Former FTX CEO Sam Bankman-Fried's lawyer parents face scrutiny
AILSA CHANG, HOST:
Sam Bankman-Fried, the former CEO of the crypto exchange FTX, is in a lot of trouble. The 30-year-old faces multiple criminal and civil charges related to the company's collapse. Prosecutors say he defrauded customers and investors for years. Now, Bankman-Fried's troubles have also shifted some attention to his parents, Joseph Bankman and Barbara Fried, though so far there is no evidence that either of them were engaged in any criminal or otherwise improper activity that led to the crypto exchange's implosion. Bankman and Fried have both been prominent professors at Stanford Law School here in California.
And Justin Baer wrote about them and their roles in FTX this week in the Wall Street Journal. He joins us now to tell us more about his reporting. Welcome.
JUSTIN BAER: Thank you. Great to be here.
CHANG: Great to have you. OK. So just before we begin, full disclosure on my part, I went to Stanford Law School. And I remember both Joe Bankman and Barbara Fried. They were very well-liked, very popular professors. I took tax law from Professor Fried. But I'm going to start by having you tell us more about them. How would you describe these two individuals?
BAER: Yeah. So they've both been at Stanford Law School since the late 1980s, but it's probably fair to say that they're more than just faculty members. On campus, they were often described by colleagues and friends over the years as these sort of central figures, these pillars, both kind of culturally there but also intellectually.
CHANG: Can you describe what you learned about how Joe Bankman and Barbara Fried raised their son? It was a little unusual, wasn't it?
BAER: Yeah. I think they had discovered at an early age that that Sam and his brother really enjoyed having more adult conversations. And so from that point on, they really sought to cultivate that with them. You know, Joe and Barbara were pretty well-known on campus as hosting these Sunday dinner parties with their friends and colleagues and, you know, sort of interesting people that were visiting. As you might guess, many other kids didn't necessarily want to talk about politics or religion or current events and would excuse themselves and go watch TV in the other room. But Sam and his brother would always - almost always remain behind. And they would participate and hold their own in those conversations.
CHANG: And based on what you've learned so far in your own reporting, how would you describe Bankman's and Fried's involvement in FTX? Like, how deeply were they involved?
BAER: I think in Barbara's case, she wasn't really involved in any meaningful way. Joe - different story. He was actually a paid employee for some time, a little less than a year, focused a lot on their philanthropic efforts. He sat in on meetings in Washington with lawmakers as - with his son as they were either lobbying on behalf of the company or maybe the crypto industry itself. And, you know, as the situation began to turn dire, he, you know, became a bit of a liaison between other people at the company and the lawyers and his son. And then, of course, there's this luxury property that they had been using when they were visiting Sam in the Bahamas was, you know, reportedly - the parents were listed on the deed. And so that's one unresolved element there about how they obtained that and why they still appear to hold it.
CHANG: Also, Bankman, I mean, he very much helped shape this image - FTX's image as this company that would try to give, you know, low-income people access to the financial system, right? Like, as an academic, I know that Bankman was very interested in the inequities in the financial system.
BAER: Yes. No, that was sort of central to his official role within FTX. He was primarily focused on various philanthropic efforts. And that idea - low-income folks getting bank accounts, being able to transfer funds to their loved ones in other parts of the world - he was leading that effort.
CHANG: What sort of legal liability could Joe Bankman or Barbara Fried potentially face in the wake of this collapse, you think?
BAER: Yeah, that's certainly unresolved, right? We don't know yet what involvement they had in the areas that have ultimately found FTX and this sister trading firm Alameda in big trouble, right? You know, the central allegation is that they used customer funds on FTX in exchange in order to cover up losses and other issues at this trading firm Alameda. And so one thing that's unresolved is to what extent, you know, what knowledge that his parents had about that prior to it being revealed, you know, in early November as things were imploding.
CHANG: That was Justin Baer of The Wall Street Journal. Thank you very much for your reporting and for joining us.
BAER: Thanks for having me. Transcript provided by NPR, Copyright NPR.