How Sam Bankman-Fried Peddled a Story Everyone Wanted to Believe
In an excerpt from his upcoming book, Axios’s Brady Dale explores “what we think we know” about Sam Bankman-Fried, FTX, and the crypto industry.
I wasn’t there, so my account of FTX’s last big event, Crypto Bahamas, is going to be rendered through a glass darkly, but I have one thing going for mine: It has hindsight on its side. No one writing then knew that FTX would be a crater made out of legal filings inside a Delaware bankruptcy court filing cabinet by the end of the year.
The problem with conference reports is that they focus so much on what happens onstage, but the truth is, people don’t go to crypto conferences to see what’s onstage. They go to be onstage. Failing that, they go to network outside the auditorium. The agenda isn’t actually about something to watch so much as a signal to potential ticket buyers whether or not the organizers can put on an event that will attract the kind of people other people want to kiss up to in person.
To signal that, organizers have to spend money, and if there’s one thing FTX knew how to do, it was how to spend money. FTX, and its partner SALT, spent a lot of money on the guest list at this event. That’s why the agenda included folks like Tony Blair, Bill Clinton, NFL quarterback Tom Brady, fashion model Gisele Bündchen, and singer Katy Perry. Based on social media, Perry even canoodled a bit offstage with eager fanboys.
The crowd watches former President Bill Clinton speaking at Crypto Bahamas via the jumbotron, April 28, 2022. (Photo by Lucinda Shen)
In short, Crypto Bahamas was the pinnacle of FTX’s star-fucking story arc.
Crypto Bahamas ran from April 26 to 29, 2022, in Nassau, Bahamas. It was a joint venture of FTX and Anthony Scaramucci’s SALT (an organization, led by a former Trump administration official who is informally known as “the Mooch,” that does events for “thinkfluencers” at nice places).
Proprietary trading firm Dexterity Capital’s Michael Safai went. He said that he appreciated that the event had a carefully curated attendee list, with lots of blockchain companies. It had more CEOs than random business development guys, so it felt like time better spent.
As the conference opened, the prime minister of the Bahamas took to the stage and said, “The arrival and presence of FTX underscore the readiness of the Bahamas to be a home for global leaders in the crypto space.”
SBF looks on at NFL quarterback Tom Brady. (Photo by Danny Nelson)
The prime minister described how his government had put out a white paper on digital assets, saying, “This paper sets out our vision and the supporting framework to transform the Bahamas into the leading digital assets hub in the Caribbean and a global leader in the progressive regulation of businesses in this profoundly innovative space.”
The webpage where the paper was posted now shows an error message.
The Financial Times account made much of the fact that attendees had to walk through a casino. The writer found that symbolism noteworthy enough to ask other attendees about it, but was somewhat nonplussed that they didn’t seem to make much of it. Maybe they had gone to the Consumer Electronics Show? The largest tech conference in the world has had its attractions interspersed between slot machines for many years.
SBF sits between former FTX staff member Lauren Remington Platt and fashion model Gisele Bündchen as they announce the company’s editorial campaign. (Photo by Danny Nelson)
Usually, the formula for a crypto conference dispatch is: (1) Find some theme that seems to be echoed across multiple conversations, (2) Say something about the most famous person who spoke, and (3) Spe- cifically for crypto events, include a scene from a too expensive-looking party.
The culminating party reportedly looked very expensive, complete with a celebrity-laden VIP section that everyone could see into but hardly any mere mortal besides Sam Bankman-Fried could get into.
But the crucial stuff is always the side conversations that might not have happened elsewhere, like when a small gang decides to do something absurd like forking Bitcoin, sending the entire industry into a yearslong flame war.
None of that stuff shows up in the day-after reportage.
Instead, if you’re lucky, you get a few pithy quotes from onstage, like on the Prosek blog where the writer paraphrased Scaramucci as saying, “Millionaires wear suits; billionaires wear shorts.”
