Inside Sam Bankman-Fried’s $35 million crypto frat house in Bahamas

Sam Bankman-Fried has traded a luxury penthouse in the Bahamas for a decidedly different top-floor setting: a criminal courtroom in downtown Manhattan.

He’s roughly 1,100 miles away from the tropical paradise he called home until late last year, and is facing a potential lifetime in prison if convicted for financial crimes tied to the collapse of cryptocurrency exchange FTX, which was once valued at $32 billion.

Bankman-Fried, 31, is spending much of his time now on the 26th floor of 500 Pearl Street, one of two federal courthouses of the Southern District of New York. He sits just feet away from 12 jurors who will decide his fate.

Bankman-Fried, who faces seven federal fraud charges, has pleaded not guilty.

A big part of Bankman-Fried’s journey traces back to the $35 million Bahamian property he shared with nine people, including friends from high school, an ex-girlfriend, college roommates and top execs at FTX and sister hedge fund Alameda Research.

Many of his former bunkmates now comprise the prosecution’s star witness list. Gary Wang, the lesser-known co-founder of FTX and Alameda and a roommate at the Massachusetts Institute of Technology, took the stand last week and will appear again on Tuesday. Adam Yedidia, a senior FTX developer and also a roommate at MIT, testified last Wednesday and Thursday. And then there’s Caroline Ellison, who ran Alameda and had been Bankman-Fried’s girlfriend. She’s slated to appear on Tuesday.

The group was cliquey, and became even more intimate during the Covid outbreak, as the 20-somethings fled Hong Kong to ride out the pandemic in the Caribbean. They freely mixed work with pleasure, and some reports of their shared time together on the island of New Providence chronicle sexual explorations.

During the first week of Bankman-Fried’s criminal trial, prosecutors were focused on how Bankman-Fried paid for the dwelling worth tens of millions of dollars.

Lawyers for the U.S. Attorney’s office entered into evidence a series of photos featuring the penthouse condo in a building dubbed the “Orchid,” where Bankman-Fried and his fellow co-workers resided. The 11,500-square foot apartment overlooks the marina and the Atlantic Ocean.

The defense tried to strike some of the images, concerned that photos featuring yachts in the background might be mistaken for property owned by Bankman-Fried. The request was denied by Judge Lewis Kaplan.

Yedidia, the second witness called to the stand by the government, testified that Bankman-Fried’s crypto hedge fund ultimately paid for their opulent surroundings.

In his testimony, Yedidia recalled a group Signal thread labeled “People of the House,” which referred to Bankman-Fried’s $35 million penthouse. In a screenshot of a text exchange, admitted as evidence by the government, Bankman-Fried said he’d “been assuming that it’s basically just Alameda paying for it in the end.”

A superseding indictment claims Bankman-Fried misused billions of dollars worth of customer money for his personal benefit, including purchasing more than $200 million on upscale real estate properties in the Bahamas and making more than $100 million in campaign contributions for the 2022 midterm elections.

Another estimate by Bahamian lawyers claims Bankman-Fried and Ryan Salame, a former top FTX executive, spent $256.3 million to buy and maintain 35 different properties across New Providence — real estate that Bahamian regulators wanted to retrieve in FTX’s U.S. bankruptcy protection proceedings.

Separate to the criminal case, the bankruptcy estate of FTX has independently alleged that Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, “exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars.”

Lawyers representing FTX have sued Bankman-Fried’s parents in an attempt to claw back luxury property and “millions of dollars in fraudulently transferred and misappropriated funds.” The lawsuit goes on to claim that Bankman and Fried discussed with their son the transfer of a $10 million cash gift and a $16.4 million estate in the Bahamas.

“This is really just old fashioned embezzlement,” John Ray, FTX’s new CEO who previously led the Enron bankruptcy proceedings, previously told lawmakers on Capitol Hill. “This is just taking money from customers and using it for your own purpose. Not sophisticated at all.”

Ray said the company had “no record-keeping whatsoever.”

The Orchid is widely regarded as the crown jewel of the Albany, an oceanside resort that spans 600 acres and reportedly boasts a consortium of celebrity backers, including Tiger Woods and Justin Timberlake. Its ultra-rich residents ride around in golf carts, moving from their home to one of the many restaurants and then to the beach or padel courts, where they can play a sport that’s a mix of tennis and squash.

The penthouse had en suite bathrooms, walk-in closets, Venetian plaster walls and Italian marble floors, along with a balcony-lined perimeter with its own private spa, outdoor pool and jacuzzi.

In his new book, “Going Infinite: The Rise and Fall of a New Tycoon,” here’s how best-selling author Michael Lewis described the exterior:

“At night its penthouse was lit purple, and the purple light made it seem glamorous, and elicited envy even from those accustomed to being envied.”

Lewis depicts the interior of the luxury condominium as more of a “flophouse” with one wall “obscured by a row of computer monitors whose cords snaked across the marble like jungle vines.”

A CoinDesk journalist, who visited the apartment in September 2022, described the scene as a “cross between a luxury dorm room and a jury-rigged trading floor,” adding that the “curved marble living room was rimmed with computer desks, each supporting various configurations of conjoined monitors.”

One of Bankman-Fried’s iconic bean bags that he used for napping was apparently kept under the baby grand piano in the room that defense lawyers have compared to the common area of a dorm room.

Mark Cohen, Bankman-Fried’s attorney, said in his opening statement that his client was a “math nerd who didn’t drink or party.” Donning a glass of wine was tantamount to “an act of hedonism,” Lewis writes in his book.

As for the epic views, Lewis added that Bankman-Fried and his housemates “seldom so much as glanced” at them.

Outside of the Albany were six stadium-lit padel courts. Yedidia said it was there that he and Bankman-Fried spoke about concerns he had about the business.

During the summer of 2022, and while fixing a bug in FTX’s code base, Yedidia had discovered an $8 billion debt that Alameda apparently owed FTX.

Prosecutors asked why he was worried about the budget hole.

“Because if they spend the money that belongs to the FTX customers, then it’s not there to give the FTX customers should they withdraw,” Yedidia testified.

Near the little hut at the edge of the net, Yedidia asked his boss if things were OK. He was concerned because it “seemed like a lot of money” from FTX customers was at risk.

In June 2022, Yedidia submitted a report to Bankman-Fried on Signal that showed $8 billion in customer money held in an internal database tracking the cash wired to an Alameda account called “fiat at ftx.com” was missing.

While Bankman-Fried appeared “worried or nervous,” Yedidia said he trusted Bankman-Fried and Ellison to “handle the situation.”

Yedidia testified that he hadn’t talked to Bankman-Fried or seen him in person since November. The day before FTX filed for bankruptcy, Yedidia resigned after a fellow developer told him that Alameda had used FTX customer deposits to pay back creditors.