On December 13, the House Financial Services Committee held a long-awaited hearing into the collapse of the FTX crypto empire. FTX’s disgraced former CEO Sam Bankman-Fried could not, as he had hoped to, testify there in person because he was sitting, as Inmate 14-372, in a jail in the Bahamas. Instead, the committee heard an interim report from John Ray III, the seasoned bankruptcy lawyer installed by the Chancery Court in Delaware as the CEO of FTX.US and its dozens of affiliates when FTX declared bankruptcy November 11.
In his testimony, Ray said he had never “seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance.”
Meantime, the Commodity Futures Trading Commission (CFTC), which claims some jurisdiction over the crypto trading sector, noted that more than $8 billion in customer deposits into FTX were missing. Investing bodies including the Silicon Valley darling Sequoia Capital and the Ontario Teachers Pension Plan were also announcing that they had written off investments they had made in FTX of, in many cases, some hundreds of millions of dollars.
I have been trying to pull together several threads of the story of how this all came about. In the account that follows, I’ll start with a quick exploration of Bankman-Fried’s parents and the kinds of values they inculcated– why not? Then, I’ll move to actors who had probably an even deeper, continuing influence on the decisions taken by the mop-haired fraudster during his “adult” years, namely, the leaders of a deeply wrong-headed and dangerous—but strangely influential—Oxford-based cult called Effective Altruism.
** 1. The parents
Much has been written about the fact that Bankman-Fried was a beloved son of two accomplished professors at Stanford University’s law school. His father, Joseph Bankman, is a highly lauded expert on tax law and the prime intellectual interest of his mother, Barbara Fried, has been legal ethics and philosophical ethics more broadly. In this article in the New York Times and this one in Puck, the writers reported on the shock and horror with which the news of young Sam’s downfall was greeted in the Stanford faculty social circles in which he was raised.
In Puck, Theodore Schleifer noted that Joseph Bankman, “wrote three casebooks on tax shelters and tax evasion, becoming one of the country’s leading experts on the subject.” Bankman also agitated for the simplification of the U.S. tax-filing system, at one point working alongside Sens. Elizabeth Warren and Bernie Sanders on (ultimately unsuccessful) proposals to achieve this.
Schleifer also notes that in the acknowledgments section of her most recent book, published 2020, Barbara Fried wrote glowingly of young Sam’s precocious intellect, crediting him and his younger brother with a “significant intellectual debt.” She added, “In the years since, both Sam and Gabe have become take-no-prisoners utilitarians, joining their father in that hardy band.”
The question arises as to whether, or to what degree, we might blame these parents for their son Sam’s extreme moral turpitude. I will come to the matter of Sam Bankman-Fried’s allegedly hard-core embrace of utilitarianism very soon. But first: the matter of blaming the parents. My general view, as a mother of three mid-career adults, is that parents can be assigned blame—or credit—for the actions of their offspring only to a limited extent, and one that decreases rapidly from the onset of adolescence onward. Given that Sam Bankman-Fried is 30 years old, I would normally not even glance at the matter of his parents’ possible culpability for his actions, except for two notable and relevant facts. Firstly, his father has worked a lot with Sam, apparently on matters connected to FTX and Alameda.
Schleifer writes that Joe Bankman,
interviewed and hired the first lawyers for Alameda Research, back in 2017, and effectively served as FTX’s first attorney. He handled the inbound that came and made the resulting introduction that helped FTX raise $130 million from his former law student, private equity mogul Orlando Bravo; spent his free time on FTX’s charitable and regulatory efforts; and was ultimately in the room before Sam made the fateful decision, at 4:30 a.m., to sign the documents that declared Chapter 11, according to the bankruptcy filing. “We’ve always enjoyed working together and thinking together,” Bankman said in a podcast interview explaining how he ended up working for his son. Sam had begged him for “a number of years” to work together, he said. “Any parent would love to hear that.”
