On 2 November 2023, almost a year after the collapse of what used to be the second largest cryptocurrency exchange in the world, its founder was found guilty on all seven charges against him, which include wire fraud and money laundering. I previously mentioned Sam Bankman-Fried and FTX in a blog post last March where I talked about the fall of two US banks due to losses brought on by the fall of the fraudulent cryptocurrency exchange. Most may consider the story complete, and life shall go on. This is a tale about pride, greed, lust, and the ruin those things bring.
I’m not going to waste time chronicling the story of FTX and Sam Bankman-Fried since way too many outlets have done that already since November 2022. Look those links up to get the full context for what we’ll be looking at here, which are the lessons we can learn from the whole fiasco. That story is full of juicy details in between the financial chicanery, like polyamorous relationships, drug-fueled orgies in their Bahamian penthouse suite, and so on.
Bankman-Fried had been the darling of the financial world in the late 2010s until November 2022 when that front was torn off by fate. Now that he has stood trial, we can now pass judgment and drag his name in the mud without remorse. Let’s learn from his bad example and avoid both his kind and his deeds. Here are four major things we can learn from the disaster wrought upon by that manchild who thought he was smarter than everyone else.
Reasons Not to Feel Sorry for That Crazy-Haired Fat Fuck
Throughout this blog post, I resist the urge to be lazy and refer to the man as ‘SBF’ because that’s his preferred nickname. He deliberately cultivated his personal brand of SBF as “the world’s most generous billionaire” to push his agenda in the guise of effective altruism. This is not a puff piece, so I refer to the man as Bankman-Fried.
You can’t rizz your way out of legal consequence
During the fallout of the FTX collapse, Bankman-Fried did something weird — he appeared in as many interviews as he could. I’m sure his lawyers were facepalming so hard, the audible smacks were reverberating throughout New York City. As the kids would say these days, he was trying to rizz his way out of trouble. He just kept showing up to every podcast, interview, and Twitter (now X) space he could while holed up in his parents’ basement.
He built his image with his idiosyncratic candor that made him seem honest and transparent, but it all turned out to be manipulation.
Some people (usually introverts) start talking a lot when they’re caught with their pants down to seem more sympathetic and remorseful of their actions in an attempt to get off more lightly. I know this since I myself have done it in the past. In fact, by saying that, I’m doing it again. Once you recognize that pattern, you’ll see a surprising number of people employing that tactic.
Another example of someone who does that on a regular basis is the content creator Boogie2988, who’s Internet-famous for his Mountain Dew-loving Francis character and being extraordinarily rotund. However, him being a nice guy turned out to be an act and he was eventually exposed as an emotionally manipulative individual who cultivated a following with his facade of self-awareness, but has never engaged in active self-improvement.
I’m not saying being verbosely honest means you’re being manipulative. The intent is important. Are you being honest to be sincere and forthcoming? Or are you doing it to make people think of you in a certain way for an ulterior motive? To win their trust to then use them for your own ends? To butter them up and make them more willing to do as you ask?
Perhaps you can get away with it most times, but it’s no longer helpful if you then have to face the music and be judged in the court of law. No amount of candor and charisma will help you legally; saying less does. If he kept his mouth shut the whole time and left little to no digital trace, perhaps he could’ve gotten away with it. But that wasn’t how he operated.
Gambling sucks
There’s something insidious with gambling that convinces otherwise smart people that they can overcome natural laws. It sucks you in, makes you think you can still win, then absolutely destroys you. Your massive ego is no match for Lady Luck. No matter how much you floss and flex, you can’t sway the whims of RNGsus. If you somehow win big, quit while you’re ahead.
It was over for FTX once Bankman-Fried and company thought they could make up their losses with wins from big trades. They tried to win back that money, then lost even bigger, then gave Alameda Research even more from customer funds, and gambled even bigger. It was a snowball effect from start to finish. Those so-called whiz kids did not stand a chance.
