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suy  2yr ago (astralcodexten.substack.com)   Edited 2yr ago   4226 thread views

Scott Alexander on Sam Bankman-Fried, FTX and Effective Altruism

astralcodexten.substack.com

I made this a top level post because I think people here might want to discuss it but you can remove it if it doesn't meet your standards.

Edit: removed my opinion of Scott from the body

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The term "there but for the grace of God go I," comes to mind.

Crypto in particular has made and lost many fortunes and the only common thread I've seen running through it all is appetite for/tolerance of risk.

You almost never see anyone make it big in Crypto using a measured, conservative strategy.

Hell, running an exchange is supposed to BE the only safe moneymaking strategy but we see where that has gotten them.

I think running the exchange was kinda safe (maybe not making them tons of money though).

What wasn’t safe was the Alameda trading firm.

What made it (probably) a crime was plundering the customer deposits of the safe business to prop up the risky trading firm.

If Alameda had been totally separate, they might even have managed to come out of that. But they were both tied so closely, nearly literally at neighbouring desks, that the problems of one swamped the other. And what is coming out about his habit of shifting funds from FTX wallets to Alameda and back is not looking good; his entire project was built on sand.

I think there's more than enough blame to go round, and it's not all on FTX/Friedman-Bank. The VCs, the regulators, the auditors/accountants - everyone should have been looking at this and wondering where it was all coming from. But the simple answer is greed: as long as the numbers looked right and the profits seemed to be rocketing up, nobody wanted to question the golden goose.

That's what I'm saying, though. Companies that are willing to just quietly run a functional exchange are doing pretty well (for now).

But so many in the space have a desire to place bigger and bigger bets rather than accepting consistent returns and tying on the trading firm to the exchange probably seemed like a GREAT idea for a while.

But so many in the space have a desire to place bigger and bigger bets rather than accepting consistent returns and tying on the trading firm to the exchange probably seemed like a GREAT idea for a while.

Indeed and I think this is the real problem for EA. The traditionalist critiques of utilitarianism that rationalists have been dismissing as "uncharitable straw-men" have been revealed as flesh and blood all along.

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