AUTHOR | WILLIAM D. COHAN, PUCK
Compilation | Maodi
On a Tuesday afternoon, I found myself in a very unusual situation—sitting on a cramped plastic chair and a crowded table at the federal prison, the Metropolitan Detention Center (MDC), on 29th Street in Sunset Park, Brooklyn. Outside, the weather was beautiful, the kind of picture-perfect, slightly damp weather that inevitably reminds longtime New Yorkers of the morning of September 11. Inside the prison’s visiting room, however, there was no natural light, no sunshine, just the Hitchcockian hum of fluorescent lights and three vending machines in the corner. Posters on the wall tried to compensate for the gloomy atmosphere by offering a cheerful welcome to visiting families.
I first met Sam Bankman-Fried in December 2021, at the height of his power and influence, when he was the richest person in the world under 30. My friend Anthony Scaramucci, aka The Mooch, connected us. I interviewed him on a cold winter evening at the One Hotel on Sixth Avenue, where I was working on a documentary about Bitcoin and its creator, Satoshi Nakamoto. Sam showed up in a black T-shirt and cargo shorts, having apparently just flown in from the Bahamas on a private jet an hour late. A month later, Sam’s cryptocurrency exchange FTX raised $400 million in its last funding round from a group of high-profile investors — including SoftBank, Temasek, and Paradigm — that valued the company at $32 billion, making it one of the most valuable companies in the industry. At that moment, Sam was said to be worth $26 billion.
This week, we reconnected in very different circumstances. Sam and I arranged the visit through his Corrlinks email account, at the suggestion of his mother, Barbara Fried, and the family’s prison counselor. We met on Tuesday at 1 p.m. because that was the only time the MDC allowed visits, a relic of the COVID era. Inmates can receive visitors during one of two time slots, either starting at noon or at 5 p.m.
Our meeting was later than noon because the facility was short-staffed. I was allowed to bring in $1 or $5 bills, up to a total of $30, in case I wanted to buy Sam some water, soda, or snacks from the buzzing vending machines. I was told to put my $20 bills, wallet, and iPhone in a locker. Sam himself was not allowed to buy anything.
After about an hour of bureaucratic missteps (I went to the wrong building initially, and I wasn’t wearing dark pants—although an exception was made for me) and other forms of prison processing (shoes and belt removed, passing through metal detectors, hands placed in scanners), I was finally allowed inside the prison, without my cell phone, watch, recording device, or even paper and pencil. (Of course, I knew this in advance, and immediately began preserving my memory of our conversation once I left the facility.)
After waiting for a few minutes, I looked up to see Sam Bankman-Fried, standing in the corner, wearing a chocolate brown prison jumpsuit and his trademark shaggy curls. Sam looked a lot thinner than the last time I saw him—at least 25 pounds less. But to be honest, he looked better and healthier than I had expected—less chubby, less frenetic, less fidgety, no dark circles under his eyes.
He survived on rice and beans, he said, because prison food was predictably inedible, especially the vegetarian entrees he was served, which even his cellmates thought smelled like shit. He didn’t complain, only noting that he was trying to make the best of a bad situation. The rice he bought at the prison commissary had become a kind of currency within the MDC. We joked briefly about how the arbitrage opportunities in prison were better than anything he’d experienced trading crypto at Jane Street Capital or buying and selling assets at Alameda. He looked me in the eye for the most part, something he’d rarely done with people in the past.
After we shook hands, he sat in his plastic chair, with cameras on the ceiling watching us. Around us were several similarly dressed inmates facing their visitors. Sam initially declined my offer to buy snacks, but eventually agreed to buy a $4 bottle of water and a $2 bag of Wheat Thins, which he devoured eagerly.
The next 75 minutes or so were his first interviews with reporters since he was incarcerated at the MDC last August and subsequently convicted of two counts of wire fraud, conspiracy to commit wire fraud, and securities fraud. In March of this year, he was sentenced to 25 years in prison. It was a deeply moving and fascinating conversation, conducted under such rather extreme circumstances.
Prison Diary
Sam started by answering my questions about his life in prison. According to him, he lives in a section of the prison that houses mostly female inmates, except that he and 35 other men share dormitory-style living in a large open room - bunk beds, no privacy, extreme boredom, and four televisions tuned to ESPN, Telemundo, BET, and a news channel. Sam said he could try to convince other inmates to change the channel selection, but television bores him, so he's not interested in the challenge. He prefers to watch a handful of movies or play some subpar video games on a tablet with no internet connection, which the prison provides to him and other inmates.
When I told him he seemed better than I expected, he responded that he had become good at faking it. So, yes, life in the MDC was not the Bahamas. But in reality, I had expected to see him coping less well. At the MDC, Sam was allowed to use his prescription medications for most of the time, and he said the cocktail of drugs he was allowed to take helped him think clearly and fuel the legal battle he planned to fight the ruling soon.
At the same time, he told me, he didn't worry about his safety. He could shower several times a week and use the bathroom in peace. He had always had trouble sleeping, and he still didn't sleep very well in the MDC, but mostly because sometimes people would disturb him at night, wanting the bags of rice they were going to trade for. He was grateful that he wasn't touched or abused.
He acknowledged that his record at MDC was unique, and that his cellmates did recognize him. He estimated that about half of the 35 other men in his unit were murderers who were turned into cooperating witnesses for the prosecution in exchange for not serving a life sentence. In prison, many inmates consider cooperating witnesses to be the lowest kind of vermin, even lower than pedophiles. Sam also told me that some other inmates tried to approach him, thinking that being close to the former billionaire would benefit them financially. He said he did not cooperate.
