Dear Readers,

Since you subscribe to my blog, I’ll wager that you share my love for a good anti-hero, and until recently I’ve been wondering if Sam Bankman-Fried could be a real-life archetype.

While a student at M.I.T., he was passionate about animal welfare and met with the philosopher, William MacAskill, a proponent of effective altruism movement, who advised SBF that he could do more good by working a high-earning job and donating the money rather than directly working for the cause. After confirming this with the Human League and other charities, SBF went on to found the cryptocurrency exchange, FTX. 

According to Bloomberg, in March 2022, SBF was worth $26 billion, the bulk of which he had pledged to give away in the next two decades. Surely that’s some kind of record for a fortune raised on behalf of a cause! But then in early November, the collapse of FTX erased it all.

In the media, his status plummeted from hero, his picture on the cover of Forbes and Fortune, to ‘financial villain’.  The man who was once compared to Warren Buffet and Bill Gates has now become the new Bernie Madoff.

If he loaned out money that wasn’t his to loan then clearly he crossed the line. But does this make him outright evil? Or is this more like a tragic flaw born from inexperience and lack of oversight?

I’m wondering if his investors granted him such unprecedented latitude because of his his well-publicized altruistic intentions? I often find myself favoring corporations with large philanthropic efforts, even though some studies show that a large portion of the grants given serve to increase political influence; at least they’re helping people in the process.

The collapse of FTX is a good reminder that there’s no shortcut for due diligence. The red flags were out there before the collapse, but buried in all the hype. Last spring in the Bloomberg Odd Lots podcast, SBF explained yield-farming in a way that sounded like a Ponzi scheme.

It really struck me when he said, “I would never read a book. I’m very skeptical of books.”

So do you think is SBF is merely a flawed human being who did the wrong thing for the right reasons? Or is he an outright villain? 

He tweeted: “I feel deeply sorry about what happened. I regret what happened to all of you. And I regret what happened to customers. You gave everything you could for FTX, and stood by the company—and me.” 

But then he also said: “man, all the dumb shit I said. It’s not true, not really.” He said he’d been engaged in “this dumb game we woke Westerners play where we say all the right shibboleths and so everyone likes us.”

Regardless of his true motivations, I’m disappointed that Sam Bankman-Fried failed to live up to the hype.