> Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.
> "I know who I'd rather trust my money with: SBF, hands down."
This quote is complety antithetical to everything crypto is actually trying to achieve; which is a trustless financial system, a system that would be void of these sorts of melt downs.
That works just fine but the vast majority of cryptocurrencies just copied the flawed design of conventional fiat currencies and they fail in exactly the same ways.
Its really worse than this.. This guy really LARPed the white-knight / sheriff-of-the-crypto-wild-west for years. He's the last guy anyone would have thought would pull such blatantly shady stuff like this. Before this all came out, more people in the space would have seen him in positive light than they would have seen CZ (the CEO of Binance).
Somewhat related, the bull run of the last decade has made it possible to run a fund and only have a 10% hit rate (absolute winners), compared to a 52% hit rate for hedge funds in the public markets. The net effect in VC must have been a sense of a "can't lose" attitude. Added to the fact that there is a herd mentality when a firm that is hot is raising money, the due diligence boils down to "other big VCs are investing and we don't want to miss out". In other words Group Think, but it doesn't matter provided the public markets are sending newly minted IPO stocks to the moon. Perhaps more turbulent public markets will enforce more stringent due diligence...
Thanks. great article. also never want to get a letter like that "your investment is marked to zero". got to love this quote from article "“Everything was rickety—there was no avoiding the ricketiness. Obviously, the line between rickety and shady is a little unclear at times, but the places that seemed like they were going to steal customer funds outright, we didn’t touch,” Singh says. “Even the best players in the space were having big problems.”
I still get sketched out that companies feel so free to "unpublish" content that they later decided was embarrassing. Traces of "Nineteen Eighty-Four"...
To be fair, if something has been deemed offensive by the everyone on the interwebs, do you leave the offensive thing there to thumb your nose at them or just remove it to at least stop the bleeding?
Fair question, but in this case it wasn't so much "offensive" as "embarrassing to the author." i.e. they're hyping up this guy who later turned out to be not as smart as he thought.
> Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.