The delicious fall of Sam Bankman-Fried

Dame Edna Everage says that one of life’s most precious gifts is the ability to laugh at the misfortunes of others. You may regret this instinct, but we all cherish it. New Yorkers are especially sensitive when it comes to real estate envy. Every few years it feels like a skyscraper goes up in the city that is significantly taller than the previous very tall new skyscraper. Every time someone does, the only thing that goes higher than the tower’s residences is the cost to buy them. With what enthusiasm New Yorkers read about the misfortunes these buildings are going through. Oh, the thrill of learning that they sway in the wind, that people get seasick in the penthouses, that when owners throw their trash into the garbage chutes, the noise on the lower floors is like a tactical nuke.

Reading such stories makes the heart of the whole city rise a little. Anyone can think, if not say, “Well, I might be down in the dumps, paying through the nose for rent, but at least I didn’t spend $150 million. I didn’t buy a penthouse that swings.” So it is that this bit of adversity makes everyone’s day a little bit happier.

The same goes for last week’s news that a cryptocurrency exchange called FTX has collapsed with between $1 billion and $2 billion in client funds disappearing.

Why should I take special pleasure in the collapse of such a company? Not because I have anything against crypto, but purely because of the way the founder of FTX behaved. The company placed a particular emphasis on ESG. Please don’t get lost in these abbreviations.

As anyone who has dealt with large companies in recent years knows, ESG stands for “Environmental, Social and Governance” and is prevalent in the corporate world. There was a time when a company strove to make money for itself and/or its shareholders. If it wanted to do good works, it could set up a workhouse, a school for villains, or something like that.

Today, if you want to show that you really care – rather than really care – you talk about how concerned your company is with ESG. Companies are even judged based on their ESG scores. It is a great medieval Vatican style scam. And it’s everywhere.

In any case, FTX was big on ESG. In a video from January this year, company founder Sam Bankman-Fried and the vlogger Nas Daily — the former a shy one, the second a possibly naive one — claimed that FTX only existed to make money that could then be given away. The two young men are crazy in different ways, but the main one, Bankman-Fried, looks about fourteen and has a face like a stress ball being squeezed by someone who is very stressed indeed.

This pair talks about all the things our age values ​​most while arguing that earning money to pass on to special causes is way better than just getting rich and buying a Lamborghini. Earning money and giving it away to these causes, they say, will make you much happier than spending it on yourself.

With some unfortunate turns of phrase, Daily says different things about Bankman-Fried, to which the latter then responds. “He’s financing everything you can imagine: global warming” (“It’s one of the biggest problems we as a world have to tackle together”). “Covid-19 preparedness” (“We must be ready for the next pandemic”). “Neglected tropical diseases” (“More than a billion people suffer from them – we must eradicate these diseases”). “And of course animal welfare” (“Animals deserve to live like us; that’s why I’m vegan”).

Leaving aside the question of whether animals deserve to live as we do, this is quite a comprehensive catechism for our time. Bankman-Fried may have added something about BLM, but it’s possible that the most up-to-date embarrassment is a tiny bit different from last season.

For here we are in the realm of the kind of sanctimonious fraud that our species has known throughout history. The great writers of Chaucer and Boccaccio knew these types. Many classical literary works contain them. But one of the strangest things about people is not that we constantly throw up on such people, but that people always fall for them.

This is a matter of eternal fascination for me. If a man came to my front door and said he had a Gucci bag that he would really like to sell me and the price would only be $50 for me, I’d like to think I wouldn’t fall for it. If someone wearing priestly robes said they had a way to get me and everyone I loved into heaven – 100 percent sure dead, no questions asked – and all I had to do was hand my worldly goods to him transfer, I would be sure to slam the door in his face. But that’s because it’s easy to spot old drawbacks. It is discovering new things that we seem to have trouble with.

ESG — like its fellow traveler “Diversity Equity and Inclusion” — should now be a major warning flag for investors and speculators everywhere. If a company or an investment fund rants about ESG or DEI, it should arouse some deep-seated suspicion, such as being provoked by a sinister stranger with a comb volunteering to care for the kids at bath time. And yet it’s not just that people keep making the same mistakes, it’s that they make the same mistakes in subtly different ways, with the people cheating them always snooping around to pinpoint the day’s weak spots. I’m sorry to anyone who lost their money to these FTX crooks – these people who talked about saving the planet but instead pocketed a few billion and did a runner. But we’ve seen them before – and a strange happiness comes from that fact.

This article was originally published in The spectator‘s British magazine. Subscribe to the World Edition here.

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