy arm by the debtors of FTX and Alameda, who are trying to recover money for the bankrupted companies’ investors and customers. Much of the complaint tracks with Bankman-Fried’s criminal charges, which include accusations of lying to customers, diverting deposits, and unlawfully paying for political contributions.
As part of the alleged broader scheme, the debtors say he took $71 million of customer and corporate funds and invested it in “life science companies” for his own personal profit. Bankman-Fried had long been a power broker in “effective altruism” circles, which mobilize charity against what its proponents believe to be global, long-term threats to humanity. The debtors allege that Bankman-Fried didn’t have altruistic purposes like pandemic prevention at the front of his mind, but rather that the investments “could generate goodwill and amass political capital and influence for himself.”
On Thursday, The New York Times published an article about the written records of soon-to-be star witness Caroline Ellison, Bankman-Fried’s on-and-off girlfriend and CEO of Alameda Research. The reported writings, some diaristic, others directed to Bankman-Fried, include personal doubts about her leadership abilities and jealousy toward another trading company.
Prosecutors were none too happy. Before the day was done, Damian Williams, a district attorney, had sent a letter to the presiding judge asking that Bankman-Fried and his lawyers be blocked from making extrajudicial statements. He alleged that the disgraced crypto mogul had leaked the documents to “discredit a witness, cast Ellison in a poor light, and advance his defense through the press and outside the constraints of the courtroom and rules of evidence: that Ellison was a jilted lover who perpetrated these crimes alone.”
Williams complained that “such efforts have the potential to taint the jury pool, and could have a chilling effect on witnesses,” and that the report’s publication in the paper of record “lends a misleading patina of legitimacy to what would otherwise be naked advocacy.”
Another debtors’ lawsuit hit the court Friday, detailing more alleged fraud. The complaint alleges that Bankman-Fried directed at least $35 million in donations — mostly from Alameda customer accounts — to an organization run by his brother Gabriel called Guarding Against Pandemics.
Gabriel Bankman-Fried and an officer of FTX’s philanthropic arm, the suit alleges, created a plan to buy the Pacific island nation of Nauru. The suit, referencing a memo, says they had the idea to “construct a ‘bunker / shelter’ that would be used for “‘some event where 50%-99.99% of people die [to] ensure that most EAs [effective altruists] survive.’”
The memo allegedly also said, “probably there are other things it’s useful to do with a sovereign country, too.”
Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.
Source: SFGATE