So there’s that. And then, regarding the matter of blaming the mother, there’s the intriguing fact that in 2013, Barbara Fried published a lengthy article in Boston Review titled “Beyond Blame.” This article is constructed almost wholly from the kind of nitpicking jargon that plagues most philosophical writing in the Anglo-American (analytical) tradition. But on the question of whether people’s actions are undertaken out of their own free will (in which case they can be blamed), or on the basis of external, predetermined factors, she is quite clear. She nails her colors firmly to a view she calls “skeptical incompatibilism”. The skeptical incompatibilist, she writes, “agrees with the libertarian that we are blameworthy for our actions only if we have free will in the requisite sense. But, contra the libertarian, the skeptic concludes that we don’t have the requisite free will, or at least there is no persuasive evidence that we do.“
Prof. Fried has done a lot of apparently admirable work with Stanford’s Center on Poverty and Inequality. It is quite probable that she developed her strongly anti-“blame” views as a result of that work. But if we can say that a deeply impoverished mother should not be “blamed” for stealing food essential for her children’s survival because of her impoverishment, that is one thing. But should we also be prepared to use the same kind of argument to exonerate the actions of a 30-year-old person raised in circumstances that are way beyond those of moderate comfort?
Perhaps the only mitigating circumstance we might identify for Bankman-Fried is that he was raised in a home where his mother seemed reluctant to assign “blame” or personal responsibility to anyone for anything, while his father, an expert on tax evasion, was also a family leader in the “hardy band” of “take-no-prisoners utilitarians”?
Oh, the poor baby…
** 2. The guru
How does a rich celebrity meet his guru, or how does a guru cultivate a person who might later become become a rich celebrity? We might all love to know when Tom Hanks first encountered Scientology… In the case of Beatle George Harrison, one key turning point occurred in the mid-1960s—in the Bahamas, of all places—where the Fab Four were filming their movie Help! and the founder of Sivananda Yoga gave each of them a signed copy of his book… (George was the most receptive giftee of the four, and went on to become a life-long devotee of Hinduism.)
In the case of Sam Bankman-Fried, he was still an undergrad at MIT when he met a young Oxford- and Cambridge-trained philosopher called Will MacAskill. MacAskill was just a few years older than Bankman-Fried but he had already started building strong, transatlantic sinews for a cult-like organization dedicated to what he called “Effective Altruism.” This modern branch of the centuries-old philosophy of utilitarianism is known by its many devotees in Oxford, Cambridge (MA), Silicon Valley, and elsewhere simply as EA.
Utilitarianism is a form of consequentialism and as such is centrally concerned with outcomes, in contradistinction to theological or other worldviews that are built around strict rules of behavior, rather than outcomes. Utilitarianism enjoins its followers to work to achieve “the greatest good for the greatest number.” With his development of EA, MacAskill added to the existing utilitarian canon two new contributions. He argued that in order to be able to “give” the greatest amount of cash or resources to philanthropic efforts, well-meaning individuals should seek to maximize their earning power. And he stressed the importance of “longtermism“, arguing that, “Humanity might last for a very long time… Barring catastrophe, the vast majority of people who will ever live have not been born yet… [W]hat we do today can affect the lives of future people in the long run.”
The best account I’ve seen of the very large influence that MacAskill and EA had over the life decisions that the young Bankman-Fried made from 2012 on is this one, penned by “private historian” Adam Fisher for the website of the Silicon Valley VC firm Sequoia Capital. (In Spring 2020, Sequoia made a big investment in FTX, and soon thereafter Fisher’s doubtless high-priced text was paraded on its website. After FTX imploded Sequoia took Fisher’s fawning but informative profile down off the site. But by then it had been captured on the Wayback Machine.)
Fisher writes that when Bankman-Fried was a junior studying math and physics at MIT, MacAskill visited the school, “in search of volunteers willing to sign on to his earn-to-give program.” Bankman-Fried was apparently not the only MIT math nerd who did so. As Fisher describes it, it was MacAskill who suggested that the next summer Bankman-Fried get an internship at the quant-driven, New York investment firm Jane Street. After graduating the following year, Bankman-Fried went to work there full-time.
Fisher writes that by 2017,
He was killing it at Jane Street… He was giving away 50 percent of his income to his preferred charities, with the biggest donations going to the Centre for Effective Altruism and 80,000 Hours. Both charities focus on building the earn-to-give idea into a movement. (And both had been founded by Will MacAskill a few years before.) He had good friends, mostly fellow EAs. Some were even colleagues.
