From “Coin Musk” to prisoner, how he deceived the world

He regretted it. What he regretted was that he bet wrongly on the chance of being caught, but he refused to admit anything.

U.S. District Judge Lewis Kaplan commented .

Last week, Sam Bankman-Fried (hereinafter referred to as "SBF"), the founder of the American cryptocurrency trading platform FTX, was sentenced to 25 years in prison for seven counts of conspiracy to commit fraud and money laundering, and US$11 billion in assets were confiscated.

SBF, who was born in 1992, is known as "Musk in the currency circle". The valuation of FTX, which he founded, soared to US$32 billion in three years of its establishment.

As fast as FTX's jump is the speed of SBF's fall.

In November 2022, the cryptocurrency industry news website "CoinDesk" exposed the balance sheet of Alameda Research, a hedge fund company also founded by SBF, thereby revealing an $8 billion loophole in FTX.

Just nine days later, FTX officially declared bankruptcy. Weeks later, SBF was arrested in the Bahamas.

Another important label of SBF is "effective altruism". He will actively express that he is "extremely rich in order to help others as much as possible" and use this to create a more credible image for himself and FTX.

Everything has collapsed today.

The “Founder’s Story” is more textbook than textbook

With a head of fluffy curly hair, wearing a loose T-shirt and shorts, the most popular image is sleeping on a huge bean bag sofa.

SBF meets the requirements of a "Silicon Valley genius boy": he must "not care" about his personal image; it is best not to sleep, and even if he does, he must sleep in the company; of course, he must be a white male.

Sequoia Capital stated in an article that has been deleted from its official website that they were already fascinated by this young man when they listened to the SBF proposal at the online meeting.

Later, when they discovered that SBF was actually "dealing" with questions while playing League of Legends, they loved him even more.

▲Appeared on the cover of Fortune magazine at the age of 29

What is more advantageous than others is that SBF's parents are law professors in one of the most important places in Silicon Valley – Stanford University, the birthplace of legendary technology companies such as Google, Cisco, Yahoo, and PayPal.

SBF grew up in a small bungalow on the Stanford campus. He was exposed to law school professors and students, as well as sociologists, engineers and social scientists.

SBF parents Barbara Fried and Joseph Bankman would tell The New Yorker that they discovered early on that their children longed to be treated as equals. How to live an ethical life is a long-standing topic at the dinner table.

At a regular Sunday dinner, their law school professor friend Larry Kramer said "You will understand when you grow up" when discussing social issues with SBF and his brother.

Afterwards, Bankman took him aside and said, "He wants his children to be treated like adults."

SBF has been interested in mathematics and utilitarianism since he was a child. The latter is also a theory that his parents believe in-doing good for as many people as possible.

▲ SBF parents

While studying physics at MIT, he met Will MacAskill, the man who could help him perfectly combine his love of mathematics and utilitarianism.

In developing countries, human life remains unreasonably cheap.

$2,000 can save one life, $1 million can save 500 people, and $1 billion can save 500,000 people.

MacAskill, co-founder of "Effective Altruism" believes that if a person's goal is to maximize the effect of good deeds he can do, then he can make as much money as possible and then donate the money to do good deeds – also It means "earn to give".

Yes, that sounds reasonable.

This sharing not only helped SBF find his life direction, MacAskill also suggested that he intern at the hedge fund company Jane Street Capital, where he learned how to trade stocks and laid the foundation for the future creation of FTX.

The beginning of collapse

▲ FTX Advertisement: I am in the cryptocurrency industry because I want to do the most influential good deeds in the world

In 2017, SBF did an excellent job at Jane Street Capital, and he was the type that other colleagues would come to watch and learn from his operations.

At the same time, he also donated 50% of his income to charities, most of which went to the "Center for Effective Altruism" and "80,000 Hours", both of which are organizations that promote the "make money to donate" movement.

Everything was smooth, everything was too conservative.

Obviously, I care about impact.

Impact is about maximizing the odds that we can help them.

SBF said in an interview. In his view, in order to have greater influence, he must choose a path that is more risky but can gain more wealth. Since in the end the money will be given out to help others, there is no reason to be afraid of this risk.

After returning to Silicon Valley, he began to study cryptocurrency and discovered that there were price differences in Bitcoin on different exchanges, so he began to do arbitrage trading – buying on low-price platforms and selling on high-price platforms.

