Sam Bankman-Fried and the geometry of conscience
scottaaronson.blog
scottaaronson.blog
No.
His net worth was never $15B. His net worth might have been negative - less than that homeless living in a tent under the bridge.
He was a fraud, a con man.
There's no reason to assume his entire Effective Altruism interest was authentic. It could easily been a way of connecting to important people like Tony Blair and Bill Clinton.
In Sam Bankman-Fried’s case, he seems to have let it be a justification for the huge risks and likely criminal actions he took.
There's no amount of money that will satisfy someone like that, even if his EA statements were heartfelt. Why would he give a billion dollars to charities, when he could risk it, flip it into $20B, and give it to charity? Why would he give $20B to charity when he could risk it, and flip it into $150B? etc...
But that would be the rational thing to do...
$1B less donated to charity is only roughly 1/20 as bad as $20B donated to charity is good, because there are also other people donating large amounts. In other words it's not at all like betting everything and ending up homeless if you lose the bet. At $20B vs $150B the catastrophe of losing $20B starts to become more significant, but I would absolutely still take that bet.
*Aside: obviously it was tone-deaf for me to reply to that quoted sentence out of the context in this case of the money being stolen
Good luck finding that limit though, especially when the market seems undefeatable.
To me it sounds like a way to justify making more money at all costs under the guise of a moral high ground. It'd feel more honest to do it without the cosplay around it and the "I donate better than you" holier than thou-ness.
I think it's more of a reactionary outburst from people who became wealthy enough to wonder about the purpose of their life and want to detach themselves from the late stage capitalist brand they get as cushy first world living while still reaping all the benefits.
I'm afraid if there were many good hearted people in that movement this single event will also discredit the rest. But maybe it was all a cult, who knows.
In this guy's case it sounds like a handy way to minimize whatever sentence he gets over this because he can argue "he did it out of pure intentions to help the world", which basically counts as insurance / marketing expenses for the scam.
Setting aside the case of this crypto conman, is being holier-than-though the valid criticism it feels like - or is that just my instinct to protect my ego, when the guy sitting next to me and earning the same salary donates 100x more much to charity than I do?
dont get fooled by people who think they can put good-ness into a box labelled "giving", I dont believe its that simple.
like the covid vaccines weren't possible because charity, but because science, the two are in no way equivalent. and there is evidence (not proof) from the last 150 years that capitalism enables science at a much higher multiple than charitable giving.
I would characterise both as elite but not upper class (as in, regularly going to old money dinner/rave parties).
I don't know which of the two is more "Effectively Altruistic".. lol.
Nevertheless, I find the anti-parallels with Buterin .. charming. Vitalik is clearly less anti-intellectual, less ambitious (more Ravenclaw than Slytherin), and thus less offensive to the gods.
(Although I’m not sure exactly what you mean by wealthy vs rich)
But I agree, my distinction between wealthy and rich is pretty sloppy.
Generally, in public downfalls like this, people over ascribe the causes to moral turpitude. There aren’t enough details here to say either way yet. There is a good book about this sort of thing Mistakes were made (but not by me). [1]
I think the blog post is very good, providing a unique perspective, and wonderfully written.
[1] https://www.amazon.com/Mistakes-Were-Made-But-Not/dp/1491514...
SBF got his start in crypto doing arbitrage with Japan, because setting up a trading account in Japan was hard. He got someone to do it through the EA community.
Most of the people who are in positions of power in his companies came from the EA community. And no joke a bunch of them are all in romantic relationships with each other too. You've got the CEO of his trading firm, who SBF dated, posting on tumblr about how poly relationships should be a vicious power struggle to get to the top.
I think you're way underestimating just how weird and cultish this whole clique is, and how moral criticism is actually valid here as the ideology is in a central role. These people cast themselves as noble heros making the world better in the net, when in reality they're total nepotistic weirdos.
Seems that he always benefited from membership in the cult.
That title would probably go to Zucc after the most recent set of earnings. But the previous title holder was none other than Mr. Cyber Hornets himself, the man who just about popped the Dot Com bubble - Michael Saylor.
Saylor lost $6B in a single day (and $10B in 2 weeks) after reporting that his firm had cooked the books in 2000 and his 1999 profit was actually a loss. This was the largest single-day decline in history at the time. [1]
He was fined $8.2M banned from running a public company (just kidding, of course). [2] You'll never imagine what line of work he got into next.
[edit] $6B in 2000 dollars is ~$10.38B in 2022 dollars, and similarly the $10B over 2 weeks would be ~17.31B adjusting for inflation. So it looks like Mr Cyber Hornets still gets to slide in at number two.