At that point, our hero quit Jane Street and moved to Berkeley, where he worked briefly as a professional fundraiser for MacAskill’s Center for Effective Altruism. He also, more consequentially, founded the crypto-centered hedge fund Alameda Research, which relied on a lot of distinctive input from fellow EAs in Berkeley, Japan, and Hong Kong. Very soon, Alameda was consuming nearly all his attention. At the beginning, the firm was extremely profitable, but within a couple of years, it started experiencing big losses; when Bankman-Fried founded the crypto-trading exchange FTX a couple of years later, one of its main functions was reportedly to channel funding into Alameda.
How closely did Bankman-Fried continue to work with MacAskill and his EA network during the Alameda/FTX years? In February this year, Bankman-Fried created a large philanthropic organization called the FTX Future Fund, which was headed by MacAskill and his colleagues from the Center for Effective Altruism.
(On November 10, as the FTX implosion started, MacAskill and his colleagues resigned from the Fund and wrapped up its operations. They stated “Our hearts go out to the thousands of FTX customers whose finances may have been jeopardized or destroyed,” and expressed regret that, “it looks likely that there are many committed grants that the Future Fund will be unable to honor.”)
Meantime, in late March of this year, at a point when there were questions whether Elon Musk could afford to complete his planned purchase of Twitter, Will MacAskill reached out to his friend Musk to explore whether he would be interested in having Bankman-Fried—whom MacAskill described as “my collaborator”—join him in the purchase. At one point during the intermittent DM exchange that followed, Musk asked MacAskill if he could “vouch” for Bankman-Fried. MacAskill’s speedy reply was,
Very much so! Very dedicated to making the long-term future of humanity go well!
On April 2, Bankman-Fried joined that DM thread, and apparently set up a call with Musk. It did not go well. Shortly after FTX imploded, Elon Musk told listeners on a live-audio Twitter discussion that he had talked to Bankman-Fried,
for about half an hour. And I know my bulls**t meter was redlining. It was like, this dude is bulls**t–that was my impression.
(On this matter, Musk looked much more savvy than the Sequoia Capital employees whose slatheringly positive assessments of Bankman-Fried’s investment smarts, as recorded in Adam Fisher’s account, had two years earlier led Sequoia to make its large investment in FTX.)
And by November of this year, in the aftermath of the collapse of FTX, how was Bankman-Fried himself viewing his whole involvement with the EA “movement”?
On November 15, when he was still living in his (super-expensive) hideout in the Bahamas, Bankman-Fried got into a rambling, late-night DM exchange with Vox writer Kelsey Piper. She probed him on his commitment to philanthropy and took (and published) a screenshot of the exchange that followed. (Her comments are on the right in blue, his on the left in grey.)
** 3. A quick, idiot’s guide to EA
I spent a bit of time recently exploring the websites of Will MacAskill, the Oxford-based Center for Effective Altruism and some of the key other EA-affiliated websites like those of the Future of Humanity Institute, Giving What We Can, 80,000 Hours, etc. A few things struck me about this movement, as it represents itself on such sites:
- It seems big and well-funded!
- The people who post there—especially on the super-busy EA Forum—love to engage in lengthy and very abstract navel-gazing discussions, and see little need to adduce or refer to any evidence from the real world of urgent, current moral/humanitarian needs.
- The people listed on the “Team” page of the Center for EA website are nearly all graduates of high-ranking universities in the UK, the United States, or Netherlands. In many cases, that qualification and their affiliation with various EA working groups are the only items provided on these c.v.’s.
- The top two people listed on that page (Executive Director and Project Manager) are both apparently male people listed as having studied philosophy, politics, and economics at Oxford. PPE is the main credential used by people who end up running the major institutions of British public life. (And by others, including me.)
- The people listed on the “Team” page skew very disproportionately male—except for those in the “Community Health” section.
- Will MacAskill himself does not seem, from the videos he is featured in, including his 2018 TED talk, to be a particularly charismatic speaker.
