Before his downfall, Sam Bankman-Fried drew comparisons to Warren Buffett, J.P. Morgan and other titans of finance. As his trial approaches, WSJ’s Caitlin Ostroff charts the meteoric rise of crypto’s golden boy, exploring how he sold customers and powerful people on his ideas, while hiding secrets under the hood of his flashy crypto empire.
charts the meteoric rise of crypto’s golden boy, exploring how he sold customers and powerful people on his ideas, while hiding secrets under the hood of his flashy crypto empire. This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Caitlin Ostroff: But the US government alleges that the missing money is more than just a mistake. Last December, Bankman-Fried was arrested and charged with masterminding a multi-billion dollar fraud scheme. Caitlin Ostroff: Bankman-Fried thought he could solve questions just like that one. He was a math nerd. And in math, almost every problem has a solution. Full disclosure, I'm also a math nerd. But unlike Bankman-Fried, I stopped at college calculus. From his interviews, it seemed like Bankman-Fried thought the world's problems were simply another equation and he just needed to figure out how much time and money it would take to solve them.
Brett Harrison: It was one big open trading floor, so it was this very sort of loud, noisy, kind of exciting place where people were kind of yelling and shouting at each other and doing trades and working on systems together. And so he came through this program and he was in this group of 20, 25 students that worked with me to learn how to program.Brett Harrison: I think the first impression was that he wore t-shirts and shorts every single day regardless of whether it was summer or winter.
Sam Bankman-Fried: And so I sort of liked was like, "Man, I wonder if there's good trading to do here" and just did the most cursory of analysis you could. And it sort of looked like, "Oh wow, maybe there are actually ridiculously good trades to do here." Leandro Cabo: Once I made the initial investment, it really sucked me in and I was checking it. Constantly, I would wake up in the middle of the night to check it. So I was really on top of it consistently. My main goal was to have something to give my children.
Leandro Cabo: I began my investments on Poloniex. I used Cripsy, I don't know if you're familiar with that. Then I went on to Bittrex, Kucoin, Gemini. Caitlin Ostroff: FTX was an instant success. Within a year of its launch, it boasted that it handled $1 billion worth of trades every day. But around that time, US regulators were taking a closer look at crypto and they didn't want exchanges like FTX offering risky services to US traders. So in 2020, Bankman-Fried to launched a scaled down version of FTX for US customers. And he eventually tapped his old Jane Street coworker, Brett Harrison, to be president of FTX US.
Caitlin Ostroff: That's my colleague, Elliot Brown. And how does Sam Bankman-Fried fit into all of that? Caitlin Ostroff: Bankman-Fried was on a goal. While he was charming investors, he was also getting noticed by the media. He began appearing on TV to talk about FTX's rapid growth.Sam Bankman-Fried: Honestly, from our perspective, it sometimes feels like the world is just going sort of in slow motion around us and that we're going at about an average speed by our standards.Audio: 29 year old gazillionaire, FTX founder and CEO, Sam Bankman-Fried.
Senator Brown: Mr. Bankman-Fried, is it reckless for crypto companies to get rich by selling Americans such a dangerous, risky product? Caitlin Ostroff: Many lawmakers, including Senator Booker, also received donations from Bankman-Fried. From 2021 onwards, he and some of his FTX colleagues became major political donors. They eventually gave money to one in three members of Congress. Prosecutors now say that Bankman-Fried lied to the US Senate. And the government has described his donations as a "illegal campaign finance scheme," something Bankman-Fried denies.
Caitlin Ostroff: Did he used to send just overnight messages? It was just very early or very late in the evening.Natalie Tien: Good question. Caitlin Ostroff: Nishad Singh and Gary Wang were key figures at FTX, and part of what I've come to understand as Bankman-Fried's inner circle. How important were Nishad and Gary to FTX's day-to-day vetting?
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