From Puck, January 2:
S.B.F.’s $3 Billion ComplexifierSam Bankman-Fried’s prescient investment in Anthropic—now worth multiple billions—might help make his defrauded FTX investors whole. How will this impact his parents? His narrative? Or even his sentencing?
In a watershed year for Silicon Valley politics, the overarching theme of 2023 was the backlash to liberalism. It manifested seemingly everywhere, from the fall of Sam Bankman-Fried to the rise of conservative megadonors, like Jan Koum, and conservative influencers, like David Sacks, who are playing for keeps in 2024. Of course, barring some unforeseen blockbuster news event, the presidential election will be the biggest story in the tech money world. And while the primaries seem to be less exciting than we hoped, the general election is actually poised to be much more exciting, given the potential impact of third-party candidates, the legal fracas surrounding Trump, the R.F.K. X-factor, and more.
So with 2024 finally upon us, here are my five predictions for Silicon Valley politics and philanthropy in the year ahead…
I. FTX Drops Litigation Against Michael Kives and S.B.F.’s Parents
During the lead-up to the trial of Sam Bankman-Fried, in October, one major subplot coalesced around whether his legal team would be allowed to point out the success of some of his private investments. Prosecutors, of course, aimed to cast Sam as a profligate spender who made insanely risky investments using customer funds. Sam’s lawyers wanted to counter that narrative by pointing to Sam’s investments that had turned out quite well, especially after the crypto market began to recover from its mid-2022 crash. In the end, Judge Lewis Kaplan essentially ruled that the economic outcome of those investments was irrelevant to the question of whether Sam absconded with customer funds.
Since then, of course, Sam’s investing record has looked more and more prescient—so much so that FTX debtors might actually be made whole. That’s mostly due to his multi-hundred-million-dollar bet on Anthropic, the effective altruist-aligned A.I. company that, over the course of 2023, raised money from Amazon and Google and is on the cusp of reaching a valuation of $18.4 billion. That’s almost five times its valuation at the beginning of 2023. (FTX and Alameda’s stake in the company is probably worth around $3 billion or $4 billion today.)
FTX’s lawyers at Sullivan & Cromwell claim to have recovered about $7 billion in liquid assets since the collapse of the crypto futures exchange. But that still leaves a hole, which is why FTX is pursuing litigation against entities they claim haven’t returned customer money, including investor Michael Kives’ firm, K5 Global, and S.B.F.’s parents, Joe Bankman and Barbara Fried. But what happens if S.B.F.’s Anthropic investment fills the gap?
Of course, no credit would go to Sullivan & Cromwell, but at that point the white-shoe law firm would have an excuse to declare victory and drop the litigation against S.B.F.’s parents and Kives, or settle it for some smaller amount. Working against this prediction: Sullivan & Cromwell is being paid handsomely for all this work, and FTX is incentivized, as a fiduciary, to maximize returns for all debtors....
....MUCH MORE