I remember trading futures earlier this year. When you first learn about technical analysis, it makes you think you can read charts. You then discover futures trading in a platform like eToro, then you start tossing money. Fortunately, I have an internalized hatred for gambling, so I committed to quitting as soon as I reached $300 in losses in commodities.
No amount of indicators on charts will give you more information than insiders.
Their earlier successes led them to their later failures. They found an arbitrage opportunity in the form of the “kimchi premium” — a gap in cryptocurrency prices in South Korea exchanges and other foreign exchanges. Once they dried up that well, they had to find some other fountain of wealth to deplete. But it turned out that they turned to a Ponzi scheme for their next venture.
Your ego tells you that you’re special; adding drugs to that will make you feel like a god.
Stimulants don’t make you a god
Take it from someone who has also experimented with stimulants and cognitive enhancers. While they’re effective in the short term, they’re not like whatever Bradley Cooper took to become a super genius in the movie Limitless. If it works, you think your brain is going faster than everyone else’s and you can multitask at lightning speed, but you’re actually a mess.
Meanwhile, most of that stuff is a waste of money and makes your pee expensive.
Both Bankman-Fried and his then-girlfriend Caroline Ellison were reportedly popping addies like candy. Amphetamines are usually prescribed to patients with attention deficit hyperactivity disorder to help them better concentrate. Undiagnosed individuals take them as well for energy boost. But then, amphetamine addiction sets in and they can’t live without it.
Bankman-Fried was playing League of Legends while taking business calls, but he was stuck in bronze league and burning through customer funds.
It seems like such a simple question now in hindsight, but no one thought about whether he was winning those games at all. Looking up the match history of a League of Legends account is so easy, yet the people who were impressed by his multitasking savvy weren’t gamers themselves. And of course, someone playing that accursed game had to be a gambler.
Taking Adderall or snorting coke may make you feel like a god, but they don’t make you a god.
Sam Bankman-Fried was a “gifted child” who thought he could get away with anything
There’s something weird about adults who live vicariously through the younger generation. I know this because I was also subject to this treatment as a child, which I personally found condescending. On the other hand, Bankman-Fried likely thought of it as ingratiating, and it enabled his worst instincts. It’s the folly of prodigies who forever seek the approval of elders.
From what I’ve observed, most of the people he had to deal with in his business dealings were older folk and people knee-deep in the sauce. He played the ‘boy genius’ role and dazzled them with his mix of eccentricity and intelligence. When they found out he was playing a computer game while he was taking business calls, they thought it was quirky and astounding.
They somehow didn’t find it disrespectful that he wasn’t taking them seriously enough to give them his full attention. If it was an intern who did that, they’d throw them out the backdoor.
Conclusion
Take note that I did not write “4 reasons to feel sorry for Sam Bankman-Fried,” and I hope no one mistakes this for offering any sort of sympathy to the man. The details that came out of both the fallout of the bankruptcy and the trial, as well as how Bankman-Fried handled himself through the whole ordeal, shows that he’s a psychopath who knew what he was doing.
No amount of “I don’t recall” and “I feel terrible” will ever rehabilitate this man’s reputation. He fooled ordinary people who trusted his brand and took their life savings. He should rot in prison.
Bankman-Fried’s sentencing will be in March of next year. We’ll see then if he’ll get the full 115 years or maybe as little as 30 years. He won’t be playing League of Legends for a long time, never mind whether he’ll ever leave bronze league. He may have to sell himself to get a hold of uppers behind bars or suffer through withdrawals.
EDIT(27APR2024@3PM): He got 25 years, which is still a pretty long time. He’ll be in his mid to late 50s when he gets out.
In the meantime, crypto is on an upward trend at the moment. Bitcoin hit $37,000 and Ethereum hit $2,000 as of this writing. Perhaps it went back up when Bankman-Fried was served justice, thus proving that crypto may not be a complete black hole after all. Maybe.
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