Sam Bankman-Fried | The Collapse | 3

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It's October 4th, 2023, in a federal courtroom in lower Manhattan.

The large wood-paneled room is packed.

Journalists and eager spectators started lining up in the early hours of the morning for a chance to make it into the highly anticipated trial of Sam Bankman-Fried.

At a table near the front of the room, 31-year-old Sam is sitting quietly, almost unrecognizable in a dark suit.

His trademark curls have been trimmed and he's unusually still.

His knee, which so often bounces up and down when Sam's forced to stay in one spot, is motionless.

As the judge gavels the courtroom to order, the excited chatter fades, replaced by a heavy quiet.

No one wants to miss a moment of what's about to happen.

It's going to set the stage for the entire trial.

Eventually, the prosecutor stands to make his opening remarks.

He comes out swinging, accusing Sam of committing massive fraud against his customers to enrich himself.

All of Sam's wealth, power and influence were built on a foundation of lies.

Sam's claims that he wanted to donate his billions to charity were bogus.

If he were as generous as he told everyone, he wouldn't have been living in a $30 million apartment in the Bahamas.

He wouldn't have spent his days paying celebrities and athletes to promote his company, and he would have actually sent the money to the places he claimed needed it most.

When it's his turn, Sam's attorney makes the case that his client isn't the villain the media has made him out to be.

Things just got out of hand, he says.

Sam and his colleagues were building the plane as they were flying it, and although that might have been foolhardy, it doesn't make Sam a criminal.

As Sam takes notes on a laptop, his lawyer points to him and explains that Sam never intended to steal anyone's money.

He never meant to defraud his customers.

He's just a math nerd from MIT whose success was cut short by the arrival of a perfect storm.

Both attorneys tell the jurors what they can expect to hear in the coming weeks.

In particular, they focus on the witnesses who will testify against Sam, his former employees and friends, even his sometime lover, Caroline Ellison.

The defense reminds the jurors that these witnesses are likely appearing in exchange for lighter sentences of their own.

But the prosecution says that these people are the only ones with information about what happened inside FTX and Alameda Research, and that they need to be listened to.

As the lawyers retake their seats and the first witness is called, it's clear where each side stands in this fight.

Now, with both plans of attack laid out for everyone to see, it's time for the world to finally hear just what went wrong in the grand plans of Sam Bankman Fried.

From Airship, I'm Jeremy Schwartz and this is American Criminal.

In the span of just a few years, Sam Bankman-Fried went from awkward physics student to internationally known billionaire.

As the majority owner of two of the biggest companies in crypto, FTX and Alameda Research, he became the de facto face of the industry.

Cryptocurrency swelled to values few ever dreamed of, which enticed more and more investors to jump on the bandwagon.

By the end of 2021, the global value of all cryptocurrencies stood at a combined $3 trillion.

But even as the crypto faithful insisted that theirs was the way of the future, there were plenty of skeptics warning that it was just a bubble, one that could burst at any time.

When that turned out to be true, billions of dollars were wiped out in a few turbulent days.

Once thriving companies were suddenly in their death throes, desperate for a savior.

With billions of dollars to his name, Sam Bankman-Fried seemed to be the crypto industry's knight in shining armor.

But Sam's actions were only setting him up for an even more spectacular fall.

Because while he was forking out hundreds of millions of dollars to prop up the industry that made him rich, Sam made a move that doomed his entire empire.

Before long, Sam wouldn't be in a position to save anyone, not even himself.

This is episode 3 in a three-part series about Sam Bankman-Fried, the collapse.

It's February 1, 2022 in the Washington, DC office of Jerome Powell.

As chairman of the Federal Reserve, Powell is an influential man.

He's responsible for steering the monetary policy of the United States Central Bank.

His duties usually include meetings with top bankers or testifying before Congress.

But today, Powell is meeting with a young CEO who's just flown in from the Bahamas.

29-year-old Sam Bankman-Fried looks out of place in the straight-laced headquarters of the Fed.

Most of the time, Sam would dress for meetings in cargo shorts and a white t-shirt.

But this is an important face-to-face with a high-ranking government official.

So Sam's put on a wrinkled suit.

He is uncomfortable, though, and his hair seems even more unruly than normal.

