Clearer Thinking with Spencer Greenberg The FTX catastrophe (with Byrne Hobart, Vipul Naik, Maomao Hu, Marcus Abramovich, and Ozzie Gooen)
In this deep dive, Byrne Hobart, a finance newsletter writer, joins data scientist Vipul Naik, fintech entrepreneur Maomao Hu, crypto hedge fund partner Marcus Abramovich, and research president Ozzie Gooen. They dissect the astonishing collapse of FTX and the early warning signs that went unnoticed. The conversation covers ethical failings, the interplay between FTX and Alameda, and the future of effective altruism. Insights on risk-taking, accountability, and the emotional fallout of this financial catastrophe add depth to the analysis.
03:24:44
Alameda's Early Days
- SBF co-founded Alameda Research, a crypto hedge fund, in 2017.
- Early employees left due to risk management and ethics concerns, reporting mismanagement and large losses.
Coindesk Revelation
- Coindesk revealed Alameda's balance sheet was heavily reliant on FTT, a token issued by FTX.
- This suggested an unusually close relationship between the two entities and raised concerns.
Binance's Move
- Following Coindesk's report, Binance CEO CZ announced plans to liquidate Binance's FTT holdings.
- This triggered a bank run on FTX as customers rushed to withdraw funds.
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Intro
00:00 • 2min
The Rise and Fall of Alameda Research
01:42 • 11min
The Rise and Fall of FTX: Management and Strategy Insights
13:00 • 9min
The Philanthropic Ambitions and Challenges of the Future Fund
22:20 • 1min
The Unraveling of FTX
23:42 • 17min
Unpacking Ethics and Regulation in Business
40:51 • 2min
FTX's Financial Catastrophe
42:28 • 6min
Challenging Conventional Betting Strategies
48:56 • 2min
Risk and Collapse: The FTX Saga
50:41 • 19min
The Psychology of Fraud and Unlucky Consequences
01:09:58 • 2min
Unraveling FTX: Financial Mismanagement and Fraud
01:11:49 • 18min
The Fall of FTX: Analyzing FTT and Ethical Failures
01:29:28 • 15min
Betting on Utility: Risk and Wealth
01:44:20 • 10min
The Ethics of High-Stakes Risk-Taking
01:53:53 • 8min
Learning from Incidents: Accountability and Improvement
02:02:22 • 2min
Ethics, Risk, and Financial Accountability
02:04:16 • 14min
Unraveling the FTX Collapse
02:18:26 • 11min
Unraveling FTX and Alameda: A Cautionary Tale
02:29:36 • 18min
Lessons from the FTX Fallout
02:47:55 • 15min
Navigating Ethical Dilemmas in Venture Capital and Effective Altruism
03:03:15 • 14min
EA Community Fallout: A Call for Transparency
03:16:51 • 4min
Understanding the Impact of the FTX Catastrophe
03:21:05 • 4min
What the heck happened with FTX and Sam Bankman-Fried? Were there early warning signs that most people failed to notice? What could've been done differently, and by whom? What effects will this have on the EA movement going forward?
Timestamps:
- 00:01:37 — Intro & timeline
- 00:51:48 — Byrne Hobart
- 01:39:52 — Vipul Naik
- 02:18:35 — Maomao Hu
- 02:41:19 — Marcus Abramovitch
- 02:49:38 — Ozzie Gooen
- 03:21:40 — Wrap-up & outro
Byrne Hobart writes The Diff, a newsletter covering inflections in finance and tech, which has 47,000+ readers. Previously he worked at a hedge fund covering Internet and media companies. Follow Byrne on Twitter at @ByrneHobart or subscribe to The Diff at thediff.co.
Vipul Naik holds a PhD in mathematics from the University of Chicago and is currently the head of data science at Equator Therapeutics, a drug discovery startup. He previously worked at a tech startup called LiftIgniter and then at The Arena Group, a media / tech company that acquired LiftIgniter. Learn more about him at his website, vipulnaik.com.
Maomao Hu is a blockchain, fintech, and AI entrepreneur and thought leader. He has been involved in organizations ranging from leading investment banks to new startups, to solve both microstructure problems like market surveillance and macrostructure problems like capital allocation. Currently, he leads development and quantitative research at asset manager Zerocap. Learn more about him at his website, thefirenexttime.com.
Marcus Abramovich is a managing partner at Enlightenment Ventures, an EA-aligned cryptocurrency hedge fund. Marcus also leads a Facebook group and Discord community of effective altruists focused on accumulating capital to donate to EA causes, and advises several cryptocurrency projects. Marcus discovered effective altruism as a PhD candidate at the University of Waterloo and professional poker player. Email him at marcus.s.abramovitch@gmail.com.
Ozzie Gooen is the president of The Quantified Uncertainty Research Institute. He has a background in programming and research. He previously founded Guesstimate and worked at the Future of Humanity Institute at Oxford. Follow him on Twitter at @ozziegooen or learn more about his current work at quantifieduncertainty.org.
