Sam Bankman-Fried Is So Stupid It's Incredible
He has the right to remain silent, and yet...
I am not qualified to offer legal advice, but here is some: If you are an allegedly polyamorous effective altruist under investigation from at least four federal bodies for possible fraud, you should not tweet. If you made billions off of a crypto exchange and its affiliate hedge fund, then fell from grace in one of the most dramatic financial explosions since Enron, you should also not talk to the media. You should shut up and let your lawyers handle the talking part, even if they are best known for representing Bernie Madoff’s sons. This is good advice — so good, in fact, that it is the first, constitutionally required, and arguably only valuable thing cops say upon placing you under arrest.
I am, however, qualified to give media advice. And I think Sam Bankman-Fried, the disgraced FTX-founder whom the previous paragraph is about, should absolutely keep posting. Keep talking, please. You’re doing great king. Bankman-Fried has tweeted through the two-week collapse of his crypto empire; he has also spoken to journalists — twice. First, he talked to the New York Times, in an exceedingly generous interview on Monday. Now, he’s spoken with Vox reporter Kelsey Piper, in a much less generous exchange.
The conversation is, frankly, a nightmare, and not on Piper’s part. Bankman-Fried does not even try to make himself sound innocent. He does not try to make himself sound smart. He misspells “shibboleth.” What he does do is say “heh” enough times to convince anyone to retire the term forever, and make obvious that he was never acting out of altruism, ethics, or even sound financial logic.
When Piper asks about Bankman-Fried’s prior claim — that he discouraged doing “unethical shit,” for example — he says: “Man, all the dumb shit I said…it’s not true, not really.” The veneer of ethical trading, he explains, was just PR, to mask the reality that “good guys” were made from their balance sheet. “It’s what reputations are made of, to some extent,” he said. “I feel bad for those who get fucked by it…by this dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us.”
This may be true. It is also profoundly stupid to admit on the record. Being stupid is perhaps Bankman-Fried’s best excuse right now. It’s become obvious that his hedge fund, Alameda Research, was borrowing customer funds from FTX to make risky investments, disappearing several billion in the process. And as Bankman-Fried spells out in this interview, his defense essentially boils down to: I am stupid. As Piper writes:
One theory is that the seeds of FTX’s downfall were sown earlier this year, when Alameda reportedly took huge losses after the crypto company Terra’s LUNA stablecoin collapsed. Bankman-Fried said he didn’t realize the extent of the problem because of “messy accounting” — albeit messy accounting to the tune of billions of dollars.
Or as SBF put it: “messy accounting + margin exchange → position built up over time, though in retrospect LUNA crash was when a lot of it did…but messy accounting → I didn’t realize full size of it until a week ago.” Losing at least $8 billion is more than messy accounting. It is a level of stupid too grand for the word stupid to describe. But even Bankman-Fried’s stupid excuse is stupidly executed. Consider his response to Piper’s question about a now-deleted tweet, where he claimed FTX did not invest customer deposits:
you tweeted out some stuff like - we never invest your deposits
that was bs, right?
it was factually accurate
huh!!! but like - their deposits were totally not there? or do you just mean, technically it was Alameda
If you are trying to come clean about a stupid mistake, perhaps don’t tell us you’ve lied. But again, we thank you for doing so. The entertainment value is off the charts.