Research & Analysis

SBF’s Father Joseph Bankman Taught Peter Thiel, Orlando Bravo at Stanford

"I get to know them as individuals"

In the “hayday” of FTX — before the bankruptcy, before the arrests, and before it was described by prosecutors as “one of the biggest financial frauds in American history” — then-CEO Sam Bankman-Fried’s father, Joseph “Joe” Bankman, was much more than just a “proud dad.”

He was, according to The Wall Street Journal, “a paid employee of the company for almost a year,” who “joined his son in meetings with Washington policy makers, expanded its philanthropic endeavors and helped connect his son to at least one major investor.”

Furthermore: “Both his parents, as Mr. Bankman-Fried would note in meetings with Washington policy makers, are professors at Stanford Law School,” to again quote the WSJ. “Their reputations were a credential to their son as he grew his crypto empire, even to those inclined to see little value in the industry.”

It’s beyond obvious at this point that SBF was more “made” than “self-made,” and that anyone trying to understand the real story of where he came from therefore needs to look at his early days and background. That would of course include his family connections — first and foremost those of his parents.

One almost completely overlooked source of insight in this regard is an interview that Joe Bankman himself gave with The FTX Podcast this August, just months before the company imploded. While it has been scrubbed from numerous places, it is (for now) still available on Spotify.

The episode description reads:

Welcome to the 118th episode of the FTX Podcast with special guest Joe Bankman and your host Tristan Yver!

What an opportunity it is to have a conversation with Sam’s father! After graduating Yale Law School in 1980 and then working at a Law Firm for four years, Joe became a professor at USC. Joe’s career has given him a unique inside look at the mechanics of social change in the USA and positioned him to be at the heart of business transactions – with his specialty in the field of tax. Joe’s accumulation of knowledge, networking, and expertise has great utility for FTX’s charitable initiatives and navigating regulatory relations for the crypto industry.

Thank you so much Joe! Your time, energy, and insight are appreciated!

Among the more interesting parts of the discussion is when Bankman discusses the (soon to be) powerful and influential individuals that he is able to meet and “get to know” as a professor at one of the most prestigious law schools in America — undoubtedly part of his “accumulation… of networking” described above.

One such example: high ranking federal judges.

“I’ve been so lucky, because at USC and at Stanford I get all of these brilliant students each year,” Bankman said on the podcast (starting around the 29 minute mark).

“And a lot of them have gone on to things that most of your listeners aren’t gonna—or viewers— aren’t gonna know. Federal judges for example. Which is a real big deal kind of job; to be, say, a circuit court judge. But the average person couldn’t name a circuit court judge. Right? So, one step below the Supreme Court, but not someone you’re gonna know.”

Another example: future billionaires — at least one of whom is linked to the early days of the “effective altruism” (EA) movement, and another that went on to heavily fund and promote the multi-billion dollar crypto scheme ostensibly headed by Bankman’s son, which, in turn, funneled money to EA organizations and “EA-approved charities” via The FTX Foundation.

Peter Thiel

“Probably the best known student” that Joe Bankman had, he said, was Peter Thiel, who got his law degree from Standford in 1992.

“Peter is famous for saying education’s a waste, although I think I can reveal that he once told me that my class was his most valuable, because he was able to put a lot of his Paypal stock in an IRA, and shield it from taxation.”

“That’s an entirely legal move, by the way,” Bankman added. “Many people have done it. I think by now this is a known fact about Peter.”

Indeed, a 2021 report by ProPublica entitled Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank documented this strategy, although Bankman is not named.

“Roth IRAs were intended to help average working Americans save,” reads the subtitle, “but IRS records show Thiel and other ultrawealthy investors have used them to amass vast untaxed fortunes.”

Quoting other tax experts, ProPublica writes:

Victor Fleischer, a tax law professor at the University of California, Irvine who has written about the valuation of founders’ shares, read the PayPal filings at ProPublica’s request. Buying startup shares at a discounted $0.001 price with a Roth, he asserts, would be indefensible.

“That’s a huge scandal,” Fleischer said, adding, “How greedy can you get?”

Warren Baker, a Seattle tax attorney who specializes in IRAs, said he would advise clients who are top executives working at a startup not to purchase founders’ shares with a Roth to avoid accusations by the IRS that they got a special deal and undervalued the shares. Baker was speaking generally, not about Thiel.

“I would be concerned about the fact that you can’t support the valuation number as being reasonable,” he said.

Thiel has historically been linked to the “effective altruism movement,” whose fingerprints are all over SBF’s origin story.

