The beautiful mind of Sam Bankman-Fried

By Amy Castor and David Gerard

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i can’t tell you how many pieces i have read that have me mentally screaming “YOU ARE TALKING TO A TWEAKER. THAT’S IT. IT’S NOT SOME MYSTERIOUS SIDE EFFECT OF AUTISTIC GENIUS, IT’S JUST A HELL OF A LOT OF ADDERALL”

Andrew Molitor

David spent the last month moving house and Amy was packing up a house, so we mercifully dodged having to cover the Sam Bankman-Fried trial. We highly recommend the coverage from Molly White, Jacob Silverman, Nikhilesh De, and Inner City Press. [Molly White; Jacob Silverman; Airmail News; CoinDesk; Twitter]

But there are a few important things to say about Sam that don’t seem to have been covered much elsewhere.


Sam on Good Morning America for the 2022 criminal confessions tour


Your honor, 1) What

Sam’s trial has been on for three weeks now. The prosecution is wrapping up — and Sam has demanded his right to speak for himself. He is going to testify.

This is the stupidest possible move, and we’re certain his long-suffering lawyers strongly advised against it. But the prosecution’s case is overwhelming. A Hail Mary pass is probably all that’s left to him.

But also, Sam just can’t shut up. He was shooting his mouth off as fast as possible in his criminal confessions tour through November and December 2022, between FTX declaring bankruptcy and his arrest. He just wants to explain.

Why would Sam think testifying now, or talking to anyone who would listen last year, was a good idea? First, you need to understand the LessWrong rationalists and the Effective Altruist subculture — and how they think.

A rationalist on the rationalist

Zvi Mowshowitz is a long-time LessWrong rationalist. Mowshowitz was a trader at Jane Street, a professional Magic: The Gathering player, and the CEO of rationalist medical crank startup MetaMed. He also worries about Roko’s basilisk. [Observer, 2012]

Mowshowitz has known Bankman-Fried for many years via the Effective Altruism crowd. And now he’s written an extremely long review of Michael Lewis’ appalling puff piece on Sam, Going Infinite — though the review is really the story of Sam and Zvi. [Substack]

Mowshowitz writes like he always realized Bankman-Fried was a crook — but other evidence, such as his previous writeup on the fall of FTX and what that would mean for EA, suggests Zvi first realized FTX was a fraud only when it fell over last November. [Substack, 2022]

He tries to put a skeptical cast on the tale — but the facts Mowshowitz describes of the years he’s known Bankman-Fried show how Sam played Zvi like a kazoo. And Zvi isn’t happy about it.

This is Mowshowitz’s description of Sam Bankman-Fried’s personality:

This is a very raw-G ‘smart’ person, who manufactured an entirely artificial superficial charm, has grandiose self-worth, pathologically lies, is endlessly manipulative, lacks remorse or guilt, has extreme emotional shallowness, fails to accept responsibility for anything ever, needs stimulation constantly to the point of constantly fidgeting, never sleeping and playing video games during television appearances, is constantly impulsive and irritable and irresponsible, has goals like going infinite and mostly does things without any plan or vision at all, did all the crimes and the first opportunity he got had his bail revoked, although Lewis seems to be in denial about the crimes and the bail got revoked after the book’s events.

Well, yes — but the description up to “did all the crimes” is also most of the EAs and rationalists, including Mowshowitz himself.

“Raw-G” is a rationalist way of saying “a bright lad.” The “G-factor” is a common way for rationalists to say that someone has lots of IQ points — even as psychologists will tell you that intelligence is made up of about 120 disparate and only somewhat correlated factors and isn’t really a single number. Rationalists tend not to have achievements, so they talk a lot about the IQ scores they got in school.

Mowshowitz believes that Bankman-Fried says whatever the person he’s talking to wants to hear. He doesn’t care whether any statements he makes are true or false. Sam only cared about making the number go up — to win at EA as if it were a winnable game.

Legally prescribed medication

One hint as to why FTX/Alameda was a disorganized, chaotic, and mismanaged mess is Caroline Ellison’s Twitter thread of April 5, 2021: [Twitter, archive]

nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is.

