Sam Bankman-Fried, the Disgraced founder of cryptocurrency exchange FTX, has given up his philanthropic endeavors
Sam Bankman-Fried, the disgraced founder of crypto exchange FTX, appeared in a US courtroom in New York Thursday to face eight counts of fraud and conspiracy. He was freed on a $250 million bond after his first appearance in an American court.
Contrary to what FTX investors and trading customers were told,Bankman-Fried diverted FTX customer funds to Alameda and then used them for private venture investments and political contributions.
As a follower of “effective altruism,” Bankman-Fried has sought to make as much money as possible in order to give it away. His philanthropic endeavors are in doubt at the moment.
On Thursday, the entire staff of the FTX Future Fund, which says it has committed $160 million in grants, publicly quit. The legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund have been questioned by the five-person team.
A large portion of that total has since disappeared, they said. A source thought the missing amount was about $1.7 billion. The other said the gap was between $1 billion and $2 billion.
Investigation of the FTX.com, Alameda Research, and the FTT token price collapse probed by the US Securities and Exchange Commission
The failure of FTX will cause destruction of billions of dollars of wealth and make it harder for the industry to believe in cryptocurrencies at a time when they need a vote of confidence.
Bankman-Fried implied on Friday that he was figuring out what had happened at FTX. “I was shocked to see things unravel the way they did earlier this week,” he wrote. “I will, soon, write up a more complete post on the play by play.”
In an attempt to stave off a collapse of the FTT token price, Ellison and Bankman-Fried began to liquidate Alameda Research’s investments — freeing up cash for buybacks, according to the CFTC complaint. It wasn’t enough. During that period, Bankman-Fried, Ellison, and a third, unnamed FTX executive expressed surprise that the price of Bitcoin hadn’t fallen more.
That Sunday, Bankman-Fried held a meeting with several executives in the Bahamas capital Nassau to calculate how much outside funding he needed to cover FTX’s shortfall, the two people with knowledge of FTX’s finances said.
Prosecutors say billions in customer and investor funds are missing, accusing a small circle of insiders at FTX and Bankman-Fried’s crypto hedge fund, Alameda Research, of misusing the money for themselves from the very start of their operation.
The legal and finance teams were able to establish that Bankman-Fried implemented a back door in FTX’s book-keeping system.
The Securities and Exchange Commission in the US is investigating FTX.com’s handling of customer funds, as well as its activities in the sector, a source with knowledge of the inquiry told the news agency on Wednesday. The Commodity Futures Trading Commission is investigating, as well as the Department of Justice.
Swan Bitcoin: A Stranger’s View of the World’s First Twelfth Billionaire and a Paraiah
The stunning collapse of one of crypto’s most prominent firms has quickly morphed into a legal battle pitting former executives and ex-romantic partners against one another.
FTX said on Friday that it had given control of the company to John J. RayIII, a restructuring specialist who oversaw the downfall of one of the world’s largest companies.
Alameda was allowed to invest client assets and use FTX customer funds to make investments far riskier than treasuries by defendants and Bankman-Fried.
“I care because it’s retail investors who suffer the most, and because there are still many people wrongly associated with the ‘cryptocurrencies’ space,” said Cosart Klippsten, CEO of Swan Bitcoin, who raised concerns about the business model. He is enthusiastic about bitcoin, but has skepticism about other parts of the universe.
A meeting with Bankman-Fried was described by the investment firm as likely being “the world’s first trillionaire.” Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. After several more meetings, Sequoia decided to invest in the company.
The 30-year-old Bankman- Fried, also known as “SBF,” became a pariah last month when his company suffered a liquidity crisis and files for bankruptcy, leaving more than one million depositors unable to access their funds. The Royal Bahamas Police Force said that he was arrested without incident at his apartment complex just after 6 pm Monday, and will appear in a Nassau court Tuesday.
How Did Bankman-Fried Save the World? A Brief History of Investments in Cryptocurrencies and the U.S. Securities and Exchange Commission
Not all of the investments in this early stage asset class perform to expectations, according to a terse statement by the Ontario Teachers’ Pension Fund.
When Bankman-Fried bought up the assets of a bankrupt firm, it brought some relief to account holders, whose assets have been frozen since their own failure. That rescue is now in question.