Further Reading:
- "Clarifications on diminishing returns and risk aversion in giving" by Rob Wiblin @ the EA forum on why he disagrees with the SBF's risk-taking approach [link]
References:
- 0xhonky. (November 13, 2022, 03:12 AM UTC). https://twitter.com/0xhonky/status/1591630071915483136. Twitter. [link]
- alamedatrabucco. (April 22, 2021, 10:37 AM UTC). https://twitter.com/alamedatrabucco/status/1385180941186789384. Twitter. [link]
- Allison, I.. (November 2, 2022). Divisions in Sam Bankman-Fried's Crypto Empire Blur on His Trading Titan Alameda's Balance Sheet. Coindesk. [link]
- Austin. (November 14, 2022). In Defense of SBF. Effective Altruism Forum. [link]
- autismcapital. (November 12, 2022, 07:33 AM UTC). https://twitter.com/autismcapital/status/1591333446995283969. Twitter. [link]
- Berwick, A.. (November 13, 2022). Exclusive: At least $1 billion of client funds missing at failed crypto firm FTX. Reuters. [link]
- carolinecapital. (April 5, 2021, 11:41 AM UTC). https://twitter.com/carolinecapital/status/1379036346300305408. Twitter. [link]
- corybates1895. (November 10, 2022, 10:37 PM UTC). https://twitter.com/corybates1895/status/1590836167867760641. Twitter. [link]
- cz_binance. (November 6, 2022, 03:47 PM UTC). https://twitter.com/cz_binance/status/1589283421704290306. Twitter. [link]
- cz_binance. (November 8, 2022). https://twitter.com/cz_binance/status/1590013613586411520. Twitter. [link]
- Faux, Z.. (April 3, 2022). A 30-Year-Old Crypto Billionaire Wants to Give His Fortune Away. Bloomberg. [link]
- Ellison, C.. (September 21, 2021). https://worldoptimization.tumblr.com/post/642664297644916736/slatestarscratchpad-all-right-more-really-stupid [deleted]. World Optimization. [link]
- ftxfuturefund. (February 8, 2022, 05:32 PM UTC). https://twitter.com/ftxfuturefund/status/1498350483206860801. Twitter. [link]
- Gach, E.. (November 14, 2022). Crypto's Biggest Crash Saw Guy Playing League Of Legends While Luring Investors [Update]. Kotaku. [link]
- Hussein, F.. (November 16, 2022). House panel to hold hearing on cryptocurrency exchange FTX collapse. PBS News Hour. [link]
- Jenkinson, G.. (November 17, 2022). SBF received $1B in personal loans from Alameda: FTX bankruptcy filing. Cointelegraph. [link]
- Kulish, N.. (November 13, 2022). FTX's Collapse Casts a Pall on a Philanthropy Movement. The New York Times. [link]
- Levine, M.. (November 14, 2022). FTX's Balance Sheet Was Bad. Bloomberg. [link]
- Ligon,C., Reynolds, S., Kessler, S., De, N., & Decker, R.. (November 11, 2022). 'FTX Has Been Hacked': Crypto Disaster Worsens as Exchange Sees Mysterious Outflows Exceeding $600M. Coindesk. [link]
- Morrow, A.. (November 18, 2022). ‘Complete failure:' Filing reveals staggering mismanagement inside FTX . CNN. [link]
- Nick_Beckstead, leopold, ab, & ketanrama. (November 10, 2022). The FTX Future Fund team has resigned. Effective Altruism Forum. [link]
- Partz, H.. (November 9, 2022). FTX founder Sam Bankman-Fried removes “assets are fine” flood from Twitter. Cointelegraph. [link]
- Piper, K.. (November 16, 2022). Sam Bankman-Fried tries to explain himself. Vox. [link]
- Regan, M.P. & Hajric, V.. (November 12, 2022). SBF vs CZ: How 2 crypto billionaires' social media “bloodsport” went from keyboard warrior shenanigans to a $32 billion blowup. Fortune. [link]
- Rosenberg, E., Khartit, K., & McClay, R.. (August 26, 2022). What Is Yield Farming in Cryptocurrency?. The Balance. [link]
- sbf_ftx. (December 2, 2020, 09:25 PM UTC). https://twitter.com/sbf_ftx/status/1334247283081138178. Twitter. [link]
- sbf_ftx. (December 11, 2020, 04:19 AM UTC). https://twitter.com/sbf_ftx/status/1337250686870831107. Twitter. [link]
- sbf_ftx. (November 8, 2022, 04:03 PM UTC). https://twitter.com/sbf_ftx/status/1590012124864348160. Twitter. [link]
- sbf_ftx. (November 10, 2022, 02:13 PM UTC). https://twitter.com/sbf_ftx/status/1590709195892195329. Twitter. [link]
- sbf_ftx. (November 11, 2022, 03:23 PM UTC). https://twitter.com/sbf_ftx/status/1591089317300293636. Twitter. [link]
- Sigalos, M. & Rooney, K.. (November 9, 2022). Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse. CNBC. [link]
- tara_macaulay. (November 16, 2022, 08:57 PM UTC). https://twitter.com/tara_macaulay/status/1592985303262072834. Twitter. [link]
- taylorpearsonme. (November 10, 2022, 10:00 PM UTC). https://twitter.com/taylorpearsonme/status/1590826638429650944. Twitter. [link]
- Tsipursky, G.. (November 16, 2022). SBF's dangerous decision-making philosophy that brought down FTX. Fortune. [link]
- whalechart. (November 15, 2022, 06:46 AM UTC). https://twitter.com/whalechart/status/1592408565402464259. Twitter. [link]
- Wiblin, R. & Harris, K.. (April 14, 2022). Sam Bankman-Fried on taking a high-risk approach to crypto and doing good. 80,000 Hours. [link]
- Yaffe-Bellany, D.. (November 14, 2022). How Sam Bankman-Fried's Crypto Empire Collapsed. The New York Times. [link]
- yashkaf. (November 12, 2022, 07:18 PM UTC). https://twitter.com/yashkaf/status/1591606925149540353. Twitter. [link]
- FTX (company). Wikipedia. [link]
- Sam Bankman-Fried. Wikipedia. [link]
Staff
- Spencer Greenberg — Host / Director
- Josh Castle — Producer
- Ryan Kessler — Audio Engineer
- Uri Bram — Factotum
- Miles Kestran — Marketing
Music
Affiliates