In the context of the thread, Ellison is clearly speaking of amphetamines for treating ADHD — she describes common ADHD symptoms. A lot of ADHD medication, such as Adderall, is just amphetamines. But if you have ADHD, then a small dose of amphetamines works to focus your brain. And Caroline is a true believer.

So, fine. Though many have speculated about just how large an amount of stimulants Sam was taking as pills and patches — well beyond any normal ADHD treatments.

How did Sam and Caroline get into taking high doses of ADHD medication? We think it was via Scott Alexander Siskind, the psychiatrist behind the rationalist blog Slate Star Codex.

Siskind occasionally writes up particular psychiatric drugs as public education. One popular piece was “Adderall Risks: Much More Than You Wanted To Know” from December 28, 2017. [Slate Star Codex]

Siskind starts by discussing how quite a lot of his patients seek out Adderall to make them better at working in finance. He then claims that Adderall helps with concentration for finance whether you have ADHD or not.

He goes on to name a specific rationalist, Kelsey Piper of Vox — the journalist that Sam later shot his mouth off to — as someone who really should have gotten onto Adderall for greatest effectiveness in her altruism: “by my calculations, that decreased Kelsey’s effectiveness by 20%, thus costing approximately 54 billion lives.” Yeah, rationalists really do say that sort of thing as if it’s normal.

Siskind discusses the medical nuances and risks of ADHD drugs at great length with many cited studies. But we can assure you that the rationalist subculture took that Slate Star Codex post as a starter’s pistol to get on Adderall by any means possible — convinced that it would turn them into geniuses of finance and Effective Altruism. We’ve even seen anecdotal reports of some rationalists who “microdosed” street meth, hoping for the same effect.

We are quite certain that Sam Bankman-Fried and Caroline Ellison were two of the rationalists who read that essay and headed straight for all the prescription amphetamines they could legally obtain. FTX had its own staff psychiatrist on hand, after all.

It’s important to note that if you take Adderall at well over therapeutic doses, you’re going to get the same effects you would if you just took that much speed. Because it is speed. You’ll speak with unshakable confidence. You’ll work long hours. You’ll take wild risks with customer money and run your business into the ground.

The world of finance is well acquainted with how cocaine has the same effects. Stimulants don’t make you into a financial genius — they just make you think you’re a financial genius.

Sam’s defense complained to Judge Lewis Kaplan that Sam wasn’t getting all of the ADHD medication he had been prescribed. Sam really wanted to feel the confidence he was used to before going up on the stand. [Doc 323, PDF]

Iron Chef

After graduating from MIT, Bankman-Fried worked as a trader at Jane Street for three years. He then struck out on his own to make it big in crypto.

Sam’s crypto origin story is the “kimchi trade,” named after a Korean dish —  where traders purchased bitcoin in the US and elsewhere and then sold it on the South Korean and Japanese markets for a profit.

In 2017, it was difficult to move cash out of Korea and Japan. This created significant discrepancies in the price of bitcoin — it might trade for $10,000 in the US, but $15,000 in Korea and $11,500 in Japan. If you could figure out how to buy bitcoin in the US, sell it in Asia, and get the cash back into the US again, you stood to make heaps of money.

Of course, that also required figuring out how to convert Yen into US dollars and move bucketloads of cash from Japanese banks to US banks without your accounts being frozen for money laundering.

Sam supposedly figured out how to dodge the financial controls and make millions of dollars a day from this arbitrage — although he was incredibly vague on the details. [BeinCrypto]

This sort of arbitrage on international exchanges was well known. The bitcoin world rabidly sought out international arbitrages. But for some reason, only Alameda was in a position to exploit this one on a large scale — if you believe Sam.

This is about as plausible as Charles Ponzi’s International Reply Coupon arbitrage — that arbitrage also existed, but Ponzi couldn’t possibly have run as much money through it as he claimed. But people fell for it as long as they thought there was a chance they could get rich for free.