As king of crypto, his influence was starting to pour into political and popular culture. FTX bought prominent sports sponsorships with Formula Racing and bought the naming rights to an arena in Miami. Bill Clinton was invited to speak at the FTX conferences after he pledged $1 billion to Democrats this election cycle. Football star Tom Brady invested in FTX.
During the 2008 financial crisis, a top Regulator told CNN that there were eerie similarities between the rise and fall of Bankman-Fried and FTX.
Bair notes that 30-year-old Bankman-Fried, like Madoff, proved adept at using his pedigree and connections to seduce sophisticated investors and regulators into missing “red flags” hiding in plain sight.
He was known on Wall Street as a wizard before his Ponzi scheme collapsed. He managed money for the rich and famous, was on the Securities and Exchange Commission’s advisory panels, and was the former chairman of the Nasdaq Stock Market.
Reply to Senator John Ray III on the FTX Debacle: Implications for Traditional Banking and the Crypto-Technical Sector
Better Markets CEO Dennis Kelleher said in a statement on Monday that FTX had a strategy of “revolving door hires” from the Commodities Futures Trading Commission (CFTC) and elsewhere “to use their knowledge, influence and access at the agency and in Washington to move FTX’s agenda.”
You get this herd mentality where if your own peers are doing the same, you need to as well. And that adds credibility with Washington policymakers. Bair is a board member at Paxos, a Blockchain infrastructure company and she spoke about how it all feeds itself.
It was possible to make use of the elaborate scheme that involved returning existing clients with new client deposits in order to make use of the marvelous returns that were offered to investors.
The former director of the FDIC is not worried that the FTX implosion will endanger the entire financial system like Lehman Brothers did in 2008. Crypto is still a relatively small part of the broader economy and financial market.
Bankman-Fried would have to provide his own testimony as well as respond to what John Ray III had to say, who was due to speak ahead of him.
The misuse of client funds and the failure of both entities caused the billions of dollars in debt to be wiped out, according to the senators.
Today was the first time that Bankman-Fried had talked about the FTX debacle in public. Waters was surprised to learn of the arrest. The public has been waiting for these answers to be made known to Congress and this arrest denies the public the chance to do so.
“There are still significant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up.”
Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.
They said that the banking system may have more in common with the tech firms than previously thought. “Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access.”
A Brief Rebuttal to Bankman-Fried: Cryptocurrency Mismanagement in the U.S. After his Dec. 12 Extradition from the Bahamas
He was extradited from the Bahamas, where FTX was based, on Wednesday after his arrest there on Dec. 12. A federal judge in Manhattan agreed to release Mr. Bankman-Fried on Thursday after his legal team and prosecutors worked out a bail package that required him to live with his parents in Northern California and wear an electronic monitoring bracelet.
In a hearing Wednesday morning, his lawyer in the Bahamas told the court that Bankman-Fried had agreed to extradition to the US, where federal prosecutors have charged him with orchestrating “one of the biggest financial frauds in American history.”
The United States’ extradition treaty with the Bahamas allows US prosecutors to return defendants to American soil if the charges would be considered punishable by imprisonment of at least a year in both jurisdictions.
“I didn’t knowingly commit fraud,” he told the BBC over the weekend. I did not want any of this to happen. I was certainly not nearly as competent as I thought I was.”
“While I am disappointed that we will not be able to hear from Mr. Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened,” Waters said in a statement Monday night.
“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. That feels pretty embarrassment in retrospect.
Bankman-Fried has denied knowledge of any such backdoor. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.
Sam Bankman-Fried, the Collapsing CEO of FTX, and the First Hearing of his Resignation as Prime Minister
The arrest was made by the U.S. government at the request of New York’s Southern District, according to Damian Williams.
The prime minister stated that the country was cooperating with agencies in the United States but that it had its own investigations into the collapse of FTX.
Still, Bankman-Fried wanted the world to think there was a strong separation between the two entities, the complaint says. That was a major motivator for his resignation as the CEO of Alameda.
As of late Monday night, the committee still had a notice of the hearing posted that listed Bankman-Fried as a witness and also included the written testimony of the hearing’s other witness, FTX’s CEO John Ray.
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chair Gary Gensler said in a statement.
Bankman- Fried said during a virtual appearance at the New York Times Deal Book Summit that he screwed up. “There are things I would do anything to do over.”
