The federal trial of Sam Bankman-Fried continues to provide absolutely no surprises regarding the downfall of the company. What it does confirm is the different levels of the fraud – at the accounting level, at the cryptocurrency level and at the Effective Altruism level.
Gary Wang testified he added logic to the exchange platform he wrote that allowed FTX accounts to bypass automatic “circuit breakers” that normally closed out any FTX account whose positions became net negative. This allowed FTX to continue making highly leveraged bets no other account was allowed to execute.
Caroline Ellison testified that over $5 billion in “personal loans” were taken out of Alameda Research by SBF, Gary Wang and director of engineering Nishad Singh. FIVE BILLION DOLLARS Ellison and Wang had to sign off on some of these loans and in many cases had no idea how the proceeds were going to be used. In others, they were taking out loans to use in giving money away to supposedly charitable organizations (did the “Human Fund” show up in any of the records?).
At this point it seems all of these “effective altruism” adherents decided, “To hell with actually WAITING to become billionaires to give it away, let’s just give it away now, using other people’s money. The profits will come eventually, but we get our EA endorphin high now.”
One thing I didn’t mention in the review of Going Infinite was that FTX hired a California psychologist as a full time counseler to FTX staff, including senior leadership. Since the psychologist had no license to practice outside California, they simply hired him as an “HR executive”. Nearly every key player in the company was a “patient” and spent considerable time in his office seeking counseling for the neurosis likely triggered by their understanding of what they were doing.
I really hope the prosecutors didn’t give up too much to Caroline Ellison and Gary Wang in exchange for their testimony against SBF. None of it should have been needed to put him away and the testimony they have provided confirms they were fully aware of the manipulations of balances between FTX ledgers and Alameda Research. They ALL deserve to go away for a very long time.