[1] https://slate.com/news-and-politics/2000/03/michael-saylor.h...
From what it seems, SBF is a pathological liar. He tried to lie at the last minute, assuring everything was fine and that others were to blame. After the last minute, he kept saying that if you filter out the mandatory "sorry" messages. It's not just Apollo 11 gone wrong, it was NOT Apollo from the start.
Maybe EA is a bit too far stretched, maybe it just attracts the wrong kind of individuals.
People go to prison for stealing a car, this is literally 1000000 times bigger and he's not even arrested.
He belongs to prison for a life time.
All the other talk about crypto / regulation is just hiding how corrupt the system is for not arresting this guy instantly.
Obviously it will take time for investigations to gather evidence, prosecutors to file charges, etc. These are still very recent events. Just be patient!
2) To obfuscate this slightly, they lent "$10bn" of tokens to Alameda Research, which was a "hedge fund" run by his girlfriend on the exchange
3) Alameda made huge trading losses, as often happens to novice traders. A Nick Leeson event.
4) Changpeng Zhao of Binance noticed there was a problem: https://fortune.com/2022/11/07/crypto-billionaires-cz-binanc...
5) This triggered a "bank run" on FTX
6) FTX are now insolvent: https://twitter.com/SBF_FTX/status/1591089317300293636
7) That was the last we heard from SBF. There are now reports that the exchange has been "hacked" and coins stolen. It is not yet clear by whom, or where SBF is.
Mark Karpales didn't go to prison for Mt Gox, he spent some months in jail because they were afraid he might leave Japan + Japan isn't like the west he prpbably doesn't have connections there, then left and worked for different financial companies and then started another company assessing risk or something.
Alex Mashinsky (founder of Celcius) didn't go to prison either.
On the other hand, Do Kwon (Terra) is a fugitive and interpol is looking for him, and Satish Kumbhani (Bitconnect) got indicted but disappeared so the cops are looking for him.
So yeah you have to turn off your pattern recognition or else be called a bad name.
So I'm not sure what you're correcting here.
"Clinton's critics alleged that Rich's pardon had been bought, as Denise Rich had given more than $1 million[36] to Clinton's political party (the Democratic Party), including more than $100,000 to the Senate campaign of the president's wife, Hillary Rodham Clinton, and $450,000 to the Clinton Library foundation during Clinton's time in office.[31]"
Theranos was exposed as a fraud in 2015. but only now, in 2012, Elizabeth Holmes' trial has reached sentencing with the prosecution asking for 15 years.
It's an unbelievable amount of for persecutors to untangle the web of transactions to be able to prove to a jury the existence and scale of fraud.
I would bet that both Mashinsky and SBF will spend a lot of quality time in a federal prison.
They won't, Mashinsky will NEVER go to prison for Celsius, and SBF, if somehow was to go to prison, will commit suicide on his first day there (suicide will be commited upon him but potato potato).
I don't see what's wrong with having "crypto=fraud" pattern recognition?
(Especially "staking"/"yield farming"! Anyone offering risk free high return is being dishonest about one of those two aspects)
Another good piece of pattern recognition: is this being run from a financial secrecy or tax evasion jurisdiction? (In this case, the Bahamas)
Celsius' Mashinsky, MtGox's Karpales didn't go to prison, and I bet Bankman-Fried won't either. Epstein has been investigated by the FBI for 20 years before going to prison and during the Deutsche Bank - Epstein trial a pizza delivery guy rang the door of the son of the judge overseeing the trial, and shot him dead after he opened the door.
Is you don't see a pattern between the two paragraphs then what do you want me to tell you, just stick to the news.
Individuals and companies need to be better held to account for the scale of societal (and environmental) damage that they cause.
Well, not any more.
https://www.sfchronicle.com/sf/bayarea/heatherknight/article...
IMO, it seems like Sam had an astonishing amount of pride in himself -- purportedly installing backdoors, playing LoL while on calls with investors, antagonizing competitors, installing nobody with any experience -- and it was all accepted, even rewarded. I can't help but think that if he had trusted others a little bit more, he might have been able to make better decisions for the sake of his company and the world. If I could give him advice, something like that would be it.
Same here on HN btw. Who cares about another take how evil Sam is.
It obviously pays off for Steve, at least in the short run. He is on the front-page of HN and has gained a couple of subscribers.
Man's still very upset about whatever happened to get him cancelled. I refuse to look up this particular piece of drama.
The way I am gauging the situation is that even if you tap your breaks on the “this guy is total scum and is trying to make a break for Argentina/Dubai” narrative that you’re complicit in his evil doings.