Powell's a busy man, and like many in Washington, he isn't sure where the future of crypto lies.

But given Sam's rising star and how quickly crypto markets have inflated in recent years, Powell's happy to speak with the industry's golden boy.

Perhaps Powell thinks he'll learn a thing or two.

On the agenda today are stable coins and the important role they play in an otherwise unstable digital economy.

It's a complex subject, but one that Powell is eager to discuss.

He recently spoke to Congress about the need for a government-backed digital currency.

Sitting back in his chair, Sam feels more at ease once he and the chairman start talking about business.

Crypto is a comfortable space for him, and Powell's clear interest in the subject is encouraging.

Sam's been eager for the federal government to start regulating digital currencies for some time now.

He believes it'll help bring in more customers, bring in more money.

Sam isn't usually in a position to have to explain basic crypto concepts to people, but if talking about stable coins is the way to achieve his goal, he's okay with that.

The world of digital currencies has always been volatile, in part because there's no government-backed asset to act as a stabilizing influence.

They also, for the most part, have no real world use to dictate their value.

Fiat currencies, the yen, the dollar, the peso, are all used in their home countries as a tool of trade.

Crypto coins, though, have never taken off as a popular form of payment, so at this stage, all they're really good for is rampant speculation.

Bitcoin may be the best-known crypto asset, but its value can fluctuate considerably from day to day, even second to second.

That can make using it to buy and sell other digital assets a risky experience.

But stable coins are meant to be the answer to that problem.

They're currencies that exist purely within the digital space, but are, in most cases, backed by real-world assets like government-issued currencies or gold.

In 2022, one of the more popular stable coins in the crypto ecosystem is TeraUSD, and it's supposed to be worth 1 US dollar at all times.

So paying 10 dollars gets you 10 TeraUSD tokens, guaranteed, every time.

Or so the company behind it says.

But Tera is one so-called stable coin that doesn't have assets stored in traditional financial institutions.

Instead, TeraUSD stays at parity with the dollar thanks to its partner token, Luna.

They were launched together with an algorithm that ensures one TeraUSD will always buy one US dollar worth of Luna.

There's a complex system in place that automatically reduces or increases the amount of each token to keep this in balance.

So in theory, the price of Luna can go as high as any other crypto token, but one TeraUSD will always buy one dollar worth of Luna.

If that sounds confusing, all that's really important to know is that it's a successful system until it isn't.

In early May 2022, a handful of large investors, like hedge funds, lose confidence in the TeraLuna partnership and start selling off their holdings of Tera.

If it weren't for the blockchain, the incident might not have been anything more than a blip.

But the blockchain allows anyone to see who holds what assets at any time.

So vigilant investors know as soon as these sell-offs begin, and they also start dumping their Tera and Luna.

It's like a run on a bank.

Unfortunately, the TeraLuna system can't cope with the loss of the market's confidence.

In a matter of days, the once stable peg comes unstuck, and TeraUSD slips away from its $1 value.

Smaller investors are the last ones to notice what's happening, and lose the biggest when TeraUSD plummets to cents on the dollar.

The collapse essentially wipes out $40 billion from the crypto economy.

But things don't stop there.

Crypto investors across the market lose confidence, and start pulling their money out of all kinds of tokens.

Crypto lender Celsius offers customers a 17% return on assets its customers keep with the company, which are then loaned out.

And that high interest rate has attracted plenty of investors.

But Celsius has a huge chunk of its funds invested in TerraUSD, because until now, it seemed like a safe place to park money.

When the Terra Luna collapse starts, they rush to get over half a billion back before everything goes to hell.

But they don't move fast enough.

And when Celsius customers start asking for their money back, there's not enough to cover the withdrawals.

On June 13, 2022, Celsius suspends all transactions, citing, quote, extreme market conditions.

That announcement sends shockwaves through the crypto community, and the prices of Bitcoin and another popular currency, Ethereum, fall by 12% and 14%, respectively.

And still, it's not over.

One of FTX's rivals, Coinbase, lays off almost a fifth of its staff on June 18, admitting that they grew too quickly.

Then, in late June 2022, it's announced that crypto hedge fund Three Arrows Capital is unable to make payments on its loans.

They've been making huge bets on companies like Celsius, and they paid the price.

