The Full List of Sam Bankman-Fried’s Freak-outs: BlockFi, Saudis, and Keeping Willie Happy

• Sam Bankman-Fried could be facing over 150 years in prison for his role in FTX’s spectacular collapse.
• Once again, Caroline Ellison’s personal writing has landed a huge blow to his chances of avoiding punishment.
• A list shown in court reveals the Bankman-Fried’s deepest worries before the exchange collapsed.

As Sam Bankman-Fried’s trial continues, Caroline Ellison’s intriguing revelations from inside the courtroom have provided plenty to talk about. Ellison, the former CEO of Bankman-Fried’s hedge fund Alameda Research, has previously shed light on the FTX saga through her diaries and Google Docs. She hasn’t let us down again.

Luckily for us, the list was submitted as evidence in open court as part of Caroline Ellison’s cooperation with prosecutors.

Things Sam Bankman-Fried Was Freaking Out About

Last year, before FTX collapsed in November 2022, Ellison wrote a list of “Things Sam is Freaking Out About.” The document reveals what preoccupied Bankman-Fried in the months leading up to FTX’s implosion. 

Included are several entries that unveil the hubris of the then-youngest billionaire in the world. Among them is “buying SNAP,” which Ellison explained as Bankman-Fried’s grand plan to buy the parent company of Snapchat. Some are more pedestrian, like the entrepreneurs’ concern about “bad English language content” on the FTX website. Others, however, are far more incriminating.

Prosecutors submitted the list of 17 items into evidence on October 12, on Ellison’s second day of testimony. Let’s go through the highlights.

Bad PR in the Next 6 Months

From what we know thus far, Alameda Research and FTX were already in the financial quagmire in early 2022. Bankman Fried had already asked Gary Wang, FTX’s co-founder, and Nishad Singh, its director of engineering, to enable Alameda to withdraw and use customer funds in July 2019.

Wang testified that Alameda had unrestricted access to FTX user funds and wrote code to protect the hedge fund from liquidation, even with a negative balance.

The ingredients for what was to come were already there. Bankman-Fried, who was allegedly fully aware of criminal activity, would have been anxious about it coming to light, as it eventually did.

User Experience

The curse of every product manager is to be forever worried about the user experience. Apparently, the CEO of FTX was no different.

Ellison lists “VIPs: API throughput” in her list alongside “click traders: front end lag,” an indication that the speed of trading on FTX was suboptimal. Tweets by SBF a month before the collapse touting new “lower latency API” and “double the order throughput” suggest these were issues on his mind right until the end.

Getting Regulators to Crack Down on Binance

With the walls slowly closing in, Bankman-Fried and co. appeared to have a plan to put everything right, according to Ellison’s testimony in court. If only U.S. regulators would shut down their largest rival, and the industry’s undisputed leader, FTX could take all of their customers and be in the clear.

“Various regulators had been promising him that this would happen for a while, but it never happened,” she told prosecutors on October 12. 

The plan may not have been completely crazy. Binance had already faced regulatory scrutiny in 2019. The heat forced Binance to restrict American access to its main exchange, Binance.com, and launched a new US-based arm called Binance.US. The company would later find itself in serious legal trouble with regulators in 2023.

Raising From MBS

According to Ellison’s notes, Bankman-Fried appeared keen to acquire finance from Saudi Crown Prince Mohammed bin Salman, or MBS. In court on October 11, his former girlfriend told the court that the prince was a potential investor. Apparently, they had even considered selling equity to the controversial Saudi royal.

A Puck report  from April 19 revealed Sam Bankman-Fried met with MBS in Saudi Arabia shortly before FTX’s bankruptcy. Though SBF sought $1 billion for FTX, Saudi investors only offered $250 million. This meeting occurred just weeks prior to FTX’s collapse. Strangely, crypto trading is actually illegal in the kingdom.

Getting Capital From BlockFi

Testimony revealed FTX’s efforts to acquire more help from the digital asset lender BlockFi as the crypto exchange scrambled for capital. 

According to Ellison, FTX was in the process of acquiring  BlockFi, and Sam Bankman-Fried suggested using that relationship to obtain additional loans or funds. FTX had already extended a line of credit to BlockFi, which had $355 million frozen on FTX when it filed for bankruptcy, according to the lender’s bankruptcy filings. 

Seeking cash wherever possible, FTX looked to leverage its ties to BlockFi to extract further capital from the struggling lender right before FTX itself collapsed.

The Alameda/Modulo relationship

FTX, through its hedge fund Alameda Research, invested hundreds of millions of dollars in another crypto hedge fund called Modulo despite Ellison’s objections .

According to her testimony, Sam Bankman-Fried directed Alameda to begin investing in Modulo in early 2022 and to continue pouring more money into it through fall 2022, even as Ellison raised concerns about Modulo’s trading performance and the generous terms given to them.

Crucially, in June 2022, Bankman-Fried ordered a $50 million payment to Modulo just one week after Alameda had secretly used billions in FTX customer funds to repay loans. At this time, Alameda had no liquid funds of its own, so this $50 million likely came from FTX customer deposits, Ellison said.

Keeping Willie Happy

Ellison’s notes also mention Bankman-Fried being worried about “Willie being happy,” a possible reference to William MacAskill, Sam Bankman-Fried’s mentor, fellow effective altruist, and one of the movement’s intellectual stars.

MacAskill was also part of FTX’s Future Fund, which donated $160 million to effective altruism causes in 2022. This included $33 million to MacAskill’s affiliated groups. However, the academic and author resigned  from the fund shortly after MacAskill’s bankruptcy. We hope Willie is happier now.