No, Bankman-Fried gambled on a trial; reportedly, his defense team declined even to explore a plea deal when the prosecution floated the prospect. Prosecutors mounted an absolutely devastating case, producing witness after witness who testified that Bankman-Fried had personally directed and overseen the process of using customer accounts to fund a combination of wild overspending and risky trades. Whereupon he doubled down, taking the risk of going on the stand and opening himself up to cross-examination.
How you interpret these decisions has a lot to do with how you interpret Sam Bankman-Fried. Is he a bloodless swindler, so devoid of normal human feeling that he’s willing to risk inflicting horrific suffering, even on himself, in pursuit of a possible payoff? Or is he an innocent man just trying to clear his name — a weird but decent guy who tried to make the world a better place and succeeded only in making a mess?
That’s what the jury has to decide. I spent much of Friday and Monday glued to live feeds from reporters in the courtroom as attorney Mark Cohen led Bankman-Fried through one version of the story. In this telling, Bankman-Fried was a goofy altruist who trusted his colleagues a little too much, not a swindler. Mind you, this protagonist was not without fault: He badly mismanaged the firm, failing to put in place proper risk controls and delegated too much money and responsibility to idiots. But however grotesquely irresponsible his conduct, the story goes, it was never criminal.
The tale was a compelling enough that, for a brief time, I wondered if SBF might at least hang the jury. Not because I believe it — I believe a co-conspirator, who says Bankman-Fried oversaw the pillaging of FTX customer accounts. But juries are unpredictable, and financial trials are challenging to prosecute, because few jurors have the mastery of jargon and accounting principles often required to fully understand the alleged crimes.
Then cross-examination started, and — well, I guess you never can tell about juries. But as the prosecutor confronted Bankman-Fried with the evidence of his alleged guilt, it seemed obvious that he belongs in jail. And I suspect the jury will agree. In fact, the only person who might not realize it, at this late date, is Sam Bankman-Fried.
For it seems very possible that he really believes in the picture his attorney painted, at least in its broad outlines, if not in all its persnickety detail.
“You would be shocked at how defendants can delude themselves into believing they’re innocent,” says a defense lawyer of my acquaintance. And really, it’s not so hard to imagine a story Bankman-Fried might tell himself: He’s not some criminal; he didn’t start some boiler room to sell pump-and-dump schemes to innocent pensioners. He is a genuinely brilliant and unconventional thinker who built a fortune by taking risks that other people were too shortsighted or fearful to touch. And he used the money not to buy opulent toys, but to buy a better future for everyone — okay, also a $35 million penthouse, but mostly a better future. He funded charities and seeded investments in potentially revolutionary technologies and pushed for better crypto regulation. Even splashy initiatives such as stadium naming rights were really about making the company an even bigger cash cow.
Sure, he overestimated his ability to predict where crypto markets would go and didn’t pay enough attention to details such as “Where, exactly, is the company’s money?” And when things went south, he panicked and made some bad decisions. But is that criminal, or just human?
The answer, of course, could be “Both.” Yes, human minds are limited and prone to error, even minds as gifted as Bankman-Fried’s. This is why humans evolved many instincts that seem to have been missing from his makeup — such as risk aversion, affection for people around us and respect for tradition. It’s also why society has evolved institutions to reduce our scope for damaging errors, including accounting, bank regulation and fraud statutes.
Bankman-Fried was better at calculating odds than an ordinary person, but he still miscalculated a lot — including, I think, on the odds that he might go to jail. Most important, he miscalculated the risk that he might be miscalculating.
And so he failed to appreciate his own limits and the need for guardrails. He found a ready home in crypto, a whole ecosystem of people who think they’re far smarter than boring old bankers or bank regulators. But having freed himself from the constraints of traditional institutions, he proceeded to demonstrate why so many of them are necessary, from risk-management standards to the federal penitentiary.
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