Or, more accurately, their creditors have, to the tune of about $3.5 billion.

All in all, it's not a good summer for the crypto industry.

After Three Arrows files for bankruptcy, other businesses start looking shaky too.

But then, a hero emerges, Sam Bankman-Fried.

His net worth has taken a beating during the recent crash, leaving him at just $11 billion.

But that's still plenty of cash to throw around.

To hear journalists describe what happens next, Sam is the cape-wearing savior of the industry.

But the truth is more complicated than that.

The fact of the matter is that crypto is in a precarious spot, and if too many more companies or currencies collapse, the contagion might not be able to be stopped.

Recognizing that if the industry crumbles, everyone loses.

But Sam deputizes a group of FTX employees to find businesses to rescue.

At least a dozen different entities ask FTX for help, but some, like Celsius, are beyond help in Sam's opinion.

FTX agrees to loan out hundreds of millions of dollars to various other companies, though, and outright acquires some of the smaller ones.

Sam himself invests some of his personal fortune, buying what he thinks will be good investments, either for his own bottom line or for the health of the industry.

The move does wonders for Sam's image.

He's already got plenty of eyes on him thanks to his massive wealth and splashy celebrity endorsements.

Now, though, people are comparing him to JP Morgan, the financier who rescued railroads, banks and even the US Treasury during the late 19th and early 20th centuries.

But despite Sam's best efforts, he can't turn the tide.

See with crypto crisis still falling and plenty of businesses crumbling, it's not just smaller investors who are getting cold feet about the whole thing.

Many crypto investment firms and hedge funds work with a lot of borrowed funds.

They use these investments to generate substantial returns on what they hope are smart bets.

But that means they're at the mercy of their creditors.

That's the case with Sam's other business, Alameda Research.

And sometime in June 2022, their lenders lose confidence and start calling in their loans.

On paper, paying that money back shouldn't be a big deal.

Alameda's been boasting that it holds assets worth $14.6 billion.

But that number includes FTT, which are the FTX native token.

In the past, Alameda has pointed to the FTT as assets to borrow against.

And no one's really batted an eye.

But now, this is absolutely a problem.

Alameda can't use the FTT to pay its debtors.

They need cash.

But they can't sell off all their FTT without tanking the value of the token.

That would mean trouble for both Alameda and FTX.

So, Alameda is stuck.

They're not technically broke, but they don't have the cash to repay their loans.

So, Sam gets together with Alameda's CEO and his sometimes-girlfriend Caroline Ellison, along with other leadership from Alameda and FTX.

They have to figure out how to handle the situation.

And although Sam's always willing to hear suggestions from other people, he usually prefers to use his own solutions over anyone else's.

In this case, Sam orders that FTX coding be changed to allow Alameda to borrow money from the pool of customer funds.

It's a directive that's met with resistance in the room.

After all, that sounds an awful lot like stealing.

But Sam dismisses the concerns, explaining that it's just a loan.

This is a bad move.

And it's not an inconsequential amount of money that Alameda is quote-unquote borrowing from its sister company.

This is $8 billion that Sam siphons out of FTX customer accounts.

And nobody outside of either company knows what happened.

Not yet, anyway.

Sam knows, though, and it's occupying his mind.

He confesses to one of his employees that the whole situation is making him about 5 to 10% less productive.

But that's not enough for him to put the money back.

He's confident that the situation will right itself once crypto prices start ticking up again.

If he believed in a god, Sam might start praying that no one notices what happened before then.

But prayers aren't his thing, so all he can do is hope for the best.

Unfortunately for Sam, that won't be enough.

It's October 30th, 2022.

Sam Bankman-Fried is in his office in the Bahamas, scrolling through Twitter on his phone.

The 30-year-old shifts in his beanbag chair when he reads a post by one of FTX's executives.

The tweet is about Shengpeng Zhao, usually known as CZ.

It praises the Binance CEO for the discussions he's taken part in following the recent crypto crisis.

The industry is moving forward, the FTX executive suggests, thanks in part to CZ's leadership.

Sam bristles at his rival getting this kind of attention, especially from one of his own employees.

In Sam's mind, CZ is one of the crypto world's shadier figures.

So, wanting to stir the pot, Sam taps out a reply.

Excited to see him repping the industry in DC going forward.

