The Bankman-Fried Mystique

The obsession with S.B.F. in the Democratic party had to do with the theoretical role he was going to play in a few years, not the role he was playing until two weeks ago. Photo: Tom Williams/CQ-Roll Call, Inc./Getty Images
Theodore Schleifer
November 18, 2022

“Is it weird I have this urge to say sorry for your loss?” a source-friend texted me last week as Sam Bankman-Fried began his catatonic implosion. My bud, like the half-dozen other people who wrote me with similar notes over the last few days, was of course just giving me shit. But I have charted the rise of S.B.F. and his kin closely over the last three years, and so there is an element of something lost here—although, of course, the narrative of S.B.F. has never been as astonishing. 

I first talked to Sam Bankman-Fried in late 2020 when I saw that he was a major donor to a new, somewhat mysterious super PAC, Future Forward, that I was following closely that cycle. He and I talked off the record, but it was clear even then that he was seriously considering becoming a major player in Democratic big-money politics. A few months later I published one of the first interviews with him, where he explained his goal to maximize his net worth, his distaste for CSR programming, and his desire to help Joe Biden think about crypto.

I’ve followed his work very closely ever since—one of my first stories at Puck was about his work alongside Dustin Moskovitz to try and jam a new pandemic agency through Congress; I also wrote about his effort to circumvent Congress through a new ballot measure in California; broke the news about S.B.F. becoming a media investor; and talked with Sam about his crazy $12 million bet on an Oregon congressional candidate that backfired spectacularly. Over the last three years, I’ve also gotten to know his family, friends and advisers in settings both official and unofficial, writing some stories they liked and some they didn’t. Not unusual in the world of philanthropy, there was almost a worshipful attitude toward S.B.F. from his orbit, a sense that they were in the service of one of history’s great men—and a belief from some that they were on a 50-year campaign for influence and impact.

I’ve been asked a lot over the last few weeks about whether I was surprised by the recent turn of events. I never really wrote about his corporate work at FTX, but no, I didn’t see this coming. Sam always struck me as a little bit of a bullshitter, sure, but not any more of a bullshitter than other entrepreneurs, or fundraisers, or frankly plenty of the figures in my own media industry. He had his schtick and delivered the schtick, like we all do. The idea that he may have been defrauding people felt risible, because he earnestly seemed to believe in his left-brained ideology, and he is too smart to think that he wouldn’t get caught doing it.

I’ve talked a lot about this over the years with Jon Kelly, the co-founder and editor of Puck, who has always appreciated S.B.F. an ascendant player in our culture. Herewith, we discuss his mystique, his family, and how much money S.B.F. was actually moving.

Jon Kelly: Teddy, I’ve gingerly disparaged effective altruism in the past as a quixotic fascination of the utmost leftward flank of the Democratic party—a little world where advocates focus on narrower problems than the issues bearing down on Congress. S.B.F. seemed like the perfect avatar for this movement. He was quixotic, himself, and a preternatural combination of academic brainiac and zillionaire, plus his early adulthood was disproportionately shaped by Covid, an EA focus. So what will become of this movement without him? I presume his brother no longer has the credibility to lead it.

Without question, S.B.F.’s implosion has created an existential crisis for effective altruism. And it’s not just because of all the money that suddenly went poof, but because of how much he had become the E.A. brand. 

A decade ago, E.A. was a fairly niche community—a debate society of sorts where budding philanthropists and academics would read about randomized-controlled trials and try to move more money toward affordable, life-saving causes like anti-malaria bed nets. Nowadays, it’s become popular in the community to note that there are few funding constraints—billions of dollars are, er, were, available thanks to people like S.B.F. and Moskovitz—and millions were flowing into disparate cause areas like A.I. safety, direct cash transfers, and most interestingly to me, Democratic politics.

More than anyone else, S.B.F. did a tremendous amount to elevate E.A.’s profile and bring it into the mainstream. He gave interview after interview, did podcast after podcast, magazine cover after magazine cover, every reporter dutifully mentioning that he slept in the office on a beanbag, in case you missed it in the first 40 pieces. He talked non-stop about his moral code, about the idea of “earning to give,” and how philanthropy can be an effective means of saving human and animal lives. He was unabashedly pro-capitalism, but also positioned himself as a global humanitarian. It’s not a reach to say that he was the central avatar for the E.A. movement, and largely responsible for its presence, such as it is, in the broader zeitgeist. 

So when S.B.F. collapsed, and was exposed as a possible fraudster who took “earn to give” too far, it’s safe to say the brand fell into crisis, too. It doesn’t matter whether that’s fair or not, or whether S.B.F. was a real reflection of the E.A. faithful. It doesn’t matter whether S.B.F.’s extraordinary interview-over-DM with Vox showed him to be something of a charlatan, willing to manipulate the language of E.A. as a public-relations tool. To put it bluntly, no one will ever look at effective altruism the same ever again.