The agency also alleged a longtime pattern of Alameda and FTX sharing funds. “Alameda accessed and used FTX customer funds for Alameda’s own operations and activities, including to fund its trading, investment, and borrowing / lending activities,” the complaint says.
SBF made statements to investors that FTX was a safe place to invest due to an automated risk engine that sold off assets to make sure the customer’s assets stayed at the required levels.
Other charges may follow, but these are the ones he’s facing so far, and that’s just from the SEC — its announcement notes other charges are being filed today by the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC).
After his arrest, SBF had continued an ongoing postbankruptcy-filed media tour of Twitter spaces chats and Zoom calls, with at least two live appearances on Monday to testify before the House Financial Services Committee. That hearing will go forward and is scheduled to begin at 10AM ET, with testimony from FTX’s new CEO, John J. Ray III.
The arrest has sparked jubilation in crypto circles, after some nail-biting over his ostensibly generous treatment by “mainstream media” and speculation (by Twitter CEO Elon Musk, no less) that his political donations may earn him a free pass of sorts with US law enforcement.
The Failure of Corporate Control by François Bankman-Fried: From a Preview of his Testimony to the Latest U.S. High Court Cases
The first indication that Bankman-Fried was in for a rough ride came from a written preview of Ray’s testimony. “Never in my career have I seen such an utter failure of corporate controls at every level of an organization,” wrote Ray, before describing Bankman-Fried and his inner circle as “grossly inexperienced and unsophisticated.”
Details on Wang and Ellison are included in the updated civil suits filed by the SEC and CTFC. FTX provided Alameda Research with a “virtually unlimited line of credit” because Wang exempted them from the risk mitigation measures. according to the updated SEC complaint.
In a press conference today, US attorney Damian Williams characterized Alameda Research and FTX as “one of the biggest financial frauds in American history.”
The CFTC made a pretty strong argument that this could be false, as Ellison previously stated that she and Bankman-Fried kept the two companies separate in terms of day to day operations.
The teams shared office space, staff, and technology according to the complaint.
On Tuesday, Ray testified before the House Financial Services Committee, relaying what he could about the company he took over just four weeks ago. Ray was quick to make a distinction between his experience with FTX and that of Enron.
The New York Criminal Trial Reveals an Old Ponzi Scheme: Alameda Banks, the Great Recession, and the Great Depression
Last Tuesday, federal prosecutors from the Southern District of New York charged Bankman-Fried with eight counts of fraud and conspiracy. Bankman-Fried could face up to 115 years in prison if convicted on all eight counts against him, though he likely wouldn’t get the maximum sentence.
Two senior executives associated with the collapse — Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as Alameda’s CEO — have since pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors, according to unsealed court records.
Several lawyers not involved in the case have told me that the speed of Bankman-Fried’s arrest signals that former FTX employees may be aiding prosecutors.
The smart move by former employees would be to rush to become cooperators in exchange for better treatment, and that would not be surprising if one or more of them had done so. He added: “The fact that only one person has been charged so far would seem to indicate this as well.”
The author and journalist is covering dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington, DC. His own opinions are expressed in this article. CNN has more opinion.
In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always pair a lack of regulation and oversight with promises of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns out of thin air.
A half-century later in the late 1920s, the crash of the stock market — which more Americans had poured funds into, without any kind of oversight — propelled a series of bank runs that led to the actual Great Depression. The Great Recession, which was sparked by faulty loans repackaged as unique financial products, was caused by regulators asleep at the wheel.
Bankman-Fried is going to a Los Alamos Prison: A High-Sensitive Case Filed against Jeffrey J. Bankman
The Ministry of Foreign Affairs in the Bahamas confirmed that Bankman-Fried will be deported after the Foreign Minister signed a warrant of surrender.
For example, a few weeks before Bankman-Fried was arrested, crypto vlogger Tiffany Fong interviewed him by phone, and the conversation turned to Bankman-Fried’s campaign contributions. (He reportedly donated about $40 million during the 2022 midterms.)
The 30-year-old appeared to be holding a plastic bag of personal belongings during the hearing. Bankman-Fried gave his occupation as “entrepreneur and executive” and told the magistrate that his address was “a little unclear right now.”
