Happy Wednesday, and welcome back to Dry Powder.

Almost since the moment of S.B.F.’s arrest, I’ve been fascinated by the role that his father, Joe Bankman, and mother, Barbara Fried, have played in their son’s legal defense. All signs from S.B.F. indicate that money should be tight for legal costs, but somehow, his two Stanford Law School professor parents have hired some of the best lawyers in the country. How? Today, in the fifth installment of The S.B.F. Chronicles, some fresh reporting and revelations around this mystery.

But the Substack post also contained some tantalizing clues as to what may really be going on in S.B.F. land these days. To wit, S.B.F. wrote that he had offered to pledge “nearly all of [his] personal shares” in Robinhood, the online brokerage, to FTX customers but would contribute even more—100 percent of those shares—if, and this is the interesting part, “the Chapter 11 team would honor my D&O legal expense indemnification.” In other words, it appears S.B.F. is virtually on his own when it comes to paying his legal bills.

No wonder he wants to get his hands on those Robinhood shares. S.B.F. bought the shares in Robinhood in May 2022 via a loan he received from Alameda Research. (According to bankruptcy court filings, S.B.F. received a $1 billion loan from Alameda that has not been repaid and may never be.) His Robinhood shares are still worth roughly $450 million. But in December, John Ray III, the C.E.O. of the bankrupt FTX/Alameda estate, filed a motion to freeze that asset, among others, for the benefit of the estate and its creditors. S.B.F. countered with a motion suggesting he needed the money to pay his legal bills, among other things. The Substack post is just the latest entreaty.

Obtaining and then dispersing those assets isn’t up to S.B.F., of course. And, on January 4, the Justice Department seized S.B.F.’s Robinhood shares, making moot the question of whether S.B.F. can get his hands on them to subsequently make his former customers whole. He cannot. But this little detail in the manifesto seemed extremely revealing. Not only does it suggest that Ray is not honoring FTX’s indemnification of S.B.F. for legal fees, it also implies that money is tight for the family’s legal costs, which are just now ramping up. S.B.F.’s trial, after all, is not until October.

The judge agreed. However, motions filed last week with Judge Kaplan, in the Southern District of New York, by a large group of news organizations, and represented by Davis Wright Tremaine, asked Kaplan to un-redact those names in the interest of the public’s First Amendment right to know who they are. Judge Kaplan would be smart to honor that request at the next court hearing. (DWT represents Puck in some matters.)

Then there is the question of how S.B.F. and his Stanford Law School professor parents, Joe Bankman and Barbara Fried, are paying for his costly legal defense, which is being handled by criminal defense attorney Mark Cohen, at the law firm of Cohen & Gresser, in New York. Also, how is Joe Bankman paying for Sean Hecker, the criminal attorney he hired on January 13, to represent him?

The extent of Bankman’s involvement in FTX remains unclear and is still unfurling. According to Reuters, Bankman “closely advised” his son from the start of Alameda Research, S.B.F.’s hedge fund, in 2017, and made introductions for S.B.F. to Bankman’s connections in Washington D.C. And, as Anthony Scaramucci told me, Bankman called The Mooch in early November to see if he could help S.B.F. out of his financial morass prior to the November 9 bankruptcy filing. It seemed to be an amorphous role, perhaps befitting a company run in many atypical ways.

The Mooch flew down to the Bahamas for the day, but it was quickly apparent to him that things were far out of control by that point and he could not help S.B.F., so he flew back to New York City. In Davos this week, the Mooch said he felt betrayed by S.B.F., whose FTX Ventures bought a 30 percent stake in the Mooch’s hedge fund last September for $50 million. “If anyone has read Dante’s Inferno, you know what the ninth circle of hell is reserved for,” The Mooch said. “It’s betrayal. Who lives there on a frozen lake with the devil? It’s Judas and Brutus.” The Mooch told me recently that he would be trying to buy back the bankrupt estate’s stake in his hedge fund, SkyBridge Capital.

