FTX and Effective Altruism: Philanthropy for Psychopaths

A progressive crypto cultist scammed millions of people, believing it was all for the ‘greater good’

“I think of myself as like a fairly cynical person. And that was so much more cynical than how I would’ve described [yield] farming. You’re just like, well, I’m in the Ponzi business and it’s pretty good.”
Bloomberg’s Matt Levine to Sam Bankman-Fried in April, 2022

Sam Bankman-Fried (SBF), the disgraced ‘crypto king’, is a psychopath. There’s no other way to describe someone openly running a cassino-like $32 billion Ponzi scheme.

Running a Ponzi scheme makes you either a conman — if you do it for a profit —, or a cultist — if you do it for the ‘greater good’. So SBF was both a psychopath and a cultist. His cult is called ‘effective altruism’. In my piece on another prominent ‘effective altruist’, Sam Harris, I've warned you about this cult. And also about how progressives are ruining crypto.

‘Effective altruism’ is a trendy movement among the Silicon Valley elites, whose doctrine preaches an objective moral standard: amassing as much power and wealth as possible in society, and then using it to create some sort of utopic ‘greater good’. It is a cult seeking to establish a socialist plutocracy.

Effective altruism is a cult seeking to establish a socialist plutocracy

In a September 2022 fluff hagiography for their corporate publication, Sequoia Capital praised SBF’s savior complex in the title “Sam Bankman-Fried Has a Savior Complex — And Maybe You Should Too”. The hagiography turned prophetic when it tried to reason that SBF’s conniving, reckless risk-taking was for the — wait for it — ‘greater good’:

“…he felt he needed to take on a lot more risk in the hopes of becoming part of the global elite […] Very high risk multiplied by dynastic wealth trumps low risk multiplied by mere rich-guy wealth. To do the most good for the world, SBF needed to find a path on which he’d be a coin toss away from going totally bust.”

The making of a psycho

But the Sam Harris or Sequoia types were just his enablers. There’s more to SBF’s psychopathy than just phenotypical elements. There’s also genetics. SBF’s mother is Barbara Fried, a Stanford Law professor and co-founder of Mind the Gap.

Mind the Gap is an undercover political action committee dedicated to siphoning millions of dollars from ideologically-aligned Silicon Valley pockets into the campaigns of Democratic candidates. Part of their strategy is to avoid disclosing which candidates are getting their donations, to prevent Republicans from fighting their efforts.

They don’t even have a website. One insider has told Vox that Mind the Gap’s “raison d’être is stealth”.

SBF is (or was) one of the many clients of Mind the Gap. According to Open Secrets, he was also the second largest individual donor to the Democratic Party at $37m during the 2021–2022 cycle. Only behind George Soros…

SBF was the second largest individual donor to the Democratic Party at $37m. Only behind George Soros…

Like many kids in liberal homes, SBF was raised in an environment prone to conspiracy theories and under a rigid moral code, the product of blind faith in constructivism and the manifest destiny of global elites.

This mixture echoes Karls Popper’s ‘naïve rationalism’, a belief that a select group can generate their desired state of nature just by virtue of putting their resources towards it. While, at the same time, indulging in the self-deception that their engineered state of nature is better than any spontaneous order of society.

This proposal appeals so much to human vanity that is professed even by those who know it to be false, but believe it is an innocuous lie. Naïve rationalism gives them a sense of unlimited power to realize their wishes, oblivious to the reality that even institutions that have arisen by virtue of human action, might not be controllable by human will.

The greatest 21st-century addition to their mental framework was the eschatology of climate change, giving them absolutely higher moral grounds to justify affecting all kinds of harm to others in the name of the ‘greater good’. The outcome of this twisted, experimental thought process is an army of psychopathic fundamentalists. Like SBF.

While a low-functioning psychopath will glue itself to a basketball court or throw Campbell’s soup at a painting in a museum, a high-functioning psychopath might wreck the financial lives of 5 million people in one fell swoop. All in the name of the ‘greater good’.

A low-functioning psychopath will glue itself to a basketball court or throw Campbell’s soup at a painting in a museum, a high-functioning psychopath might wreck the financial lives of 5 million in the name of ‘the greater good’

In a way, Sam Bankman-Fried’s sister is Greta Thunberg.

Philanthropy for Psychopaths

Philautia is the love for self. In microeconomics, so-called rational decisions are made based on weighing expected utility against expected cost. As rational agents, we are expected to maximize utility and minimize cost.

Now, mind you that costs are objective, but utility is subjective. An ice cream cone might cost $2 to anyone, but it doesn’t mean it will provide everyone with the same amount of pleasure.

What the ‘effective altruism’ types believe in is that they can replace the inferior, subjective standards of the plebs; with the superior, objective standards of the ruling class. That they can provide you with an amount of utility that you couldn’t even dream of. So they feel they have a moral carte blanche to impose whatever costs on you. Philautia disguised as philanthropy.

In classic microeconomics, the system is deemed to be in equilibrium when you cannot reallocate resources to increase a person’s well-being, without reducing another person’s well-being. A zero-sum game known as Pareto efficiency.

In effective altruism, a new type of equilibrium is proposed, where you cannot reallocate resources to increase a person’s speculative well-being, without reducing another person’s actual well-being. A psychopathic random-sum game I’ll call Bankman-Fried efficiency.

A hedge fund trader by training, SBF knows well the arithmetics of risk transfer. In his calculations, he just concluded it was an acceptable cost for all the ‘greater good’ he could cause.

In a 2013 article, the Stanford Social Innovation Review called effective altruism “philanthropy for elitists”. Almost ten years later we see it for what it is: philanthropy for psychopaths.

The silver lining that always was

Effective altruism is a failed concept from the start, as it assumes a consensual, objective moral code that exists in a vacuum and generates a monotonic scale of ‘greater good’.

Armed with those tools, their proponents feel empowered to do an unhinged collection of immoral things because, frankly, they are saving the world. And they know how to save people better than people know how to save themselves.

The world would be a much better place if we would only do what ‘effective altruists’ tell us. They will ‘nudge’ us and gives us ‘carrots’ as incentives. But that’s not about us. We don’t need that emotional blanket. It is them who are desperate to be someone’s emotional blanket.

What the future reserves for SBF will be proportional to the ‘greater evil’ he caused. Amid an ongoing SEC investigation and potential criminal charges, the political ties between FTX and the Democratic Party deserve more than a cursory interest.

He did however add a new chapter to an emerging business model in our sick society: become a startup founder -> raise/make a lot of money -> lose all the money in spectacular fashion -> Netflix show. 200% IRR over 5 years.

What is so fascinating about this story is how it encapsulates progressive thinking so well: the meaning of life is to do the ‘greater good’… with someone else’s money while looking good at it, and bathing our egos in all that infatuation. In this case, the ‘effective altruist’ SBF was making a buck running a Ponzi scheme while championing his philanthropic ventures with the customers’ money. A study on philanthropy for psychopaths.

Full Disclosure

I never did any business with FTX, nor have ever held their token (FTT).