We didn’t discuss his trial strategy or whether he intentionally moved $8 billion of FTX clients’ funds to Alameda. Both topics seemed irrelevant at this point. We discussed his former girlfriend, Caroline Ellison, whom he chose to run Alameda after lawyers had been pestering him about the conflicts inherent in running FTX and a hedge fund. (He chose to run FTX.) He admitted that he had asked several other people if they were interested in the position, but they all turned them down. Ellison, he said, was someone who was good with people and administrative work, but she didn’t like making big investments or taking big risks. (Obviously, this seems like an odd aversion for a hedge fund manager, but I didn’t dwell on it too much.) Anyway, Alameda ended up doing both.
He regretted not trying harder to find another executive. He also said he should have ignored the advice of his lawyers and continued to run both FTX and Alameda regardless of the conflict, a bit like Elon Musk oversees his various companies. Ignoring legal advice became a theme for Sam during our visit.
Legal treatment
We did discuss his appeal at length, and how he felt he was being set up as a scapegoat — a victim of that build-then-destroy narrative arc. His theory of the case is that by the fall of 2022, everyone was on their own in what looked like a sinking ship. By early November 2022, FTX was facing a liquidity crisis. Sam first sought a deal with Binance, which quickly fell apart or never really took place, and in the process of trying to raise billions of dollars, his attorneys advised him to hand over the keys to FTX to John J. Ray III, which Sam did. Ray soon filed for bankruptcy for FTX and appointed Sullivan & Cromwell, the company’s outside counsel, as counsel for the debtor.
Sam told me that he became a target of federal prosecutors shortly after Sullivan & Cromwell’s outside counsel presented them with what they thought Sam might have orchestrated between FTX and Alameda on Nov. 9, 2022, a day or two before the bankruptcy filing, which was described as the theft of $8 billion in customer funds. In a sworn statement about that meeting, S&C lawyer Andrew Dietderich said he reported only to the DOJ what FTX’s U.S. general counsel, Ryne Miller, told him about “coordinating digital assets with rights” and made no mention of Sam and his alleged violations.
Sam told me that if he had not been persuaded by Sullivan & Cromwell and subsequently his personal attorney to give up the C.E.O. position to Ray, the company would not have filed for bankruptcy and would still be a thriving business worth $80 billion. In this alternate reality, he would be worth $40 billion, and he certainly would not be at MDC. (S&C declined to comment on Sam’s theory of the case. It should also be reiterated here that Sam was sentenced to 25 years in prison after a jury conviction on the above charges.)
I got the distinct feeling that Sam still didn’t think he’d committed any crime, except that he was responsible for putting FTX in a position vulnerable to bank runs and dodgy behavior by competitors, not unlike the failures of Bear Stearns and Lehman Brothers in 2008. Why, Sam wondered, was he being prosecuted when no one at Bear Stearns or Lehman Brothers faced criminal prosecution? During our conversation, Sam appeared contrite and clearly chastised but not truly apologetic: He maintained that he was innocent, save for a few oversights—which, in his view, were punishable by civil consequences rather than criminal penalties and a quarter-century sentence.
According to Sam’s theory, he wasn’t in jail because of commingling FTX and Alameda assets. Rather, he was an innocent man who had no chance to negotiate a deal with federal prosecutors, and he wondered why he was being prosecuted for what he saw as a form of bank run. Instead, they simply presented him with his indictment and told him he could take it — accept it and plead guilty and be sentenced, or go to trial and try to fight it. With no plea deal on the table, he said, he fought the charges at trial, and lost. Unlike his cellmates, he told me, Sam has been on the phone with his new attorney for about an hour almost every weekday, as the focus of his appeal becomes clear. He expects to file an appeal this fall. Yes, he will appeal, but most people think his chances of success are slim.
On the day I visited, Sullivan & Cromwell, still counsel to the debtors in the FTX bankruptcy, filed a first draft of a reorganization plan that appears to return its clients and creditors their money in full and more—$15 billion on $12 billion in claims—in large part because of investments Sam made through Alameda. The plan, which still has a long way to go before it can be confirmed, also grants Sullivan & Cromwell and other FTX advisors “immunity” from future lawsuits related to their conduct in the matter. This is not uncommon in reorganization plans. But Sam has detailed thoughts on the subject, which I may explore with him in subsequent conversations.
Custody transfer
I’m not sure how much longer Sam will stay at MDC, and neither is he. He’s asked to stay at least until the fall, to remain in Brooklyn while his appeal is filed. But that’s not up to him, of course. I’m told that if he’s transferred, which could happen at any time without warning or explanation, he’ll probably be sent to California, closer to Palo Alto, where he grew up and where his parents are both law professors at Stanford. At that point, the question will be whether he’ll spend his years in federal prison, which are mostly scary places filled with hardened criminals, or in a minimum-security prison more like the one Mike Milken once was.
If he is indeed transferred out of Brooklyn, his family and legal team fear that he could end up spending up to four months on a bus, handcuffed to a seat, slowly making its way across the country. Such prison buses make frequent stops—to pick up new inmates, to drop off others—which explains why they take so long to reach their final destination. It’s also possible that he could be put on one of the many planes operated by the U.S. Marshals Service, aka “Con Air.” But they fear that he’d be more likely to get the infamous “diesel treatment.” Either way, on this hypothetical cross-country journey, Sam would be completely cut off from his family and lawyers until he reached his new home in California, deprived of the minimal internet and email access he currently enjoys in Brooklyn.
Just as we were about to discuss some of the tough stuff, like his choices at trial or the fact that many who had worked for him had betrayed him to save themselves, our meeting time was up. It was non-negotiable. We quickly shook hands again. Then Sam went back to his dorm and I went back outside on a beautiful spring afternoon.