There comes a time in the development of a new technology when hype is so common that it passes for common sense. Lawyers, accountants and regulators are nowhere to be found. Investors insist that businessmen take their money. The world trembles on the brink of change.
For dotcoms, the moment was 1999. For artificial intelligence, it was just over nine months ago. For cryptocurrencies, it was 2017.
Six years ago, Sam Bankman-Fried knew little about altcoins. But he correctly bet that there were big opportunities in taking a small piece of millions of cryptocurrency trades. In the blink of an eye, he was praised for being worth $23 billion. Only Mark Zuckerberg had accumulated so much wealth at such a young age.
The Facebook co-founder has his critics, but he looks like Thomas Edison next to Bankman-Fried. After a quick trial in Manhattan federal court, the former cryptocurrency king, now 31, was found guilty Thursday of seven counts of fraud and conspiracy involving his companies FTX and Alameda Research.
Bankman-Fried once partied with stars and bigwigs, doled out fortunes in looted funds to politicians and himself, was hailed as crypto-sam-bankman-fried-interview/” title=”” rel=”noopener noreferrer” target=”_blank”>the next Warren Buffett, He employed his friends and made them rich for a time, he was courted by the media who printed his most banal comments. For a while, everyone loved Sam Bankman-Fried, with the apparent exception of Sam Bankman-Fried.
“I am, and for most of my adult life have been, sad.” That plaintive statement appears at the end of testimony Bankman-Fried hoped to give Congress last winter before his arrest derailed his plans. He was right.
In photographs from his heyday, Bankman-Fried always looked uncomfortable, embarrassed and like he’d rather be playing a video game. even when Gisele Bündchen had her arm around him. Everyone kept insisting that he was an extraordinary genius, the entrepreneur who would create the future. Maybe he knew better.
As journalists (and now prosecutors) have made clear, FTX and Alameda were run by a group of hapless young people who did not have the necessary skills, maturity or patience. Those who actually had a moral compass and sensed something was wrong soon split up, leaving a core group that drifted (or perhaps plunged) into trouble.
“When I started working at Alameda, I don’t think I would have believed him if he had told me he would send false balances to our lenders or accept money from customers, but over time it was something I became more comfortable with.” Caroline Ellison, a colleague and sometime girlfriend of Mr. Bankman-Fried, testified during the trial.
When Ellison started working at Alameda, something called blockchain was going to transform everything, in some way. Silicon Valley poured billions into cryptocurrencies, seeking out those like Bankman-Fried, who got there early and seemed smart.
Sequoia Capital, a major venture firm that has funded Apple, Airbnb, Instagram and WhatsApp, all but begged Bankman-Fried to take its money during the mad rush when cryptocurrencies were new and shiny. The founder of FTX did it. Sequoia then commissioned a very long celebration of Mr. Bankman-Fried from Adam Fisher, a veteran Silicon Valley writer who fell head over heels in love with the man whose fans called him SBF.
“After my interview with SBF, I was convinced: I was talking to a future billionaire,” Fisher wrote. He added: “FTX’s competitive advantage? Ethical behavior.”
Less than two months after the interview was published, FTX collapsed. Sequoia put a note at the top of the story saying this was an “unexpected turn of events.” He later deleted the story and canceled his $214 million investment in the exchange. Sequoia and Fisher declined to comment.
The central myth of Silicon Valley is that techies are here to save the world. If they get incredibly rich in the process, well, that just shows how great their idea was in the first place.
This was the appeal of Elizabeth Holmes and her blood testing company, Theranos. She was young, feminine and attractive, which looked good on magazine covers. But the notion that really propelled her to fame and fortune was that of being a kind of high-tech Florence Nightingale, working all night to refine medical technology that would improve people’s health. (The truth is, her technology didn’t work and put customers at risk by providing unreliable results.)
FTX allowed people to bet on cryptocurrencies. It was, in essence, a casino. It is difficult for even the most sympathetic journalist to present a casino as a savior of humanity, so the focus of the stories was always on Mr. Bankman-Fried himself.
He calculated the odds of everything: He thought there was a five percent chance of becoming president of the United States. He thought he would help humanity by making a fortune and then giving it all away, a philosophy known as effective altruism. The details didn’t matter. like flattery crypto/?sh=4d4795813f4d” title=”” rel=”noopener noreferrer” target=”_blank”>Forbes Profile Put it in 2021: “He’s a mercenary, dedicated to making as much money as possible (he doesn’t really care how) just so he can give it away (he doesn’t really know to whom or when).”
During the trial, it emerged that Mr Bankman-Fried had spent $15 million on private jet travel. He never did much to hide the fact that he lived with some of his FTX friends in a $35 million penthouse. The question of whether these young people should sleep on the beach instead of living the good life if they truly followed the doctrine of effective altruism never seemed to arise.
Bankman-Fried was happiest playing video games, something he did as often as he could. Even while he was talking to Sequoia over Zoom about his grand plans to create a financial super app within FTX and therefore destroy all the banks in the world, he was playing League of Legends.
Time and time again he conveyed his disdain for what he was doing and seemed to implore authorities to take a closer look at his companies. Take, for example, this statement He did it in August 2021 in one of his many interviews: “If there is something we are doing that a regulator doesn’t want, they don’t have to sue us. Just contact us and tell us what you want.”
The magic of starting a company just as a boom begins is that the bar is low. When Sequoia was looking for a crypto exchange to invest in, FTX was “Goldilocks perfect.” according to your profile. One big reason: “There was no concerted effort to circumvent the law.” It’s hard to find a bar much lower than that.
Mr Bankman-Fried tried to warn everyone.
“For the number of Ponzi schemes, there are a lot more in crypto, a little bit per capita, than elsewhere.” he told the Financial Times in May 2022.
I do not care. Investors, customers and journalists saw the genius they were told was there. And if there was even the slightest doubt, Bankman-Fried had an ace: her parents were Stanford law professors.
“He has two parents who are compliance attorneys,” said the “Shark Tank” star Kevin O’Leary, who was both a promotional spokesperson for FTX and an investor in it. “If there’s ever a place I can be and not get in trouble, it’ll be at FTX.”
O’Leary may not have known that Joseph Bankman, a tax law specialist and clinical psychologist, and Barbara Fried, a professor emeritus at Stanford Law School, had their attention elsewhere. According to a lawsuit filed by the bankrupt FTX, his son gave them, through FTX, a $16 million home in the Bahamas, $10 million in cash and many other things. The couple’s lawyers called the claims “completely false.”
In that glowing Sequoia profile, Bankman-Fried said, “I’m very skeptical about books. “I don’t want to say that any book is worth reading, but I actually believe in something pretty close to that.” He didn’t like movies either.
It is impossible to read Mr. Bankman-Fried’s sad saga without thinking that he, and many of those around him, would have been better off if they had spent less time in math camp and more time in English class. Sometimes in books, characters find their moral compass; In the best books, the reader does too.
While reading about Bankman-Fried, the historical drama “A Man for All Seasons,” once a staple for high school students, came to mind. He is about a man who knows right from wrong and a man who doesn’t. Richard Rich is a bit like Mr Bankman-Fried: a young man with great ambitions and no scruples. He begs Thomas More for a place at court. More tells Rich that he would be a good teacher.
Who knew if he was a good teacher? Rich asks dismissively.
“You, your students, your friends, God” More answers. “Not a bad crowd, that one.”
Rich rejects the quiet life, betrays More and is rewarded with a position in Wales. The spectators imply that he loses his soul. Bankman-Fried rejected the quiet life, betrayed almost everyone he knew and ended up without wealth or Wales.
