Samuel Bankman-Fried, a Bay Area native and son to two Stanford professors, has been arrested in the Bahamas on various federal fraud charges in connection to his cryptocurrency exchange FTX.
Prosecutors in the U.S. District Court for the Southern District of New York unsealed an indictment on Tuesday, Dec. 13, that charges Bankman-Fried with eight counts, including wire fraud on customers and lenders, and conspiracy to commit commodities fraud, securities fraud, money laundering and to violate campaign finance laws.
The U.S. Securities and Exchange Commission (SEC) also announced on Tuesday that it was civilly charging Bankman-Fried for allegedly defrauding FTX investors in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934.
According to the SEC, FTX raised over $1.8 billion, with Bankman-Fried representing the company as a "safe, responsible crypto asset trading platform." The SEC alleges that Bankman-Fried concealed from investors that FTX customers' money was being diverted to his privately held cryptocurrency hedge fund, Alameda Research LLC, which was being given special treatment on FTX.
"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 press release. "The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws."
Bankman-Fried was arrested without incident at roughly 6 p.m. local time at his apartment complex in the Bahamas on Monday, according to a press release from the Royal Bahamas Police Force.
The arrest came after the United States told officials in the Bahamas that criminal charges had been filed against Bankman-Friend and the U.S. was likely to request his extradition, according to a statement from the attorney general of the Bahamas.
Various officials have called in recent months for greater oversight of cryptocurrencies. U.S. Treasury Secretary Janet Yellen told CBS News last month that FTX's collapse was the result of the "absence of appropriate supervision and regulation" and described cryptocurrencies as "extremely risky assets, and even dangerous in some ways."
Bankman-Fried's parents — Joseph Bankman and Barbara Fried — are both longtime teachers at Stanford Law School and have drawn scrutiny for their connections to their son's business ventures.
Bankman was a paid FTX employee who publicly appeared on behalf of the company, according to a New York Times article about the family. Neither parent has been linked to potential criminal wrongdoing, according to the Times, but both have been impacted by the demise of their son's business.
Fried resigned as the board chair of a political donor group and Bankman announced that he wouldn't teach a scheduled class at Stanford this winter, according to the Times. Fried is an emerita professor who retired this year, the Times said.
Comments
Registered user
JLS Middle School
on Dec 13, 2022 at 4:09 pm
Registered user
on Dec 13, 2022 at 4:09 pm
Another item for the "Crimes & Incidents" category. It looks like he passed "Fraud 101" in college. I'm surprised tho ... can't his parents block extradition?
Registered user
Downtown North
on Dec 14, 2022 at 5:54 am
Registered user
on Dec 14, 2022 at 5:54 am
It is so strange that this very local news, that is making headlines in all national news, is barely registering here, where it came from.....
Registered user
Palo Verde
on Dec 14, 2022 at 8:49 am
Registered user
on Dec 14, 2022 at 8:49 am
This is clearly a headline story for the Wall Street Journal, WAPO, NYT, etc. But is his arrest really news for the Palo Alto Weekly? Do we have any mention in the Sports section of the Weekly when Joc Pederson just signed a new Giants contract (hey, he was born here, went to Paly, has lots of friends here, etc.)? There is plenty of news coverage at the national and international level of the FTX mess, it seems to me that the PA Weekly should focus its resources on local issues of importance, which this really isn't.
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Another Palo Alto neighborhood
on Dec 14, 2022 at 9:27 am
Registered user
on Dec 14, 2022 at 9:27 am
@Palo Alto,
“It is so strange that this very local news, that is making headlines in all national news, is barely registering here, where it came from.....”
Yes, Stanford, tech culture, reckless adults. I can’t help think of soccer star Katie Meyer who was abandoned by the people who were in charge. And here, basically a 2 year old was allowed to have fun causing $8 billion fraud.
By the time Elizabeth Holmes went to trial, we had more to talk about, I’m waiting for the book, Netflix and then we should expect the adults who caused this to start whining about pardon as they are doing for Elizabeth Holmes.
Registered user
Old Palo Alto
on Dec 14, 2022 at 10:57 am
Registered user
on Dec 14, 2022 at 10:57 am
Agree with @cheese guy. The Weekly abandoned local sports coverage because they say they don't have enough money to staff it. No one is looking to the Palo Alto Weekly for coverage of this story. Weekly could have just run a wire story because nothing in this story advances the narrative.
Registered user
another community
on Dec 14, 2022 at 11:42 am
Registered user
on Dec 14, 2022 at 11:42 am
Other outlets are reporting that his mother (a Stanford law professor) laughed out loud in the hearing, after he was called a fugitive. It doesnt seem like much of a ripple, but in the context of knowing BOTH of the fugitive's parents are Stanford law professors, this shows the kind of mentality that is bred into their culture. No attorney should ever laugh in a courtroom whether they are somebodys mom or their attorney. Unless the judge makes a joke. But i have never seen a judge make a joke in courtroom. I have seen judges threaten offenders with contempt if they snicker, roll their eyes, etc and they dont care who the defendants mother is.
Registered user
Embarcadero Oaks/Leland
on Dec 14, 2022 at 11:54 am
Registered user
on Dec 14, 2022 at 11:54 am
I think this is a local story as is those about Theranos but it would be good for PAW to work the local angle and interview the people who know the principals, all those people who wrote letters of support for Holmes, people who knew Katie Mayer...
As for not having enough money to cover local sports, maybe if the publishers started integrated content from the nearby communities where it owns publications. Developments there don't stop at their borders any more than traffic does.
(Speaking of traffic and borders, where's the coordination of all the simultaneous road work projects in PA, Menlo Park, etc. To paraphrase ourLiz Kniss who famously said PA doesn't have traffic problems but if we did to just take alternate routes, we CAN'T take alternate routes when there's work on all of them at once!)
