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Why the World Fell for FTX CEO Sam Bankman-Fried

Back in April I paid $12 to “attend” a virtual event with 30-year-old crypto billionaire Sam Bankman-Fried. Around 45 other people registered for the Zoom, which was hosted by Manny Yekutiel, a San Francisco-based Democratic organizer and owner of the eponymous civic venue Manny’s

Yekutiel is an affable but astute questioner, who sat against a hot-pink sequin backdrop and pressed SBF (as he’s known) on crypto applications and regulation, concepts of liberty and freedom, and the potentially destructive means that might serve the endgame of effective altruism. SBF, who dialed in from a darkened Washington, DC, hotel room, seemed pleased with his own answers. He also appeared distracted throughout the 50-minute Zoom, his gaze wandering and his face intermittently illuminated, the telltale sign of another application being opened. League of Legends? Maybe. Either way, I didn’t walk away—or close my laptop—with any greater understanding of the hype.

It was a different SBF who sat for a livestreamed interview with the razor-sharp financial journalist Andrew Ross Sorkin this week. The crypto entrepreneur’s right arm kept shaking, and he looked chagrined. “Look, I’ve had a bad month,” SBF said at one point, in what might be the understatement of 2022. 

In recent weeks SBF’s $32 billion crypto exchange, FTX, has completely unraveledInvestors have lost millions. SBF’s own largely theoretical wealth has dwindled. Prominent investors have tried to scrub their connections with him. And the onetime wunderkind seems unable to directly answer questions about his own culpability in what is increasingly being perceived as a fraudulent crypto scheme. “I was as truthful as I’m knowledgeable to be,” he said to Sorkin. “I don’t know of times when I lied.” (It depends on what the meaning of the word is, is.)

Were there signs that FTX was a house of cards and that maybe its whiz-kid founder didn’t know which way is up? The answer is partly contingent on one’s inherent skepticism and understanding of the machinations of the crypto market. Short answer: Yes. Federal prosecutors were reportedly looking into FTX months before it crashed. But there were other reasons to be skeptical of an unproven entrepreneur who seemed overly willing to embody the Silicon Valley, mad genius archetype. So why did we—investors, crypto fiends, the media—go along with it again? Or, as writer and known billionaire-skeptic Anand Giridharad put it, “My only take on the SBF interview is that I don’t know why we keep trusting highly limited, demi-adult men with the keys to our prosperity and society … He has very little to teach. A lot to learn. Somehow, so many got it backwards.” 

I posed this question to Margaret O’Mara, a professor of history at the University of Washington and author of The Code: Silicon Valley and the Remaking of America. Everyone loves the hero’s journey, O’Mara said immediately. We’re still fixated on the idea of the eccentric genius accomplishing extraordinary things.

People still cite Bill Gates, the ultimate nerd who went on to helm an extremely transformative company, as a prime example, O’Mara points out. A generation later it was two computer scientists named Larry and Sergey, who presented not only a clean, uncluttered search portal to the world—an antidote to the pop-up mayhem of the late dotcom era—and bean-bagged offices to their employees, but who also retained control of a special class of voting shares of their company. Their greatest innovation might not have been search, but “founder control.” 

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