(San Francisco) There comes a point in the development of a new technology when the hype is so widespread that it passes for simple common sense. Lawyers, accountants and regulators are absent. Investors insist that entrepreneurs take their money. The world shudders on the threshold of change.
For dot-coms, it was 1999. For artificial intelligence, it was a little over nine months ago. For cryptocurrencies, it was in 2017.
Six years ago, Sam Bankman-Fried didn’t know much about alternative currencies. But he rightly bet that there was huge opportunity to capture a tiny portion of the millions of cryptocurrency exchanges. In the blink of an eye, he was assigned a value of $23 billion. Only Mark Zuckerberg has accumulated so much wealth so young.
The Facebook co-founder has his detractors, but he looks like Thomas Edison next to Bankman-Fried. Following a speedy trial in Manhattan federal court, the former crypto king, now 31, was found guilty Thursday of seven counts of fraud and conspiracy relating to his companies FTX and Alameda Research.
Bankman-Fried has partied with stars and bigwigs, distributed fortunes in looted funds to politicians and himself, been hailed as the next Warren Buffett, employed his friends and made them rich for for a time, was courted by the news media who published his most banal comments. For a while, everyone loved Sam Bankman-Fried – except, apparently, Sam Bankman-Fried.
“I am, and have been for most of my adult life, sad. This plaintive statement appears at the end of the testimony that Sam Bankman-Fried hoped to present to Congress last winter, before his arrest thwarted his plans. He had an idea in his head.
In photos from his golden years, Bankman-Fried always looked awkward, self-conscious and like he’d rather be playing a video game, even when Gisele Bündchen had an arm around him. Everyone insisted he was brilliant, the entrepreneur who would create the future. Maybe he knew more.
“Ethical behavior”
As journalists – and now prosecutors – have made clear, FTX and Alameda were run by a group of hapless young people who lacked the skills, maturity, and patience. Those who had a moral compass and sensed something was wrong quickly withdrew, leaving a hard core that drifted – or perhaps plunged – into trouble.
“When I started working at Alameda, I don’t think I would have believed you if you told me I would send false balance sheets to our lenders or take money from customers, but over time , I felt more comfortable with it,” Caroline Ellison, Bankman-Fried’s co-worker and sometimes girlfriend, testified during the trial.
PHOTO KARSTEN MORAN, THE NEW YORK TIMES
Sam Bankman-Fried’s ex-girlfriend and former business associate, Caroline Ellison, has pleaded guilty and cooperated with authorities in the case against the businessman.
When Ellison started working in Alameda, something called blockchain (blockchain) had to transform everything, in one way or another. Silicon Valley poured billions into crypto, looking for those, like Bankman-Fried, who got started early and seemed smart.
Sequoia Capital, a leading venture capital firm that has funded Apple, Airbnb, Instagram and WhatsApp, all but begged Bankman-Fried to take his money during the mad rush, when crypto was shiny and new. The founder of FTX did it. Sequoia then sponsored a very long tribute to Bankman-Fried by Adam Fisher, a longtime Silicon Valley writer who fell in love with the man his fans called SBF.
“After my interview with SB F., I was convinced: I was talking to a future billionaire,” Fisher writes. And added: “FTX’s competitive advantage? Ethical behavior. »
Less than two months after the interview was published, FTX collapsed. Sequoia added a note at the beginning of the article, stating that this was an “unexpected turn of events.” She later removed the article and canceled her $214 million investment in the exchange. Sequoia and Fisher declined to comment.
Effective altruism
The central myth of Silicon Valley is that computer scientists are here to save the world. If they become crazy rich in the process, that proves how great their idea was.
Such was the appeal of Elizabeth Holmes and her blood-testing company, Theranos. She was young, feminine and attractive, which made her look good on magazine covers. But the idea that really propelled her to fame and fortune was that she was a kind of high-tech Florence Nightingale, working through the night to refine medical technology that would improve people’s health. (In reality, its technology didn’t work and put its customers at risk by giving them unreliable results.)
FTX allowed people to bet on cryptocurrencies. It was actually a casino. It’s difficult for even the most sympathetic journalist to portray a casino as a savior of humanity, so all the stories revolved around Bankman-Fried himself.
He calculated the probabilities of everything: he thought there was a 5% chance that he would become president of the United States. He believed he would help humanity by making his fortune and then giving it all away, a philosophy known as effective altruism. The details didn’t matter. As explained in a flattering portrait of Forbes in 2021: “He is a mercenary, dedicated to making as much money as possible (he doesn’t really care how) only to be able to give it away (he doesn’t really know to whom or when). »
During the trial, it emerged that Bankman-Fried had spent $15 million on private plane trips. He never did much to hide the fact that he was living with some of his FTX buddies in a $35 million penthouse. The question of whether these young people should be sleeping on the beach instead of living the high life if they truly followed the doctrine of effective altruism never seemed to be asked.
In Sequoia’s glowing profile, Bankman-Fried said: “I am very skeptical about the effectiveness of altruism. I am very skeptical of books. I don’t mean to say that no book is worth reading, but I actually believe something pretty close to that. » He didn’t like movies either.
Moral compass
It’s impossible to read the sad saga of Bankman-Fried 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 the same.
As I read Bankman-Fried’s story, the historical drama “A Man for Eternity,” which was once a classic for high school students, kept coming to mind. It’s the story of a man who knows right from wrong and a man who doesn’t. Richard Rich is a bit like Bankman-Fried: a young man with excessive ambitions and without scruples. He begged Thomas More to give him a place at court. More told him he would be a good teacher.
“Who would know if I am a good teacher? “, Rich asks contemptuously.
“You, your students, your friends, God,” replies More. It’s not a bad crowd. »
Rich rejects the quiet life, betrays More and is rewarded with a post in Wales. The spectator understands that he is losing his soul. Bankman-Fried rejected the quiet life, betrayed almost everyone he knew, and ended up without wealth or Wales.
This article was published by the New York Times.