In/effective altruism made us feel awful

Here we are, looking through a Western cultural lens that is full of people continually wooed by the shiny disco ball that ultimately distracts us from our own lives. That shiny object can also come in the form of people and it often does. The actuality of the person that stands before us, their words and actions are seen through the lens of status, wealth, privilege and self professed importance. Will society as a whole wake up to a clear and obvious understanding that money and status have nothing to do with believability, reliability or in fact, experience and professionalism? Enter the case of MIT graduate, crypto-trader and heralded philanthropist, Sam Bankman-Fried (SBF). SBF, fairly recently, was the wealthiest person under 30, a classic media darling, gracing covers of Fortune and Forbes 400 as recently as August 2022. He had a real rapport with journalists, they say he was disarming with his swagger, casual clothing and Einstein dishevelled-ness. He was a formidable tech guru that fronted media, answered the questions and appeared impressive and relatable. But, the media were duped. Investors were had. We were all had, into the billions. It’s an awful feeling.

Those same profile journalists, skilled and leading with a bipartisan angle, failed to ask SBF some relatively simple investigative questions about his business acumen, he built and ran the largest crypto-trading exchange company FTX. Alongside that falsely valued company, he also owned and operated, Alameda Research, a crypto-hedge fund. SBF was without doubt funneling money from FTX investors directly to himself through Alameda, reportedly at this stage, in the $10 billion range. Stealing from Peter to pay Paul really fits here.

The spectacular fall from titan status was a 2 step dance. The first step was a leaked balance sheet that showed that Alameda Research was over exposed with FTT tokens as their main source of solvency, scary evidence that Alameda and FTX were tightly linked. That caused a run on FTT tokens instigated by Binance, a competitor and rival crypto exchange, dumping their FTT stock and FTX lost a staggering $6 billion in value overnight. Binance (second largest crypto exchange) founder put in an offer for FTX and reneged on the deal when obvious shortcomings and failed accounting came to light.

One week following the collapse of FTX, SBF was mostly tweeting unintelligible messages. A twitter thread never answered the burning question from FTX users, what were you thinking using FTX deposits to bail out Alameda (the hedge fund you also ran). This looks like plain and simple fraud, a scam, the ultimate Ponzi scheme.

Over at Vox, Kelsey Piper, who had previously written a profile on SBF, got in touch with SBF via Twitter. He was surprised to receive a response, afterall, SBF is being heavily investigated by Securities Commission and other regulators, of which, he has no time for but, then he does. Piper said he was mostly appalled by SBF’s answers. The things he claimed to care deeply about before the FTX collapse are obviously not in his priority list right now. There were so many red flags retrospectively, like when Alameda was incorporated in the Bahamas and he took up residency there with some friends in a penthouse valued at $40m. That same residency was literally up for sale following SBF applying for bankruptcy for FTX.

All the red flags, all the alarms were going off and no-one saw or understood any of it or not enough to hold anyone accountable. SBF was waving an altruistic flag, spruiking a philosophy “effective altruism” he literally did not believe in and everyone fell for it. Until his main competitor and rival, Changpeng Zhao (CZ), CEO of giant crypto exchange Binance called BS.

There are 2 schools of thought regarding SBF. He is either super naïve or a complete fraudster. He is a seemingly charming, nice person, according to Derek Thompson from In Plain English podcast. Thompson had interviewed Sam on his podcast and although a sceptic of cryptocurrency, he believed that there was some legitimacy to the FTX. Thompson interviews William Cohan about the FTX collapse and SBF’s demise, he says this is a problem with CEO celebrity and a lack of experience. He describes SBF as a cowboy living it up in the Bahamas with his friends playing video games in the penthouse he owns in a tax free haven, it’s laughable. Cohan believes that through the bankruptcy process all will be revealed but it will be long and arduous. Sigh.