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December 17, 2022

SBF: Virtue-Signaling Scammer

The crypto king used high ideals to mask low motives.

The former head of crypto exchange FTX, Sam Bankman-Fried, aka SBF, stands accused of many crimes. But no one has ever charged him with reticence.

Between 2019, when he first appeared on the scene, and December 12, 2022, when Bahamian police took him into custody — conveniently preventing him from testifying before Congress the next day — the 30-year-old MIT graduate and former billionaire would not shut up.

No audience was too small. No subject was beyond the pale. Given the opportunity, SBF would announce his veganism, discuss his fashionably liberal politics, and outline the tenets of his utilitarian worldview, his philosophy of “effective altruism.” His remarkable and short-lived career is a case study in high ideals serving as cover for low motives. It also illustrates the double-standard that liberals apply to business scandals.

Words poured from SBF’s disheveled self, faster than you can mint a bitcoin. Last year his net worth soared, reaching an estimated $20 billion. He ascended to the top rank of political donors, giving millions to Joe Biden in 2020 and contributing more money to Democratic candidates in 2022 than everyone but George Soros. Friendly media profiled “The Mysterious Cryptocurrency Magnate Who Became One of Biden’s Biggest Donors” and “A Crypto Emperor’s Vision: No Pants, His Rules.” “I have a lot of things to say,” he told New York magazine.

That’s for sure. SBF admitted to obsessive compulsion, to attention deficit disorder, to depression, and to playing Magic: The Gathering well into adulthood. He would jabber away on social media, during video game sessions, at investor conferences, and on television and podcasts. Rumors swirled about his love life, which may or may not have involved something called a “polycule.”

Invariably the writer or interviewer talking with SBF would mention his parents, described always as “Stanford Law professors,” as if this title granted them an exalted status, a grant of authority and immunity that encompassed their eccentric and exceedingly wealthy son. Less dwelt upon was the fact that one of the Stanford Law professors, Joseph Bankman, was also an FTX staffer embroiled in his son’s activities, while the other, Barbara Fried, was a well-known leftwing activist who cofounded a Democratic super PAC and counseled SBF on his political giving.

Few people looked at SBF with the incredulity he deserved. His pronouncements on ethics and politics were exceedingly banal. Veganism, in today’s world, is neither an original nor a courageous lifestyle — Olive Garden has a vegan menu. Philanthropy existed long before SBF discovered it. Effective altruism sounds nice. But no one has ever argued for impotent selfishness.

The more SBF became concerned with the fate of “humanity,” the less he seems to have been interested in the livelihood of individuals. He was called the “Bentham of Crypto,” a reference to 18th-century thinker Jeremy Bentham, the founder of Utilitarianism, whose guiding philosophy was the “greatest good for the greatest number.” The God-given natural rights of human beings were of subsidiary interest to Bentham — indeed, he didn’t believe in them (or in God) at all. “There were only interests, and the interests of the majority had to prevail,” wrote Gertrude Himmelfarb in her classic Victorian Minds (1968). “The greatest happiness of the greatest number might thus require the greatest misery of the few.”

The FBI needn’t identify Jeremy Bentham, whose mummified corpse sits in the student center at University College London, as an unindicted co-conspirator in this case. Nonetheless, the danger in Benthamism is that its high-mindedness may contribute to a moral callousness, to an instrumental view of other persons, of the sort that we read about in the court filings regarding Bankman-Fried, who kept on chattering to sympathetic audiences as his empire fell apart and the feds were closing in.

Those audiences were sympathetic because SBF was part of the club. He was a celebrity Democrat who combined financial alchemy with highly leveraged virtue-signaling. SBF’s connections may have spared him — and the Democrats who took his money — the embarrassment of congressional cross-examination this week. And they certainly insulate him from becoming a symbol of a corrupt system, a poster-boy for a failed philosophy. He’d be treated differently if he hid all that hair under a MAGA hat.

When Enron imploded in 2001, Ken Lay’s connections to the Republican White House were daily news. Columnist Paul Krugman, a former Enron adviser, wrote that the energy firm’s bankruptcy would prove more significant than the September 11, 2001, terrorist attacks. The editors of the American Prospect wrote, “The Enron scandal should ring down the curtain on a whole philosophy of free-market capitalism and a whole style of government-corporate cronyism.” Author Robert Kuttner said, “Enron is the emblem of the Bush administration’s way of life.” And historian Sean Wilentz declared: “Republicans ruled. Ergo, Enron.”

Will any eminence write, in the coming weeks, “Democrats ruled. Ergo, FTX”? Will journalists draw a connection between SBF’s funneling of investor dollars to progressive causes and candidates for office — mostly, but not all, to Democrats — and the sham economics and cynical politics of the Environmental, Social, and Governance movement running rampant through financial markets? As FTX’s current CEO, John J. Ray III, figures out what happened to the exchange, will he realize that SBF’s privileged background and chic politics allowed the young trader to behave in haphazard and unprofessional ways until, finally, he ran out of other people’s money?

Even now, Bankman-Fried is viewed as an object of pity. “It’s like a Greek tragedy,” a friend of the family told the New York Times after SBF’s arrest. “The story of flying too close to the sun, and having your wings singed.” The problem with this analogy is that Icarus didn’t buy his wings with funds from his investor’s accounts, as the U.S. government says SBF did, while blathering on about saving the world. Icarus was guilty of hubris. Not fraud.

“I f—d up,” Bankman-Fried planned to tell the House Financial Services Committee this week. That’s an understatement. A penniless, imprisoned, and for the moment silent SBF leaves behind a trail of ruin. He is a reminder that sanctimony is a handy tool for scam artists, and that well-credentialed Americans have a bad habit of rewarding a person’s ability to speak with certitude and emphasis and presumed expertise — no matter how dull, unoriginal, obnoxious, insipid, or crooked that person happens to be.

Matthew Continetti is a senior fellow at the American Enterprise Institute and the founding editor of The Washington Free Beacon. For more from the Free Beacon, sign up free of charge for the Morning Beacon email.

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