The FTX Collapse explained - the hunger for super heroes in a time with no Gods
Why did everyone worship Sam Bankman-Fried?
FTX is bust. The second largest crypto exchange turned out to be a house of cards. In two weeks founder Sam Bankman Fried(SBF)’s alleged fortune has gone from $32 billion (on paper) to 0.
Just a few weeks ago he was the darling of everyone and anyone. A-list famous Silicon Valley venture funds were pumping money into his firm. The press was reporting how great he was for bailing out ailing crypto firms out of the goodness of his heart. He spoke eloquently about Effective Altruism. He only wanted to get rich so that he could give the money away in the most effective way possible.
His lifestyle was unostentatious. He only drove a Toyota Corolla, despite having all this wealth(on paper). He dressed shabbily. Quite the opposite of Gordon Gecko then. Greed was still good, however only because it was a greed to do good.
Everyone fell for this. Surely then P.T. Barnum was right, there is indeed one born every minute. Why did people fall for this image? What was its appeal? Let’s unpack this.
First, what went wrong with FTX? Time will tell the full story, but by and large Ponzi scheme seems to be the appropriate description. The first warning should have been that his company was incorporated in the Bahamas. Ponzi schemes work as long as there are new people coming in and there is no run on the bank. When enough investors seek to withdraw their money all at once, the pyramid collapses. Shekhar Gupta from the Print has a good recap of what we know about the affair so far. Please note that this is an Indian news magazine and Indians would not fall for the peculiar appeal that SBF held for Americans.
For SBF was just so…noble. So pure. So virtuous. And also super rich. But planning to give his money away. He wasn’t interested in wealth. He drove a Toyota (but lived in a multi million dollar penthouse in the Bahamas which was conveniently overlooked.) He dressed shabbily, no Gordon Gecko wolf-of-wall street look.
He also checked the latest woke boxes - he lived in a poly community, gender-fluid, so was striking a blow against the patriarchy something something something blah blah blah.
He was the ideal American Puritan as we define it today. Please note this definition changes as the wind blows. We may have abandoned the church but we are still looking for the perfectly pure person - we are looking for Jesus, the savior.
Indeed SBF cast himself as the savior. He was going to give away his vast (paper) fortune. He was going to do it algorithmically to the places that had the most value for money. Everyone bought it. The Media, the VCs. Sequoia Capital, the A-list VC firm put a boatload of money in FTX and had a journalist Adam Fischer write the most cringe worthy article about him, finding him to be completely selfless and the one to save the world. i.e. Jesus.
We don’t go to the Church anymore but the Puritan legacy is very much in us. We are looking for the savior everywhere. In the convenient WASP fashion we want to be rich also and enjoy the wealth while making sure we don’t appear to be doing so because we are really Jesus inside.
After FTX collapsed the New York Times had a puff piece about his team - finding that all that was wrong was that his ambition exceeded his abilities. They were just young kids having a try, what’s wrong with that? In this indulgence we can see the worship of the Baby Jesus sitting on the Mother’s lap.
We are inheritors of 2000 years of tradition, it is in our bones, even though we have abandoned the outer forms. The archetypes are in us. Jung said, if the energy of personal intention is a 1000 volts, the energy of the archetype is 100,000 volts. We want to believe and when something fits the pattern we believe. We believe with that 100,000 volt energy.
If you want to meet someone who is saving the world, or at least making an honest effort try Bill Gates. He is building toilets, providing malaria treatments and much more. The kind of stuff that actually matters. A crypto exchange? Who ever decided it was something that was going to save anything? What were people using the crypto exchange for anyway? To get rich right? Because there would be someone who was ready to buy the coins at a higher price that you right? A greater fool.
Hey Effective Altruist Crypto folks! You really want to save the world? Go help build an efficient toilet. Or be honest. At least Wolf of Wall Street was. He wanted to get rich, live a luxury lifestyle and bang as many women as he could. If that’s what you really want just come out and say it.
And everyone else! You want a savior? Go back to the church. It will be less destructive than what you are doing now.