Uh, he is allowed to go to DC, right?

It's a snarky reference to CZ's various legal troubles.

He's long been resistant to the prospect of the world's governments regulating crypto, and there are rumors that CZ's refused to set foot on US soil for years out of fear he'll be arrested.

Having landed his passive-aggressive blow, Sam puts his phone down and rolls over to take a nap before his next meeting.

He doesn't imagine that he's just made a costly mistake.

November 2nd, 2022 is the beginning of the end for Sam Bankman-Fried's empire.

The chain of events begins without Sam's involvement at all.

That day, crypto news outlet Coindesk publishes a story about Alameda Research.

The article publicizes the fact that the bulk of the investment firm's assets are FTT, instead of a government-backed currency or even something like Bitcoin, Alameda is relying on the digital token floated by FTX.

The article raises a few eyebrows but doesn't trigger any widespread unease within the crypto community.

That comes four days later, on November 6th.

It's a Sunday, and CZ tweets that because of issues raised by the Coindesk article, Binance is selling off all of the FTT it has on its books.

CZ explains that the move isn't intended to be any kind of attack on its rival, but points out that FTX has been lobbying against Binance's anti-regulation interests.

He says his company is done supporting those that aren't team players.

Even if selling the FTT isn't a malicious move, announcing it to the world is calculated.

And it sparks a response.

As investors wonder whether they should also be selling their FTT, Caroline Ellison tries to calm things down.

She responds to CZ on her own Twitter account, saying that Alameda will gladly buy all of Binance's FTT for $22 per token.

Unfortunately for Caroline, people interpret the offer as a desperate move from a panicked CEO.

The thinking among experienced minds is that Alameda must need the price of FTT to stay at or above $22.

It spooks the horses, and the response is almost instantaneous.

Within seconds, investors start selling their own FTT, while FTX customers rush to pull money out of their accounts with the exchange.

By the end of that day, some $2 billion have been withdrawn from FTX.

Meanwhile, Sam is trying to do damage control.

In an attempt to stop all the bleeding, he tweets that, quote, FTX is fine.

Assets are fine.

He reports that FTX is and will continue to process all client transactions, and clearly states that the company doesn't invest its clients' money.

Technically, that last part is true.

But only because FTX hasn't invested client funds, it just sent them to Alameda Research.

Sam's words don't reassure investors, however.

By Tuesday morning, the total withdrawn from FTX is closer to $5 billion, and the FTX team are in panic mode.

But even when he's discussing the situation with his senior staff, Sam's still playing his favorite computer game.

He might have had an easier time navigating the crisis if he gave it his full attention, but he's incapable of that.

So he just pushes a button to stop FTX from making any more payments to customers and starts looking for a savior.

It seems that once again the cryptocurrency market is in danger of spiraling out of control and bringing down one of its former luminaries.

Only this time, Sam Bankman-Fried can't ride to the rescue.

He's the one who needs saving.

And as the high-profile CEO and owner of the exchange, Sam's the only one with any real resources to tap.

So he starts making calls.

He reaches out to potential investors with deep pockets, trying to entice them to give FTX around $7 billion to cover the hole in their bottom line.

Of course, when people hear a number that big, they want to know where all that money is gone.

It's supposed to be in FTX client accounts, after all.

That's when Sam stops talking.

He doesn't want to answer, so the conversations invariably end at this point.

Soon, there's only one person left on the list that Sam can call, so he picks up the phone and waits for CZ to answer.

It turns out that the Binance CEO is open to hearing Sam's pitch, though Sam has to practically beg to get CZ on board with the idea.

At the end of a nearly three-hour phone conversation, the two have hammered out the wording for a letter of intent.

Binance is going to buy FTX.

The agreement gives Binance control of the company, except for FTX US, in exchange for assuming its liabilities.

As soon as he gets off the phone, Sam sends a message to his employees to tell them what's happening.

Sam's empire has crumbled, and his aura has been severely tarnished by the last few days.

But at least the company will survive.

When news of the pending acquisition breaks in the media, pundits call the crypto industry the Wild West, and suggest that CZ orchestrated his rivals' downfall, just so he could take control of FTX.

It's a masterful chess move, people claim.

But the ink on the agreement isn't dry yet.