The Bankman- Fried was held in a prison in the US that was so dirty and overcrowded that US officials described it as dirty and lacking in medical care. Rats, flies, and insects can be found in its crowded cells which lack mattresses.
Attorneys for Bankman- Fried and prosecutors are considering an arrangement that would allow him to avoid going to the Metropolitan Detention Center. Former inmates and their rights advocates have described the pre-trial holding facility as inhumane due to its overcrowding and frequent power failures, which has left it without heat in the middle of winter.
In cooperation with the US prosecutors investigating the collapse of FTX, Wang has pleaded guilty to four counts of fraud. Bankman- Fried has been charged with eight criminal counts.
According to federal sentencing guidelines, Wang will be sentenced to up to 50 years in prison. Ellison is facing up to-110 years in prison for her crimes, per federal sentencing guidelines.
The U.S. Central Bank for Financial Crimes Against Alameda Bankman-Fried: A Brief Brief Analysis of the SEC’s Investigation
The SEC suit says Ellison borrowed billions of dollars from the banks. Those loans were backed “in significant part” by the FTT token, which was issued by FTX and given to Alameda for free, the SEC wrote. Ellison was hired to buy FTT on various platforms to increase the price and thus make the FTT more valuable than it already was. That, in turn, made it possible for Alameda to borrow even more.
Ellison conceded that the November 6 message to the CEO of Binance was kind of a misleading thing to say.
These uses weren’t authorized by customers, as the CFTC suit makes clear. (It echoes the SEC suit’s allegations about how customer funds were improperly used by Alameda.) Indeed, FTX’s terms of service explicitly forbid this kind of thing, the CFTC suit says. It is important for establishing intent and keeping customer assets safe that they are separated from other funds.
That made Alameda Bankman-Fried’s ”personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses.“
Ms. Ellison, Mr. Wang, and Mr. Bankman-Fried disagreed with each other. The documents filed by the authorities claim that even though Mr. Bankman-Fried has said that he didn’t know what was happening at Alameda, he still knew about it.
The judge said that Bankman- Fried would be charged with robbing billions of dollars from customers of his platform at a future date.
Bankman-Fried was escorted into the courtroom by a US Marshal, wearing a navy suit jacket and white button-down shirt. The sound of his ankle shackles being pulled could be heard as he entered his seat at the defense table.
When the judge asked Bankman-Fried if he understood the consequences he would face if he failed to show up, he spoke only once.
Other bail conditions include mental health treatment, surrender of any firearms and prohibitions against engaging in transactions over $1,000 without the government’s approval.
The Case of GARY Bankman-Fried, Former CFO of FTX Investments, Revealed with Encrypted Messages
Multiple cooperating witnesses, testimony from other employees of the companies and Encrypted messages are all contained in the evidence against Bankman-Fried.
For now, the 30-year-old, whose net worth had been calculated to be in the billions until recently, will live in San Francisco with his parents, well-known law professors at Stanford, while wearing an electronic monitoring device. SBF is scheduled to appear in person at his next hearing on the afternoon of January 3rd in New York City.
We didn’t see any mention of any restriction from using computers or the internet, but now that charges have been filed, it would be even more shocking if SBF’s Zoom and Twitter Spaces-powered media tour continues.
According to a report, the former CEO of the hedge fund Alameda apologized before a federal judge in New York because she and her former associates knew that they stole billions of dollars from customers of the FTX exchange.
GARY WANG, 29, is charged with and has pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
Ms. Ellison agreed to take out several billion dollars in loans from FTX to repay them.
From July through October, she told the court, Ellison agreed with Bankman-Fried and others to provide “materially misleading financial statements to Alameda’s lenders,” and prepared balance sheets that concealed the extent of Alameda’s borrowing, according to transcripts from plea hearings held on December 19 and recently unsealed.
Ellison and Wang are cooperating with federal prosecutors and could possibly be damning witnesses for Bankman- Fried, who has denied ever deceiving customers or investors.
Bankman-Fried flew from California to New York to enter his plea in person during a court hearing at the U.S. District Court for the Southern District in Lower Manhattan.
Bankman-Fried’s legal team confirmed to CNN Business that he had arrived in Palo Alto and was home with his parents. His lawyer didn’t want to comment on the guilty pleas.