You recently estimated his total proceeds donated to politics hovered around $100 million. Can you recap where this went? Also, I presume the biggest story is the fact that his future spending, which could have been presumed to be in the billions, is now poof.

While we don’t know exactly how much he donated, I would venture to say that yes, based on some reporting and informed speculation, Sam spent up to $100 million on politics over the last three years. That’s why I don’t understand why reporters and activists are hounding random senators and congresspeople who received $2,900 from him to donate to charity. That’s basically a pittance and misses the bigger the story.

To add things up, that $100 million figure includes the roughly $40 million he made in disclosed contributions this year; the $10 million that he and his hedge fund gave to a Democratic super PAC in 2020; and the $12 million that he spent on a California ballot initiative in advance of a 2022 push, which an S.B.F. team ended up screwing up, as I reported, in an act of self-sabotage. The key question then becomes how much S.B.F. donated to the 501(c)(4) run by his brother, Guarding Against Pandemics, which I’ve learned took in about $22 million in total revenue in the calendar year 2021, most of which probably came from S.B.F., bringing his total political contributions to north of $80 million. The group does have other donors, and spent $1 million or so on lobbyists, $3 million on a townhouse, and has many, many consultants, all of whom are well paid. 

This is all to say nothing of the money he spent on philanthropy, whether it was on media companies through his personal family philanthropy (I hear it was at least $10 million total in media commitments) or on effective altruist causes through the FTX Future Fund, which had claimed it had committed over $160 million in charitable giving from him and his FTX colleagues.

Of course, Sam has made a name for himself as a Democratic mega-donor, but another big takeaway of the accounting is that Republicans have been exaggerating his current political contributions. Sam was not the “second biggest donor to Biden” in 2020, a talking point being regurgitated in right-wing media. He was not even that big of a donor to the Democratic establishment—$27 million of the $40 million he spent this cycle went to his own super PAC to play in the Democratic primaries, and half of that went to back longshot Oregon congressional candidate Carrick Flynn in a highly-controversial gambit. Sam was not George Soros, or even Michael Bloomberg. Yet, at least. 

The obsession with S.B.F. in the party was more about the theoretical role he was going to play in a few years, not the role he was playing right now. I’ve heard many stories of Democrats who tried to get their hands on S.B.F. money over the last year, but relatively few about those who were able to do so. The upside for Democrats, as a result, is that the fear of contagion within the left is a little overblown.

The Democrats have been criticized about this donor loop, naturally, but Republicans weren’t isolated from FTX dollars, either, right?

Absolutely. Ryan Salame, an FTX executive, was advised by some of Sam’s personal political advisors on how to best give to Republicans. Salame founded his own super PAC, called American Dream Federal Action, and spent $24 million of his own money to back G.O.P. candidates. He also made contributions to the Senate Leadership Fund, to the main crypto-industry super PAC, and boosted his crypto-exec girlfriend, Michelle Bond, who was running for Congress as a Republican on Long Island. Republicans eager to spin S.B.F. into a toxic storyline for Democrats aren’t talking about Ryan’s contributions, naturally. And while an underling isn’t as theoretically culpable, and Ryan wasn’t as scaled a player in politics as S.B.F., there was still, undeniably, a lot of FTX cash flowing both ways.

Ever since you introduced S.B.F. to me, I’ve been fascinated by the family dynamic: his brother led on his political initiatives, and his mother was the mastermind behind this secretive, bigger donor network, Mind the Gap. And I don’t think we yet understand the full picture here. How do you comprehend the family dynamic?

Until two weeks ago, the Bankman-Fried clan had low-key been establishing itself as one of Silicon Valley’s most ambitious families, but their collective project now seems to be crumbling. Sam’s younger brother, Gabe, and his mom, Barbara, have had to step down from the organizations they founded in the last week as part of the FTX fallout.

The relationship between Gabe and Sam reminds me a little of the bond between Kimbal and Elon Musk in how intimately involved one sibling is in the other’s affairs. Gabe worked in Democratic politics for a few years in fairly junior roles, but Sam’s incredible business success enabled Gabe to become the chief of one of Washington’s buzziest advocacy shops. Gabe lived by the sword and died by the sword: he rose with Sam because of his access to Sam’s money, and fell with Sam when the surname became a liability. He resigned from Guarding Against Pandemics earlier this week.

Barbara’s ascendance is even more incredible. In 2018, when Sam was basically a nobody, the Stanford law professor founded this then little-known fundraising network called Mind the Gap. The network has become the subject of many conservative conspiracy theories over the last few days, but yes, Mind the Gap was important.

