He was very regretful. He regretted that he had bet wrong on the chances of getting caught, but he refused to admit anything.
U.S. District Judge Lewis Kaplan commented.
Last week, Sam Bankman-Fried (hereinafter referred to as "SBF"), the founder of the US cryptocurrency trading platform FTX, was sentenced to 25 years in prison for seven counts including conspiracy to defraud and money laundering, and his assets worth $11 billion were confiscated.
Born in 1992, SBF is known as the "Musk of the cryptocurrency world". The valuation of FTX, which he founded, soared to US$32 billion within three years of its establishment.
As fast as FTX's rise is SBF's fall.
In November 2022, the cryptocurrency industry news website "CoinDesk" exposed the balance sheet of Alameda Research, a hedge fund company also founded by SBF, and revealed an $8 billion loophole in FTX.
Just nine days later, FTX officially declared bankruptcy, and a few weeks later, SBF was arrested in the Bahamas.
Another important label of SBF is "effective altruism". He will actively express that "I am rich so that I can help others as much as possible" and use this to create a more credible image for himself and FTX.
Everything has collapsed today.
The "Founder's Story" is more textbook-like than a textbook
With a head of fluffy curly hair, wearing a loose T-shirt and shorts, the most memorable image is of him sleeping on a huge bean bag sofa.
SBF meets all the elements of a "Silicon Valley genius": he must "not care" about his personal image; it would be best if he doesn't need to sleep, and even if he does, he has to sleep in the company; and of course, he must be a white male.
In an article that has been deleted from its official website, Sequoia Capital stated that they had already been fascinated by SBF when they first listened to his proposal in an online meeting.
Later, when they found out that SBF was actually "dealing" with questions while playing "League of Legends", they loved him even more.
▲ Appeared on the cover of Fortune magazine at the age of 29
What makes SBF superior to others is that his parents are law professors in one of the most important places in Silicon Valley - Stanford University, the birthplace of legendary technology companies such as Google, Cisco, Yahoo, and PayPal.
SBF grew up in a small bungalow on the Stanford campus, where he was surrounded by law school professors and students, as well as sociologists, engineers, and social scientists.
SBF's parents, Barbara Fried and Joseph Bankman, would tell The New Yorker that they noticed early on that their children longed to be treated equally. What constitutes living an ethical life is a perennial topic at the dinner table.
During a regular Sunday dinner, their law school professor friend Larry Kramer said, "You will understand when you grow up" while discussing social issues with SBF and his brother.
Afterward, Bankman pulled him aside and said, “He wanted his children to be treated like adults.”
SBF was interested in mathematics and utilitarianism from an early age, the latter of which was also a theory that his parents believed in - doing good for as many people as possible.
▲ SBF parents
While studying physics at MIT, he met Will MacAskill, the person who would help him perfectly combine his love of mathematics and utilitarianism.
In developing countries, human life remains unreasonably cheap.
$2,000 can save a life, $1 million can save 500 lives, and $1 billion can save 500,000 people.
MacAskill, co-founder of "Effective Altruism", believes that if a person's goal is to maximize the effectiveness of the good deeds he can do, then he can make as much money as possible and then donate the money to do good deeds - that is, "earn to give."
Yes, that sounds reasonable.
This sharing not only helped SBF find his life direction, MacAskill also suggested that he intern at the hedge fund company Jane Street Capital, where he learned how to buy and sell stocks and laid the foundation for the future establishment of FTX.
The beginning of collapse
▲ FTX advertisement: I am in the cryptocurrency industry because I want to do the most influential good deeds in the world
In 2017, SBF did an excellent job at Jane Street Capital. He was the type of person that other colleagues would come to watch and learn from.
At the same time, he also donated 50% of his income to charities, most of which went to the Center for Effective Altruism and 80,000 Hours, both of which are organizations that promote the "earn to donate" movement.
Everything went smoothly, everything was too conservative.
Obviously, I care about impact.
Impact is about maximizing the chances that we can help them.
SBF said in an interview. In his opinion, to have a greater influence, he has to choose a path that is more risky but can gain more wealth. Since the money will be given out to help others in the end, there is no reason to be afraid of this risk.
After returning to Silicon Valley, he began to study cryptocurrencies and found that there was a price difference between Bitcoins on different exchanges, so he started to do arbitrage trading - buying on low-priced platforms and selling on high-priced platforms.
