You may be familiar with Curtis Yarvin's idea that Covid is science's Chernobyl. Just as Chernobyl was Communism's Chernobyl, and Covid was science's Chernobyl, the FTX disaster is rationalism's Chernobyl.
The people at FTX were the best of the best, Ivy League graduates from academic families, yet free-thinking enough to see through the most egregious of the Cathedral's lies. Market natives, most of them met on Wall Street. Much has been made of the SBF-Effective Altruism connection, but these people have no doubt read the sequences too. FTX was a glimmer of hope in a doomed world, a place where the nerds were in charge and had the funding to do what had to be done, social desirability bias be damned.
They blew everything.
It will be said that "they weren't really EA," and you can point to precepts of effective altruism they violated, but by that standard no one is really EA. Everyone violates some of the precepts some of the time. These people were EA/rationalist to the core. They might not have been part of the Berkley polycules, but they sure tried to recreate them in Nassau. Here's CEO of Alameda Capital Caroline Ellison's Tumblr page, filled with rationalist shibboleths. She would have fit right in on The Motte.
That leaves the $10 billion dollar question: How did this happen? Perhaps they were intellectual frauds just as they were financial frauds, adopting the language and opinions of those who are truly intelligent. That would be the personally flattering option. It leaves open the possibility that if only someone actually smart were involved the whole catastrophe would have been avoided. But what if they really were smart? What if they are millennial versions of Ted Kaczynski, taking the maximum expected-value path towards acquiring the capital to do a pivotal act? If humanity's chances of survival really are best measured in log odds, maybe the FTX team are the only ones with their eyes on the prize?
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Notes -
I still don’t understand a lot of peoples hatred of this guy. From what I can tell, he made a dumb mistake in a very complicated system that went against him. His main transgression was playing it too risky, and I can’t tell that, other than whatever that implies, there’s any bad morality at play here.edit: information revealed since I made this comment makes it clear that he was an overconfident asshole and there is definitely lots of reasons to hate him. (Tho I maintain that the early kvetching reeked too much of “his company crashed so he must be doing something wrong”, which reduces to “successful = good”)
He gambled with his customer's funds without asking or telling them, which is big time fraud.
Replace “gambled” with “traded with”, and its now basically the same as what any major modern bank does, I think. (Outside of the idiotic TOS, which I agree they effed up on, since the problematic phrase wasn’t even in there until May)
Except real banks are heavily regulated (the ratios they can lend out, what they're allowed to invest in, what they have to disclose, etc.), they can borrow money from the Fed, they're required to have keep a certain amount of cash in reserve, and they have customers' money insured by the federal government (and customers know this, which psychologically guards against the bank runs that cause this sort of catastrophe).
I swear, this crypto shit is just a speed-run of the last 200 years of issues in banking and relearning all the same lessons over again.
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From what I've read, it was specifically in the terms that they wouldn't...
It was definitely fraud... but considering their 'political donations' it'll be interesting to see what comes of this.
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