Sam Bankman-Fried had a pretty good setup for a man the federal government has accused of masterminding one of the most cartoonish and lucrative frauds in the history of American capitalism. The disgraced founder of the bankrupt crypto exchange FTX (and its troublesomely close sister firm Alameda Research) has been facing a long list of charges since December, most of them related to the alleged stealing of FTX customers’ money in ways the feds did not like. (He’s since had a few charges withdrawn so they can be refiled elsewhere, including a campaign-finance charge that initial reporting suggested had been dropped altogether.) But amid the maelstrom, the 31-year-old founder has spent the year at his parents’ lovely looking home in Palo Alto, on Stanford University’s campus. Early on, he was writing a Substack newsletter, giving interviews to seemingly anyone who wanted one, and in general not acting like a man facing many years in prison on high-profile federal charges.
That setup is done now. On Friday, a judge sent SBF to jail while he awaits a jury trial in October after prosecutors said he had gotten up to a wide range of jackassery that made it untenable for him to remain free on bail. (Bail that, by the way, would’ve put some of his allies on the hook for $250 million had he run.) The deposed crypto king who was enjoying what will probably be his last months of freedom for a long time lost that freedom because, according to prosecutors and the court, he got up to behavior that was truly astonishing for someone in his position. “He has gone up to the line over and over again,” Judge Lewis A. Kaplan of the Federal District Court in Manhattan said, “and I am going to revoke bail.” Men in jackets then led Bankman-Fried away to his new life.
The implosion of FTX last year was a financial disaster for a lot of people. It was also mind-bogglingly simple and dumb. As SBF approached his trial, it would’ve been reasonable to think that nothing about the matter could get sillier than the exchange’s collapse itself—something that happened, in large part, because Bankman-Fried built FTX’s balance sheet out of made-up crypto tokens whose value was directly correlated with vanishing confidence in FTX. That Bankman-Fried is going to jail now, for the incredibly silly things that got him put there, is a fitting penultimate chapter to an unbelievably absurd saga.
SBF annoyed prosecutors and the court in various ways, each more ludicrous than the last. The apparent final straw came in July, when prosecutors say Bankman-Fried interfered with his upcoming trial in the most avoidable and easily detectable way possible. The New York Times published an article on July 20 based on diary entries from Caroline Ellison, both an ex-girlfriend of Bankman-Fried’s and the CEO of Alameda Research, who made a deal with the government in which she admitted to committing fraud and is poised to soon testify against him. The entries paint Ellison as an overwhelmed businesswoman who felt hurt by Bankman-Fried. In a memo the same day the article ran, the government’s lawyers told the court that SBF’s legal team had admitted he’d met with the story’s reporter in the run-up to the story’s publication. “Based on the excerpts in the Article, the documents do not appear to be within the discovery materials in the case,” the government said, “but likely came from the defendant’s personal Google Drive account.” Which of course SBF would’ve had easier access to than just about anyone alive.
That amounted to a clear breach of pretrial rules, the prosecutors said, and by July 26 they were formally requesting that a judge end SBF’s bail and put him behind bars: “There is no set of conditions short of detention to ensure the safety of the community,” an assistant U.S. attorney said. Prosecutors said the leak had the “potential to taint the jury pool, and could have a chilling effect on witnesses.” An argument by Bankman-Fried’s lawyers, that the government had clearly talked to reporters about the case and that SBF was at risk of having his First Amendment rights violated, apparently was not persuasive. “Defendant speech is not protected if it is to bring about a crime,” the judge said Friday in announcing the order, according to the Times.
Bankman-Fried was a pretrial whippersnapper in other respects. He used a virtual private network in January and February, which masked his internet activity and, in the government’s view, might be a means for Bankman-Fried to access international crypto exchanges or the dark web. SBF’s lawyer made a reasonably plausible case (as any degenerate football watcher would acknowledge) that SBF had used the VPN to use an NFL streaming subscription that he’d purchased when he lived in the Bahamas. That, the lawyer said, would allow him to watch NFL playoff games, including the Super Bowl. It’s not clear if SBF’s parents did not have a TV or if it would’ve been impossible for someone to bring him one so that he could watch the games, which aired on network television and certainly didn’t require a streaming subscription to see. Bankman-Fried apparently stopped using a VPN after that, but he’d already made a mess. (Bankman-Fried has also not been allowed to use certain encrypted messaging apps.)
And to complete a fun but not necessarily exhaustive trifecta, SBF made contact last winter with several FTX employees in a way that was chummy enough to make the government think he was witness tampering by trying to improve his relationship with them before trial. “I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” he wrote to FTX’s former general counsel via both email and encrypted Signal message, which the government predictably did not like.
The judge soon after barred SBF from contacting FTX colleagues at all. It will presumably be impossible for him to do that from his new domicile. Bankman-Fried was an extremely poor financial executive and steward of his customers’ money. He has been equally ineffective so far as a criminal defendant.