SAN FRANCISCO — There comes a time for a new technology when the hype is so common that it passes as common sense. No lawyers, accountants or regulators appear. Investors insist that entrepreneurs take their money. The world trembles on the brink of change.
For cryptocurrencies, that was 2017.
Six years ago, Sam Bankman-Fried knew little about altcoins. But he correctly bet that there were big opportunities in grabbing a tiny piece of millions of cryptocurrency trades. In the blink of an eye, he was praised for being worth $23 billion.
Now, at 31, after a quick trial in Manhattan, the one-time cryptocurrency king has been found guilty of seven counts of fraud and conspiracy involving his companies FTX and Alameda Research.
Bankman-Fried once rubbed shoulders with stars and bigwigs, doled out fortunes in looted funds to politicians and himself, was hailed as the next Warren Buffett, employed his friends and made them rich for a time, and was courted by the media. For a while, everyone loved Sam Bankman-Fried—with the apparent exception of Sam Bankman-Fried.
“I am, and for most of my adult life have been, sad.” That statement appears at the end of testimony Bankman-Fried hoped to give before the U.S. Congress last winter before his arrest thwarted his plans.
In photographs taken during his heyday, Bankman-Fried always looked uncomfortable, embarrassed and like he’d rather be playing a video game. Everyone kept insisting that he was brilliant, the entrepreneur who would create the future. Maybe he knew better.
Sequoia Capital, a major venture firm that has funded Apple, Airbnb, Instagram and WhatsApp, all but begged Bankman-Fried to take its money during the mad rush when cryptocurrencies were new and shiny. The founder of FTX did it. Sequoia then commissioned a lengthy profile of Bankman-Fried from Adam Fisher, a Silicon Valley writer who became enthralled with the man whose fans called him SBF.
“After my interview with SBF, I was convinced: I was talking to a future multi-billionaire,” Fisher wrote. “FTX’s competitive advantage? Ethical behavior,” he added.
Less than two months after the interview was published, FTX collapsed. Sequoia wrote off its $214 million investment. The firm and Fisher declined to comment.
The central myth of Silicon Valley is that tech experts are here to save the world. If they become incredibly rich, that just shows how great their idea was.
FTX allowed people to bet on cryptocurrencies. It was, in essence, a casino. It’s difficult to portray a casino as a savior of humanity, so the news was always focused on Bankman-Fried himself.
He thought he would help humanity by making a fortune and then giving it away, a philosophy known as effective altruism. The details didn’t matter. As a fawning 2021 Forbes profile put it: “He’s a mercenary, dedicated to making as much money as possible (he doesn’t really care how) solely so he can give it away (he really doesn’t know to whom, or when).”
During the trial, it emerged that Bankman-Fried had spent $15 million on private jet travel. He lived with some friends from FTX in a $35 million penthouse. The question never seemed to arise as to whether these young people should be living the good life if they were following the doctrine of effective altruism.
Time and time again, Bankman-Fried expressed disdain for what he was doing and seemed to implore authorities to take a closer look at his companies. In an interview in August 2021, he said: “If there is something we are doing that a regulator doesn’t want, they don’t need to sue us. Just contact us and tell us what you want.”
Bankman-Fried tried to warn everyone. “In terms of the number of pyramid schemes, there are many more in cryptocurrencies, more or less per capita, than elsewhere,” he told The Financial Times in May 2022.
I do not care. Investors, customers and journalists saw the genius they were told was there. If they had the slightest doubt, Bankman-Fried had an ace: her parents were law professors at Stanford University in California.
But Joseph Bankman and Barbara Fried had their attention elsewhere. According to a lawsuit filed by bankrupt FTX, their son gave them, through FTX, a $16 million home in the Bahamas, $10 million in cash and other things. The couple’s lawyers called the claims “completely false.”
In that glowing profile of Sequoia, Bankman-Fried said, “I don’t want to say that any book is worth reading, but I actually believe in something pretty close to that.” Perhaps she would have done better if he had spent more time in literature class. Sometimes in books, characters find their moral compass; In the best books, the reader does too.
“The Man of Two Kingdoms” is about 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 great ambitions and no scruples. He begs Thomas More for a place at court. Moro tells Rich that he would be a good teacher.
Rich rejects the quiet life, betrays More and is rewarded with a position in Wales. He is made to understand to the viewers that he loses his soul to him. Bankman-Fried betrayed almost everyone he knew and ended up with no wealth and no Wales.
By: DAVID STREITFELD
BBC-NEWS-SRC: https://www.nytimes.com/2023/11/02/technology/sam-bankman-fried-rise-crash.html, IMPORTING DATE: 2023-11-09 21:10:07
#resounding #fall #king #virtual #currencies