Registered user
another community
on Dec 14, 2022 at 2:28 pm
Registered user
on Dec 14, 2022 at 2:28 pm
@Online Name, as far as the local angle -- interviewing the people who know the principals -- all of the cases you mentioned are in the midst of litigation, whether it's a lawsuit or an appeal. Stanford is a closed and very exclusive club. I bet they scrape the internet every minute of every day to find out what people are saying about the Law School, for sure. And the Health Care segment is ... well ... we never hear anything bad about them, now, do we? Nationally or locally? But for now the Law School will take a hit and issue some kind of apology about not having known about the bad actors in their school. I mean, come on ... who ever thought that people could trade imaginary money and not end up going to prison? OK I know of two people who should have known better and could have put a stop to it. And they both raised Sam Bankman Fried. Now their son has to halt court proceedings to put on his depression medication patch, and wants bail because there's no a/c in jail. And they said it's going to cost his parents all of their life savings to defend him. Which is just a signal to those who lost THEIR life savings to this family Ponzi scheme, don't come knocking looking for a refund. Rich White People Problems, so sad.
Registered user
College Terrace
on Dec 14, 2022 at 2:47 pm
Registered user
on Dec 14, 2022 at 2:47 pm
I see PAO posted a photo of SBF, who has not yet been convicted of anything. Double standard? Won't post photos of certain arrestees, but it's fine to post photos of other arrestees?
Registered user
Duveneck/St. Francis
on Dec 14, 2022 at 2:48 pm
Registered user
on Dec 14, 2022 at 2:48 pm
@ cheese guy - what's locally relevant is that he was the #2 donor to Democrats in recent primaries, and his mother directed no small share of his ill-gotten $$ to swing elections. It is also locally relevant that Stanford has a tenured professor who is smart enough to teach tax law and who, as a consultant to his son's company, had every chance to put 2 and 2 together but didn't.
That, to me, says a TON about what PA/Stanford elite are really, truly about. We need to expose that, burn it away and get back to what PA ethics used to be before all the quick money came in.
Registered user
another community
on Dec 14, 2022 at 4:42 pm
Registered user
on Dec 14, 2022 at 4:42 pm
Citizen, if you haven't noticed, they are also burying this article so deep his mama might never see it. WE HAVE ELEVATOR PROBLEMS that far exceed a local scandal about Stanford kin who made pretend money and bilked people out of billions.
Registered user
College Terrace
on Dec 15, 2022 at 8:57 am
Registered user
on Dec 15, 2022 at 8:57 am
I think @Palo Alto makes a good point. Weekly/PAO coverage of the FTX collapse has been curiously limited. OTOH, the WSJ and Financial Times are covering the issue thoroughly. It's a big deal. As for the parents, I kinda doubt the mother laughed in court; her son is in a deep hole of trouble and only the most preposterously unaware parent would find a court proceeding about this amusing. I'm guessing she guffawed or gasped reflexively and that's been reported in a distorted way. What I keep wondering is this: where were the checks and balances? Average people cannot use their own credit card in an unusual place of for an unusually high amount w/o triggering fraud alerts, yet SBF was able to amass and spend billions w/o any triggers going off. How does this happen? And if there hadn't been a run on the crypto bank (so to speak) would the absurd activity still be going on? I think the answer to that is yes and suspect SBF is just one of many gaming the system to their own advantage. SBF just got caught in a spectacular way. But then, while he had the money he lived in a big, spectacular way. The ages old saying, money is the root of all evil, is well illustrated in this sorry saga.
Registered user
Another Palo Alto neighborhood
on Dec 15, 2022 at 9:51 am
Registered user
on Dec 15, 2022 at 9:51 am
The old saying is "the love of money is a root of all evil" comes from the Bible. The full context, KJV 1 Timothy 6:10 to be: For the love of money is the root of all of evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
It is the love of money that can be extremely dangerous that we are being warned about.
Registered user
Another Palo Alto neighborhood
on Dec 15, 2022 at 10:11 am
Registered user
on Dec 15, 2022 at 10:11 am
@Chris Zaharias,
“@ cheese guy - what's locally relevant is that he was the #2 donor to Democrats in recent primaries, and his mother directed no small share of his ill-gotten $$ to swing elections. “
There may have been a religious thing going on. SBF was heavily written up as a do-gooder and that was the catch. Thanks to all the barbarians who create these illusions every day because they are so overly impressed with themselves, Holmes, SBF, it’s barely a hit on the betting portfolios that create these situations. The Weekly may not make this a story because nobody around here is a victim or cares. Some probably have kids who are in line to be the next Holmes and SBF. Classic bystanders.
Registered user
Old Palo Alto
on Dec 15, 2022 at 12:00 pm
Registered user
on Dec 15, 2022 at 12:00 pm
The Bahamian prison Sam is in now is reportedly a real h*llhole, infested with rats and vermin, with meals at irregular intervals — a far cry from his $40 million luxury penthouse apartment.
Any truth to the rumor that his family asked for a vegan diet for him? That's laughable.
My take is that with all the money Sam spread around, he felt he had bought himself a "get out of jail free" card and authorities would never come after him. He certainly acted as if the rules didn't apply to him.
Sam is a smart guy, but apparently not smart enough to stay out of jail.
Registered user
Old Palo Alto
on Dec 17, 2022 at 6:03 pm
Registered user
on Dec 17, 2022 at 6:03 pm
Now Sam has decided not to fight extradition and will soon be extradited to New York.
I imagine a couple of nights in an infested Bahamian jail cell made a U.S. jail cell look like an attractive option.