A significant element of Sam Bankman-Fried's trip to the courtroom can be traced to the 11,500-square foot apartment in the Bahamas which he occupied with nine other people, which cost $35 million.The property which affords a view of the marina and Atlantic Ocean was a topic of a Signal thread titled "People of the House", which was introduced by an essential witness in the trial.
Sam Bankman-Fried, 31, has exchanged high-end living quarters in the Bahamas for a completely different environment - a criminal court in downtown Manhattan. If convicted for financial misdeeds linked to the collapse of crypto exchange FTX, once valued at $32 billion, he could face a possible life in prison. Every day, Bankman-Fried sits close to a jury of 12 people on the 26th floor of 500 Pearl Street - one of the Southern District of New York's two federal courthouses. He has denied all the seven federal fraud accusations against him.
A major component of Bankman-Fried's story can be traced to the $35 million Bahamian estate he occupied jointly with nine people, including friends from high school, his ex-girlfriend, his college mates and prominent employees of FTX and the affiliated hedge fund Alameda Research. The housemates now feature prominently on the prosecution's list of key witnesses. Gary Wang, the less renowned co-founder of FTX and Alameda and a former MIT roommate, testified last week and is scheduled to return to the stand on Tuesday. Adam Yedidia, a senior FTX programmer and another former MIT flatmate, was heard last Wednesday and Thursday. On Tuesday Caroline Ellison, former head of Alameda and Bankman-Fried's ex-partner, will be called upon.
The group was close-knit, and grew even closer during the Covid outbreak, as the 20-somethings left Hong Kong to spend the pandemic in the Caribbean. They preferred to combine work with leisure, and some accounts of their visit to the island of New Providence describe sexual adventures.During the initial week of Bankman-Fried's criminal trial, prosecutors were concerned with how Bankman-Fried funded the multimillion-dollar estate.
Lawyers for the U.S. Attorney's office presented to the court a set of pictures of the penthouse condo situated in the "Orchid" structure. This 11,500-square foot apartment has a view of the marina and the Atlantic Ocean. The defense asked Judge Lewis Kaplan to disallow some of the photographs because they might be perceived as the accused's personal property with yachts in the backdrop. The judge rejected the petition.
Yedidia, testifying as the second witness for the government, remembered the 'People of the House' Signal thread concerning Bankman-Fried's $35 million penthouse. A screenshot of a text exchange, presented by the government as proof, showed Bankman-Fried's acknowledgment that Alameda would be footing the bill for his luxury home.
The allegations against Bankman-Fried state that he misappropriated billions of dollars of customer funds to increase his own wealth, such as the acquisition of more than $200 million in luxury real estate properties in the Bahamas and contributions in excess of $100 million for the 2022 mid-term election. According to legal experts in the Bahamas, Bankman-Fried and Ryan Salame, a former high-ranking FTX executive, laid out $256.3 million to purchase and maintain 35 properties in New Providence. The Bahamian regulators have expressed a desire to recover the real estate assets as part of FTX's U.S. bankruptcy protection proceedings.
Apart from the criminal proceedings, the bankruptcy estate of FTX has its own set of allegations against Joseph Bankman and Barbara Fried, the parents of Bankman-Fried. The estate's lawyers are taking legal action in order to recover luxury property and millions of dollars that they believe have been wrongly taken. In particular, they state that Bankman and Fried talked to their son about a $10 million cash gift as well as a $16.4 million estate in the Bahamas.
John Ray, who previously steered the Enron bankruptcy proceedings, stated to officials on Capitol Hill that this situation was essentially plain-old embezzlement. "It's nothing more than filching money from clients and utilizing it for your own reasons. Not complex in any way," he remarked. Ray additionally remarked that the company had "no written records in any way."
The Albany, an oceanside resort spanning 600 acres with reported celebrity backers such as Tiger Woods and Justin Timberlake, features the Orchid as its crown jewel. Luxury is exemplified by the golf carts that transport its ultra-rich occupants from their home to one of the many restaurants or to the beach and paddle court for a game of tennis-squash hybrid. Atop the resort lies the penthouse, where amenities include en suite bathrooms, walk-in closets, Venetian plaster walls, Italian marble floors, and a balcony-lined perimeter with a private spa, outdoor pool, and a jacuzzi.
In his new book, "Going Infinite: The Rise and Fall of a New Tycoon," best-selling author Michael Lewis paints a pictorial of the exterior: "At night the penthouse glowed in a deep purple hue, eliciting envy from those used to being envied." With the interior, Lewis is more critical as it appears more like a "flophouse" with a row of computers whose cords seemingly ran around like jungle vines.
A CoinDesk reporter who visited the domicile in September 2022 described the space as a "combination of a luxury dormitory and a jury-rigged trading room," and remarked that the "bendy marble living room was circumscribed by computer desks, each with a variety of merged monitors." Apparently, one of Bankman-Fried's signature bean bags, which he often took naps on, was kept beneath the baby grand piano in the room that defense lawyers compared to the gathering place of a dormitory.Mark Cohen, Bankman-Fried's counsel, contended in his initial statement that his patron was a "math geek who didn't drink or have a good time." Per Lewis' book, donning a glass of wine was practically "an act of indulgence."As for the stunning views, Lewis further stated that Bankman-Fried and his housemates "seldom looked" at them.
Outside of the Albany there were six stadium-lit padel courts, where Yedidia and Bankman-Fried discussed the $8 billion debt Alameda had apparently owed FTX. It was during the summer of 2022 when Yedidia had identified the issue while debugging FTX's code base. When prosecutors asked why he was worried about it, he answered that "if money belonging to the FTX customers was spent, it wouldn't be available if they requested a withdrawal". Yedidia had voiced his concern to his boss at the edge of the net and felt it was a substantial amount of money at stake.
In June 2022, Yedidia reported to Bankman-Fried on Signal that $8 billion held in an internal database tracking customer cash wired to a FTX account was unaccounted for. Reportedly, Bankman-Fried appeared "worried or nervous," but Yedidia had faith in him and Ellison to manage the circumstances. Yedidia stated that he hadn't spoken with Bankman-Fried personally since November. The day prior to FTX declaring bankruptcy, Yedidia departed after learning that Alameda had applied FTX customer deposits to pay back its creditors.
Bankman-Fried welcomed journalists from everywhere into his resort in the Bahamas. During a CNBC interview conducted there in September 2022, Bankman-Fried proudly proclaimed that he had an abundance of liquid capital available to spend on sector investments. By October 2022, in an interview with CNBC at the DC Fintech Week, Bankman-Fried continued to applaud FTX's assistance in maintaining industry stability while a number of bankruptcies happened that year. - Written by CNBC's Dawn Giel.
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