26 March 2023

It's All a Scam

I figure that it is time to loop back around to Sam Bankman-Fried, and his increasingly long list of fraud and theft. It has now been revealed that the disgraced former head of the FTX crypto exchange took $2.2 billion from the business before its collapse.

More than $2bn was transferred to Sam Bankman-Fried from FTX entities, according to bankruptcy court filings made by the new management of the cryptocurrency exchange on Wednesday night.

According to a press release describing financial statements filed with the bankruptcy court in Delaware, Bankman-Fried and five members of his inner circle transferred $3.2bn in total to their personal accounts in the form of “payments and loans”, the funds primarily coming from Alameda Research, a crypto trading hedge fund affiliated with FTX.

John Ray, the new chief executive of FTX appointed at the time of the Chapter 11 bankruptcy filings in November, has been seeking to identify the location of cryptocurrency and other assets that can be eventually returned to the millions of FTX customers whose accounts have been frozen since its collapse.

Bankman-Fried is facing a dozen federal charges related to the collapse of FTX accusing him of securities fraud and looting the platform for personal gain. FTX’s management said on Wednesday the $3.2bn figure did not include $240mn for “luxury property in the Bahamas”, “political and charitable donations”, and “substantial transfers” to subsidiaries. Filings showed Bankman-Fried had received $2.2bn.

This is not a surprise.  SBF, as he is known, was clearly running robbing his customers blind.

This is not a surprise, but what is a surprise is that the people who dominate the philosophical fraud known as "Effective" Altruism, ignored warnings about SBF's fraud for years, largely because SBF was giving them a lot of money.

Quoting Upton Sinclair, "It is difficult to get a man to understand something, when his salary depends on his not understanding it."

Leaders of the Effective Altruism movement were repeatedly warned beginning in 2018 that Sam Bankman-Fried was unethical, duplicitous, and negligent in his role as CEO of Alameda Research, the crypto trading firm that went on to play a critical role in what federal prosecutors now say was among the biggest financial frauds in U.S. history. They apparently dismissed those warnings, sources say, before taking tens of millions of dollars from Bankman-Fried’s charitable fund for effective altruist causes.

When Alameda and Bankman-Fried’s cryptocurrency exchange FTX imploded in late 2022, these same effective altruist (EA) leaders professed outrage and ignorance. “I don’t know which emotion is stronger: my utter rage at Sam (and others?) for causing such harm to so many people, or my sadness and self-hatred for falling for this deception,” tweeted Will MacAskill, the Oxford moral philosopher and intellectual figurehead of EA, who co-founded the Centre for Effective Altruism.

Yet MacAskill had long been aware of concerns around Bankman-Fried. He was personally cautioned about Bankman-Fried by at least three different people in a series of conversations in 2018 and 2019, according to interviews with four people familiar with those discussions and emails reviewed by TIME.

He wasn’t alone. Multiple EA leaders knew about the red flags surrounding Bankman-Fried by 2019, according to a TIME investigation based on contemporaneous documents and interviews with seven people familiar with the matter. Among the EA brain trust personally notified about Bankman-Fried’s questionable behavior and business ethics were Nick Beckstead, a moral philosopher who went on to lead Bankman-Fried’s philanthropic arm, the FTX Future Fund, and Holden Karnofsky, co-CEO of OpenPhilanthropy, a nonprofit organization that makes grants supporting EA causes. Some of the warnings were serious: sources say that MacAskill and Beckstead were repeatedly told that Bankman-Fried was untrustworthy, had inappropriate sexual relationships with subordinates, refused to implement standard business practices, and had been caught lying during his first months running Alameda, a crypto firm that was seeded by EA investors, staffed by EAs, and dedicating to making money that could be donated to EA causes.
More from TIME


It’s not entirely clear how EA leaders reacted to the warnings. Sources familiar with the discussions told TIME that the concerns were downplayed, rationalized as typical startup squabbles, or dismissed as “he said-she said,” as two people put it. EA leaders declined or did not respond to multiple requests from TIME to explain their reaction to these warnings and what they did in response. But by the end of 2018, Bankman-Fried’s behavior was such an open secret that EA leaders were debating Bankman-Fried’s presence on the board of the Centre for Effective Altruism. In emails among senior EA leaders, which TIME reviewed, one person wrote that they had raised worries about Bankman-Fried’s trustworthiness directly with MacAskill, and that MacAskill had dismissed the concerns as “rumor.” In 2019, Bankman-Fried left CEA’s board.


Why did the braintrust of a social movement dedicated to virtuous impact apparently fail to heed repeated warnings about one of their own, while continuing to promote him publicly as a force for good? For a group of philosophers who had spent their lives contemplating moral tradeoffs and weighing existential risks, the warnings about Bankman-Fried may have presented a choice between embracing a big donor with questionable ethics or foregoing millions of dollars they believed could boost their nascent movement to help save the future of humanity. In a span of less than nine months in 2022, Bankman-Fried’s FTX Future Fund—helmed by Beckstead—gave more than $160 million to effective altruist causes, including more than $33 million to organizations connected to MacAskill. “If [Bankman-Fried] wasn’t super wealthy, nobody would have given him another chance,” says one person who worked closely with MacAskill at an EA organization. “It’s greed for access to a bunch of money, but with a philosopher twist.”

You know, "Greed for access to a bunch of money, but with a philosopher twist," is a pretty summary for "Effective" Altruism, though I still prefer the description, "Prosperity gospel for agnostics."

It's all about the Benjamins.


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