Andrew Chow, TIME Magazine correspondent and author of "Cryptomania," shares SBF's playbook for deceiving the most powerful people in America.
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00:00I'm Andrew Chow. I'm a technology correspondent for Time magazine and the author of Cryptomania.
00:05My book covers the rise and fall of crypto over the pandemic and centers upon Sam Bankman-Fried.
00:10Sam had built a crypto empire based on the cryptocurrency exchange FTX and shaky,
00:16risky assets. He was later convicted of fraud and stealing customer money.
00:24This is SBF's playbook for conning America.
00:27Step one, cultivate public image. Sam realized how powerful a public image could be. He soon
00:35started a deluge, which included an $135 million contract to slap FTX's name on the Miami heat
00:43arena and an omnipresence in the press in which Sam was basically willing to pick up the phone
00:49at all times of day and night in order to present himself as the sensible expert of cryptocurrency.
00:55In these appearances, Sam put himself forward as pro-regulation and a sort of Silicon Valley guru
01:01with crazy hair who didn't really spend any time on his image. He knew that this would fit
01:07in the lineage of Steve Jobs and Bill Gates before him.
01:12Step two, persuade politicians. In 2021 and 2022, Sam was still living in the Bahamas
01:18because it was the easiest place for him to get regulatory clearance to run FTX the way he wanted.
01:23But meanwhile, he was coming to Washington, D.C. every other week, having closed-door meetings with
01:28politicians trying to convince them why he was good for the American financial system and why
01:33they should let him back on American soil. So he was meeting with a lot of Democratic politicians,
01:38but he was also meeting with Republicans. He was also hiring former regulators to be on his team
01:44to forge alliances, and he was trying to convince regulators like Gary Gensler to go easier on the
01:49crypto landscape. Step three, donate to campaigns. In late 2021, Sam realizes that one of the easiest
01:57ways to exert influence is that there are midterms coming up, and maybe he can get some people who
02:03are friendly to him into the halls of Congress. So he spins up a super PAC and a non-profit, which
02:10are ostensibly for guarding against pandemics. But really behind the scenes, he's contributing to a
02:15lot of people who he thinks may help him with pro-crypto regulation. And while he puts himself
02:21forward as a public Democrat, donating most publicly to Democrats, he's also giving in secret
02:27to Republicans. It's later revealed that most of this money is coming from the deposits of FTX
02:34customers. 196 members of Congress, more than one-third, received some sort of money from SPF.
02:41Step four, get cash from venture capitalists. Sam had really big aims for his impact on society. He
02:49believed that the more money he could earn, the more impact he could have. He also believed that
02:54in order to make as much money, he needed to borrow as much money. So he goes to venture capitalists,
03:00many of them in Silicon Valley, and he makes big pitches so that they give him billions of dollars.
03:06He has these big ideas about how he's going to transform finance. He had one pitch meeting where
03:11he said, FTX will be an everything app where you can buy everything from a Bitcoin to a banana.
03:16And the VCs loved this. So they gave him billions of dollars to play with, and then he uses that
03:22to make risky investments that he thinks will make even more money. Step five, constantly mislead
03:30about the fundamentals. Sam was really good at building an image of himself in which he loved
03:35regulation, in which he was playing by the book at all times. Following the trial, there's lots
03:41of evidence that suggests that he was not playing by the rules that he set out for himself. For
03:46instance, he told Congress that he had a sort of safety net, an insurance net of millions of dollars
03:52that would allow him to absorb any customer losses. But that safety net was completely made up and
03:58generated by a random bit of code. He also talked a big game about a so-called risk engine, a set of
04:05automated tools that would allow FTX to liquidate bad actors in their system. But his own trading
04:11firm, Alameda, was exempt from that, and they were the biggest and riskiest player in his ecosystem.
04:16He was also lying about the connection between his own trading firm and exchange, FTX, saying that
04:22there was a Chinese wall between them, where really they were quite connected and moved together in
04:28many ways. His lying would continue through his trial, in which he took the stand, was very evasive,
04:33and the judge later ruled that he committed perjury multiple times under oath.
04:40It's completely possible that crypto has reformed and moved beyond its criminal era,
04:45as exemplified by Sam Bangman-Fried. But as I continue reporting on the space,
04:50to me, it seems like they risk making a lot of the same mistakes that they did just two years ago.
04:55And I detail all of that in my book, which is out now.