Since November 11, many of these websites have displayed signs that the orgs behind them have been wrestling with the impact of the FTX collapse. For example, on the 80,000 Hours website, which is one of the main ventures dedicated to grooming future EAs, you can find this notice on their “Our donors” page:
** 4. The conceits of EA
Up above, I described Effective Altruism as a branch of utilitarianism that added to the centuries-old principles of this worldview the injunctions to embrace “longtermism” and the concept of “earning to give.” Back in the late 18th century CE, when the Oxford-trained philosopher Jeremy Bentham published the most widely recognized codification of this philosophy, utilitarianism represented a foundational move to free ethical thinking from its longstanding reliance on theological precepts as constituting the basis for moral action or moral philosophy. It was tied both to English empiricism, with its reliance on real-world data, and to consequentialism, the broad view that the ethics of any action should be judged by its consequences. What Bentham added into that mix were two far-reaching ideas: first, that desirable consequences should be defined as “the greatest good for the greatest number [of persons]” and even more powerfully that “each person should count for one, and none for more than one.”
He also tied the idea of “utility” closely to that of human happiness or pleasure. Back when I was studying philosophy, many people in the field would talk about the utilitarian’s need to maximize “hedons.” Now, from reading some of the EA materials, it seems the jargon has shifted to the need to maximize “utils” or “utilons”. (Personally, I prefer to talk about hedons.)
Effective Altruism seems to me to be based on a number of unsupportable conceits that dangerously subvert the core Benthamite ideas of human equality and empiricism. Its first and greatest conceit is its signature reliance on “altruism”. For a person to act “altruistically”, that already presupposes that she has the privilege of making a distinct range of life choices. Let us consider a range of examples:
- A is a person with enough disposable income that she can make substantial contributions to favored causes (or even, heck, like Bill Gates, set up major philanthropic orgs with the power to steer the policies of national governments.)
- B is a person in the Global South struggling to deal with the effects of (disproportionately West-caused) climate change and the fallout from centuries of other harmful policies enacted against her community and its neighbors by the governments of rich countries.
- C is a young person from a rich country with the blessing of a good formal education.
Now remember, for a Benthamite each of these individuals has equal worth. And empirically, we can safely say that there are many thousands times as many people in the B category as there are in the C and A categories put together. So whose voices should we listen to? Why would we even give the time of day to the chattering chimps of categories A and C—except that they have the leisure and the resources to propagate their utterances to a point of near-monopolization of many online spaces?
I realize it’s not always easy in today’s frantic, rich-kid-dominated information environment to hear the voices of the largely dis-voiced peoples of the Global South. But it remains important to try to do so: to actively seek out and listen to the voices of people like Vandana Shiva, Umair Haque, Indi Samarajiva, Mikaela Nhindo Erskog, Vijay Prashad, Kambale Musavuli, and countless other deep and impactful thinkers from the previously colonized zones of the world.
For a Benthamite, it is always important to check in with the people who might be affected by one’s actions. That responsibility stems from both the empiricism and the consequentialism of any utilitarian commitment. (I realize that Bentham himself failed to do this, on many occasions, including when developing his very worrying “Panopticon” proposal for the design of prisons. But still… )
The second conceit of EA is the idea of “earning to give”. This one slides easily into thinking, “Heck, if only I can earn more, then I can give more [to the causes that I and those who think like me judge worthy].” Indeed, by several of the accounts cited above, EA guru Will MacAskill actively advised the newly minted MIT grad Sam Bankman-Fried to go and work for the financial firm Jane Street—as the “ethical” thing to do. Because, you know, “earning to give.”
At this point, too, the professed “longtermism” of MacAskill’s EA can also kick in, in a dangerous way. I have known a number of people who have pursued some version of “earning to give” in their own lives. They say things like, “I’ll just take this high-paying—and possibly, a little socially questionable—job for a few years, then when I’ve made a nest-egg I can retire early and devote myself to good works.” But if a person is concerned overwhelmingly with long-term altruistic projects, then she might easily fall into the trap of concluding that, (a) there is no immediately pressing need to give up that high-paying job, and by staying in it she can earn more and then eventually, potentially, give more… and anyway, (b) it is better for her and for all of humankind, if she uses her very highly-tuned analytical skills to figure out solutions to the “big” longterm problems rather than spending any time worrying about or trying to meet immediate humanitarian needs. (In some EA circles, these latter kinds of needs are sometimes referred to a little disparagingly as “bed-nets”, referring to recent Bill Gates-supported campaigns to use such nets to curb the spread of malaria in the Global South.)
