As Sam Bankman-Fried, who is under arrest in the Bahamas, prepares for extradition to the United States on criminal charges, former employees of the cryptocurrency exchange FTX recall him as a complex and contradictory character whose calculating mind ultimately led him down a dark path.
Bankman-Fried was taken into custody on Dec. 12 by the Royal Bahamas Police Force in response to charges filed by U.S. authorities.
“At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States,” the Bahamian government said in an official statement.
In the public eye, Bankman-Fried has gone from quirky financial genius and selfless philanthropist to liar, con artist, and thief. But his former employees describe a more nuanced person that’s neither angel nor villain.
“Of all the things I’ve heard and read so far, 80 percent of it is [expletive],” said one Bahamian staff member, who spoke to The Epoch Times on the condition of anonymity. Having grown up in some rough sections of Nassau, the employee said, “I’ve been around thieves; I’ve been around con artists; that wasn’t him.”
The Bahamians hired by the crypto exchange and its sister company Alameda Research were well paid—on average $50,000 per year plus benefits, compared to average local salaries of around $20,000. The environment was one in which staff worked exceptionally hard in the belief that they were building a landmark company in the digital currency space.
In the eyes of most staffers, “it was a legitimate profit-making company,” the employee said. “It was working with some of the nicest people you could imagine. When you see people believe in something so passionately, you know it’s not a fraud.”
In retrospect, he said, “You can have the nicest family, but if you have a bad father, it’s going to collapse.”
Another employee, who also wished to remain anonymous, said of Bankman-Fried’s interviews in the wake of the collapse, “I have not watched it. I can’t bring myself to watch it ... I think he’s still delusional.”
Having worked closely with Bankman-Fried, he said, “Here’s how Sam looks at things: He’s an extremely mathematical, analytical, and logical guy. You know, MIT physics, all that other stuff, Jane Street,” referring to the Wall Street hedge fund where the FTX founder had worked.
“He looks at the different outcomes, and he assigns probabilities to them. And for each of the outcomes, he assigns a profit or a loss, what is the expected gain or loss? And so he would do something, as long as the expected outcome is net positive. The word that he likes to use is positive EV, positive expected value.”
“The issue with that thinking is stealing customer assets is not a probabilistic decision. It is a black-and-white line. You should never, ever have used customer assets for anything other than to hold it in trust for customers.”
Poor Judgment?
Bankman-Fried, before his arrest, responded to questions about his actions in arcane, obfuscatory terms, claiming to be surprised about the multibillion-dollar losses and the misuse of investors’ money. He spoke about mistakes and poor judgment on his part, but never criminal intent.Bankman-Fried had agreed to testify before Congress from the Bahamas via Zoom, though he stated at the time that since he no longer has access to FTX files, his testimony “won’t be as helpful as I’d like.” He also said he was staying in the Bahamas because his schedule was “quite overbooked” and that he was concerned about being mobbed by paparazzi.
Life in the Bahamas
Like those who invested on the FTX exchange believing their assets were being held in secure accounts, many rank-and-file employees also saw their investments in FTX evaporate overnight. In some ways, this story is familiar to the islanders, they say.“These foreign entities come and they [expletive] on us and leave us to clean up the mess,” the Bahamian employee said, though he shrugs and says he doesn’t expect FTX’s collapse to leave much of a mark on the Bahamas. “Bahamians are resilient people. We’re going to pick up the pieces.”
Around the island, most locals are aware of the FTX story but don’t seem particularly concerned that it will have any fallout beyond crypto investors. There’s embarrassment and criticism directed at regulatory authorities at the Bahamas Securities Commission and a setback for those who had hoped the Bahamas would become a respected financial center for cryptocurrencies, but the population at large appears to have moved on.
According to one taxi driver, the FTX story is “a non-starter issue.” The economy is driven by tourism, which is now experiencing a strong recovery after a year of pandemic lockdowns. Bahamians speak with satisfaction about ousting Prime Minister Hubert Minnis in retribution for his shutting down the economy in 2020, sending the tourist industry into a tailspin.