The former high-flying executive is facing charges stemming from the collapse of FTX, a case that could see him sentenced to 115 years in prison. He was accused of taking billions of dollars of his customers’ money for his own use.
BlockFi claims it is owed hundreds of millions of dollars by Bankman- Fried because of Alameda’s failure to repay its loan obligations.
Sam Bankman-Fried, Kramer, Paepcke, Park, and Park will face charges in a third-party bail deal
“We don’t have a lot of information that you guys don’t have. We’re just watching this unfold and … it’s going to be locked up in bankruptcy proceedings, most likely for some time.”
The recent implosion of cryptocurrencies has been a trouble for the company. The company laid off 23% of its staff in August after cutting 9% of its employees in April. The online broker’s stock is in freefall due to the lack of trading.
“There is serious cause for concern that the two additional sureties would face similar intrusions on their privacy as well as threats and harassment if their names appear unredacted on their bonds or their identities are otherwise publicly disclosed,” the letter states.
“It is common for defendants to do this,” said Christine Chung, a professor at Albany Law School. “A not guilty plea opens up the door to the discovery process, which will give Sam Bankman-Fried a better idea of the evidence that the government has collected thus far in its investigation.”
According to James Park, a securities fraud expert at UCA Law, Bankman-Fried didn’t have many options going into Tuesday’s hearing, because of Wang’s and Ellison’s plea deals.
A federal judge released the names of two people who co-signed Sam Bankman-Fried’s $250 million bail deal, which allowed him to be released on house arrest while he awaits trial on federal fraud and conspiracy charges.
In documents made public Wednesday afternoon, the court revealed that Larry Kramer, a former dean of Stanford’s law school, and Andreas Paepcke, a Stanford computer scientist, each signed on as guarantors.
During the past 2 years, while my family faced a harrowing battle with cancer, they have been the truest of friends and have sought to support them.
Bankman-Fried is an FTX User and a Virtual Private Network (FTX): Detecting a Major Misuse in the U.S.
Prosecutors proposed limiting Bankman-Fried’s use of electronic devices to prepare for trial, allowing only a Gmail account, voice calls and SMS text messaging. They said that he could use a phone app to communicate with them.
“There is now a record before the Court of a defendant who appears motivated to circumvent monitoring and find loopholes in existing bail conditions,” prosecutors said in a letter to the judge.
Judge Lewis Kaplan previously expressed concern about Bankman-Fried’s use of any application or device that could be encrypted or have auto-delete functions.
Prosecutors noted Bankman-Fried chose to use a VPN, or virtual private network, to watch the Super Bowl, even though it was readily available to watch in the US. A VPNs is used at businesses to allow them to hide the computers that they use to access the internet.
In a brief letter, Bankman-Fried’s attorneys informed Judge Lewis Kaplan that they agreed with his proposal for a security expert who would work solely for the judge. They would propose candidates by the end of the week.
The judge has been grappling with finding a balance to allow Bankman-Fried access to communication channels so he can prepare his defense against the potential misuse of those apps or VPNs. Bankman- Fried has pleaded not guilty to multiple charges.
The contact with the former employee was unwarranted, according to Bankman-Fried’s attorneys. They also told the judge that FTX’s attorneys informed them that they would need to use a VPN to access documents and data that is held on a cloud server.
He has been charged with orchestrating one of the largest financial frauds in history and facing the prospect of spending his life in prison, but he has been giving interviews and posting messages on his website to try to convince people that he is not a criminal.
“I made all the Republican donations dark” and “removing a little bit of me from my campaign”, Ms Mermelstein told AFP in an interview
“I think every white-collar lawyer you could ask would say, ‘Shut up: Keep your mouth shut, and let us do the talking,’” says Rebecca Mermelstein, a partner at the law firm O’Melveny.
The communication that Bankman-Fried left behind is soon going to haunt him.
“All my Republican donations were dark,” he told Fong. “And the reason was not for regulatory reasons. It’s because reporters freak the f*** out if you donate to a Republican. They’re all liberal and I don’t want to fight them. So, I made all the Republican ones dark.”
Then, on Thursday, when federal prosecutors unveiled four additional criminal charges against Bankman-Fried, they included new details about their widening case against him.
In the latest indictment, prosecutors specifically cited the comments from that interview as part of their additional evidence for their charge on “unlawful political contributions.”