Longtermism, indeed, could well turn out to be the most damaging (and least defensible) conceit of the EA movement. Numerous leaders of the EA movement have pronounced on it, including MacAskill himself, on his website and in a recent book. Serried ranks of other philosophers who, as this page on the strongly EA-ist “80000 Hours” website coyly puts it, “have spent time in Oxford,” have also jumped onto this bandwagon.
That latter web-page carries a manifesto that argues the “longtermist” case thus:
The average mammalian species lasts for about one million years. Homo sapiens have been around for only 200,000. With the benefit of technology and foresight, civilisation could, in principle, survive for at least as long as the earth is habitable — probably around 600–800 million years more. [Here, an ominously Bezos-esque footnote adds: “And if humanity finds a way to flourish outside of Earth, civilisation could last far longer still”]
Given that we can’t rule out this possibility, this means that there will, in expectation, be a huge number of future generations. There could also be a much larger number of people in each future generation, and their lives could be much better than ours.
We think future generations clearly matter, and impartial concern most likely implies their interests matter as much as anyone’s.
If we care about all the consequences of our actions, then what’s most important about our actions from an impartial perspective is their potential effects on these future generations.
As a grandparent (of six amazing young people), I find this argument by turns hilarious and stunningly wrong-headed. This tiny coterie of Oxford philosophers, none of whom provides any evidence of having children, let alone grandchildren, wants to arrogate to themselves the right to make calculations about and make (putative) decisions on behalf not only of the eight billion people in today’s world who are not EA adherents but also of large numbers of future generations of humans! (The manifesto mentions, as one hypothetical, 28 future generations.)
There is, of course, a fine adjective that describes people who want to arrogate to themselves powers to which they have zero legitimate claim…
Speaking for myself, I know I currently live in a world with many features that my grandparents—all of them born in the 19th century—could never have imagined. And it is quite fair to assume that my grandchildren, all of them born in the current century, will in their adulthoods be inhabiting a world with features that I can only barely imagine. I could not dare, and would not want, to arrogate to myself the right to make the calculations today or in my lifetime as to how they should, or might, live their best lives. The best that their other grandparents, their parents, and I can hope to do is to give these youngsters and as many of their peers as possible the skills, empathy, curiosity, and discernment they will need if they are to have the best chance to live lives that are meaningful, safe, and rewarding for them. But those lives will be theirs to choose and to live; not mine.
These youngsters and their peers are just two generations removed from my generation. And the EA-ers feel themselves qualified in some way to make pronouncements for global descendants 28 generations or so into the future?
It gets worse. The above-cited manifesto of EA-ist longtermism also argues that, “we don’t see much reason to expect that actions with good short-term effects will also be those that will be best from a long-term perspective.”
In other words, they want us all to forget about “bed-nets”, housing the currently homeless, or undertaking any other effort to meet current humanitarian needs.
** 5. Safeguarding human existence: Not a ‘longterm’ project
But will any of my grandchildren (or those of any of my age-mates in Global South or Global North) even make it alive to the end of this century? This is a burning issue that requires urgent action, now, on a number of different fronts.
I see two massive and quite possibly existential threats to humankind’s survival over the decades ahead. One is the threat of ecocide/omnicide due to climate change and the other the threat of omnicide/ecocide sparked by nuclear war. These threats have different probability curves. Anthropogenic climate change has already started to inflict real pain and disruption on peoples in many parts of the world, and over the decades ahead it will almost certainly inflict amounts of pain and disruption on our fellow humans that increase on a curve that rises sharply over time. The probability of an all-out nuclear war is, in any given year, pretty low—even with the recent increase in tensions over Ukraine. But if nuclear war happens, next year, or 20 or 50 years down the line, then the effects will be almost immediately catastrophic. And if some small communities survive the first months after a nuclear catastrophe, their later existence will be very harsh, very primitive, and literally clouded over for some years by the debris clouds that will strictly limit the amount of sunlight that food plants and other flora rely on to survive.
