The collapse of the FTX cryptocurrency exchange and the arrest of its founder is a tragedy for thousands of blockchain believers, who may never recover most of the money they bet on this amorphous wealth-of-the-future scheme — a scheme I confess I could never grasp. How did the word “mining” attach itself to the creation of cryptocurrency, some kind of energy-profligate computer exercise that failed to make sense to me no matter how much I read about it? (True, it’s an area where my lack of insight is exceeded only by my lack of interest.) But now, thanks to the FTX disaster, bewildered neo-Luddites like me may never be obliged to figure it out. Paul Krugman of the New York Times, our only working journalist with a Nobel Prize in economics, appears to have written cryptocurrency’s obituary in a recent column. Dismissing “the rolling debacle that is crypto,” Krugman declares that “after all this time, nobody has come up with significant real-world uses for cryptocurrency other than money-laundering.”
Good riddance, and I concede that my sympathy for the gullible, would-be cutting-edge Americans who may have been ruined by FTX is as half-hearted as my sympathy for chain smokers with lung cancer. The more symbolic and resonant tragedy is the fate of the FTX founder, Sam Bankman-Fried, the disheveled 30-year-old wunderkind whose future almost certainly includes a long stretch in federal prisons. Bankman-Fried’s spectacular rise and fall, so uniquely American, should serve as the cautionary tale of tales for a tech-intoxicated 21st-century. No one can deny that this young man with his retro-Afro hairstyle and baggy cargo shorts was one of America’s best and brightest. Barely five years out of MIT with a degree in physics, his innovations in the netherworld of cryptocurrency had made him a mega-billionaire with an estimated net worth over $26 billion. In his 20s he became one of the richest men in the world, possibly the richest young man whose fortune had not been launched by inherited wealth.
Here was the myth of the unorthodox, wildcat American entrepreneur at its wildest. In October, after some disturbing rumors about the stability of his business and the bitcoin world in general, Bankman-Fried’s wealth was still estimated at $10 billion-plus. In November FTX filed for bankruptcy. As I write this, at the turn of the year, the fallen genius is camping at his parents’ home in California, wearing a security bracelet after posting an unprecedented $250-million bail bond. The Bloomberg Billionaires Index estimates his current net worth as essentially zero. He faces charges of wire fraud, securities fraud and money laundering, and several of his colleagues — including the woman alleged to be his girlfriend — appear to be ratting him out to prosecutors to reduce their own prison risks. Convictions on all these charges would send him to prison for 115 years. Mythic? When, since Icarus, has there been a swifter fall?
What can we make of a tragic figure like Sam Bankman-Fried? Moralizing is too easy. He’s the son of two prominent Stanford law professors, and I’m tempted to cut him some slack because I was also a double faculty brat. When you grow up believing your parents are the smartest people in your area code, you may be inclined to extreme efforts to show them you’re no knuckle-dragger yourself. Bankman-Fried obviously impressed his parents — his father became so involved in his son’s business that he, too, may be exposed to prosecution. My own efforts to impress were much less ambitious (and less successful) than young Sam’s. But even if he’s guilty of everything he’s accused of, his compulsive over-achievement is a flaw I can grasp. I get it. And remember he’s not much more than a boy. He’s young enough to be my grandson.
A genius, maybe. A criminal, quite likely. A madman, I doubt very much. At least not half as mad as, say, the stark raving ex-president Donald Trump. Sam’s is not just another story of greed metastasizing. Unlike most of his fellow macro-billionaires in this age of loathsome excess, he wasn’t just running a silly race to a nonexistent finish line marked “Richest of all.” His philanthropy was real and generous, especially in the Bahamas where he lived and where he remains widely revered. His political contributions were enlightened, most of them to progressive Democrats. The average billionaire funnels his largesse to the sinister bagmen of the Republican Party, which never falters in its commitment to protecting the fortunes of the fortunate.
Bankman-Fried even offered an ethical framework for his awesome rise to riches. As an undergraduate he was converted to a theory of benevolent capitalism known as “effective altruism,” which originated with the Oxford philosopher William MacAskill. E.A., as it’s known, condones greed only if all its proceeds eventually contribute to the common good. As recently as November, Sam was presenting himself as primarily a humanitarian. “I was thinking a lot about, you know, bed nets and malaria,” he told an interviewer. “About, you know, saving people from diseases no one should die from.”
In another interview, he sounded more cynical about the E.A. gospel of “make good to do good.” Yet he decided, against the advice of his attorneys, to submit to extradition from the Bahamas in order to “put the customers right.” I’m not here to heap punishment on a man who has apparently hanged himself. That’s the job of the prosecutors. This is a very complicated young man. I don’t think it’s too much sympathy for the devil to describe Bankman-Fried as a child of his time. His time and his place. Not the victim, perhaps, but the comprehensible product of a specific environment.