There's a last hurdle for the FTX deal to clear.

Before it all goes through, Binance wants to inspect the FTX and Alameda books.

It doesn't go well.

Alright, well talking of Binance, Binance confirming that it is dropping its bid for FTX, saying in a statement, quote, as a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of ftx.com.

In the beginning, our hope was to be able to support FTX's customers to provide liquidity, but the issues are beyond our control or ability to help.

The deal is off.

FTX is doomed.

In a memo to his staff, CZ writes that FTX going down is not good for anyone in the industry.

Not that that's hard to figure out.

In the week since the CoinDesk article first appeared online, the price of Bitcoin has fallen 16% and a market index measuring the performance of the industry as a whole suggests that combined crypto assets have tumbled 12%.

In a matter of days, the falling crypto market has wiped billions more off Sam's personal wealth.

But that isn't the only thing Sam has to worry about right now.

As the Binance statement alluded to, the US government has started looking in to just what FTX did with its customers' funds.

So not only are his businesses crumbling around him, there's almost certainly legal trouble on the horizon.

It's hardly surprising at this point that FTX's employees start jumping ship.

Some have been receiving death threats from customers whose money is still locked away in the FTX accounts.

So they're hurriedly booking flights out of the Bahamas, eager to put as much distance between themselves and FTX as humanly possible.

In Hong Kong, meanwhile, Caroline Ellison decides it's time to tell the Alameda employees what's up.

She calls a meeting, and in a speech punctuated with nervous laughter, she announces that the firm is in trouble.

Alameda paid its debts using FTX customer funds, and with the way things are looking, she doesn't see a future for the investment company.

After that, most of her team beat a path for the exit.

There's no point sticking around, not when they've been unknowing parties to what seems a lot like fraud.

In the Bahamas, Sam meets with a couple of his remaining executives, and the subject of arrest comes up.

One of the execs thinks that they should get their story straight now, so that they're all on the same page later.

Sam doesn't see the point though.

In his mind, they haven't committed any crimes, at least not knowingly.

But whether he meant to commit a crime or not, Sam has lost everyone's trust.

That includes the Bahamian government, which freezes FTX's assets and suspends its registration on November 10th.

The government doesn't want FTX to do any more damage to the country's economy or reputation.

Still, they don't want Sam to leave the country yet either, in case they want to press criminal charges later, so they confiscate his passport.

Though, to be fair, it's not clear where Sam would go if he did run.

He's advised that any number of countries could come after him.

The Bahamas, where FTX is based, and Tegua, where it was incorporated, or even Hong Kong, where the company was founded.

Sam's lawyers tell him that his safest bet is to make sure he's tried in the US, where at least he'll have attorneys who understand the system.

In that window of uncertainty, bankruptcy attorneys make their move.

They stand to make a huge windfall from taking over the situation.

Coordinating with Sam's father, the law firm of Sullivan and Cromwell draw up Chapter 11 bankruptcy papers, convincing Sam that he'll be better off with the US authorities than an unknown quantity somewhere else.

All night, Sam is surrounded by people who are telling him that he has to file for bankruptcy, and he has to do it now.

People who aren't in the room are sending him text messages saying the same thing.

It's urgent, they say, he has no choice.

So, just before dawn on November 11, 2022, Sam signs on the dotted line.

FTX enters into bankruptcy, with John J.

Ray III appointed as the company's new CEO to oversee the proceedings.

An experienced attorney and bankruptcy specialist, Ray has a reputation for fighting hard to get money back into the hands of creditors and investors.

Among other companies, he worked to dig Energy Giant Enron out of its multibillion dollar hole in the early 2000s.

Now, after looking through FTX's books, he tells the press that in his 40 years on the job, he's never seen, quote, such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.

It's a damning indictment of Sam's leadership, and he spends the next few days trying to get in touch with Ray to offer him assistance.

He wants to explain what happened to tell his side of the story.

Sam remains convinced that there was a way forward, that FTX could have found a route to the mess if they just had more time.

It's too late now, though, so all he can do is try and minimize the blowback and maybe help recover some of the money he lost.

But his emails go unanswered.

Like everyone else, Ray doesn't trust Sam Bankman-Fried.

His reign as one of crypto's brightest stars is over.

But his story has one chapter left.