Why do I make that bold claim? Your very interpretation of Scott’s plea to wait on passing judgment.
Bankman is a bit hard to pigeonhole. He isn’t a textbook narcissist like Adam Neumann. He doesn’t appear to be a psycho/sociopath a la Jeffrey Epstein or Harvey Weinstein. He also doesn’t have the moral elasticity of someone like Madoff. If I had to guess, I think the relationship (which may or may not be platonic) between him and the people at Alameda is what sunk him. He got into some kind of situation there which he couldn’t deal with effectively. He has various neurodiverse traits IMHO, that make this more likely.
But who knows, he could also just be a crook who is good at maths, or the high priest of a cryptosex cult.
This argument about tone-deafness is kind of collectivist rally against individual conversation. There is no need for everyone to focus on the same thing. One could even argue that overly focusing on the actual events is less productive (as for actual events there will be official investigation that should lead to more solid results).
> but Aaronson seems to be taking an extremely strong stance in support of Sam by saying "the worst thing he did is he incorrectly weighted money"
That just seems like misreading of the post, Scott explicitly wrote: "If SBF indeed gambled away his customers’ deposits and lied about it, then I condemn for it utterly".
This seems like such an oddly prickly and defensive bit to throw into the middle of the essay? I have no idea why Aaronson is nervous about being associated with SBF ("both were affiliated with the same large research university at some point in time" hardly seems damning), nor what on earth these charges about disrespect to women are about. Am I missing something?
Rather than use the phrase, he takes "association" to be a distance metric, and guilt to be a measure of conscience.
I'd suppose quite a lot of people have, of late, felt the "guilt by association" culture inimical to a lot of social media. This is just his way of illustrating its impact on him.
A woman in a leadership position might likewise have said, "and I'm supposed to be JK Rowling, ..."
However, it's clear he has some very neurotic attitudes surrounding sexuality. I don't say this lightly and without empathy. I was raised by evangelical extremists. I'm talking the kind of people where the school I went to debated whether it was sinful to allow the girls to wear pants instead of dresses during a blizzard. I never received any form of sex education or guidance on the topic. You get the basic picture. I get where he's coming from.
But he's just wrong to be so overly concerned about being seen as a sexual predator. I don't know what the solution for him his other that introspection and perhaps therapy, but I do wish he'd have enough self awareness to realize that perhaps, this is not the topic he should be offering sage like advice blogs about.
This seems a bit of a leap to me.
It's a bit like saying a King or Queen is morally ahead of you. You're taking a point of concentrated wealth in a system designed to create that concentration and comparing it to 1 individual and using that to support the system.
I can see why that works if you think you are likely part of the concentrated wealth, but it seems like it would fall apart under the level of scrutiny that effective altruists alledgedly put in.
I wasn't able to follow. Could you rephrase or elaborate on the last part?
That only makes sense if your starting place in the system makes becoming a king possible.
Meanwhile, if they asked "what's the most we can do?" then the answer is unlikely to involve kings and more likely involves changing the system that gives them the opportunity to be kings.
Certainly true. Unfortunately, we don't seem to be able to reach the consensus needed to make such changes to the system. Hence we have to ask instead "What can I do?"
EA may leave it to each individual to decide the best route to do good for the world.
I do agree that changing the system to make becoming a king impossible is the best route possible. But for people in some circumstances, even this goal may best be achieved by first becoming a king.
I wish I could say the era of "move fast, break things" is over, but I have lost all faith. Can we please just stop all this craziness now? Good leadership should be about having good intuition, good instincts and planning for _long_ time horizons.
Instead the valley's "idols" are Zuckerberg and Elon and a bunch of quants obsessed with financial engineering.
How can the author pretend SBF his actions are comparable to a "tiny crack in an oxygen tank"? He willingly and knowingly defrauded customers and investors. Arguably as early as years ago and already provably months ago when he started bailing out crypto companies with funds defrauded from customers and funding his (failing) trading firm with customer funds.
Personally with all the lies and deception I'm starting to believe his entry and reign in crypto is one big fraud. There's no record of his geographical Bitcoin arbitrage whatsoever except hearsay. His exposure to tradfi (jane street) is limited and he didn't do anything impactful there. His "baby" Solana is a glorified Excel sheet working on a few centralized nodes. Most of his networth has always been in illiquid coins he created himself. And to see how this drama has unfolded, I find it hard to believe how he is into EA and not just obsessed with having influence and driving up his money-highscore as if it's a game.
There are ways to game the system … well, one can see how there’s a forgone conclusion to that line of thinking.