Source: https://www.npr.org/2023/02/26/1157528598/ftx-crypto-sam-bankman-fried-bankruptcy-fraud-criminal-charges
The fate of a black-collar defendant like Bankman-Fried: a lawyer’s perspective on a possible trial of an old fraudster
“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,” they say he wrote. “I’d love to get on a phone call and talk.”
Although Bankman-Fried has not made a public comment since Jan. 19, lawyers who have dealt with prominent white-collar defendants warn that it can be a challenge to keep them quiet for long, especially if they are accustomed to living in the spotlight.
That’s a potential problem for Bankman-Fried, who hobnobbed with people like former President Clinton and former quarterback Tom Brady at the height of his popularity.
A former U.S. Attorney Barbara McQuade has said she has seen defendants struggle with the temptation to talk.
“‘If I could just talk to you long enough, I can explain it all away,’” she imagines a defendant thinking. “‘I can tell you that I was following the law,” I said.
In his public statements, the former CEO of FTX has sought to defend himself, saying that he was not trying to cause losses for customers of FTX, and that he was not a bad guy.
For example, days before Bankman-Fried was arrested in the Bahamas, ABC News anchor George Stephanopoulos asked him if he felt it was fair for people to compare him to Bernie Madoff, one of the world’s most infamous fraudsters.
Bankman-Fried isn’t sure if that’s who he is. “But I understand why they’re saying that. People lost money, and people lost a lot of money.”
Bankman- Fried reminds lawyers of another CEO whose trial went ahead despite him not being in touch with them.
He first sparked controversy after his company bought the rights to a drug used to treat people with compromised immune systems, and then spiked the price dramatically.
He got into a public feud with the rapper Ghostface Killah and did several broadcast interviews against his lawyer’s advice. Then, when his trial got underway, Shkreli wandered into the press room and badmouthed the prosecution to reporters.
Source: https://www.npr.org/2023/02/26/1157528598/ftx-crypto-sam-bankman-fried-bankruptcy-fraud-criminal-charges
The Case Against Flip Phones: Sam Bankman-Fried, a Silicon Valley CEO, Sensitive to Witness Tampering
Fred Garcia, who teaches crisis management at New York University and Columbia University, says he can’t understand what Bankman-Fried “hopes to get out of it.”
Bankman-Fried gained fame as a young CEO due to his public image, but now that he’s old, it’s against him. He became widely known for wearing shorts and t-shirts, and famously played a video game during a pitch meeting with a prominent venture capital firm.
But Anthony D’Angelo, a professor of public relations at Syracuse University, says that persona is unlikely to play well any longer among FTX customers, now that they fear their fortunes have disappeared.
“Unorthodox is okay,” D’Angelo says. “Losing $8 billion among people is not, and whatever charm your cargo shorts and frizzy hair may give you an advantage in in other forums, it’s not going to help here.”
One of the restrictions prosecutors and Sam Bankman-Fried’s attorneys are asking the judge to approve is the use of a flip phone.
The lawyers have been working to satisfy concerns raised by Judge Lewis Kaplan, who said he could “conceivably” revoke Bankman-Fried’s bail after he found there was a “threat” of witness tampering.
Bankman-Fried’s new laptop will only be used to log onto the internet through a special Virtual Private Network (VPN), and he will only be able to access websites that have been identified as white listed via the Virtual Private Network.
Among the websites are programs he could use to prepare for his defense, including Zoom, Microsoft Office, Python, and Adobe Acrobat. He would not be allowed to purchase electronic devices if he installed monitoring tools on his laptop.
The judge previously raised concerns about Bankman-Fried’s access to his parents’ computers, cell phones and internet. Parents would have to sign affidavits stating they will not allow their son to use their devices. Each device has a software that takes photos and video of the user.
Kaplan and the Electronic Devices Bankman-Fried Use for Chat, Text messages, and Computer Observations on Computers and Computers with Internet Access
The accounts were released after the payment from the main trading account was deposited into a private wallet.
A laptop and a phone that can only be used for voice calls and text messages are the electronic devices Bankman- Fried will have access to. He is “otherwise prohibited from using any other cellphones, tablets, computers, videogames (including video game platforms and hardware) that permit chat or voicecommunication, or “smart” devices with Internet access,” Kaplan wrote.