Cryptocurrency: FTX Fraud Exposes Scam Of Woke Capitalism
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Thu Nov 17 19:00:31 PST 2022
Crypto Fraud Exposes Woke Capitalism As A Scam
Why do people keep falling for it?
Klaus Schwab, Executive Chairman, World Economic Forum; Sam
Bankman-Fried, founder, FTX; President Bill Clinton
Sam Bankman-Fried, the founder of FTX, which was, until last week, the
world’s second-largest cryptocurrency exchange, is today facing prison
time for allegedly defrauding his customers of billions of dollars.
Bankman-Fried, 30, donated to many progressive causes allied with the
“effective altruism movement,” including pandemic prevention and
response. He spoke at, and presumably donated to, the World Economic
Forum’s Davos conference last May and the Clinton Foundation’s Clinton
Global Initiative in September. Bankman-Fried is similar to Bernie
Madoff in that both men used philanthropic giving, and the veneer of
humility, to create a positive reputation while running pyramid
schemes that should have set off red flags among investors,
regulators, and journalists.
In truth, the Bankman-Fried scandal shows that all do-gooder
capitalism should set off red flags. Bankman-Fried claimed he was only
trying to get rich in order to raise money for charity, and investors
and journalists overwhelmingly took him at his word, even while
visiting him at his $40 million home in the Bahamas. “You were really
good at talking about ethics for someone who kind of saw it all as a
game with winners and losers,” a Vox reporter said to Bankman-Fried
last night, to which he responded, “ya, hehe… I feel bad for those who
get fucked by it. By this dumb game we woke westerners play where we
say all the right shiboleths [sic] so everyone likes us.”
Kelsey Piper: you were really good at talking about ethics, for
someone who kind of saw it all as a game with winners and losers Sam
Bankman-Fried: ya. Hehe. I had to be. it’s what reputations are made
of, to some extent. I feel bad for those who get fucked by it, by this
dumb game we woke westerners play where we say all the right
shiboleths and so everyone likes us.
Defenders of do-gooder capitalism say that socially-responsible
investing, which was rebranded as ESG to refer to investing that takes
environmental, social, and governance issues into account, has done a
lot of good. They point to ESG investments in things like renewable
energy, electric vehicles, and carbon offsets as proof that capitalism
and philanthropy can co-exist.
But ESG has been rocked by scandal after scandal for greenwashing
things that are bad for the environment, people, and democracy. Few
carbon offsets actually reduce carbon emissions. Many are scams. Some
pay landowners to not cut down trees they were never going to log.
Others pay renewable energy developers who were already going to build
wind and solar projects. Most solar panels and electric car batteries
are made in Xinjiang, China by incarcerated Uyghur Muslims. Solar
projects require 300-600 times more land than nuclear or natural gas
plants and are devastating fragile desert environments. And there is
no waste disposal solution for used solar panels, a hazardous waste,
which means they will be sent to landfills or dumped on poor nations.
Even Bankman-Fried acknowledges that “ESG has been perverted beyond
“Fraud” may seem like a harsh word for describing ESG, but Black’s Law
defines fraud as an activity that relies on deception in order to
achieve a gain, and ESG certifiers, and sellers of solar panels and
solar projects, know perfectly well that their projects violate the
letter and spirit of ESG. Representatives of the renewable energy
industry for years claimed their products were cheaper than other
energy sources even as they were lobbying Congress for $369 billion in
subsidies. And many ESG funds exclude nuclear energy even though
nuclear has the smallest environmental footprint of any energy source,
pays higher wages than solar, and enjoys the strictest regulatory
governance of any energy source.
CoinDesk - Unknown
Clinton with Bankman-Fried at the Clinton Global Initiative, September
In truth, societies are much more vulnerable to ESG, renewable energy,
and offset frauds than to con artists like Madoff and Bankman-Fried.
The latter are caught as soon as the stock market crashes and their
pyramid scheme collapses. ESG, renewables, and offsets, by contrast,
continue to find customers despite scandal after scandal — as do the
the Clinton Foundation and World Economic Forum. The Clinton
Foundation is still holding pay-to-play conferences despite having
been caught accepting $10 to $25 million from Saudi Arabia and $1
million from Qatar before and while, respectively, Hillary Clinton
became Secretary of State. And the World Economic Forum’s founder,
Klaus Schwab, was at the G-20 meeting this week despite revelations
that WEF promoted FTX.
As such, the question is not why Woke frauds like Bankman-Fried do
what they do, nor why they get caught, but rather why people fall for
it. Why do such transparent efforts to buy public sympathy through
greenwashing and woke-washing continue to work?
Wokeism Is The New “Greed Is Good”
Andrew Ross Sorkin and Kate Rooney referring to Bankman-Fried as “the
JP Morgan” and “Michael Jordan,” respectively, of crypto.
Over the spring and summer, as investors pulled their money out of
cryptocurrencies, Bankman-Fried started bailing out cryptocurrency
firms. He characterized his actions as altruistic. Many reporters
uncritically accepted this interpretation. CNBC’s Jim Cramer called
Bankman-Fried the “J.P. Morgan of this generation,” in reference to
banker John Pierpont Morgan’s famous 1907 bail-out of failing banks.
“They call him the J.P. Morgan of crypto,” said CNBC’s Andrew Ross
Sorkin of the influential show, Squawk Box, while introducing a
September 16, 2022 profile of Bankman-Fried.