This person described the S.B.F. parents as serene and intentional. Barbara Fried was “very soft spoken” and “calm.” In fact, the “the level of calmness” on display by Bankman and Fried “was almost eerie. Everybody’s calm. You’ve seen Sam’s interviews—he’s calm.” Bankman, this person continued, was charming and his affection for his sons was real and evident. (Gabe Bankman-Fried, Sam’s brother, was essentially his man in Washington and oversaw his political philanthropy.)

Joe explained that he believes what has happened to his son is, as my source recalled him saying, “tragic.” He also relayed that Joe believed Sam had made mistakes, but that he and Barbara loved their son and that they were “going to help him explain what happened.” This person also indicated that S.B.F.’s parents aren’t just sticking beside him on account of unconditional love. They believe in his innocence. Joe explained that he was “saddened” by the whole thing and that his son had never intended to do anything wrong—essentially conveying the same points that S.B.F. has made on Substack, on Twitter, and to my partner Teddy Schleifer.

Joe also made two other fascinating comments to this person. First, he suggested that FTX’s bankruptcy filing may have been, in his view, premature. S.B.F. has, of course, said and written the same thing. According to my source, the family blames Sullivan & Cromwell, the Wall Street law firm, which not only provided legal advice to FTX and Alameda and to S.B.F. prior to the bankruptcy filing but also managed somehow to be retained as counsel to the debtor as part of the bankruptcy.

That may be changing. Last week, the U.S. Trustee filed a motion to remove Sullivan & Cromwell as the attorney for the debtor. The judge will decide the retention motions on Friday. A spokesman for Sullivan & Cromwell pointed me to recent court filings that oppose the U.S. Trustee’s motion, including a statement from the creditors’ committee filing in support of the ongoing retention of S&C, claiming that S&C’s work in the cases so far has been “integral.” Another “omnibus” motion in support of the retention of several professionals, including S&C, Alix Partners and Quinn Emanuel, observed that S&C’s role in contacting federal prosecutors, the S.E.C., and the Commodities Futures Trading Commission was “of critical importance” in leading to S.B.F.’s indictment, his arrest and his extradition to the United States. The S&C spokesman also pointed me to the fact that S.B.F. made the decision to hire John Ray and that it was Ray’s decision to make the FTX/Alameda bankruptcy filings.

Second, my source continued, Joe said the family was going to “spend all their money” to defend Sam, before explaining that there was little money left—a notion that Wall Street Journal reporter Justin Baer also shared in a December podcast with a colleague. My source said that Joe explained that about a year ago, S.B.F., or entities he controlled, made a loan, or a gift, of some $10 million worth of FTT tokens—which were worth $50 per token a year ago and $2.40 now, a decline of 90 percent—or other FTX- or Alameda-related assets to his parents, and that they subsequently sold 70 percent of the assets for $7 million. “That’s how they are going to pay for the first several months of his defense, until the money runs out,” this person told me. Risa Heller, a spokesperson for Bankman and Fried, firmly rebutted this assertion. “In short,” she told me, “Joe and Barbara never received any tokens or any loans from their son.” The often-loquacious S.B.F. did not respond to my request for an interview. (Heller has represented Puck.)

We’re obviously still in the earliest innings of this unfolding drama, and one that has been dominated by the sparks of S.B.F.’s media dance rather than the slow burn of the legal investigation. The good news is that, sooner or later, we’ll know everything: Whether S.B.F., or entities related to him, gave or loaned his parents $10 million worth of FTT tokens, or not—or whether S.B.F. sought to intentionally deceive his customers, or not, or whether it was all just one huge naive mistake by a boy genius, or not. Eventually, the facts will all come out one way or another. Whether Judge Kaplan appoints an examiner who will spend months and millions of dollars, or whether the fleeced creditors take it upon themselves to get to the bottom of what (or was not) perpetrated here, the truth will come out.