It's December 2nd, 2022.

In his Bahamas penthouse, Sam Bankman-Fried sits in a chair surrounded by portable studio lights.

A camera is pointed at his face.

Another aimed at a reporter from the Wall Street Journal.

I think that what a lot of people are struggling with here is that, you know, you were an MIT physics major.

You are, by all accounts, a very smart guy.

How is it possible that you overlooked this more than $5 billion problem?

I ask myself a lot how I made a series of mistakes that seem, they don't just seem dumb.

They seem like the type of mistakes I could see myself having ridiculed someone else for having made.

The kind of mistakes that I would have considered myself to have been above.

It's been three weeks since Sam signed the documents that placed FTX into bankruptcy.

Since then, he's been on a relentless media campaign, trying to explain his side of the story.

The problem is that Sam's never been great at giving direct answers.

And now that he's lost billions of his customers' money, he's even less forthcoming.

Even simple questions about the functionality of his company stump him.

Were you sweeping people into margin trading and allowing their collateral to be loaned out?

I honestly, off the top of my head, I don't know exactly what procedures were used to determine whether an account was doing margin trading.

Or I do remember a way that people could have opted into it, but I don't know off the top of my head.

Despite his determination to avoid giving out any useful information about what happened at FTX and Alameda Research, Sam has said yes to just about every interview request he's received.

Invariably, they all lead to some version of the same question.

Sam, what you've described sounds, at a minimum, like gross negligence.

Obviously, there are a lot of people there who think that you committed outright fraud.

Do you expect to go to prison?

I'm not focusing on that right now.

Just 10 days later, on December 12th, 2022, Sam's holed up in his penthouse when the Bahamian police arrive to arrest him.

When they show up, Sam's putting the finishing touches on his written testimony for the House Financial Services Committee in Washington.

He was scheduled to deliver it the day after his arrest.

Obviously, he doesn't make it to DC.

Instead, he spends about a week in the Fox Hill Prison on the east side of the island, while his lawyers negotiate with the US government about the terms of an extradition agreement.

Until that's settled, Sam's stuck.

It's dark in the prison, and it stinks.

There's little running water, and the overcrowded building houses so many prisoners that a lot of them have to sleep on the floor.

Even still, the thing that irks Sam the most about his time behind bars is the lack of internet access.

Since he signed over control of his company, he hasn't had any information about what's going on inside FTX.

Before, at least he could still follow news reports, watch the crypto market.

Now, he's completely cut off.

After eight nights, he can't take it anymore.

He's too bored, so he tells his lawyers that he won't fight extradition to the US.

It's December 22nd, and Sam Bankman-Fried is in a Manhattan courtroom to hear the charges against him.

He's been in federal custody for a little over 24 hours.

Since leaving the Bahamas, he's found out that at least two of his former employees have pleaded guilty to charges.

Gary Wang was one of the first people to join Alameda Research in 2017, and he wrote the code that created FTX.

Caroline Ellison joined Alameda in 2018 and eventually took over from Sam as a co-CEO of the firm.

She also dated him on and off for several years.

Now it seems like both Gary and Caroline have turned on Sam.

Pundits point out that the only reason they plead guilty is if they're getting some kind of deal in exchange for testifying against their former boss.

But that doesn't mean their evidence will be any less damaging.

There's been no mention of a deal for Sam.

And why would there be?

With the public screaming for blood and plenty of witnesses lining up to testify against Sam, prosecutors see no reason to go easy on the former boy wonder of the crypto industry.

So, while FTX's bankruptcy attorneys work to recover as much of the missing money as they can, a data is set for Sam's trial.

His day in court will come in October of 2023.

In their opening statements, Sam's lawyers try to tell the story of a man who lost control of a business that grew too big, too fast.

The prosecutors contend that Sam was a duplicitous, deliberate fraudster.

One of those arguments is more convincing than the other.

On the stand, some witnesses suggest that Sam was faking his effective altruism creds as part of an elaborate scheme to enrich himself.

That idea pairs nicely with what Sam's former deputies all say, that he was responsible for everything that happened.

Anything that went down at FTX in Alameda was a result of his orders.

Throughout the proceedings, people following the story wonder whether Sam will take the stand.

Most legal experts agree that doing so wouldn't be a good idea.

