The fallout from the FTX saga has been relentless, and what’s especially remarkable is how many different rabbit holes the story has opened up, as it extends in multiple directions.
At the center of it all sits the disgraced former CEO, Sam Bankman-Fried. The picture of him that emerges, as the plot unfolds both retrospectively and in real-time, depicts a confusing and erratic character, who, through his actions and public statements, is raising the hackles of observers on every side.
Outraged Customers
The people perhaps most outraged with SBF (as Bankman-Fried is often known) are the regular customers who utilized his exchange and have, likely irretrievably, lost their money. There are now indications that customer funds were essentially shifted into what amounts to a central slush fund, from where they could be easily misused.
And, then there is the loan of $1 billion given from FTX-connected, SBF-founded Alameda Research to SBF himself. On top of that, there was a loan of $2.3 billion given to Paper Bird, a company owned by SBF.
One can’t help but make speculative connections here, recalling that, according to Elon Musk himself, SBF offered $3 billion to be part of Musk’s Twitter acquisition. The new Twitter owner intuited that something was not right and declined, leaving us to wonder how it was that SBF had these kinds of funds to hand.
Avoidance of Responsibility
Getting back to those seriously disgruntled customers, a further aggravating factor may be SBF’s conspicuous refusal to take responsibility for his actions and the resultant FTX train wreck.
SBF has been communicating publicly through his Twitter account, but his messages are out-of-touch and peculiar, seeming to imply, at times, that what occurred was partly just an unfortunate accident, rather than the consequence of his own behavior.
Relatedly, some interesting digging that was circulated on Twitter showed an essay from nine years ago by SBF’s mother, Barbara Fried, who is a lawyer and a Stanford professor, arguing that free will is not real, and criminals should not be blamed for their actions.
She presents a coldly mechanical argument that runs directly counter to social norms, and it seems particularly jarring when considered alongside SBF’s own lack of personal accountability for his actions.
Revealing the Game
Then, there are SBF’s comments to a reporter at Vox, Kelsey Piper, who had been profiling SBF. In a private exchange, made public by the reporter, SBF makes it very clear that he has been simply running through the motions in public, saying whatever he believed would gain him the most social capital.
Here is the most revealing quote:
“I had to be [good at talking about ethics], it’s what reputations are made of, to some extent. I feel bad for those who get f***ed by it, by this dumb game we woke Westerners play where we say all the right shibboleths and so everyone likes us.”
It’s a statement that has managed to simultaneously trigger a reaction from both sides of the political/cultural aisle.
Many of SBF’s most indignant critics from the libertarian-leaning world of crypto, especially those who are focused on Bitcoin, actually express similar opinions to SBF on what he frames as ‘this dumb game we woke Westerners play’.
It’s not uncommon to come across the observation that political demands have become overbearing and censorious, and there is unease at what’s perceived as ideological encroachment into the business sphere.
Nowhere is this more apparent than around Elon Musk’s takeover of Twitter, as it appears that the new owner is not in the mood for either politics in the office or overzealous content moderation.
At the same time, those who support the kind of thinking that SBF makes a mockery of (which would likely include the progressive-left target readership of Vox), may be appalled that SBF has first manipulated them (appearing to be, in a sense, on their side), and now openly trivialized their beliefs.
An ESG-Stamped Shambles
Through ongoing revelations about their business practices, FTX and SBF have glaringly discredited ESG policies, which were already attracting some high-profile criticism.
In the FTX bankruptcy filing, liquidator John Ray, who supervised the liquidation of Enron and has over 40 years of related experience, had the following to say about FTX:
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
The rest of the document then goes on to reveal a haphazard shambles of an organization. And yet, FTX received the ESG stamp of approval, including, remarkably, for its leadership and governance.
How is it possible that ESG scores can have any genuine bearing or relevance, if no-one responsible for assigning them could pick up that there were critical faults at FTX and, specifically, with its management?
Notably, Elon Musk and Shopify CEO, Tobias Lutke have both been critical of ESG, the latter remarking tactfully that, “ESG the idea is really good,” but that, “the current implementation is broken, cynical, and counter productive.”
Meanwhile, Musk was characteristically forthright, stating, after Tesla was removed from the S&P ESG Index, “ESG is a scam. It has been weaponized by phony social justice warriors.”
For what it’s worth, SBF, who benefitted from the ESG system, at least partly agrees with Musk and Lutke. In that same exchange with Piper, the Vox reporter, SBF claims, as part of a disparaging condemnation of financial regulators, that, “ESG has been perverted beyond recognition.”
Aftershocks Continue
Picking apart the FTX web, one thing we can be confident of is that SBF has angered (or at least irritated) anyone who genuinely believes in cryptocurrencies and decentralization.
It would be beneficial if a clear distinction were made between FTX, a corrupt centralized platform, and the decentralized blockchains and applications that most crypto users advocate for.
Perhaps that difference will become apparent with more details about FTX becoming public, as it looks, for now, like the aftershocks are far from over.
