How Sam Bankman-Fried’s elite parents enabled his crypto empire

From the article:

Bankman and Fried have steered clear of much of the scrutiny that’s enveloped FTX. That’s at least in part because they’ve yet to deliver a full accounting of their roles in helping their son build a sprawling business and political-influence operation. Instead, they’ve generally been portrayed as spectators, who, often in tears, offer emotional support to their son at frequent court appearances. But their names will almost certainly come up during the trial. The defense team has signaled its strategy may, in part, rest on advice Bankman-Fried received from lawyers, including his parents.

...

[...] legal filings suggest Bankman and Fried were crucial to their son’s transfiguration from schlubby startup nerd to hyperconnected crypto mogul. The couple profited tremendously from FTX, netting $26 million in cash and real estate in 2022 alone. They were regular fixtures at the company’s offices, offered words of encouragement to employees and were included in internal company communications. Their reputations and connections were essential to FTX’s success.

...

Fried was an even bigger intellectual than her husband and, though well liked on campus, she has a reputation for provoking anxiety among students as much as for helping them manage it. Her academic work centers on a branch of ethics known as consequentialism, or the idea that the results of our actions are more important than abstract notions of right and wrong. These ideas became something of a family religion.

...

Fried’s most famous paper focuses on the “trolley problem,” the well-known thought experiment involving a train destined for tragedy. [...] Fried’s paper argued that the problem was bunk and obscured the real-life moral choices policymakers face—for instance, how much aid to give to the poor or how much health care to give to the uninsured.

...

Bankman-Fried needed lawyers. Fortunately, a very, very good one was available. His dad wasn’t an expert in crypto, but at the time Alameda started, no one was. “From the start, whenever I was useful, I’d lend a hand,” Bankman said on an FTX podcast in August 2022. Noting the company didn’t have lawyers at the time, he added, “I think my utility there was pretty obvious.”

Former Alameda staffers say Bankman helped draft early legal documents. Invoices from Fenwick & West, Alameda’s law firm, list him as an attendee in meetings, showing he was involved not only on tax issues but also in the development of marketing materials for FTX and FTT, the made-up currency Bankman-Fried issued when he launched his crypto exchange [...]

[...]

A person familiar with FTX’s operations says Bankman played a key role in the decision to relocate to the Bahamas, where there were few restrictions on digital currencies. The specifics were arranged by someone Bankman personally recruited—Daniel Friedberg, a former Fenwick & West lawyer who became FTX’s general counsel.

To his employees, Bankman-Fried gave the impression he consulted his dad constantly. When someone would offer a legal suggestion, he’d often say it sounded good but he wanted to “call Joe” first, according to a former staffer, who added that almost all the lawyers who worked for Alameda seemed to be friendly with Bankman.

...

Sequoia was convinced to invest, say people close to the deal, after a phone call from a prominent ex-SEC official who’d consulted with the firm informally on previous deals and now teaches at Stanford. This former official spoke in support of FTX’s legal strategy—which involved operating overseas while it worked to win approval from US regulators—and said Bankman-Fried also happened to be the son of his friends.

...

Bankman, meanwhile, often accompanied his son to meetings with regulators and elected officials. Bankman also appeared at FTX events as a spokesman for the company’s charitable ambitions. He still advocated on behalf of tax reform, but now he’d sometimes toss in a new interest: crypto.

During his appearance on the FTX podcast, Bankman touted a pilot program he was running in South Florida that would give poor people digital currency wallets in lieu of bank accounts. “If you’re not part of the financial system, everything is harder,” he said. “It’s expensive to cash checks. It’s expensive to move money around. So that’s kind of a national disgrace.” FTX, Bankman promised, was going to fix that.

...

FTX bought that dwelling, along with three dozen others on the island, at a cost of roughly $250 million. Through their spokeswoman, Bankman and Fried have said they saw the home as company property, not theirs.

...

A bill of sale, obtained through a public records request in the Bahamas, shows that on April 7, 2022, Bankman and Fried signed as co-owners of the apartment, with a Bahamian notary as witness. The document makes no mention of FTX and refers to the property as a “vacation home.” “The house was used as temporary housing while Joe worked in the Bahamas,” the spokesperson for the couple said in a statement. “Outside counsel confirmed to Joe and Barbara that FTX would have all beneficial ownership of the house and agreed to document that in writing.”

Around the same time, Bankman received a $10 million gift from his son. A lawsuit filed by Ray, the FTX bankruptcy chief, claims Bankman-Fried got the money by borrowing it from an account that contained customer funds. According to the complaint, he did so after consulting the person who by this point had become a top adviser on legal matters personal and professional: his dad. The lawsuit alleges that the loan was never formalized—there’s no loan agreement, promissory note “or other indication that the funds were not simply taken from Alameda by Bankman-Fried to enrich his family.” His father moved almost $7 million to personal bank accounts; the rest he kept in crypto on FTX.