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Culture War Roundup for the week of December 5, 2022

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I Accidentally Got SBF To Admit to Fraud

So...SBF is simply a moron. I've been trying to resist that conclusion, but now I'm asking myself why I bothered.

In the link above Youtuber Coffeezilla drops into a call with SBF (a second time! Why is he still taking calls??) and proceeds to basically get him to admit that funds were comingled.

Coffeezilla noted that SBF always deflects the issue by arguing that some accounts were trading on margin and so were deliberately open to being used by Alameda, unlike regular accounts. So literally all he does - and all any journalist needed to do - was just keep drilling down on whether the FTX only customers who weren't doing that could still get their funds. SBF obviously has no answer. Even worse, he basically screws himself by admitting that they had one withdrawal process which was him admitting to comingling funds.

So...the guy is just a moron. He doesn't have some grand legal plan to plead negligence or ignorance. He has a half-baked plan based on the idea that everyone is dumber than him (despite multiple counterexamples) and he falls apart the minute anyone puts any thought into his answers.

The entire video is actually a good look at how a journalist should view someone like SBF and his word games and deflections and how they should strategize to defeat them (and the end has the sort of pure joy at skewering the target that I bet all journalists feel but are too dignified to admit when picking up their Pulitzer). And this is coming from someone who thought the idea of people like Coffeezilla being "journalists" laughable.

But he has legitimately done the best job of questioning SBF out of everyone (Stefanopoulos was the close second)

So...the guy is just a moron.

Well, yeah. But the important thing to remember is that he's a smart moron. The embarrassing Sequoia fanboy squee article hit that point, too:

Highly mathletic, SBF breezed through Crystal Springs Uplands, an elite prep school in Hillsborough, California. Though he earned top marks, he kept to himself, spending most of his free time playing computer games (StarCraft, League of Legends) and a trading card game, Magic: The Gathering. But at MIT he found his tribe: fellow pledges at Epsilon Theta, a coed fraternity of supergeeks similarly interested in Magic, and video games. Thetans are fond of debating math, physics, computer science, linguistics, philosophy and logic problems—for fun—at alcohol-free parties.

As an aside, anyone who coins a cutesy neologism like "mathletic" should be rolling around on the floor, clutching their ears, in agony. But what is my point here?

Because the worship of intelligence/IQ I see in these circles, including on here, usually "X is really really good at STEM/maths". I've seen comments casually tossed off about 'normies', about '95 IQ rednecks', many assumptions that Ordinary People Are Dumb, and we know it because they must all be sub-100 IQ, we know that because if they were Smart Like Us they wouldn't be rednecks or normies.

Well, guys, here's one of the Smart Like Us crew who is dumber than an ordinary person when it came to "I can make yuuuuge money out of trading magic beans".

He doesn't have some grand legal plan to plead negligence or ignorance. He has a half-baked plan based on the idea that everyone is dumber than him (despite multiple counterexamples) and he falls apart the minute anyone puts any thought into his answers.

I agree that he doesn't have some grand legal plan, but I do think he is relying on "negligence or ignorance". The entire set-up at his Bahamas tax haven base (see the Sequoia article again, man that is probably the worst thing this Adam Fisher ever wrote but it's a treasure trove of nuggets about the mindset of everyone involved, from the fanboy journalist to the investors throwing money at Bankman-Fried on the basis of one Zoom call) was juvenile - it sounds like "still living like we're in college in our second year even though we're all late twenties and heading into our thirties". Everyone seems to have had an instinctive mindset that the conventional way of doing things - even business - was somehow icky, somehow.... normie. And they weren't normies! They were supersmart EA types who were going to save the world by making tons of money and having fun doing it!

So whether or not Bankman-Fried set out from the outset with fraud in mind, the setup was so chaotic, it was conducive to it. I think there is something suspicious there, because Bankman-Fried had so much ownership and control behind the scenes, but he may genuinely have thought he was a supersmart cookie who could find a new way to make zillions after his One Weird Trick dried up.

His parents are lawyers, I wouldn't be at all surprised if he imbibed some half-baked notion that "if I say X was separate from Y, and it was Y did all the fiddling around with funds, then I'm in the clear" when it comes to his technicality about "it wasn't FTX that did it, it was Alameda". I do think he's relying on technicalities to save his skin, which just shows once again that "a little knowledge is a dangerous thing".

I really hope one of the lessons people in the rationalist and rationalist-adjacent sphere, including on here, take away from this is to lose the ugly attitude around the idolisation of 'intelligence' and the corresponding denigration of 'normies' (this constant assumption, as I've said, that ordinary people are all 90-95 IQ and not the average of 100 IQ or even up to 105!).

