Sam Bankman-Fried was “risky” and “reckless” toward spending and the law. Sound familiar?
That’s part of comments made by employees in 2018 as half of them left Alameda Research, the sister trading firm of crypto exchange FTX, according to internal documents reviewed by Semafor. (Bankman-Fried is an investor in Semafor)
They are part of a post-mortem by Bankman-Fried on Alameda’s problems, from massive losses to managerial disputes, and contain clues about what would go wrong at FTX. Here’s a sampling of the comments:
- “Sam had a genuinely different risk profile for Alameda than the other managers. He wasn’t going to be happy with the very achievable 10s of millions a year. He wanted to chase the 100s of millions a year paths.”
- “Sam repeatedly misled candidate hires, investors, and employees about Alameda’s prospects and performance. He was consistently too optimistic, fudging numbers or deliberately neglecting others.”
- “Sam demonstrated recklessness in spending EA [Effective Altruism] money, expending EA trust, and attitude towards the law.”
- “People repeatedly told him to step away from the single-owner LLC structure, countless lawyers advised him against it, and Sam promised that it’d be a holdover solution and then never tried to change it after.”
Bankman-Fried seems to still be the same person he was in 2018. Instead of learning from the lessons that drove employees to leave Alameda then, he seemed to have doubled down on them at FTX, reflecting his superhuman tolerance for risky and messy situations that frightened everyone around him.
According to the documents and interviews, the first two months of 2018 were traumatizing to many of the employees at Alameda. I learned that at least one employee continues to get physically ill when thinking about it.
Just when Alameda was starting to get the hang of its trading and accounting software, Bankman-Fried decided he wanted to deploy an automated trading “bot” that had been developed. Employees at the firm, battle weary from the previous two months, were pushing back hard on the idea.
Bankman-Fried was unfazed. Unilaterally, he decided to unleash the automatic trading bot, known as “ModelBot.”