If Sam achieved this arbitrage at all, then he couldn’t have done it without extensive bank fraud — and he later admitted he was lying to Japanese banks to get and keep accounts. The secret ingredient is still crime. [Protos]

Arthur Hayes, founder of the BitMEX crypto futures exchange, also got a start in arbitrage trading in Asian markets — in 2013. He started small, and it was by no means an easy arbitrage to exploit.

While Hayes was in Hong Kong, before he started BitMEX, he did bitcoin arbitrage between China and the rest of the world — but it involved carrying large bags of cash across international borders: [Vanity Fair, archive; YouTube, 8:15 on]

When he heard Bitcoin was trading significantly higher on the Chinese mainland, he bought a bundle, transferred the coins to an exchange in China, and swapped them for yuan — literally lugging around a backpack containing stacks of banknotes. “Over a period of days,” he recounted, “I physically crossed the border by bus to Shenzhen with some friends, had lunch, and came back over the border carrying legal amounts [of cash].”

Naia Bouscal, who was a software engineer at Alameda, said that Sam did get some money out of the arbitrage. According to Bouscal, Sam set up Japanese accounts (by doing bank fraud) and made something like $10 to $30 million — but he then lost it to “a series of bad trades and mismanagement of assets.” [Effective Altruism forum, 2022, archive]

There’s another rumor, which is an incomplete story — but a lot of people strongly suspect that Alameda was started with a pile of tethers backed by nothing, because there was too much heat around Bitfinex/Tether in 2017 and the whales needed a new trading partner.

We know from the CFTC settlement that Tether printed tethers from nothing and accounted them in the reserves as “loans.” We also know that Alameda minted 39.55 billion tethers and certainly didn’t send Tether anything like $39 billion — which would have been more than their entire claimed assets under management. [CryptoSlate]

Did Sam do a small amount of his claimed kimchi arbitrage, but then get a loan of tethers to start Alameda and later FTX?

We also need to keep in mind that Sam Bankman-Fried has just been shown to be a long-term liar and fraud.

In the meantime, here’s a yummy-looking recipe for pork belly bossam with radish and oyster kimchi. [SCMP]

The myth of the boy genius billionaire

FTX worked hard to promote itself as a trustworthy financial institution run by a dynamic genius in the mold of Steve Jobs of Apple.

Jobs was eccentric, acerbic, and prickly — and he solidly delivered through the late 1990s and into the 2000s.

The Jobs archetype is a poison in tech culture. Jobs made amazing things, but he was also a toxic asshole — and his emulators assume you have to be an asshole to make it work.

Elon Musk did the same, promoting electric cars and energy transition while Tesla’s accounts looked increasingly puffed-up and driven only by his image.

If the past year of Twitter achieves anything, we can only hope it’s shattering the image of rich guys as universal geniuses.

Most zillionaires don’t seek the limelight. They just get on with making money. If you see the ultra-wealthy promoting themselves, it’s a stage-managed production for publicity purposes, designed to distract from whatever is really going on.

They want you to think they’re the next Steve Jobs. Somehow, they keep turning out to be Elizabeth Holmes.

Sam Bankman-Fried promoted himself as an eccentric billionaire genius thinker with financial acumen beyond normal minds and the policy insight to take this fabulous new asset class into the future.

Back in the real world, Sam was nothing more than a flim-flam artist. This is the Sam who will take the stand. He will try to con the jury in the same way he conned crypto investors, venture capitalists, and the media — but now the world is onto him.

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14 Comments on “The beautiful mind of Sam Bankman-Fried”

  1. Proposal: financial trading is essentially gambling. Gambling is a sport. Professional sports players have to do drug tests before competing to prevent cheating. Therefore, traders (both crypto and real money) should have to pass drug tests.

  2. About the Kelsey Piper thing, I think that quote from SSC is clearly intended as a joke. It’s not something “rationalists really do say as if it’s normal”.

    Apart from that, thank you for the new article, very insightful as usual! Keep up the good work 🙂

    1. Rationalists do say that sort of thing in all seriousness, and it would only work as a joke because they do. This example is in the class of statements that they mean until they’re called on them, at which point they claim they were “jokes.” Scott Alexander has always been very heavy on this variety of deniable statement.

