Theodore Schleifer examines the intellectual and ethical upbringing of Sam Bankman-Fried, the 30-year-old indicted yesterday for perpetrating one of the biggest frauds in history:
Of all the potentially unanswerable riddles underpinning the Sam Bankman-Fried saga—why did Sequoia invest in a mop-topped kid who played video games during a diligence call; were Alameda and FTX ever really separate?—perhaps the most vexing is how the mastermind of this whole legal and ethical imbroglio was the offspring of two beloved legal scholars who were obsessed with ethics, in an effective-altruist Petri dish focused on analytical rigor, civic-mindedness and, crucially, consequences. How could a family so committed to doing the greatest good for the greatest number end up depriving so many people of so much happiness—and then see their son get arrested?
The optics are complicated for Joe Bankman and Barbara Fried, who flew to The Bahamas amid the collapse of FTX and have remained there to counsel their son, almost as if he were a therapy patient or a legal client. Meanwhile, people on The Farm have been gossiping about how neither parent has any courses at Stanford next year: Joe canceled the one class he was slated to teach over the winter semester, and Barbara is listed as an emerita professor. (She has written that she “hopes” to make a return to teaching in the future.)
Sam has gone out of way to absolve his parents of any culpability in his financial misdeeds, telling Andrew Ross Sorkin at last month’s Dealbook conference that they “bore no responsibility” for the collapse of FTX. “Anyone close to me, including my parents and employees and co-workers who fought with the company to push forward, they were hurt by this,” he said. “I feel really grateful for the support my parents are still giving me throughout all of this.”
And yet the truth is that both parents, whether they bear responsibility or not, are deep in the barrel with Sam. As Reuters has reported, official property records show that Joe Bankman and Barbara Fried were the named owners of a $16.4 million beachside “vacation home” in Old Fort Bay, part of a broader real estate portfolio owned by FTX and senior executives totalling hundreds of millions of dollars. “They may have stayed there while working with the company sometime over the last year,” Sam told Sorkin, though he denied knowing any details about the $300 million worth of real estate that FTX and his parents bought in the Bahamas. (Joe and Barbara have said they’ve been working to return the property to the company for some time.)
I mean, all the ethical rigor in the world won't help if your son is a sociopath.