If there were any doubts about Sam Bankman-Fried’s strategic thinking – assuming the bankruptcy filing could be ignored, the odd tweetand the billions of dollars in missing client assets – those doubts were surely evaporated after midnight Wednesday, when the fallen billionaire opted to DM with a Vox reporter to discuss his beleaguered crypto exchange FTX, providing answers with a level of candor that would make many lawyers vomit.
The 30-year-old is experiencing a virtually unprecedented meltdown. In quick succession, he had gone from MIT prodigy to millionaire to billionaire to global crypto figurehead, only to have it all vaporize overnight. He doesn’t seem to be taking his fall well.
Last summer, Bankman-Fried outlined his ethical framework to Vox reporter Kelsey Piper, telling her that unethical conduct was not acceptable, even in the service of the “greater good.”
In their conversation Wednesday morning, Piper asked him if he was sticking with it. “Man, all the bullshit I said,” he replied. “That’s not true, not really.”
Ethics, he explained, are not as important to a person’s public reputation as their success. The worst place to be, he said, is both being “incomplete” and “losing”.
“I can see why you haven’t given that answer in interviews,” Piper said of the new frame.
Bankman-Fried replied, “heh.”
Wednesday, the thirties tweeted that he had not wanted his comments made public, saying he believed he was talking to Piper privately as a “friend”. He added that “some of the things I said were thoughtless or too strong”. (Piper disputed that she and Bankman-Fried were friends and said he did not ask for his comments to be confidential.)
Investigations into FTX are ongoing in the United States and the Bahamas, where the company is based, although Bankman-Fried, whose parents are both professors at Stanford Law School, has not been charged with any crime. He did not immediately respond to a request for comment.
This week, the former billionaire was also hit by a federal lawsuit seeking class action status in Miami District Court, which alleged FTX engaged in a ‘fraudulent scheme’ that caused more than $11 billion. dollars in consumer damage. Celebrities such as Tom Brady, Naomi Osaka, Gisele Bundchen and shark tank Judge Kevin O’Leary was also named as a defendant. The lawsuit accused FTX of using the celebrities “to raise funds and entice American consumers to invest…pouring billions of dollars into the [d]responsive FTX platform to keep the whole system afloat.
The chaos at FTX moved quickly. Below are five of this week’s biggest takeaways.
1. Bankman-Fried regrets filing for bankruptcy.
“I screwed up,” he admitted to Vox. “Big…several times.” But perhaps “my biggest bullshit,” he said, was filing for bankruptcy after FTX failed to secure a bailout, leaving it on the brink of collapse. Around the same time, Bankman-Fried was removed as CEO, and the new regime, he claimed, “is trying to burn everything to ashes out of shame”. If he had just waited another month, he grumbled, he might have been able to unblock the withdrawal process and make the customers whole. Now Bankman-Fried is trying to raise $8 billion to save FTX. The obvious question: who would eventually hand over this money? “There’s something about falling down,” he said. “There are people who know what it is and want to do for someone else what no one has done for them.”
2. His philanthropic persona was at least partially fake.
Bankman-Fried spoke endlessly of the philanthropic movement known as effective altruism, which advocates working to “help others” in the most efficient and productive way possible. It is similar to, but in some ways distinct from, classical utilitarianism. The fallen billionaire admitted to Vox that some of his public statements about ethics were little more than public relations nonsense. “I feel bad for whoever got screwed over by this,” he said, referring to “that stupid game we woke westerners up playing where we say all the right shibboleths so everybody like us”.
3. Bankman-Fried admits his work with regulators was a joke.
The former FTX executive had cultivated connections in Washington, testifying before Congress and speaking with regulators and lawmakers. Turns out it was all a sham. His real opinion, according to Wednesday’s interview: “Fuck regulators.” According to Bankman-Fried, bureaucrats are unable to tell good actors from bad ones, and not just in the crypto world. The Office of Foreign Assets Control, responsible for enforcing sanctions, he said, “is the greatest threat” to the United States losing its superpower status. Even the Food and Drug Administration is not helpful, he argued. After the publication of the Vox article, Bankman-Fried returned to some of his comments on Twitter. “It’s *really* hard to be a regulator. They have an impossible job: to regulate entire industries that are growing faster than their mandate allows,” he wrote. “And so often they end up being mostly unable to police as well as they ideally would…Even so, there are regulators who have impressed me deeply with their knowledge and thoughtfulness.”
4. He seems to be playing semantic games about how FTX uses customer deposits.
The world took notice when, before the epic meltdown, Bankman-Fried deleted a tweet insisting that client funds were “fine” and that FTX had not “invested client assets”. It later emerged that FTX had indeed bailed out Alameda Research, a trading company also co-founded by Bankman-Fried, but operated with a riskier business model. He stood by his comments to Vox, arguing that they were “factually accurate” since Alameda was under the umbrella of his larger business. But as Axios noted, FTX’s terms of service prohibited using client money to fund trading activities. In Wednesday’s interview, Bankman-Fried said he “didn’t want to” do “incomplete” stuff, and he blamed the mess in part on shoddy accounting. “Each individual decision seemed good and I didn’t realize how big their sum was until the end,” he added.
5. FTX had an “in-house performance coach”, and he is surprised by the company’s downfall.
In an interview with The New York Times, psychiatrist George K. Lerner said he coached FTX employees about their careers and mental health. He struggles to come to terms with the notion of Bankman-Fried as a “criminal mastermind”, he said. Lerner also pushed back on recent storylines about romantic mix-ups between FTX employees, including executives. “They were working way too much,” he said. “The superiors, they mostly played chess and board games. There was no party. They were under-sexed, if anything.
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