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Sam Bankman-Fried’s Wild Rise and Abrupt Crash

There comes a moment in the development of a new technology when the hype is so common it passes for common sense. Lawyers, accountants and regulators are nowhere to be found. Investors insist entrepreneurs take their money. The world trembles on the brink of change.

For dot-coms, the moment was 1999. For artificial intelligence, it was just over nine months ago. For cryptocurrency, it was 2017.

Six years ago, Sam Bankman-Fried knew little about alternative currencies. But he correctly bet there were huge opportunities in grabbing a tiny piece of millions of crypto trades. In the blink of an eye, he was lauded as being worth $23 billion. Only Mark Zuckerberg had accumulated so much wealth so young.

The Facebook co-founder has his critics, but he looks like Thomas Edison next to Mr. Bankman-Fried. After a speedy trial in Manhattan federal court, the onetime crypto king, now 31, was convicted on Thursday of seven counts of fraud and conspiracy involving his companies FTX and Alameda Research.

Mr. Bankman-Fried once partied with stars and big shots, doled out fortunes in looted funds to politicians and himself, was acclaimed as the next Warren Buffett, employed his friends and made them rich for a while, was courted by the news media that printed his most banal comments. For a time, everyone loved Sam Bankman-Fried — with the apparent exception of Sam Bankman-Fried.

“I am, and for most of my adult life have been, sad.” That plaintive statement appears at the end of testimony Mr. Bankman-Fried had hoped to give Congress last winter before his arrest scuttled his plans. He was onto something.

In photographs from his heyday, Mr. Bankman-Fried always looked awkward, embarrassed and as if he would rather be playing a video game, even when Gisele Bündchen had an arm around him. Everyone kept insisting he was off-the-charts brilliant, the entrepreneur who would create the future. Maybe he knew better.

As journalists — and now prosecutors — have made clear, FTX and Alameda were run by a group of hapless young people who did not have the required skills, maturity or patience. Those who actually had a moral compass and sensed something was wrong soon peeled off, leaving a core crew who drifted — or perhaps dived — into trouble.

“When I started working at Alameda, I don’t think I would have believed you if you told me I would be sending false balance sheets to our lenders or taking customer money, but over time it was something I became more comfortable with,” Caroline Ellison, Mr. Bankman-Fried’s colleague and sometime girlfriend, testified during the trial.

When Ms. Ellison started working at Alameda, something called the blockchain was going to transform everything, somehow. Silicon Valley poured billions into crypto, seeking out those like Mr. Bankman-Fried who got in early and appeared smart.

The central myth of Silicon Valley is that techies are here to save the world. If they get insanely rich in the process, well, that only proves how great their idea was in the first place.

This was the appeal of Elizabeth Holmes and her blood-testing company, Theranos. She was young, female and attractive, which looked good on the covers of magazines. But the notion that really propelled her to fame and fortune was that she was a sort of high-tech Florence Nightingale, working all night to refine medical technology that would improve people’s health. (The truth was that her technology didn’t work and placed customers at risk by giving them unreliable results.)

FTX allowed people to bet on cryptocurrencies. It was, in essence, a casino. It is difficult for even the most sympathetic journalist to portray a casino as a savior of humanity, so the focus of the stories was always on Mr. Bankman-Fried himself.

He calculated the odds on everything — he thought there was a 5 percent chance he would become president of the United States. He figured he would help humanity by making a fortune and then giving it all away, a philosophy known as effective altruism. The details didn’t matter. As a fawning Forbes profile put it in 2021: “He’s a mercenary, dedicated to making as much money as possible (he doesn’t really care how) solely so he can give it away (he doesn’t really know to whom, or when).”

During the trial, it emerged that Mr. Bankman-Fried had spent $15 million on private plane travel. He never did much to disguise the fact that he lived with some of his FTX pals in a $35 million penthouse. The question of whether these young people should be sleeping on the beach instead of living the high life if they were truly following the doctrine of effective altruism never seemed to get asked.

In that glowing Sequoia profile, Mr. Bankman-Fried said: “I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that.” He didn’t like movies, either.

It’s impossible to read the sad saga of Mr. Bankman-Fried without thinking he, and many of those around him, would have been better off if they had spent less time at math camp and more time in English class. Sometimes in books, the characters find their moral compass; in the best books, the reader does, too.

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