But as the reporter who has chronicled the organization more than anyone, allow me to clarify the S.B.F.-Mind the Gap relationship. Mind the Gap has been, undeniably, one of the most important political networks in Democratic fundraising (though its allure has definitely cooled). I broke the news about Mind the Gap’s existence when I was back at Recode in 2020. What the organization essentially does is advise wealthy donors, originally mostly in Silicon Valley, about where to give their money—be it to individual Democrats or to nonprofit groups that work to turn out likely Democratic voters. Mind the Gap has helped move hundreds of millions into progressive political causes over the last four years, but not all of that money is from S.B.F.. Sam has been a part of the Mind the Gap network, and donated to its recommended organizations, but Mind the Gap now has 2,200 donors. I don’t know—but am very curious—how much of the money that Mind the Gap has moved came from Sam, and that question has been posed to me by many operatives over text and in phone calls over the last two weeks. Sam once told me that he has “consulted” for the organization, although Mind the Gap recently told me that he never had an official role with the group. I’m guessing that he offered some informal advice to his mom along the way, especially as the organization was starting out, back when Sam was still a nobody.

We broke the news earlier this week that Barbara Fried had stepped down from Mind the Gap, where she served as board chair and as one of its founders. Fried, I’m told, emailed the board of directors to defend her son and to express her desire to not be a distraction as she helps Sam figure out his next steps. The move, I hear, was well received by the donor community; she obviously is a distraction right now. It all ties back to the now-radioactive surname, even though I know many insiders who only recently learned about the familial relationship between Barbara and Sam. 

But you’re right, Jon, to key in on the fascinating family dynamic here, and just how close Barbara is with Sam and Gabe. Consider this passage from the acknowledgments of Barbara’s most recent book: “When Sam was about fourteen, he emerged from his bedroom one evening and said to me, seemingly out of the blue, What kind of person dismisses an argument they disagree with by labeling it the ‘Repugnant Conclusion.’ Clearly, things were not as I, in my impoverished imagination, had assumed them to be in our household. Restless minds were at work, making sense of the world around them with no help from me,” she wrote. “They have shown me by example the nobility of the ethical principle at the heart of utilitarianism: a commitment to the wellbeing of all people, and to counting each person—alive now or in the future, halfway around the world or next door, known or unknown to us—as one.” That should paint a picture for you.

God, they all sound awful… What’s the next beat in the story?

It’s an ideology, Jon! Anyway, it is clear that the political and philanthropic projects of S.B.F. in their current form are dying—and now the death just needs to be managed. Will Moskovitz save S.B.F.’s orphaned projects? I’ve reported they’re in talks.

Will anything be found to suggest that S.B.F.’s political or philanthropic projects outside of FTX were mismanaged, too? I have no reason to believe that as of now, but anything is possible at this point.

More symbolically, will the Gates Foundation keep S.B.F. in The Giving Pledge? He’s still there, even though he’s not a billionaire anymore, and even though Bill Gates wants this to be a community unanimously above disrepute.

And of course, will Sam end up facing criminal charges and maybe even go to prison? Now that could be the true blast radius here—I’ve had several people remark to me this week that what happens to Sam matters, yes, but the more pressing macro questions revolve around how this will affect the broader crypto economy, the broader cross section of tech donors engaging in philanthropy, and to the young guns trying to reinvent politics. 

Last question here. I was surprised and mortified, years ago, when I occasionally overheard notes of sympathy for Elizabeth Holmes among the founder-investor three-comma-club community. They rejected her crimes, obviously, but they appreciated the hustle and ambition she displayed. Have you heard any sympathetic murmurs about Sam?

Haven’t heard that yet, even privately. I’ll say “yet” because I think that much of Silicon Valley is still searching for exactly where the bottom is here, and if this is a Bernie Madoff situation or something more gentle. If there is some exculpatory evidence, I could see people (very privately) adopting a Tim Draper-like posture alleging that S.B.F. was just a victim of CZ and Binance and that, effectively, his grand plan would’ve worked if he hadn’t been bullied around by a bigger balance sheet. No one would ever say that publicly, of course. But I think part of the reason why S.B.F. is so unilaterally despised right now is indelibly tied to politics—the left hates him because of his rapacious capitalism and misconduct, and the right hates him because of his lefty checkbook. He’s in the Zuck zone—targeted by both sides.

Actually, last last question. Presumably over the objection of his attorney, Martin Flumenbaum, S.B.F. recently did that interview with Vox you mentioned in which he player-hated crypto regulation and said he was trying to raise $8 billion in a two week window, which seems like a mighty tall task unless he’s taking capital from Vladimir Putin. Are these signs that he’s cracking?

Look, Sam claims he thought the interview with my old colleague Kelsey Piper was off the record, which of course it technically was not. But it’s out there now, and it is an interview which makes you question everything you’ve read and heard about him over the last three years. Was all of this—the image, the donations, the hair—an elaborate con? I’m not ready to go that far. He’s obviously under tremendous stress right now, and so yes, he’s cracking. If his brand wasn’t damaged enough, that interview will go down as the last straw that forever punctured his mystique with the true believers I’ve gotten to know ever since 2020.