But eventually, Sam doesn't have a choice.

This has become a case of he said she said, and if he doesn't try to convince the jury that he's innocent, he'll lose.

It's a Hail Mary play, and it doesn't go well.

Under questioning by his own attorney, Sam tries to foist the blame onto his employees.

He claims that he wasn't aware of most of what was going on at Alameda, and that he didn't understand how closely his two companies were connected.

That answer doesn't convince, and the cross-examination by the prosecution is even worse.

Just like in as many media interviews, Sam gives rambling answers that don't really address the question, and he's chastised by the judge, who accuses him of not paying attention.

Whenever Sam says he doesn't recall something, the prosecutor is prepared with an email or a tweet or a direct quote from one of Sam's interviews, proving exactly what he knew and when.

She hangs him, using his own words as the noose.

After three days on the stand, Sam finally sits back down at the defense table.

Then it's all over and in the hands of 12 of Sam's peers.

No one really expects anything but a guilty verdict from the jury.

Despite the complexity of the charges and the dizzying number of novel financial instruments in play, it's hard not to see Sam as just another guy who lied to get his hands on other people's money.

Still, none of the experts guess just how quickly the jury will make their decision.

It takes them five hours to come back with their verdict.

Sam Bankman-Fried is guilty on all counts.

After that, Sam has to wait for several tense months before his sentencing.

Finally, in late March of 2024, the judge hands down his decision.

Judge Lewis Kaplan notes that Sam's committed perjury during his testimony, was otherwise evasive on the stand, and never expressed remorse for his crimes.

With that in mind, he sentences Sam to 25 years behind bars.

Sam's also ordered to forfeit $11 billion that the government can then use to compensate the victims of the FTX collapse.

Of course, Sam's net worth by this stage is nowhere near this figure, but the ruling is designed to ensure he'll never be in a position to defraud anyone else for a long, long time.

In the meantime, those responsible for steering FTX through its bankruptcy announced that they expect to begin repaying debtors and customers by the end of 2024.

While they can't guarantee all will be made whole, the administrators seem confident that they'll be able to do just that.

Judge Kaplan, though, isn't so sure.

Before handing down his sentence, he says that the idea that people will get their money back is, quote, logically flawed.

Some of the investors who lost money in the FTX collapse share that concern, though they're more fixated on what they could have made if the fraud never took place.

A group of people file a lawsuit against FTX, insisting that the company pay them back more than the value of their accounts in November 2022.

Back then, crypto assets had just taken a beating, and even the value of the most popular currency, Bitcoin, was affected.

But less than two years later, crypto had surged again, and that's left people feeling even more angry, this time at what could have been.

There's a familiar feeling when it comes to this story, a sense of frustration at what could have been.

If only ambition, hubris, carelessness, recklessness and greed hadn't gotten in the way.

Then again, if you take any of those ingredients out of the pot, would there even be a story to tell?

Sam Bankman-Fried needed them all to make his billions, let alone lose them.

In the end, the crypto industry proved just as fallible as the markets it set out to subvert.

So maybe there's a lesson to be learned here.

It's just not one about technology, because no matter how smart the algorithm or how innovative the coding, it's humans behind the scenes who pull the strings and manipulate the patterns.

And if there's one thing that humans are, and will always be, it's flawed.

From Airship, this is episode 3 in our series on Sam Bankman-Fried.

On the next episode, I'll be joined by author and senior writer for Wired, Andy Greenberg, to talk about the day that FTX collapsed and the wild world of crypto crime detectives.

We use many different sources while preparing this episode.

A few we can recommend are Going Infinite by Michael Lewis and Number Go Up by Zeke Fox, as well as Reporting by the Wall Street Journal and Yahoo Finance.

This episode may contain reenactments or dramatized details, and while in some cases we can't know exactly what happened, all our dramatizations are based on historical research.

American Criminal is hosted, edited and produced by me, Jeremy Schwartz.

Audio Editing by Mohamed Shazib.

Sound Design by Matthew Filler.

Music by Thrum.

This episode is written and researched by Joel Callan.

Special thanks to Richard Metcalfe.

Managing Producer Emily Burke.

Executive Producers are Joel Callan, William Simpson and Lindsey Graham for Airship.