This year, SBF collaborated with university friends to establish the hedge fund company Alameda Research, seizing the opportunity when traditional banks were unwilling to lend money to the crypto industry, and became the industry leader in just one year.

In 2019, at the suggestion of his father, SBF chose to move the fund to the Bahamas and established FTX to start his own cryptocurrency trading platform.

He used the benefit of holding Alameda to conduct a large number of transactions on FTX to enhance the reputation of the newly created trading platform. At the same time, he may also privately give Alameda additional information.

The U.S. Commodity Futures Trading Commission has accused FTX of providing Alameda with an "unfair advantage." This claim was later dismissed by the SBF.

It was later learned that the relationship between the two companies went beyond that.

In December 2022, SBF stated in an interview with the Wall Street Journal that due to the strict management of cryptocurrency transactions in the early days, FTX did not have its own bank account. When customers wanted to deposit FTX, they could only transfer money to Alameda first, and then they There will be money on FTX.

SBF argued that due to poor financial management, not all funds were transferred from Alameda to FTX. Over time, serious problems arose in the accounts, and he himself did not know it.

In the ongoing trial in 2023, the testimony of former Alameda CEO Caroline Ellison showed that SBF was not ignorant as it said.

SBF personally selected the "most obscure" version from eight versions of Alameda's balance sheet, which had misappropriated billions of dollars in user funds even before the 2022 cryptocurrency crisis.

The chief engineer of FTX said that as early as 2020, SBF knew that FTX had changed the platform code to allow Alameda to borrow almost unlimited money from FTX. Moreover, this money is not used from FTX’s own reserves, but from the deposits of other customers.

However, over the past 10 months, SBF has still tried to shift the blame in court to former employees, lawyers and competitors, insisting that the mistakes it made were just "carelessness" and not "deliberate".

Although SBF's lawyer has said he will appeal, he seems to have accepted the fact that he will go to jail:

After all, my useful days are probably over now.

Break the filter

With the fall of the iconic figure of SBF, "effective altruism" has also been questioned more. Aidan Gomez, CEO of AI startup Cohere, once commented :

When people begin to truly believe that they are so unique that they are even qualified to benefit and save all of humanity, they often take extreme actions to do so.

Some scholars believe that the secular and long-term nature of effective altruism will lead to some "strange conclusions." For example, they believe that reducing future survival risks by 0.0001% is more important than saving 1 billion people today, but it is difficult for us to predict the next few decades. , not to mention what will happen in thousands of years:

Rather than reining in its founders' control over their philanthropic activities, the effective altruism movement has given them new tools to make the world serve their cynical ambitions and insane obsessions.

What’s more common is that celebrities who promote “saving the world” use their money to build a luxurious life for themselves in opaque ways. FTX bankruptcy documents indicate that the company spent approximately $250 million to buy 35 properties in the Bahamas and used private jets to secretly transport Amazon express from Miami to the Bahamas for employees.

FTX also does social projects, such as supporting the Universal Basic Income research project in Chicago and sponsoring mental health projects in Southern California. But it also provides a place for SBF parents to work. Stanford University donated $5.5 million to support the career development of the two. . After the case broke, Stanford announced it would return the money.

However, SBF’s parents also helped FTX a lot. It is said that Sequoia was still hesitant when it invested in FTX. Not only was SBF's parents' status as Stanford law professors more "attractive", but their friend, a former SEC official and current Stanford teacher, also gave Sequoia an investment. After a phone call and expressing his confidence in FTX’s compliance prospects, the financing was finally implemented.

In the opinion of New York Times economics reporter Peter Goodman, people put too heavy a filter on billionaires:

I think billionaires internalize this: "Look, I'm a billionaire, so not only am I good at building wealth, but I'm also a good person."

Because we all want to believe that our society is fair and rewards the right things.

Whether it’s SBF, Musk and Zuckerberg who showed their childishness in last year’s “Cage Fighting Challenge”, or Ultraman who showed his duality in the “Palace Fight”, they are all reminding us that it’s time to get rid of billionaires. Charmed.

As Vox senior reporter Whizy Kim puts it :

Billionaires are just as ordinary as everyone else. They have some advantages and many disadvantages. They can sometimes be inspiring and exciting, but often they can be disappointing.

The difference between them and us is that they have billions of dollars at their disposal, which gives them the power to make incredibly bad decisions that affect millions of people.

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