Both these kinds of existential threat are among the (somewhat longer) list recited in the writings on “longtermism” in the screeds of the EA-ers. But the EA-ers betray a startling insouciance (or ignorance) of the scale and imminence of these threats when they blithely proceed to talk about “securing the interests of the coming 28 generations”, or about the possibilities of connecting with other lives in other parts of the universe. (They also betray a fundamental misunderstanding of our planet’s dire ecological situation when they write blithely about the possibility that there could be, “a much larger number of people in each future [human] generation”… )
Both of the threats I’ve identified above need to be addressed right now. This is not a “longtermist” project. Regarding climate change, we heard plenty at the two international Conferences of Parties held in the past 12 months about the scale of the climate crisis that already exists and its terrible effects on island nations and many other nations in the Global South. We know, at many different levels, what needs to be done right now, to radically reduce CO2 emissions worldwide and to buttress the resilience of the world’s most vulnerable nations. We also know that this effort—like the prevention of nuclear war and the dismantling of nuclear arsenals—relies above all on the peoples of the world being able to craft and maintain a series of truly respectful, well-governed, and globe-girdling collaborations
(Each person counts for one, and none for more than one, remember.)
So why aren’t all those apparently idealistic young people at Oxford, MIT, Stanford, etc rolling up their sleeves and taking on these real and very present challenges?
Back when I was at Oxford in the early 1970s, most of the idealistic, thinking students and young faculty there were Marxists. We sought not only to understand the world, but also to change it. We did not achieve our goals, I’ll admit; but along the way we learned a lot about the world and about ourselves. Rising early to hand our mimeographed newsletters to night-shift workers as they poured out into the frosty mornings around East Oxford’s massive car-plants may not have taught us all there was to know about capitalism, but it sure gave us a useful window into our own privilege. For summer occupations, we’d get manual jobs (in my case, as a nurse’s aide, a gardener, etc.) or travel to other cities to help with the labor-organizing efforts there.
The concept of interning at a financial firm “as a way to do good”? That would have been met with total disbelief.
** 6. The real-world costs of crypto
The whole idea of a “cryptocurrency” that is not issued by and backed by a national (or supra-national) government but created from the whirring hearts of large web-servers by hands unknown is certainly a huge Ponzi scheme, whose dire consequences fall firstly on the hundreds of thousands, or millions, of small customers and investors who get left—as in any Ponzi scheme—holding the bag when the scheme implodes. (Also, let’s not forget the teachers of Ontario, whose pension plan had to write off US$95-million investment in FTX after the implosion.)
But if cryptocurrency is a Ponzi scheme it is one with other, large-scale and negative, real-world consequences. These fall not just on unwary (or naive) investors but also on all the rest of us due to the high cost that crypto “mining” imposes on the natural environment.
In May, as I noted here earlier, Jeremy Hinsdale of Columbia Climate School reported that the “mining” of Bitcoin—which is just one of many cryptocurrencies, though admittedly the largest—was then consuming electricity at an annual rate greater than the entire country of Argentina (population 45 million) and emitting CO2 into the atmosphere at a rate comparable to that of Greece (population 10 million.)
A lot of this electricity consumption has been occurring in the United States. On December 8, Rep. Jared Huffmann (D, CA) and Sen. Edward Markey (D, MA) introduced some timid legislation into their respective chambers that would require federal agencies to report on the climate and energy impacts of cryptocurrency mining, as a prelude to establishing basic energy efficiency standards for the sector. In an op-ed that Huffmann wrote on the issue, he asked plaintively, “What happens when smoke and mirrors burn the planet?”
** 7. Political ramifications
This legislative proposal is a first step in trying to bring to heel an activity that has mushroomed in size and environmental impact in recent years. But it is only a very tiny baby-step, and its proponents are up against powerful political headwinds. Since 2020, the cryptocurrency sector, spearheaded by Bankman-Fried and FTX, has become notorious for the vast size of the political contributions it has made, directly and through PACs and other cut-outs, to political campaigns and campaign committees on both sides of the aisle, though disproportionately to Democrats. As has been reported in The New York Times and elsewhere, since 2020, Bankman-Fried has given at least $45 million to various Democratic campaigns and committees, his former FTX colleague Ryan Salame has donated $24 million, primarily to Republicans, and Nishad Singh, also formerly of FTX, gave 9.7 million, primarily to Democrats.