It’s not insignificant that he grew up in the shadow of Silicon Valley, the high-tech Vatican City with its mythology of the entrepreneurial giants in their jeans and T-shirts — the legendary college dropouts (Steve Jobs, Bill Gates, Mark Zuckerberg) who turned their backs on common knowledge and conventional wisdom and conquered the world. My friend David Von Drehle at the Washington Post responded to the FTX trainwreck with a column deploring the American cult of The Entrepreneur, the worship of cyber-sorcerers and digital demigods. “Today’s recurring theme is over-hyped creators of over-hyped companies,” he writes. “Journalists would be wise to write profiles of modern moguls in disappearing ink.”
Even the way young Sam dressed, avoiding long pants as an affectation, gives us a clue about his role models. That and the fact that this crypto mogul, worth billions, lived in the Bahamas in a kind of dormitory penthouse with 10 roommates. Raising the middle finger to bourgeois conventions is a big part of the California tech-star mystique. But that wouldn’t be the attitude that really separates him from fossilized relics like me. In the ’60s and ’70s we grew our hair down to our elbows to scandalize our elders, and wore hippy gear that looks downright ridiculous in photos that survive.
Maybe it all comes down to role models. My contemporaries, the ones who identified as progressives, looked up to citizens who took personal risks to protest Jim Crow, as well as the hopeless war in Vietnam. Martin Luther King and Rosa Parks, of course, and Gene McCarthy, Jane Fonda, George McGovern. Even Angela Davis, not always for her ideas but for her guts and principles. Writing about her 50 years ago, when she stood up to Ronald Reagan and the California Board of Regents, I’m afraid I made her sound like the African-American Joan of Arc. I know that my editors asked for several “more balanced” rewrites of the Davis-slanted stories I produced.
We didn’t always live up to our idols or our ideals, in those days, but we admired integrity stripped of self-interest. Remember honor? Who did Sam Bankman-Fried have to match our heroes? Mark Zuckerberg, Elon Musk? This idolatry of scruffy billionaires, especially in the high-tech, fast-bucks environment that nurtured Sam Bankman-Fried, is a social disease unique to the 21st-century. And then came Trump, who proved that you could make it all the way to the top in this country without a shred of integrity, in fact with the morals of a pimp and the soul of a sewer-dwelling rodent. The lesson from Trump to the ambitious was that you didn’t need to tell the truth or play by the rules to succeed. How could this fail to warp the character of smart kids like Bankman-Fried, who graduated from college in 2014?
If the world has bowed to your will to such an extent, and made you a multi-billionaire when your friends are still in graduate school, there’s a great temptation to believe you’re invincible and begin to cut legal and ethical corners. Sam B-F is hardly the only or even the most flagrant pirate of his generation. Simultaneous with his fall, eight social media “influencers” in their 20s and 30s were indicted for a “pump and dump” stock swindle that cost their gullible investors at least $144 million. These bandits milked hundreds of thousands of fools who followed them on Twitter. If you really go looking for it, the mother lode of suckers is never hard to find.
When it comes to millennial deceit, it’s hard to compete with congressman-elect George Santos of New York, 34, who tells so many lies about himself that no one knows who he is or where he came from. But in another interview Sam Bankman-Fried revealed a deeper, sadder, possibly incurable flaw in his character. “I would never read a book,” he told a reporter last summer. ‘I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that.”
Seriously? I have to assume he was serious. No books at all? Not Joyce or Faulkner or Virginia Woolf, not Yeats, not Gibbon or Kant or Hume, not Dostoevsky or Flaubert? Not Dante or Shakespeare or Plato? If there are millions of tech-inebriated millennials in Sam’s generation, bright ones like him, who share this astonishing arrogance-in-ignorance, America is in even deeper trouble than I imagined. God help us. To turn your back on the past, and all the wisdom and eloquence of the past is simply to perform an auto-lobotomy. Most of us who write or have ever written books flatter ourselves that Bankman-Fried might have learned something from reading them, something that might have saved him from this tragic mess he’s made of his life.
But now he’ll have plenty of time to read.
Hal Crowther is a longtime journalist whose latest essay collection, “Freedom Fighters and Hellraisers: A Gallery of Memorable Southerners” (Blair, 2018) won the gold medal for nonfiction at the Independent Press Awards, as well as the gold medal for essays at the Foreword Review Awards. A winner of the Baltimore Sun’s H.L, Mencken Writing Award, he is the author of “An Infuriating American: The Incendiary Arts of H.L. Mencken” (Iowa, 2015) and four previous collections of essays. Email delennis1@gmail.com.
From The Progressive Populist, February 15, 2023
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