The Lost Art of Spotting Sociopaths
Maybe if people read more books they’d have seen Sam Bankman-Fried coming.
Sam Bankman-Fried’s downfall makes you wish there were still novelists toiling in the 19th-century tradition of realism. The cryptocurrency titan who placed selflessness and “effective altruism” at the center of his hucksterism: it is the sort of saga that cries out for a Trollope, a Thackeray, or a Balzac. Alas, even if there were novelists of that caliber in our midst—and there probably aren’t—the reality might exceed their talents.
Not that Bankman-Fried’s alleged misdeeds are all that interesting in themselves, mind you. No, financial skullduggery is always at bottom quite boring. The “literary” aspect of this story, rather, has to do with the wider culture’s inability to see them coming. Simply put, too many Americans seem to have lost the ability to identify sociopaths.
But first, the facts. These might appear complicated, because a dense fog of technical jargon and math wizardry permeates the crypto universe. But what lies beneath isn’t, in fact, all that complex. Cryptocurrencies are a class of unregulated and highly speculative assets—databases whose values, for those who trade in them, are a function of a desire to circumvent central-bank-regulated currencies for shady or utopian reasons, as the case may be.
Until recently, “SBF” (as he came to be known) operated a cryptocurrency exchange called FTX, a marketplace for trading these currencies, including by converting them to dollars. He also ran a range of other companies, including a trading firm called Alameda Research. This month, an exposé in the industry outlet CoinDesk revealed that SBF mingled funds between his various entities, using an in-house cryptocurrency as the common medium of exchange. The revelation prompted a rival exchange to threaten to dump its holdings of that in-house currency.
The whole structure came tumbling down. As the Atlantic summarizes,
FTX found itself having trouble paying out withdrawals to customers. Suddenly, a company once worth $32 billion was $8 billion in the hole. . . . FTX was never a bank; customers will be lucky to get even a fraction of their money back in bankruptcy court over the next few years, and it seems possible that SBF will face serious legal repercussions.
You can’t but feel pity for the smalltime investors who lost it all to SBF’s apparent scam. Setting aside those who prefer crypto over regulated currencies for illicit reasons, the psychology of the ordinary crypto investor is perfectly understandable. As the antitrust writer Matt Stoller has argued, crypto boosters are men and women who came of age in the wake of a devastating recession caused by the greed and cynicism of the “respectable” financial industry.
“They” got bailed out, while middle-class borrowers had their homes foreclosed on. Wrote Stoller: “The children of the financial crisis of 2008, emerging into early adulthood with memories of foreclosures and parental layoffs, wouldn’t be fooled by the idea that working hard would get you anywhere. They knew, they saw, that cheaters always win.” That sense of grievance fueled the crypto industry, even though it was often championed by…the same Wall Street-friendly politicos and regulators whose laxity had set the stage for the earlier crisis.
Still, in this case, you have to wonder why more clients didn’t wonder if something foul was afoot, just judging by SBF’s persona. The veganism. The polyamory. The ostentatiously cheap Corolla. The messy hair and disheveled clothes. The millions of dollars donated to the pro-crypto side in intra-Democratic political contests. The commitment to philosophical consequentialism and utilitarianism. The sleeping on beanbags at the office. The shared therapist at the FTX office. The friendship with Bill Clinton.
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Any one of these things might have been overlooked. But in their totality, they screamed: “Obvious Sociopath.”
Maybe the loss of a literary culture is precisely to blame. Would the kind of culture that produced the character Becky Sharp in Thackeray's Vanity Fair have possessed the moral and psychological facility for spotting the red flags planted all over SBF? It’s probably romantic to imagine so. In the event, our culture is as illiterate as its business villains: SBF himself, after all, is a self-described hater of books. “I would never read a book,” he told an interviewer in September. “I think, if you wrote a book, you f—d up, and it should have been a six-paragraph blog post.”
That statement alone should land him in prison, if you ask me.