Can we see the math and logic he's said to have done?

I ask because I remember there being something of a dive into his League of Legends ranking based on the infamous investor call, and apparently he was not at all ranked the way a genius mathlete willing to put in the hours would be at all, and also because I myself have seen a lot of people who associate with smart, nerdy things entirely for smart, nerdy cred, and whose actual ability to engage with the crunchy, mathy, requires-focus-and-practice bits of them is completely nonexistent.

I'd absolutely believe that Sam got top marks entirely based on his family and social connections and the fact that a prep school is about making him look good for a college environment that has completely desisted from actual educational discernment. It's absolutely the case that smart people can believe very dumb things, especially when those dumb beliefs are serving as vital shields for their self-image, and that high-IQ memorize-loads-of-facts-and-do-novel-work-with-them types can end up carefully compartmentalizing against the heresies of their day and circle, and get badly bitten when their failure to think in that one context happens to arise.

But until I see Sam's math SAT scores or evaluate some complex code he's written, I'm personally going to hold off on claiming that he's smart.

For me, it's just parsimony. I have no faith in colleges in general any more, and Sam has demonstrated his ability to manipulate elite institutions, and is also a goober. It could be that he is high-IQ and a goober, or that he's a goober all around and simply bamboozled MIT the same way he did a bunch of others - or it might be that he simply had a lucky interpersonal-connection 'in' to MIT that would have worked whether his boiling-hot IQ was measured in C or F.

I also think it's probably fairly unlikely that we'll get hard data either way, especially now, given the extended time that's passed from any potential objective-ish evaluations like AP exams or SATs. Also, nowadays, it would be trivial for someone of his resources to game a few slightly-harder-to-fake signals, like a ghostwritten StackOverflow profile and some boilerplate personal projects on a GitHub account.

But given the sheer stupidity and utter agnosticism towards the very idea of personal consequences he has displayed so far, I feel like I can safely say he's probably real dumb, in the classic sense, excepting for his ability to lie and manipulate people (which, in fairness, is a non-trivial skill, but also one not necessarily interacting with deep math, science, and programming geekery). I predict that no actual evidence of Sam doing anything difficult and valuable with anything not vulnerable to social pressure, where the results can be verified (meaning mostly math or programming, since those are things I feel I could verify myself) will be found. I am not super-invested in this theory, and I happily admit this is purely a balance-of-probabilities as I see it; I'd be delighted for someone to turn up, e.g., a deeper dive into Sam's LoL rankings, if nothing more objective can be found.

He does seem to have some sort of charisma which, frankly, I wouldn't expect from his appearance. That Sequoia article is embarrassing in how hard the writer is squeeing over him, and it's really hard to know why, unless Bankman-Fried has some in-person ability to baffle you with his bullshit. I cannot get over the account of the Zoom call where Bankman-Fried is looking for funding and he gives some waffle in response to "so what can you do with your crypto exchange?" and they all fall over themselves to throw money at him:

Bailhe remembers it the same way: “We had a great meeting with Sam, but the last question, which I remember Alfred asking, was, ‘So, everything you’re building is great, but what is your long-term vision for FTX?’”

That’s when SBF told Sequoia about the so-called super-app: “I want FTX to be a place where you can do anything you want with your next dollar. You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”

Suddenly, the chat window on Sequoia’s side of the Zoom lights up with partners freaking out.

“I LOVE THIS FOUNDER,” typed one partner.

“I am a 10 out of 10,” pinged another.

“YES!!!” exclaimed a third.

...The B round raised a billion dollars. Soon afterward came the “meme round”: $420.69 million from 69 investors.

After my interview with SBF, I was convinced: I was talking to a future trillionaire. Whatever mojo he worked on the partners at Sequoia—who fell for him after one Zoom—had worked on me, too. For me, it was simply a gut feeling. I’ve been talking to founders and doing deep dives into technology companies for decades. It’s been my entire professional life as a writer. And because of that experience, there must be a pattern-matching algorithm churning away somewhere in my subconscious. I don’t know how I know, I just do. SBF is a winner.

But that wasn’t even the main thing. There was something else I felt: something in my heart, not just my gut. After sitting ten feet from him for most of the week, studying him in the human musk of the startup grind and chatting in between beanbag naps, I couldn’t shake the feeling that this guy is actually as selfless as he claims to be.

So I find myself convinced that, if SBF can keep his wits about him in the years ahead, he’s going to slay—that, just as Alameda was a stepping stone to FTX, FTX will be to the super-app. Banking will be disrupted and transformed by crypto, just as media was transformed and disrupted by the web. Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.