Parents of the ex-head of FTX SBF Stanford professors Joseph Bankman and Barbara Fried played a key role in their son’s transformation from nerd to well-connected crypto tycoon. Bloomberg came to these conclusions.
Both had distinguished careers long before the alleged SBF fraud, serving for more than three decades at the university’s law school.
Typically, the media portrayed parents as spectators who provided emotional support to their son during the debate. But their names will almost certainly come up during the trial, journalists admitted.
SBF previously told the New York Times that the parents “were not involved in any of the relevant parts” of the group of companies. This is supposedly only true of ex-CEO Gabe’s younger brother, who was involved in charitable projects at FTX.
At the same time, former employees and business partners of the top manager who came under criminal prosecution made it clear that they had a different impression.
Joseph and Barbara made regular appearances at the organization’s offices, offering words of encouragement to employees and being included in internal communications. Their reputation and connections were essential to the success of FTX–Alameda Research.
At the beginning of his son’s business, Joseph Bankman acted as a lawyer. In his words, he “extended a helping hand” and demonstrated “his usefulness.”
SBF’s father helped draft the first legal documents. They indicate that Bankman Sr. attended meetings and was involved in tax issues and developing marketing materials for FTX and its utility token FTT.
The publication’s interlocutors emphasized that Joseph played a key role in the decision to move to the Bahamas after tightening supervision in Hong Kong, where the company was based. FTX’s general counsel was Daniel Friedberg of Fenwick & West, who was hired personally by Bankman Sr.
Employees were under the impression that SBF always wanted to “call Joe” first before accepting any legal proposal.
Sam’s father asked specialists about their personal lives, participated in joint games and appeared at corporate dinners. He was perceived as a “sweet old man” – a figure who was there to prevent his son from losing control of himself in communications with subordinates.
One of the key investors in the platform (allocated $150 million) – Sequoia Capital – explained its decision to support the SBF initiative due to his work at a trading firm on Wall Street and his upbringing of parents – Stanford law professors.
In 2021, they turned to a venture capital firm and were able to alleviate concerns about the potential legal and regulatory risks of investing in a crypto exchange. A phone call from an unnamed ex-employee may have been key. SECwho consulted informally with the firm on previous deals and now teaches at Stanford.
The former official spoke in favor of FTX’s legal strategy, which included working overseas while it sought U.S. regulatory approval. In the conversation, he also noted that Bankman-Fried is the son of his friends.
“The parents really opened the door for Sam.” — one of the interlocutors commented.
By then, Barbara Fried had launched the political movement Mind the Gap, which advised prominent tech donors including former Google CEO Eric Schmidt and LinkedIn co-founder Reid Hoffman.
Having donated $5 million to the structure in 2020 (in 2022 – already $40 million), SBF instantly became a player in the District of Columbia (location of the US capital – Washington).
Bankman Sr. began frequently accompanying his son to meetings with regulators and elected officials. He has also appeared at FTX events as a spokesperson for the company’s philanthropic ambitions.
In particular, Joseph promoted digital currency wallets instead of bank accounts to the least affluent residents of South Florida, with promises that the exchange would fix expensive transfers.
Against the backdrop of SBF’s declared modesty (Toyota Corolla, worn sneakers, cohabitation with colleagues), FTX “selflessly spent money”, turning the office into “an emerald city of „The Wizard of Oz”“
When the company was on the verge of bankruptcy, Bankman-Fried turned to his father to help minimize the damage by publicly declaring that the platform had no problems.
At that time, father and son were trying to cope with bank run in conversation with investors. In particular, on November 7, the head of Skybridge Capital, Anthony Scaramucci, heard about a liquidity deficit of $1 billion. During the next call, the figure increased to $4.5 billion. Later it was already about $7 billion.
“I think Joe wanted to help his son. […] You want to think only the best about your children.” – he commented.
Just before filing for bankruptcy, SBF’s father urged regulators and creditors not to rush into a ruling. He called FTX managers “just kids who made a mistake,” promising that they would return the money.
After the stock exchange’s problems came to light, the parents’ friends were shocked. They were trying to understand how two men who were renowned for their ethics could be so connected to the largest fraud in US history.
After SBF’s arrest, Bankman Sr. canceled his courses, and Freed, who left the school two months before FTX’s collapse, left Mind the Gap.
“It’s hard to imagine how they could not know? The most I can allow is blind faith. They didn’t have the full picture.” – suggested one of the interlocutors.
Bloomberg admitted the plausibility of this version. Bankman-Fried, according to those interviewed, was a sociopath and deceived not only investors, but also business partners and even his own employees.
It would not be an exaggeration to suggest that he could use his own parents, along with their distinguished academic careers, for “promotion,” journalists suggested.
But even if they didn’t know about the alleged misappropriation of funds, critics say the parents deserve some of the blame.
The SBF mother’s ethical compass could explain how her son could overlook obvious moral failings in the name of what he believed to be the greater good. Following this line of thought: what is a little misappropriation of funds if the end result is billions of dollars for charities saving the world? Fried developed similar views in one of her most famous articles.
Joseph, as stated above, played a key role in the establishment of the business empire.
“In a sense, Bankman Sr. was the founding father of the company,” – concluded one of the sources.
Hearings on the criminal charges will begin on October 2. The prosecutor’s office did not bring any claims against SBF’s parents.
Sam Bankman-Fried was charged with 13 felonies. Prosecutors later dropped charges of financing certain politicians as part of a deal with the defense. The FTX founder pleaded not guilty to any of the charges, including bribery of a Chinese official.
Let us remind you that SBF used funds from a gift he made to his father using money borrowed from the platform to cover legal costs.
The volume of payments in the form of payments and loans to the so-called Bankman-Fried inner circle is $3.2 billion, including to him personally — $2.2 billion.
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