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 think the most likely explanation is that at some point in the past they were a legitimate business that ran out of legitimate funds, probably due to their known penchant for highly leveraged bets. Then they deluded themselves into believing that if they dipped into customer accounts they could gamble their way out, return the customers money, and have nobody be the wiser. Cut forward some undefined span of time and the hole gradually grew to 8 billion dollars and the whole thing collapsed.
I mostly say this because most people aren't sociopaths and this seems like the most likely route this could have happened if Bankman is not a sociopath. If he is a sociopath and planned the elaborate fraud from the start, i guess nevermind. Feels less likely, though.
Anyway, I don't think we're looking at anything more or less than a polycule of stim-abusing rationalists with a gambling problem, good PR, and access to several billion dollars with which to gamble.
I think that the main lesson here is that you can't trust people just because they use lots of ingroup shibboleths and donate lots of money to charity, even though (to be honest) that would be kinda my first impulse.
There's a LOT more to it than that. His extensive anti DeFi lobbying and his donation history (donating money he didn't have) point to a much deeper rabbit hole than a Bernie Madoff situation. Between this and the possibly related murder of Nikolai Mushegian, it's a very strange time to be in the DeFi sphere. This is like our Epstein.
I know this sounds like a "just trust me bro" post but there isn't a lot written about it that's up to date that I can reference and it's unlikely the media will ever dig deeper.
I don't think I can have an educated opinion on whether the opposition to DeFi was (a) principled advocacy for something he genuinely believed, (b) basic self-interested moves typical of big players in most industries, or (c) nefarious shit that should tank his credibility among honest folk. My money ordinarily would be on (b), but that's just priors.
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