Does ‘Ruin’ Get Crypto Right?

Scammer Sam Bankman-Fried

Does ‘Ruin Get Crypto Right? Yes, Mostly (until the end)

Bloomberg has released, ‘Ruin,’ a documentary about the rise and fall of Sam Bankman-Fried and the bankrupt FTX crypto exchange. The former wunderkind “Crypto Fro” is on trial in New York for the stealing customer funds and using them to among other things, political campaigns and paying off pay sister company Alameda Research debts.

The program narrated mostly by Bloomberg reporters mixed in with sundry crypto players covers Bankman Fried’s rise from the privileged sire of Stanford law professors to Jane Street quant to crypto entrepreneur to the stars. Bankman-Fried’s carefully cultivated image as a devil-may-care do-gooder who played by his own rules, eschewed the trappings of wealth, and did everything for the greater good is aptly covered.

The documentary, though annoyingly overproduced, deftly reveals the disconnect between white hat image including his oft-highlighted Toyota Corolla and the reality of his multi-million Bahamas condo and private jet. In the process it exposes the ridiculousness of his “Effective Altruism” world view. For the blissfully unaware, Effective Altruism provides moral cover for people in tech to get rich as possible whilst ignoring rules and proper risk assessment for the distant promise to give away their wealth and save humanity. It’s a kissing cousin to ESG, the moral cudgel CEOs use to proclaim they shouldn’t be judged on shareholder performance because audiences laud them at international conferences for “saving the planet.”

‘Ruin’ gets the absurdity of Effective Altruism right

Bankman-Fried and his merry band of altruists never gave away anything. They did, however, spend big on celebrity and political endorsements, and apparently tried to sway capital-markets nonprofits to increase exposure and sway regulators toward them and away from competitors. FTX collapsed before the latter goal came to fruition. (Bankman-Fried’s meetings with SEC Chair and fellow MIT-er Gary Gensler go unmentioned. They also have no criticism for FTX promoter Kevin O’Leary, “Mr. Wonderful” who assured the public based on his own due diligence that FTX was solid. CNBC was less deferential to Mr. O’Leary.)

‘Ruin’ gets crypto policy prescriptions wrong

Where the doc fails is with the attitude of Bloomberg itself towards crypto. Despite securing the Twitter handle @crypto, Bloomberg has consistently been anti-crypto. This makes sense given their position as an institutional organ for TradFi. A constant theme throughout the doc is crypto’s lack of regulation that makes it unsafe, dangerous. It’s inferred proper government policing could have saved this debacle.

This familiar view of finance is expected from Bloomberg even if it’s baseless. Regulations did not stop Bernie Madoff or any other scammer. Anyone thinking regulations stop fraud should visit the SEC’s website any random day and note how many of their most recent press releases involve enforcement actions against an alleged fraudster.

The beauty of crypto if it’s allowed flourish is that it can take away the element of human greed and the temptations that come from having access to boatloads of other people’s money. Indeed, DeFi can take out human management completely. Transactions can happen peer-to-peer based on permissionless, open-source code. The code, as the saying goes, is the law.

Crypto done right deals with codes and transparent rules

This is the real promise of crypto that Bloomberg doesn’t understand or care to learn. It’s not having the SEC approve a Bitcoin-ETF or BlackRock investing in a crypto fund. It’s eliminating the need for traditional finance altogether. Of course, this comes laden with its own issues, namely lurking hackers. But AI-based code auditing and insurance markets could alleviate much of that risk.

The best possible future is not to integrate crypto into the existing corrupt system run by human-beings with all their flaws and fallibility to temptation and moat building. It’s for people to be able to remove themselves from that system completely if they wish. But that would ‘Ruin’ Bloomberg’s TradFi worldview.

By Jossey PLLC

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