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bet monkey What Stage of Capitalism Is Sam Bankman-Fried?
How do you make a multibillion-dollar company disappear in a week? For Sam Bankman-Fried and his crypto exchange FTX, the simple answer is that a leaked balance sheet leads your biggest rival, himself under federal scrutiny, to instigate a sort of “bank run” you cannot possibly cover, exposing billions of dollars in shortfalls you apparently created by riskily investing money that wasn’t yours. And revealing yourselfbet monkey, in the process, to be a very new kind of financial villain — one who pitches not just the prospect of profit but also deliverance from the corrupt speculative system in which you “made” your “billions.”
But if S.B.F. was just a meme stock — his cultural capital inflated by our collective desire to see his profile grow — what exactly was the meme?
Cryptocurrency is little more than a decade old, and yet it has passed through several reputational phases: first, as the lawless province of black marketeers and hard-core libertarians obsessed with escaping government oversight; then as a speculative market in which many of those people made an astonishing and enviable amount of money; then as an investment sector for adventurous normies who might previously have turned to simple day-trading; then as an “asset class” eyed by big-money investors and establishment banks. It was only at the start of last year’s N.F.L. season that Matt Damon, unknowingly standing on the precipice of a coming “crypto winter” in which the value of Bitcoin fell by two-thirds, endorsed Crypto.com and reminded millions of Americans that “fortune favors the brave.”
The gold-rush phase for cryptocurrency is over now — with the FTX collapse punctuating that crypto winter, a Christmas of malfeasance. The death of FTX has been called crypto’s “Lehman moment,” but it was not the first such collapse — it follows the implosions of Celsius, Three Arrows Capital, Terra and Luna, among many others. But it’s fitting that Bankman-Fried will now always be remembered as this crypto crash’s central figure, because he postured as someone who could rewrite not just the rules of the financial system but its morality as well. To investors and legislators, he looked like the potential face of a new era for crypto, poised to legitimize through transparency and regulation what had always been an enormously shady, if often quite lucrative, sector. To progressives, he looked like our kind of oligarch, a sort of boy wonder who seemed capable of conjuring up world-changing billions guiltlessly, effectively out of thin air.
And he had promised to give that magic internet money away just as quickly: to Democrats, for whom he was the second-largest donor in the midterm cycle and to whom he had casually promised as much as $1 billion by 2024; to pandemic-prevention policy work; to journalistic start-ups and a whole host of causes affiliated with “effective altruism,” a movement devoted to doing maximal good in the world. In just three years after its founding, FTX grew from zero to a $32 billion valuation and along the way seemed to provide every progressive millennial a potential sugar daddy.
This was a fantasy, as anyone looking closely at the time could have told you. But it was very tempting to believe, and nobody was trying to look all that closely, it turns out — not the editors who put him on the covers of Forbes and Fortune; not the traders who trusted him with billions in daily trading volume; not the recipients of his philanthropic pledges, many of which will now go unfulfilled; and most conspicuously, not the investors who handed him millions without seeming to even bother checking the books.
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