The biggest bankruptcy

SBF’s full name, Sam Bank man Fried, was born in 1992 in Santa Clara County, California, and just turned 30 this year.

SBF’s parents are both Stanford law professors, with his father having drafted legislation for Senator Elizabeth Warren, currently an extremely prominent Democrat, and his mother raising money in Silicon Valley to support Democratic campaigns. In fact, just before FTX went bankrupt, SBF was the largest donor to the U.S. Democratic Party in 2022.

So, SBF comes from a typical white American elite family with a worldview and values extremely skewed towards the Democratic Party, and would grow up discussing various philosophical topics at the dinner table, and this high concentration of philosophical literacy environment deeply influenced SBF’s worldview.

SBF also has a brother who grew up playing board games with his brother and intentionally trained himself to play other games at the same time, trying to “have two minds”, which became a habit for him later. For example, when he met with Sequoia Capital, the world’s leading venture capital fund, to discuss the company’s structure, development model, and the major issues of FTX financing, he was playing games and talking to people at the same time, becoming a prodigy in the eyes of others who can have two sets of logic in his head at the same time.

In the past, we only heard of similar characters in Jin Yong’s novel “Shooting Heroes”, where the old codger Zhou Booting and the warrior Goo Jing, were able to do two things at the same time, thus practicing the mastery of left and right hand combat, and becoming the best of the martial arts masters with one against two.

Now, we also see such a “martial arts master” in the real world, what kind of results will he bring to the world?

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In 2010, SBF entered the physics department at MIT, but it didn’t take long for him to realize that he had little interest in physics research, and as he neared graduation, SBF became a deep believer in Effective Altruism (EA).

The pioneer of EA was Peter Singer, an Austrian Jew who had three ancestors who died in Hitler’s concentration camp massacres. Perhaps because he felt the pain of his ancestors being slaughtered like animals, Singer applied this ethic to animals that people breed and wrote Animal Liberation in 1975. In 1975, he wrote Animal Liberation, a book that started the modern animal rights movement.

Singer used the term specialism to articulate the idea of “human domination of nonhuman animals” and linked it to racism and sexism, likening the humane treatment of animals to the liberation of women and blacks, and arguing that it was the ultimate liberation of humanity. Veganism is promoted as a moral ethic, and the vast majority of highly educated contemporary vegans have been influenced by Singer’s philosophical ideas.

In terms of understanding the meaning of life, Singer believes that the purpose of human life is to maximize the happiness of others from a utilitarian perspective, which is one of the important sources of contemporary Western “white left thinking”. Singer also believes that it is a moral obligation of the human species that all rich people in the world should donate 10%, 20% or even 50% of their income to improve the lives of the world’s poor.

Peter Singer has taught philosophy at Oxford University in the UK, New York University in the US and Bandura University and La Trobe University in Australia, as well as being a professor of bioethics at Princeton University, and he is still teaching at Monish University in Melbourne. Not well known in China, he is probably the most popular philosopher alive in the West today.

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As for the EA espoused by SBF, founded by a young Oxford philosopher named Will MacAskill, and quite popular in the San Francisco Bay Area and among some young people on Wall Street who are involved in financial investments, MacAskill elaboration and play on EA combines moral logic with financial investments and wealth accumulation.

Simply put, if one’s goal is to efficiently maximize the happiness of others, one can usually achieve their life values by choosing to make as much money as possible, with the ultimate goal of giving it all away to aid others.

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After deep reflection and continued interaction with his peers, SBF, at the time of graduating from college, found his life’s purpose: to

Make money, make as much money as possible, and donate it!

After graduation, SBF, like his brother, one of the most legendary Wall Street quantitative trading firms, where he became a young trader with a good understanding of all kinds of financial arbitrage trading.

It was during his time at Jane Street that SBF also met his later partner, Caroline Ellison, CEO of Alameda before FTX went bankrupt, and they were both believers in the MacAskill philosophy.

Ellison also comes from an elite San Francisco Bay Area family, whose father’s name is Glenn Ellison, the MIT chair of economics, and Gary, the current chairman of the SEC, had been a subordinate of Glenn Ellison before he was nominated by Biden to be chairman.

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After three years at Jane Street, SBF, like at 3AC, discovered the huge arbitrage potential in crypto currency markets around the world, especially in Asian trading, where there is the famous “kimchee premium” (the price of bit coin in South Korea, which is significantly higher than other regions), and he founded Alameda hedge fund company to focus on arbitrage trading in crypto currencies.

Because of the more relaxed regulation and ease of trading crypto currencies in Hong Kong, SBF moved to live in Hong Kong with a dozen traders, including Alison.

Shortly after moving to Hong Kong, in 2019, SBF founded the FTX exchange, which features crypto currency derivatives trading, short for “Futures Exchange”. SBF and his team are all traders, so FTX has a good understanding of the pain points of crypto currency trading. With a team of only a few dozen people, their product went head-to-head with the four major crypto currency derivatives exchanges of the time – Coonan, Hot coin, OK, and Bite – and grew exponentially from there.

In addition to its talent in trading, SBF also has a keen political sense because it comes from an elite Democratic family. During the 2020 election, SBF donated over $10 million to President Biden’s campaign team, and after Biden’s victory, the identity of the Democratic Party’s gold owner made FTX’s influence in the US grow rapidly.

SBF understands the media communications effect, naming the Miami Heat arena after FTX, entering into a long-term partnership with seven-time U.S. Super Bowl winner Tom Brady and Brazilian supermodel Gisele Bunche, and taking advertising space in the 2022 Super Bowl, the highest-rated U.S. sports program, to introduce FTX and crypto currencies to 90 million viewers. So, the SBF deserves a lot of credit for making crypto currency so popular in the US today.

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The U.S. Congress held a hearing on crypto currencies and SBF represented FTX.US and preached the Web3 concept to the legislators. FTX even proposed to the CFTC (Commodity Futures Trading Commission) to use block chain smart contracts to replace futures brokers (FCM) and automate risk management, which was praised by the CFTC.

In the specific exchange variety design, in addition to various crypto currency perpetual contracts and futures contracts that other derivatives exchanges have, FTX has also creatively launched equity pass-through products that allow users to use crypto currencies to buy U.S. stocks including Apple, Alabama and others, and has also launched campaign options for Trump and Biden in the 2020 U.S. election.

 

 

 

 

 

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