This year, SBF and his college friends founded the hedge fund company Alameda Research. They seized the opportunity that traditional banks were unwilling to lend money to the crypto industry and became the industry leader in just one year.
In 2019, at the suggestion of his father, SBF chose to move the fund to the Bahamas, established FTX, and started his own cryptocurrency trading platform.
He used the profits from his holding of Alameda to conduct large transactions on FTX, improving the reputation of the newly established trading platform, while also possibly giving Alameda additional information privately.
The U.S. Commodity Futures Trading Commission had accused FTX of providing an “unfair advantage” to Alameda, a claim that was later refuted by SBF.
It was later learned that the relationship between the two companies went beyond this.
In December 2022, SBF stated in an interview with The Wall Street Journal that due to the strict management of cryptocurrency transactions in the early days, FTX did not have its own bank account for a time. When customers wanted to deposit money into FTX, they could only transfer the money to Alameda first, and then they would have money on FTX.
SBF argued that due to poor financial management, not all funds were transferred from Alameda to FTX. Over time, serious problems arose in the accounts, and he himself was unaware.
During the ongoing trial in 2023, testimony from former Alameda CEO Caroline Ellison showed that SBF was not as ignorant as it claimed.
SBF personally selected the "most obscure" version from eight versions of Alameda's balance sheet, and had misappropriated billions of dollars in user funds even before the 2022 cryptocurrency crisis.
The chief engineer of FTX said that as early as 2020, SBF knew that FTX had changed the platform code to allow Alameda to borrow almost unlimited amounts from FTX. And the money used was not FTX's own reserves, but deposits from other customers.
However, over the past 10 months, SBF has continued to try to shift the blame to former employees, lawyers and competitors in court, insisting that its mistakes were simply "carelessness" rather than "deliberate."
Although SBF's lawyer has said he will appeal, he seems to have accepted the fact that he will go to jail:
After all, the useful days of my life are probably over now.
Break the filter
With the fall of the iconic figure SBF, "effective altruism" has also been questioned more. Aidan Gomez, CEO of AI startup Cohere, once commented:
When people begin to truly believe that they are so unique that they are even qualified to benefit and save all of humanity, they tend to take extreme actions to do so.
Some scholars also believe that the secular and long-term nature of effective altruism will lead to some "strange conclusions", such as believing that reducing future survival risks by 0.0001% is more important than saving 1 billion people today, but it is difficult for us to predict what will happen in the next few decades, let alone thousands of years:
Far from reining in its founders’ control over philanthropy, the effective altruism movement has given them new tools to make the world serve their cynical ambitions and maniacal obsessions.
More often, celebrities who claim to “save the world” use their money to buy themselves a luxurious life in an opaque way. FTX bankruptcy documents indicate that the company spent about $250 million to buy 35 properties in the Bahamas and used private jets to transport Amazon packages from Miami to the Bahamas for employees.
FTX also does social projects, such as supporting a universal basic income research project in Chicago and sponsoring a mental health project in Southern California, but it also provides jobs for SBF's parents. Stanford University donated $5.5 million to support their career development. After the case broke out, Stanford announced that it would return the money.
However, SBF’s parents also helped FTX a lot. It is said that Sequoia was still hesitant when investing in FTX. SBF’s parents’ identities as Stanford law professors were not only more “good-looking”, but also after their good friend, a former SEC official and current Stanford teacher, called Sequoia and expressed his confidence in FTX’s compliance prospects, the financing was finally implemented.
In the view of Peter Goodman, an economic reporter for The New York Times, people have too heavy a filter for billionaires:
I think billionaires internalize this: “Look, I’m a billionaire, so not only am I good at accumulating wealth, but I’m also a good person.”
Because we all want to believe that our society is fair and rewards the right things.
Whether it is SBF, Musk and Zuckerberg who showed their immaturity in last year's "cage fight challenge", or Ultraman who showed his two-sided nature in the "palace fight", they are all reminding us that it is time to demystify billionaires.
As Vox senior reporter Whizy Kim puts it:
Billionaires are just like everyone else. They have some strengths, many weaknesses, and can be inspiring and uplifting at times, but they can also be disappointing all the time.
What makes them different from us is that they have billions of dollars, which gives them the power to make extraordinarily bad decisions that affect millions of people.
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