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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I don't think so. The EA work of FTX/SBF were rather incidental to the main scam activities, and I don't see much input from the EA/rat circles into the scam. They got some outputs from the scam, and maybe lent it a small measure of credibility, but I don't see any way they were an inherent part of the scamming and had any substantial input to the decisions FTX investors and clients took.
You would be wrong. Here is Caroline explaining her trading philosophy literally replying to Scott Alexander.
The money quote: "Those people are lame and not EAs; this blog endorses double or nothing coin flips and high leverage". That's the smoking gun
Maybe you misunderstood me. That person is the CEO of FTX-affiliated hedge fund Alameda research. She's the one making the trades (with Sam's approval).
OK yes, I didn't realize whose messages those were, my mistake. It's more of a smoking gun than I realized, I'll probably need to research it deeper.
It's not. Double or nothing with leverage is just normal finance with EA goals. The scam is what they did when they hit 'nothing' - rather than take the L, they siphoned off customer money for one last big bet. (And it might have worked, if they got another six months.)
I don't agree this is "normal finance". It's a high risk game that is sometimes played in finance, but they committed fraud by the way they played this game and the way they presented it. My question was about whether EA/rat angle played any role in it. Initially, I thought the connection was purely coincidental, now reading more about it, I am not so sure - it looks there are some aspects of both a con aimed at EA/rat world and using EA/rat premises as justification for doing evil things, or at least to destroy all fencing that usually keeps one from doing evil things - which eventually inevitably led to doing evil things.
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