The criminal trial for FTX founder and ex-CEO Sam Bankman-Fried on fraud and conspiracy charges began in earnest this week, and the author of a new book about the former crypto billionaire’s rise and fall shed light on his biggest fears as he faces a lengthy prison sentence.
Michael Lewis – the author of "Going Infinite: The Rise and Fall of New Tycoon" – appeared on CBS’ "60 Minutes" Sunday to discuss his book and Bankman-Fried’s state of mind as the trial begins. CBS’ Jon Wertheim asked Lewis, who met with Bankman-Fried over 100 times in a two-year period for the book, what the 31-year-old fears the most about prison.
"Not having the internet," Lewis said. "Now that sounds crazy, but I do think that if he had the internet, he could survive jail forever. Without having a constant stream of information to react to – I think he may go mad."
"If you gave Sam Bankman-Fried a choice (this is quite serious) of living in a $39 million penthouse in the Bahamas without the internet, or the Metropolitan Detention Center in Brooklyn with the internet, there’s no question in my mind he’d take the jail," Lewis added.
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Bankman-Fried’s cryptocurrency exchange FTX imploded last year, falling from being the second-largest crypto exchange in the world valued at an estimated $32 billion to entering bankruptcy in November 2022.
FTX’s collapse occurred as it was hit with a rush of withdrawals amid reports it had commingled funds with its sister hedge fund, Alameda Research, to cover the hedge fund’s losses. Alameda was run by Bankman-Fried’s top deputy and ex-girlfriend Caroline Ellison, who pleaded guilty to wire fraud and conspiracy last year and figures to be a key witness against Bankman-Fried in his trial. Prosecutors allege that Bankman-Fried has attempted to intimidate Ellison by sharing her writings with journalists.
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Customers of the crypto exchange lost billions of dollars amid the collapse, and current FTX CEO John Ray III, who was brought in to replace Bankman-Fried following the firm’s collapse, has been working to claw back those funds. Retail investors who put money into FTX may not see the recovery of their investments as the bankruptcy process continues to play out.
The collapse of FTX also left creditors ranging from Amazon Web Services to Jimmy Buffett’s Margaritaville Resort in the Bahamas hanging in the lurch.
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Ray, who previously oversaw the bankruptcy of scandal-plagued energy firm Enron in 2001, slammed Bankman-Fried’s management of the firm writing in bankruptcy filings last November, "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
Among the examples of Bankman-Fried’s mismanagement noted by Ray were the use of emoji approvals for employee payments, the lack of a comprehensive list of bank accounts or a full roster of employees, plus the use of corporate funds to buy homes and personal items.
Bankman-Fried has previously acknowledged that he should have "stress tested more rigorously" but has denied mishandling or stealing funds.
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Bankman-Fried was first arrested in the Bahamas, where FTX International was based, before being extradited to the U.S. in December. Federal prosecutors in Manhattan have accused Bankman-Fried of misleading investors and lenders, and stealing billions of dollars in customer funds to buy real estate, make political contributions, and make up for losses at Alameda.
He was released on $250 million bail and remained on house arrest for several months at the California home of his parents, Joseph Bankman and Barbara Fried, before U.S. District Judge Lewis Kaplan revoked his bond in August over prosecutors' claims the former CEO attempted to tamper with at least one witness.
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Bankman-Fried has pleaded not guilty to all the charges against him, but members of his inner circle — four former FTX and Alameda executives — have all pleaded guilty to crimes connected to the companies' downfalls and are expected to testify against him in the trial after agreeing to cooperate with the government.
FOX Business’ Breck Dumas, Chris Pandolfo and Danielle Wallace contributed to this report.