In 2013, while SBF was still in college, Thiel was one of the four keynote speakers at the first-ever Effective Altruism Summit.

The other three?

  • Peter Singer, who is cited as the primary philosophical influence for SBF and his apparent handler, EA co-founder William MacAskill
  • Jaalinn Tallinn, another tech billionaire that reportedly went on to give SBF and his hidden co-founder(s) at Alameda a critical infusion of tens of millions of dollars a few years later
  • Holden Karnofsky, co-founder of Open Philanthropy and GiveWell, two of the most influential EA organizations

At the following year’s EA Summit, Peter Thiel was reportedly the sole keynote speaker.

Thiel has been characterized by Fortune as “the don” of the so-called Paypal Mafia, of which fellow billionaire Elon Musk is arguably the most famous member.

Musk himself spoke on a panel at EA Global 2015, and recently described EA co-founder William MacAskill’s book as “a close match” for his “own philosophy.”

Documents made public earlier this as part of Musk’s lawsuit with Twitter revealed that MacAskill had a direct line to Musk, and was personally lobbying the billionaire to make his twitter deal a “joint effort” with SBF.

Orlando Bravo

Thiel was not the only future billionaire that Joe Bankman “got to know” at Stanford Law School. Another was Orlando Bravo, co-founder and managing partner of one of the largest private equity firms in the world, Thoma Bravo.

“Orlando Bravo of Thoma Bravo was a student of mine,” he said on the podcast. “And is still— and is now a good friend. We’ve reconnected, uh, through cryptocurrency and FTX.”

Bravo was a “wonderful student […] who actually came to me for independent study, pitching business ideas,” Bankman continued. “And let’s just say that the ideas that he finally came up with were much more successful than some of the early ideas he and the other student pitched to me.”

“Sometimes there’s just the most brilliant students,” he explained a moment later, “and they just never talk. They never talk to you. So maybe they write a fantastic exam, but they have kind of better things to do than talk to their professor. I never know them, really. And sometimes there are people like Orlando who I really get to know.”

It was this connection that reportedly landed FTX one of their “largest backers.” The Financial Times reports that a “surprise phone call” from Bankman is what “launched private equity investor Orlando Bravo into becoming one of the most prominent and vocal supporters of Sam-Bankman Fried and his crypto trading firm FTX.” Per the FT:

Bankman told Bravo his son was looking for guidance on philanthropic projects in Miami to further his “effective altruism” mission. Only after they spoke did Bravo learn that Bankman-Fried was also in the process of raising a $US900 million Series B funding round at a $US18 billion valuation, with a who’s who of investors including Sequoia Capital, BlackRock and SoftBank. He quickly called Bankman back seeking an introduction and a way into the deal, which was progressing quickly and would be the largest capital raising in crypto exchange history.

When Bravo and a partner, Tre Sayle, began due diligence for the funding round, they were taken aback by FTX’s numbers. The two-year-old start-up led by a relatively small staff of young traders was on course to earn over $US200 million in operating profit for the year, unprecedented margins for an early-stage growth company that would normally be losing money. Bravo was blown away. Thoma Bravo invested more than $US125 million in the round in June 2021, becoming one of FTX’s largest backers.

Bravo did, indeed, become “one of the most prominent and vocal supporters of Sam-Bankman Fried and his crypto trading firm FTX.” In addition to promoting the company in various media interviews – such as this one with Bloomberg, where he called it a “phenomenal trading platform” (“we believe it’s the best”) – Bravo was also “regularly posting bullish comments about FTX and bitcoin on his Twitter account and speaking at a major crypto conference earlier this year,” to quote The Wall Street Journal.

Some examples:

In September, just weeks before the company collapsed, FT interviewed Bravo and reported that he was “disappointed to find that ethical standards in parts of the crypto industry are not as high as in private equity,” and that “his firm is pausing investments in other crypto companies” – emphasis on “other”:

However, he said, the firm would “certainly look at” putting more money into FTX if it held another funding round. The Bahamas-based crypto company was going to be “a big winner”, he said, describing 30-year-old Bankman-Fried as “one of the best entrepreneurs” he had come across. 

After FTX imploded, The New York Post reported on “an unusual call with investors” in which Orlando Bravo “apparently felt he had some explaining to do.” According to one of their sources, some investors on the call were “in disbelief that a firm of Thoma Bravo’s sophistication” – one that had “earned a reputation as a conservative tech investor, mainly betting on less-sexy data and business software companies” – would “put millions to work in an investment where there wasn’t a board or even a CFO.”

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