This underplays what happened. FTX implosion appears to be due to fraud, lack of controls within the organisation and puts in question the judgement of the EA community, VCs, auditors, media.
The lessons to draw are not technical in nature. To continue the author's analogy: Wehrner von Brau as an individuap, construction and inspection procedures, or security culture at Nasa. They are instead fundamental. And would put in question all of NASA, the ecosystem (universities, suppliers), funders like the Congress and the president , and any oversight agencies.
If the what we've learnt so far is confirmed, then a Sequoia investment and its due diligence failed, trust in the EA community is undermined as it is not particularly ethical or rational.
There is a very, very weird phenomenon of people that consider themselves to be very clever inexplicably carrying water for others that also consider themselves to be very clever, regardless of the material conditions or facts at hand. It’s like Scott Aaronson is applying to be in a club that Mr Fried is the bouncer for.
I know that it garners fewer clicks, but wouldn’t it be more honest to just say “Damn. I wish I had been rewarded with billions of dollars for my shitty behavior, and further (since I’m imagining myself in this scenario) it all worked out in such a way that I was deified for this grift.”
Author says he will be held accountable, as he is white and Jewish and nerdy. Like... What???
Cynicism is not that common sense, it seems.
Anyway, what a weird, weird post. (and what's with the random insertion about harassment?)
It's almost as if spending your entire day in an air-conditioned spaceship looking building hunched over a monitor warps your view on society...
EA is a morally bankrupt, barely coherent, stupid ideology designed to justify pre-hoc teenage technocratic fantasies. In that sense, no matter what SBF believed in his heart of hearts he's a poster child for EA all the way.
Dozens of ideologies say that. EA doesn't say only that.
On a personal level, my familial obligations supersede even local art charities and much less distant global health issues. Most EA people have enough instinctive moral behavior to avoid falling into a trap like SBF, but EA taken to its extreme clearly states that distance is not morally relevant.
I've always maintained my theory that Satoshi was CIA. Crypto is the evil kind of stuff they are good at.
EA perspective is not limited to one specific moral foundation (in this case act utilitarianism), it is a general idea that if you are going to be altruistic (for whatever reason), you should rationally focus on how to get best 'benefit to others' for your money. EA is not moral philosophy, it is altruistic strategy. For some, altruism is not even connected to morality.
So the gamble you describe is more argument against act utilitarianism than against EA.
No, that's a caricature of EA (edit: AFAICT EA seems to be about working within the system). There are perfectly rational reasons not to break moral standards (such as not gambling with other people's money or lying about safekeeping it): the world becomes a worse and unstable place and becomes far harder to improve when everyone acts like that, when you can't trust other actors; and people will keep score of how you behave.
(In another comment I wrote what may seem to be a contradictory view, but I was considering a completely abstract gamble there, not what SBF actually did.)
it seems morally hard to distinguish a
cryptocurrency trader from the millions who
deal in options, bonds, and all manner of
other speculative assets. And a traditional
investor who made billions on successful
gambles, or arbitrage, or creating liquidity,
then gave virtually all of it away to
effective charities, would seem, on net, way
ahead of most of us morally.
Warren Buffett maybe is the closest. He has promised to give away his fortune but he didn’t earn it in option trading. And whether his money will be used “effectively” is still an open question.
I’m sure lots of people have a fantasy of making billions and then helping the world with it. But more often the people who get there start believing that helping the world is best done by continuing to grow their own business interests. Couple that with the toxic ideas of EA and you start believing that any abuse you place on people today is fine because it’s in service of Long Term Propserity. That you never have to define what that is or exactly how your actions contribute is a feature.
May I just mention the "philantropist" Bernie Madoff here?
If I'm a dirty doctor selling fentanyl to addicts, but I donate 50% of my income to Narcotics Anonymous, am I moral?
Like a child can understand this doesn't make any sense, but people turn themselves into intellectual pretzels to rationalize this as virtue.
This is madness. Morality is not a game with points.
Don't compound credulity and naivety any further.
And ironically he mentions interest in "saving the world from fascism", but can't notice himself being manipulated in the same manner employed by fascist leaders.
> And a traditional investor who made billions on successful gambles, or arbitrage, or creating liquidity, then gave virtually all of it away to effective charities, would seem, on net, way ahead of most of us morally.
> On reflection, maybe I’d just try to convince SBF to weight money logarithmically when calculating expected utility (as in the Kelly criterion), to forsake the linear weighting that SBF explicitly advocated and that he seems to have put into practice in his crypto ventures
Christ.
The rivalry is over. Caltech wins.