The empty construction site where FTX broke ground to build its expansive new offices will be put to other uses, and there are approximately $300 million in houses and other real estate holdings—including a house in a wealthy gated community purchased for Bankman-Fried’s parents—that are now part of the bankruptcy proceedings. Locals are more interested in the new $300 million cruise ship terminal, scheduled to open in May, that will nearly double the number of ships that can dock at Nassau.
‘We Were Fired on Twitter’
As for Bankman-Fried himself, the closer you get to him, the more clouded opinions appear to be. The Bahamian employee described his former boss as “smart but introverted,“ saying that ”he’s definitely on the spectrum.” The former FTX chief executive would often work across six different computer screens simultaneously, reading emails, making trades, monitoring positions, doing video calls, and playing video games.“We'd stand there sometimes and just watch him in awe,” he said. But the ultimate collapse of both FTX and Alameda was the result of “not addressing the issue that they were just horrible traders.”
When asked what it was like to work for FTX, he said, “We were treated very well. We had good benefits. It was a good job.”
“You know what we were doing this time last year? We did the biggest toy giveaway this country has ever seen.” For Christmas, FTX bought and donated hundreds of thousands of toys. The company also donated to schools, churches, and other charities in the Bahamas.
On the one hand, he said, FTX allowed locals to continue trading and close out positions for a short period after the collapse of the company. On the other hand, “we were fired on Twitter,” and though many locals have been kept on as FTX employees, they haven’t been paid a salary for the past month.
In a series of interviews since his companies declared bankruptcy, Bankman-Fried has professed ignorance about the whereabouts of billions of dollars that have now gone missing, as well as how funds moved from the accounts of individual crypto investors on the FTX exchange to Alameda to cover trading and investment losses there.
“I wasn’t running Alameda; I didn’t know exactly what was going on; I didn’t know the size of their position,“ Bankman-Fried said, in a Nov. 30 interview at The New York Times DealBook Summit. ”A lot of these things are things I’ve learned over the last month, that I learned as I was sort of frantically digging into this on Nov. 6, Nov. 7, Nov. 8.
“I unknowingly commingled funds” between customer accounts at FTX and Alameda, he said, adding that he was “frankly surprised” by the extent of risk that Alameda had taken on in its trading positions, “but I wasn’t trying to commingle funds.” The various FTX subsidiaries and affiliates filed for bankruptcy protection on Nov. 11.
‘Horrible Trader’
While FTX and Alameda were separate legal entities, the senior executives of both companies reportedly shared a $30 million waterfront residence in the western section of New Providence Island, at an exclusive resort called Albany. Their offices, also behind security gates, were a short drive from the resort.Set behind high security fences with only residents and guests permitted to enter, the Albany community is home to celebrities and the super-wealthy. The resort features homes and high-rise condominiums overlooking a marina where owners can park their yachts.
In October 2021, Bankman-Fried handed over control of Alameda Research to an inexperienced colleague, Caroline Ellison, a recent Stanford graduate who had traded equities for 1 1/2 years at Jane Street, a Wall Street hedge fund, before joining Alameda. While Bankman-Fried claims at this point to have stepped away from Alameda to focus exclusively on his FTX crypto exchange, he was cohabitating with Ellison at the Albany resort.
“I did live with one or two members of Alameda for a little while,” he said at the DealBook Summit. Why someone with as thin a resumé as Ellison would be chosen to run a multibillion-dollar hedge fund remains unclear, but losses at Alameda quickly piled up and Bankman-Fried appears at that point to have used billions in customer funds from FTX to cover losses at Alameda.
Asked about Ellison, the Bahamian employee replied, “Caroline is a nice person, but it turns out, she was a horrible trader.”
The Epoch Times requested comments from Sam Bankman-Fried prior to his arrest, but he declined to comment.