  3. A content warning before the words “professional Magic the Gathering player” is in order. I think my eyes are broken from whiplash trying to ascertain if those were the words I did just read.

  4. Not being a defective altruist, I’m not up on the jargon.

    What’s “very raw-G” Mowshowitz quote?

    Someone help?

  5. Oh, never mind.

    I didn’t read far enough. You may cancel my previous comment.

    I’m either taking too much or not enough adderall, apparently (I take zero, just for the record).

  6. Hello David Gerard,
    You may remember me from Wikipedia as Feral Oink. I remember you! You may remember me from my Google fan blog where you kindly left comments under the name of Redragdiva. I am appreciative. I regret never telling you that until now. We are quite ideologically opposed in many ways but NOT when it comes to cryptocurrency and its inherent vulnerability to scams, and the larger “solution in search of a problem” aspect of blockchains.

    As for Scam Blankman Fraud, I do not believe he was ever “high g” whatever that may truly be. His simplistic cross-national arbitrage trade wasn’t anything special. A lot of people who should have known better wanted to believe in Sam’s “mystique”. Sam’s mother and father, especially his father, directly contributed to Sam’s success. Sam’s father was a very, very good tax lawyer, and he loved his son. He worked with him closely at FTX. Sam’s mother was no less competent but her field of expertise was different, She had a different contribution to FTX, that of “effective altruism” or achieving a goal without concern about the means to that end.

    I agree with you regarding the use and abuse of strong chemical stimulants: It results in confidence without justification, and a higher propensity for risk taking. Stimulants do not yield genuine improvement in cognition. Regular sleep habits, exercise, sobriety, and a healthy diet are the only ways to maximize cognitive prowess.

  7. The part about Jobs that they never emulate is the “get fired from the company you founded, then spend a decade in the wilderness as a bit of a has-been building two odd companies”.

    Jobs was still an asshole, but a changed, somewhat matured and mellowed asshole. (Also he married and had *acknowledged* kids in that time which may have been part of it.)

    The “next Jobs” is too often an enfant terrible who had only success, reinforcing the bad behavior, without that annealing process in the middle. They’re Steve Jobs in 1978 not Steve Jobs in 2000.

  8. I’ve been following crypto news for years for the schadenfreude – it’s just nice to read some news where bad people actually get what’s coming to them – but the broadly sneering reaction I keep seeing to the FTX crew’s Adderall use/abuse makes me unbelievably sad. Having ADHD, getting your diagnosis, and obtaining your medication in the U.S. is a heavily stigmatized Sisyphean nightmare where at every single step of the process people try to get you to “admit” that you don’t actually need the medication that lets you have a relatively normal life, and because it’s a controlled substance you have to go through the “obtaining your medication” part of that process once a month for the rest of your life. I appreciate you acknowledging that these medications do actually help people, but I question what speculating about Sam et al’s amphetamine abuse adds to the FTX story beyond contributing to the stigma around ADHD medication. Adderall didn’t make these people steal customer money – their own greed took care of that just fine.

    1. Hello Troy,
      I apologize for suggesting something contrary to your comment in my comment. I should have omitted “use” and just stuck to “abuse”.

      Caroline’s arrogance about using amphetamines is what I found grating. Her sneering comparison to “normies” rankled. Everything about the FTX crowd (as far as we know publicly) was redolent of that same arrogance. Arrogance is part of human nature and none of my business in general… except for the many people who should have known better, and whose own greed caused others to believe in FTX.

      None of this is your fault! I am sympathetic to your situation: Using legally prescribed medication that is associated with the stigma of a controlled substance. Please forgive my callousness earlier.

  9. The thing about the Steve Jobs hagiography that people – including you – miss is that Jobs was pretty sh-t at the technical side of things. Wozniak was the one who did all the work, Jobs was just good at marketing and exploiting the ever-loving sh-t out of Woz. How Jobs “created” Breakout was how Jobs created everything at Apple.

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