“Yeah, the Michael Jordan of crypto!” responded financial reporter Kate Rooney.
She went on. “He spent hundreds of millions of dollars to bail out
struggling companies facing bankruptcy, liquidity issues — you name
it. The CEO, though, lives a relatively understated life for a
billionaire. He drives a Toyota Corolla to FTX's offices in The
Bahamas. He lives with 10 roommates. And a golden doodle named Gopher
sometimes sleeps under his desk on a beanbag chair.”
Rooney didn’t mention that Bankman-Fried’s home is valued at $40
million, even though she interviewed him in it. In fact,
Bankman-Fried’s FTX allegedly spent $74 million on real estate in the
“You said FTX has a responsibility to seriously consider stepping into
the time to save companies,” swooned Rooney. “Why did you have that
sense of responsibility?”
In retrospect, there were red flags everywhere. In several interviews
this fall, Bankman-Fried’s leg is shaking nervously. In 2020,
Bankman-Fried admitted to using stimulants. “In general, probably half
of all people or more should be taking meds of some kind, because they
just make your life a lot better,” he told a podcaster. And in April,
Bankman-Fried appeared to admit that his company was a Ponzi (pyramid)
scheme to a Bloomberg reporter named Matt Levine.
“You start with a company that builds a box,” Bankman-Fried told
Levine. “Maybe for now actually ignore what it does or pretend it does
literally nothing. It's just a box…. This box is worth zero obviously
… But on the other hand, if everyone kind of now thinks that this box
[cryptocurrency] token is worth about a billion dollar market cap,
that's what people are pricing it at and sort of has that market cap.”
The interviewer, Matt Levine, a former investor and one of the leading
crypto reporters in the U.S., interjected, “You're just like, ‘Well,
I'm in the Ponzi business and it's pretty good,’” to which
Bankman-Fried said, “I think that’s a pretty reasonable response…
that's one framing of this. And I think there's like a sort of
depressing amount of validity.” At that very moment, Bankman-Friedman
appears to have been using FTX’s own cryptocurrency as collateral for
lending FTX customer money to his hedge fund, Alameda Capital.
In retrospect he appears to be making something of a confession to
Levine back in April. “Everyone's gonna mark to market,” said
Bankman-Friedman. “In fact, you can even finance this, right? You put
X token in a borrow lending protocol and borrow dollars with it. If
you think it's worth like [not] less than two-thirds of that, you
could even just like put some in there, take the dollars out [and]
never, you know, give the dollars back.”
And yet, Levine writes, “I came away from that conversation bullish on
FTX and Bankman-Fried. My view was, and is, that if you talk to a
crypto exchange operator and he is like ‘crypto is changing the world,
your old-fashioned economics are just FUD, HODL,’ then that’s bad. A
wild-eyed crypto true believer is not the person to operate an
exchange. The person you want operating an exchange is a clear-eyed
Levine’s not alone. In his various interviews, Bankman-Fried came
across with humility and an “aw shucks” style while also communicating
quiet confidence. Six times, in response to questions from Chuck Todd
of “Meet the Press” last September, Bankman-Fried said, silkily, “It’s
a good question.” The way Bankman-Fried said it sounded like a
compliment, like he was praising the journalist for his intelligence.
As such, Bankman-Fried was making a classic confidence artist move. In
many cons, the confidence artist expresses his own confidence in his
mark so that the mark will reciprocate by investing his confidence in
the con artist. Humans are so wired to reciprocity that it feels rude
not to feel confident in someone who has expressed confidence in us.
And con artists like Bankman-Fried and Madoff expressed progressive
values broadly shared by elites, including journalists. On “Meet the
Press,” Bankman-Fried told Todd that he was making pandemic prevention
and response a key part of his “effective altruism” philanthropy.
“Covid is one of the clearest examples of this,” he said, “where we
did not as a country, or as a world, frankly, have a coherent
Why, then, do frauds like Madoff and Bankman-Fried get away with it?
And why do we keep trusting people like the Clintons and Klaus Schwab
of the World Economic Forum?
Because many people, particularly liberal-minded investors, but also
journalists and members of the voting public, want to trust them.
Wishful thinking is powerful. We saw a similar dynamic with the fraud
carried out by Theranos Founder Elizabeth Holmes. Rich and powerful
people wanted to believe in her for the same reason people wanted to
believe in Bankman-Fried. And liberals especially wanted to believe
Bankman-Fried. That’s because they tend to feel guiltier than
conservatives and libertarians about their greed. They thus need
Wokeism, an alternative religion, to justify it.
“Greed is good,” said the hostile takeover investor played by Michael
Douglas in the 1987 classic, “Wall Street.” Douglas proceeded to give
the standard justification of capitalism provided by Adam Smith in
1776. “Greed, in all of its forms — greed for life, for money, for
love, knowledge — has marked the upward surge of mankind,” said the
Such a justification doesn’t work for liberals. They need to feel that
their greed is good because their greed is altruistic. What hucksters
like Bankman-Fried, the Clintons, and Klaus Schwab provide is a Woke
justification for their greed.
Breaking The Woke-Greed Trance
World Economic Forum’s Klaus Schwab speaking at the G-20 meeting on
Monday, November 14, 2022.
© 2022 Michael Shellenberger
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