The MeidasTouch Podcast - Listen Now: Spellcaster: The Fall of Sam Bankman-Fried

Episode Date: June 5, 2023

From Wondery and Bloomberg, the makers of The Shrink Next Door, comes a new story of incredible wealth, betrayal, and what happens when “doing good” goes really, really bad. When nerdy gamer Sam Bankman-Fried rocketed to fame as the world’s richest 29-year-old, he pledged to donate his billions to good causes. But when Sam's crypto exchange FTX collapsed, billions of dollars went missing, and Sam was in handcuffs, those who knew him were left wondering — who was Sam really? A well-meaning billionaire who made a mistake? Or a calculated con man? Listen to Spellcaster: Wondery.fm/SC_TMTN Learn more about your ad choices. Visit megaphone.fm/adchoices

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live in a penthouse above the crystal clear ocean with all of your best friends, and have it 100% paid for? Well, FTX founder Sam Bankman-Fried made that dream a reality. But US prosecutors say he was hiding a dark secret. As cryptocurrency gained mainstream popularity, FTX was the poster child, spending millions on pro sports sponsorships and A-list celebrity endorsements from the likes of Tom Brady, Larry David, and even Shark Tank's Kevin O'Leary, with some investing their own money in the marketplace. Many thought Sam Bankman Freed was just changing the game as he graced the

Forbes and Vanity Fair. Barely 30, the young crypto billionaire became a powerful financial figure and was influencing the global economy. But in just one month, his exchange would collapse, and SBF would find himself in handcuffs as tens of thousands of investors would blame him for their fortunes lost. It's one of the most dramatic falls from grace and represents one of the most spectacular failures of corporate control in American history. Here, exclusive tape of Sam and his former girlfriend and business partner, Caroline Ellison, who later admitted something had gone very wrong inside their operation. From Bloomberg and Wondery comes Spellcaster,

a new six-part docuseries about the meteoric rise and fall of FTX and its founder, Sam Bankman Freed. I'm about to play a clip from Spellcaster, The Fall of Sam Bankman Freed. While you're listening, follow Spellcaster wherever you get your podcasts. Hey, Prime members, you can listen to episodes ad-free on Amazon Music. Download the Amazon Music app today. The Baja Mar Resort

is a gargantuan hotel on a gorgeous stretch of Bahamas beachfront. You enter by crossing a Roman-style bridge over a landscaped lake, where every night there's a glitzy fountain show with pulsing lights and extremely loud music. It's like the Bellagio on the Caribbean. Tegan Klein checked into the Bahamar one afternoon in April of 2022. So you arrive and there's a

fish tank behind the check-in desk. A big vertical tank filled with lionfish, to be more specific. There were signs for Crypto Bahamas everywhere. It really felt like the whole island was kind of buzzing about this event.

Tegan was a 29-year-old crypto entrepreneur and influencer. She'd done a lot of these crypto conferences before, but she didn't know much about this one, called Crypto Bahamas. Other than that, it was invite only, and she'd agreed to speak at the event. It almost had this dark fantasy Disneyland Vegas vibe to it,

and it really felt surreal from the moment that I landed. She got her badge and was directed toward the VIP reception. She walked out on the hotel lawn to find a small gathering of people surrounded by cabanas and giant video screens. A local marching band played in the background. There was one big table.

It was a long rectangular table set for about 60 people. So we kind of coalesced in the middle of that table and we all talked together. It was a three-course meal, no caviar, but definitely nice food. The guests took turns introducing themselves. There were a lot of the usual suspects. Hedge fund guy, venture capital dude, crypto bro.

Then a woman sat down at the table. She came with two guys and they were very nice. They apologized for being late to the dinner. Tegan recognized the woman right away. It was Katy Perry as an international pop superstar Katy Perry. Then the guy next to her spoke up. He said, I got famous from my role playing Legolas in Lord of the Rings and it was actually Orlando Bloom.

But for this crowd, Katy Perry and Orlando Bloom weren't the biggest celebrities there. The next morning, Michael Lewis, the world-renowned business journalist, sat on stage with an awkward-looking 30-year-old guy with a mop of curly hair, wearing shorts and a baggy T-shirt. Three years ago, nobody knew who you were. And now you're sitting on the cover of magazines,

and you're a gazillionaire. This was who people were here to see, the co-founder and CEO of FTX, one of the world's largest crypto exchanges. He was a billionaire many times over, a prolific political donor, a boundary-breaking philanthropist, and he'd done it all in just a few years.

These are world, this is, you're breaking land speed records. And I don't think people are really noticing what's happened, just how dramatic the revolution has become. There's a status upheaval that's going on in the financial world, and you're sitting right in the middle of it. Sam Bankman Freed. Yeah, I mean, basically, and I think the way that sort of I approached it was like, what should the product be?

Like, you know, let's take everything that we see. Lewis has written some of the definitive business books of the past 40 years. Moneyball, Liar's Poker, and The Big Short. He has spent a lifetime sorting businesses' good guys from the charlatans. And on stage, at least, he sounded impressed by what Sam Bankman Freed had accomplished. And Sam didn't just sit with Michael Lewis. He was everywhere. He shared the stage with former President Bill Clinton and former British Prime Minister Tony Blair. He had an intimate heart-to-heart with Tom Brady,

and then another with the quarterback's then-wife, Gisele Bundchen, the Brazilian supermodel. I mean, ultimately, the scale of impact you can have on the world is just really, really large. Sam was beyond awkward. His leg bounced wildly as he spoke. His eyes darted around the room. And, you know, that's, I think, what really sets it apart.

His audience didn't seem to care. His awkwardness came off as a kind of charm, like he was totally indifferent to what people thought about it. And they lapped it up, especially when he talked about his driving motivation, doing good. Sam had promised to give all of his wealth away, all $26 billion of it. The FTX Foundation's recent announcement to give up to $1 billion this year alone to high-impact charities show how Sam is transforming corporate governance and becoming the modern-day CEO that the world needs.

On stage with Giselle, Sam unveiled a new ad showing him standing with his arms crossed with a calmly confident, even virtuous expression on his face. He wore a hoodie and shorts. The quote on his ad said, I'm in on crypto because I want to make the biggest global impact for good. There you are. There you are. Watch out, he might leave crypto and start a modeling career. Kagan Klein had never seen anything like it.

I think a lot of people were kind of in awe. The crowd was captivated by Sam's good intentions, by the celebrities and world leaders he kept company with, and the sheer scale of his promises. This is where I realized that it was kind of the Sam show. The Sam show. In the spring of 2022, crypto was booming and Sam Bankman Freed was the star. At one point, FTX said it was processing on average $12.5 billion worth of transactions each day. And it was all, Sam claimed, in the name of one day giving his fortune away

to save the world. Then, not long after his star turn in the Bahamas, the Sam show began a very different season. Competitors and regulators began to circle. Crypto prices were falling.

Behind the scenes, Sam's closest advisors were abandoning him. At the same time, my colleagues at Bloomberg started poking at the myth of Sam Bankman Freed, and we published stories about it. We weren't the only ones. But even we couldn't imagine the full scale of what was wrong inside Sam's empire. By year's end, FTX was bankrupt. $8 billion were missing, and Sam was in handcuffs. Investors, prosecutors, lawyers, and crypto fans were all left to figure out what was real and what wasn't.