Thursday night, crypto kingpin turned con man Sam Bankman-Fried was found guilty of perpetrating “one of the biggest financial frauds in American history.” At first glance, the baby faced California wunderkind seems an odd fit for the role of archvillain. In the courthouse next door, a more conventional choice for the part offered his own performance Monday. Former fraudster-in-chief Donald J. Trump took the stand in his civil trial on allegations of financial fraud.
On the surface, the two men appear to be polar opposites. Having spent the last month observing SBF’s trial in person, however, I was struck by the numerous ways in which they are similar. All good con men, like all good actors, understand the power of storytelling. Sam Bankman-Fried and Donald Trump are experts in the field.
When I first saw SBF in court, it took me a second to recognize him. His usual uniform—an FTX T-shirt, cargo shorts, and sneakers—had been replaced with a drab purple tie and an ill-fitting gray suit that nearly swallowed him whole. It was more appropriate attire for a man facing life in prison, even if he looked like a kid forced to participate in the school play. But it was his new haircut that really stood out. SBF’s signature had previously been a mop of curly black hair that appeared to be left to its own devices. While sporting it, he came off as an eccentric so brilliant he had no time to focus on his appearance. In court, however, the ’do had been shorn—and without it, he had lost his power, looking like just another finance wiz kid caught playing with other people’s money.
One of the many fictions SBF cultivated was that he was unaware of his image. As his former girlfriend (and former Alameda Research CEO) Caroline Ellison testified, the opposite was true. “He thought his hair was very valuable,” she said in court, and that it was “essential to his image.” The change in SBF’s appearance was so stark that Ellison took nearly 30 seconds to identify him from the witness stand. On the other end of the spectrum is our former president. Donald Trump sells himself as a real estate magnate, the scion of a New York dynasty. The power suit, perma-tan, and well-coiffed hair are essential for creating the character and helping us forget the reality of his origins: a kid from Queens and the son of a slumlord.
In a similar manner, Trump prides himself on an ostentatious display of wealth. The marble and the omnipresent gold leaf of Trump Tower may seem garish, but the intention behind them is clear: to project an aura of extraordinary power and fabulous affluence. For the supposedly humble billionaire Sam Bankman-Fried, the opposite was true: He needed to convey humility and disdain for material possessions in order to sell himself as an effective altruist. He drove a Toyota Corolla and encouraged Ellison to drive a Honda Civic. Although he lived in a $40 million penthouse and frequently flew on a private plane, the myth of SBF as a generous genius spread far and wide, aided and abetted by a fawning press.
Of course, as with any performance, a certain amount of improvisation is crucial. Trump is famous for claiming his net worth is whatever he feels it should be. It’s also important to remember: practice makes perfect. According to Ellison’s testimony, SBF instructed her to prepare seven different balance sheets for him before approving one he felt comfortable sharing with stakeholders. FTX and Alameda were privately held businesses, so these shenanigans were shielded from public view. The Trump Organization is also privately held; only through the lawsuit by the New York attorney general has its skullduggery been brought to light.
Speaking of skullduggery, there are broad similarities between the internal operations of Bankman-Fried’s empire and the Trump Organization. Trump Inc. is alleged to have inflated the value of its assets to receive loans, and then purposefully undercounted their value when it came to paying taxes. SBF’s version of this was to mark the value of illiquid cryptocurrencies he owned (and one he created himself) far beyond the price they could reasonably be expected to sell for should the need arise. Hence why tokens like FTT, created by Bankman-Fried and his colleague Gary Wang, are referred to as “shitcoins” by the crypto crowd. SBF and Ellison had been manipulating the price of FTT for years, buying back tokens whenever the price dipped. When forced to liquidate them to meet surging customer withdrawals from FTX last November, they discovered—quelle surprise—no one actually wanted to buy the damn things. FTT became virtually worthless overnight, and FTX filed for bankruptcy shortly thereafter. (Ellison and Wang pleaded guilty to fraud and agreed to cooperate with prosecutors.)
To enable this scheme, SBF kept his circle of trust tight, a crucial ingredient for running a successful con. He hired people he had known for years, such as his on-again, off-again ex-girlfriend, and a childhood friend from math camp, and allegedly consulted his parents on the company’s operations. Ten of the top employees of FTX/Alameda even lived together in a luxury penthouse in the Bahamas. The Trump Organization, meanwhile, is a family affair, and members of the inner circle are valued based on their loyalty to the man in charge. Trump is notorious for never writing emails and not trusting anyone who takes notes. According to an FBI agent called by the prosecution, SBF, who conducted essential business operations via the encrypted application Signal, participated in 288 chat groups that were set to auto-delete.
Finally, a con man needs to hire the right legal counsel. Trump was a devotee of the notorious shark and legal fixer Roy Cohn. Cohn was an adviser to Joseph McCarthy, as well as a long list of mobsters (Fat Tony Salerno and John Gotti among others) and numerous businessmen of ill repute. From Cohn, Trump learned a simple legal strategy that has so far served him well: never give an inch, always go on the offense, and make things up if you must. The truth is immaterial; it’s the story that counts, at least in the court of public opinion. This strategy was on full display during Trump’s testimony Monday when he tried to turn his own misdeeds into an indictment of the legal process: “This is a very unfair trial, very, very unfair, and I hope the public is watching.” It was a performance Cohn himself might have attempted.
Sam Bankman-Fried hired Daniel Friedberg as FTX’s in-house counsel, an attorney whose previous stints included working for an online poker site that folded when it was revealed insiders could access a secret “god mode” to see other players’ cards. Of course, once he gets in hot water, a con man must look after himself above all else. After his indictment, SBF hired new lawyers who attempted to blame Friedberg for FTX’s illegal activities—the exact maneuver Trump pulled with Michael Cohen. (Friedberg has reportedly cooperated with US investigators by providing information on how FTX operated.)
Ultimately, SBF’s attempts to evade punishment for his crimes proved unsuccessful. Donald Trump faces not just the New York attorney general’s lawsuit, but indictments in four separate states. And with any luck, he may see the same fate.
Ben McKenzie
Source link