There was a little falling action ahead: FTX had already purchased advertising real estate in Vogue. The magazine ended up splitting its print space equally between Bündchen and SBF — because, obviously, they each appealed to the Vogue audience roughly equally.
That magazine spread showed there was more to Scaramucci’s haberdashery take than might be readily apparent. There’s a divide in crypto that takes time to pick up on. Both sides intermingle a lot, but they aren’t the same and they aren’t even really aligned. One group is the actual crypto natives. They yearn for crypto to succeed in shifting how humans coordinate with each other, and they want to see how far they can push it.
It would be an overstatement but not quite a useless illustration to say that this group is generally (though not completely) unlikely to be seen in Oxford shirts or pants from Bonobos. There’s a lot of denim and sweatshirts in the disruptive camp, but there’s definitely no uniform.
Even Brian Armstrong, Coinbase’s CEO, has taken to making a point of favoring T-shirts. And his rhetoric (at least) clearly puts him on the side of disruption, even if his company can be timid.
The second group can best be described as TradFi-who-see-a- crypto-play. These are the ones who believe there is money to be made in blockchains, but don’t believe in its promise particularly. They just want boat money.
Many of these types may be the sort who learned just enough in traditional finance to be a little more sophisticated than the average crypto trader about some tricks of the trade but couldn’t quite cut it on Wall Street.
It’s a lot like the difference between actual rock stars and the bands on Christian rock labels. One is able to win by playing by the same rules as everyone else, and the other needs to market themselves to a group that wants a taste of the forbidden, but with safety rails and parental approval.
Both TradFi crypto and Christian rock are easier paths to more-limited success.
Given the conversation at Crypto Bahamas, it definitely seems like it leaned toward the TradFi take. Crypto, but just enough. It’s the same language that SBF primarily speaks.
And this brings me to SBF’s shorts. Alameda’s former chief operating officer, Andy Croghan, told The New York Times that he wore the shorts all the time to affect a mystique. It was about being the kind of guy who wouldn’t touch long pants, who couldn’t be bothered for anything shy of Congress.
This insistence created a contrast as sharp as a lit-up neon sign in the center of a forest when SBF wore the getup onstage with Tony Blair and Bill Clinton. His schlubby shorts and T-shirt actually managed to appear to be trying too hard in that context.
It was even worse when he sat between one of the more fashionable members of his staff and Bündchen, who appeared in a demure business casual dress. In videos and photos from that panel, SBF seems to be slouching more than usual, as if he’s realized just how far he’s taken this affectation.
Former U.K. Prime Minister Tony Blair and former U.S. President Bill Clinton with SBF at Crypto Bahamas. (Photo by Danny Nelson)
Next to Bündchen and former world leaders, his sartorial flex made him look like a prisoner of his own bit.
But SBF doesn’t accept that characterization. “So it’s a weird look, but what I will say is that, like, it was just legitimately the case that I was way more comfortable,” he told me.“Basically, I overheat really easily.”
In November, on Bloomberg’s Odd Lots podcast, Joe Weisenthal would say that one thing he found refreshing about SBF was that he never saw him trying to pitch ways that crypto would change the world. Crypto seemed to just be the way he made money.
Yet his looks and some of his public moves (SushiSwap, pushing Solana, promoting Serum) had brought a contingent of crypto natives around to SBF. He was seen as something of a leader, something of a hero. To me, the costume helped.
But in retrospect, SBF seems more like a member of the second crypto contingent, the TradFi-who-see-a-crypto-play sort. He just didn’t dress for that particular part.
In the next few months, his former fans would start to see through the look, even before his company fell.
Chapter 32: Crypto Bahamas
Excerpted with permission from the publisher, Wiley, from SBF: How the FTX Bankruptcy Unwound Crypto’s Very Bad Good Guy by Brady Dale. Copyright ©2023 by John Wiley & Sons, Inc. All rights reserved. This book will be available May 9 wherever books and e-books are sold.