11/9/2022: First, Do No Harm
SBF the effective altruist is causing immense pains for FTX users and investors
Geez, where do I start? I am deeply disgusted by psychopath SBF, who told the public that he wants to make billions so that he can give it all away to charity. It turns out the way he made his billions was by gambling the money entrusted by FTX investors and users and like all gamblers, he eventually lost the money. A few hours ago, Binance walked away from bailing out FTX because the hole was too big. It is reported that the gap between liabilities and assets is probably in billions and possibly more than $6 billion. It’s unclear what’s going to happen next but I hope FTX files for bankruptcy so the public will know what really happened. At this point, we can only speculate but the most likely scenario is that they misused user deposits for other purposes and possibly had large losses from trading and risk management operations.
It’s deeply ironic that SBF tried to project this do-gooder effective altruistic persona to the public. I suppose many people trusted him, including Sequoia Capital. But he is full of egregious lies. Just one day before FTX went under, he tweeted in now deleted tweets:
Sorry. But I couldn’t give him the benefit of the doubt this time. If FTX didn’t invest client assets, they should have had no problem meeting withdrawal requests. Frankly, I was very suspicious of SBF. Not just him, I am suspicious of any CEO who would put their own face on a giant company billboard. It’s a big warning sign that the CEO is a narcissist and his staff are too scared to tell him how absurd it is. Anyway, I digressed. This is not the reason why I am disgusted.
I was so disgusted yesterday evening I couldn’t eat my dinner. As many of you know, I am not a big fan of philanthropy. The feedback loop is not straightforward and there’s too much virtual signaling. But SBF really took virtual signaling to the next level and used the good will accumulated to effect his dirty lies to investors, users and regulators. In June 2022, he signed the giving pledge to announce to the world he will give away at least half of his multi-billion wealth. In an article published by Bloomberg, he declared he wants to give his fortune away by using the scientific approach of effective altruism to maximize impact per dollar.
This all sounds good. But while he was declaring his philanthropic goals, he was probably also busy using FTX user deposits to gamble in crypto, to purchase naming rights of FTX Arena and to spend lavishly in marketing and sponsorship deals. SBF failed his most basic fiduciary duty to protect user funds. Yet, he wants to be the savior and the effectively altruistic billionaire. He knew he was misusing user deposits. Yet, he went to DC to help write crypto regulations??!! How could someone do this in real life? It’s beyond disgusting.
How does the son of two Stanford law professors, MIT educated wunderkind and a former director for center of effective altruism become a criminal crypto scammer? There’s a lot for us to think about. But for all the big talk of philanthropy or effective altruism, I hope people focus on doing no harm first and doing good second. SBF had it completely backward.
Update: WSJ report: FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
SBF interview with Forbes: https://www.youtube.com/watch?v=tXDH46iNC64
Actually $8B shortfall. https://www.bloomberg.com/news/articles/2022-11-09/ftx-investors-told-that-without-more-capital-bankruptcy-likely?srnd=premium