Many of these donations went to members of the House Committee on Agriculture, which is responsible for oversight of the CFTC. Bankman-Fried reportedly had a strong preference to have the CFTC be the regulator of the US branch of FTX, rather than the Securities and Exchange Commission (SEC).) This may well be because the SEC, which regulates securities markets, is subordinate to state legislation whereas the CFTC, which regulates the participation of U.S. entities in the often free-wheeling global markets for agricultural and other commodities, is not.
It may be hard to see how “cryptocurrency” qualifies as a commodity, but that did not stop the Democratic and Republican leaders on the Ag Committee from accepting generous donations from Bankman-Fried (or Salame.) And when mop-head came to Washington DC, as he reportedly did several times over the past couple of years, he and his FTX sidekicks made a point of courting at least one CFTC Commissioner, Dan Berkovitz, as they did over an October 2021 lunch at DC’s tony Rasika West restaurant. Former CFTC Commissioner Mark Wetjen, who had earlier joined FTX as head of policy and regulatory strategy, was reportedly also expected to be at the lunch…
As almost anybody in the Washington political world would well understand, for a corporation to exceed campaign giving limits by using its employees as conduits for a series of parallel donations, is a big non-no. For this and other reasons, one of the eight counts in the indictment that the U.S. Department of Justice announced against Bankman-Fried December 13 was that of “Conspiracy to Defraud the United States and Violate the Campaign Finance Law.”
In the days after the implosion of FTX, many lawmakers hurried to (a) express shock that the firm had been managed so corruptly and (b) take speedy gestures to dissociate themselves from the donations they had received from FTX’s people. They did the latter most often by very publicly and demonstratively making donations to worthy causes in the same amount as the tainted campaign contributions. Meantime, though, the new CEO of FTX, John Ray, was clearly asking all those who had received tainted donations to return them to FTX under his stewardship, so he could use the proceeds to help to make whole the company’s legions of defrauded customers and investors. As this recent piece in the Washington Examiner makes clear, the making of those demonstrative donations does not let the lawmakers off the hook: they remain obligated to return to FTX all donations judged to be illegal.
** 8. My modest proposals
Back in 1729, when the first strains of consequentialist (and anti-clerical) thinking were starting to be heard in England and its very oppressed backyard colony, Ireland, the (Anglican) Dean of Dublin’s St. Patrick’s Cathedral, Jonathan Swift, hit back at the consequentialists with a fine piece of satirical writing. It was famously titled, “A Modest Proposal For preventing the Children of Poor People From being a Burthen to Their Parents or Country, and For making them Beneficial to the Publick.”
The essay starts with a powerful and moving description of the plight of starving indigents in Ireland. That makes the punch-line, when it comes, even more shocking:
A young healthy child well nursed, is, at a year old, a most delicious nourishing and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee, or a ragout.
The modest proposals that I would offer in response to the above-limned (and linked) phenomena of the implosion of FTX, the broader crisis of crypto that it provoked, and the apparently wide appeal that the ideas of “Effective Altruism” have in some parts of the crypto and hi-tech worlds would not go nearly as far as Swift’s “Modest Proposal”. Indeed, I propose them in all seriousness. Here they are:
- Cryptocurrency should not be regulated. It should be outlawed. It has no demonstrated “utility” apart from the facilitation of illegal money transfers– and meantime, its “mining” creates an already significant and very likely increasing hazard to the natural environment.
- Evidently, the unwinding and dismantling of the crypto sector will be a complex challenge. A good first step would be to outlaw the mining of cryptocurrency throughout the United States and its territories, and to reach out to other governments to join this effort. (I have seen several reports that China started to do this back in 2021: 1, 2, 3.)
- The “blockchain” technology on which cryptocurrency is built mayhave other, more productive uses. But its exploitation for other purposes should be pursued only very carefully and under strong and effective oversight.
- Small investors who have been suckered into putting their funds into various crypto products, including but not limited to FTX, should be the first to be made whole.
- Members and sympathizers of the “EA” community should very carefully examine the degree to which the ideologies espoused by their cult and the actions of its leaders have promoted and enabled extremely harmful behaviors by some members of the cult and a misdirection of the priorities of privileged young-adult citizens of rich “Western” countries more broadly.
- They—and the rest of us—should seriously consider changing the referent for the acronym EA to “Egregious Arrogance.”