Who is Sam Bankman-Fried (SBF) really, and how could he have done what he did? - three theories and a lot of evidence

I think "theory B" (DAE + EA) is likely true, but it also seems like he was independently considerably incompetent. The anecdotes about his mismanagement at Alameda and FTX (e.g. total lack of accounting, repeated expensive security breaches, taking objectively dumb risks, not sleeping, alienating the whole Alameda team by being so untrustworthy) weren't clever utilitarian coinflip gambits that he got unlucky on, or selfish defections that he was trying to get away with. They were just dumb mistakes.

My guess is that a number of those mistakes largely came from a kind of overapplication of startup culture (move fast, break things, grow at all costs, minimize bureaucracy, ask forgiveness rather than permission) way past the point where it made sense. Until the end he was acting like he was running a ten-person company that had to 100x or die, even though he was actually running a medium-sized popular company with a perfectly workable business model. (Maybe he justified this to himself by thinking of it like he had to win even bigger to save the world with his money, or something, I don't know.)

Since he was very inexperienced and terrible at taking advice, I don't think there's anything shocking about him being really bad at being in charge of a company moving a lot of money, regardless of how smart he was.

I've been trying to figure out how someone who appears to believe deeply in the principles of effective altruism could do what SBF did. ... It seems important to me to seek an understanding of the deeper causes of this disaster to help prevent future such disasters.

There's a part of my brain screaming "Why are you leaving yourself wide open to affinity fraud? Are you trying to ensure 'SBF 2: This Time It's Personal' happens or what?" However, I'll ask him to be quiet and explain.

The problem was that you should never go around thinking "Somebody who believes in EA wouldn't screw me, therefore this investment must be safe." Instead you should think "The rate of return on this investment is not possible without crime, therefore I don't know why somebody who claims to be an EA would do this, but I don't have to know, I just have to stay away." Or as I said in response to Zvi's book review

You have to think: this man wouldn't offer me free candy just to get in his unmarked van, that doesn't make sense. I wouldn't give anyone candy for that. What's going on here?

It doesn't matter why something is too good to be true. If it is, it must be a lie, and thus bad. Don't take the deal. In case it's not clear "taking the deal" can mean more than just investing with FTX; it also encompasses other sorts of relationships one might get into with SBF or FTX, like taking their money or allowing them to be a public symbol of you.

The point here is that understanding human psychology and motivations, especially where the human you're trying to understand might be trying to trick you, is way harder than just knowing what sorts of returns are possible on capital investments with given amounts of risk. You can try to understand the SBFs of the world in the hopes of being able to identify them, but why do all that extra work? Just don't trust anyone who says they can make you a 50% return on your investment in a year with zero risk (or comparable risk to T-bills) because every single one of them is lying and committing crimes.

Is DAE a terms that is often uses withing some community or is that something you made to formulate your thinking here?

If it's a unique term of your for this analysis I'm curious as to why you chose that approach rather than using an existing term, like sociopath/sociopathic which seems to be both more broadly known and applied. (Not just how sure Healthline is in terms of definitional rigor here but https://www.healthline.com/health/mental-health/sociopath#signs) They seem to cover what you include as well as some other aspect. 

Why don't you just call it like it is: Narcissistic Personality Disorde - NOT this sugar coated definition titled "Deficient Affective Experience." The term "Experience" is such an overused cliché of a word that now it's getting used to describe a very serious and dangerous personality disorder. Are you going to tell an abused victim of Narcissistic Rage like me and thousands of others - primarily women - that their partners that physically assaulted them, verbally and emotionally abused them, was simply having a "Deficient Affective Experience?"

This strikes me as a good post but it seems to be getting a bunch of downvotes. I'm confused why. Anyone care to explain?

https://twitter.com/alexeyguzey/status/1728549209949995299

Based on the full text:

Some readers may think that this sounds circular: if I’m trying to explain why someone would do what SBF did, how is it valid to use the fact that he did it as a piece of evidence for the explanation? But treating the convictions as evidence for SBF’s DAE is valid in the same way that, if you were trying to explain why the grass is wet, it would be valid to use the fact that the grass is wet as evidence for the hypothesis that it rained recently (since wet grass is typically substantial evidence for rain).

But a lot of your pro-DAE evidence seems to me to fail this test. E.g. ok, he lied to the customers and to the Congress; why is this substantial evidence of DAE in particular?

oh, FTX doesn’t have a bank account, I guess people can wire to Alameda’s to get money on FTX….3 years later…oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that, and so it was never delivered to FTX.

This seems like evidence in favor of Theory A and against DAE if you look at those as competing explanations? That is, he (is claiming that in this particular case he) commingled funds for reasons unrelated to DAE. 

In November 2022, he also tweeted these statements

It seems likely he believed at that point that if a run could be avoided, he would have enough assets; so making these statements could help most customers, and not making them could hurt most of them, even if it helped a few lucky and quick ones. Not evidence of decreased empathy at all (in my view).

(3) There are multiple sources suggesting that he has a tendency and willingness to lie and deceive others.

Everything under this seems to fail the rain test, at least; very many people have this willingness, most of them don't have DAE (simply based on the prevalence you mention). Is this particular "style" of dishonesty characteristic of DAE?

(4) is actual evidence for DAE, great.

(5) and (10) For the rain test you need to provide a reason to believe most manipulative people have DAE. 

Etc.

For decreased affective guilt the situation seems to be worse: as far as I can see, no evidence for it is presented, just evidence there is some reported guilt and then

In the context of the large amounts of evidence for his lack of affective empathy, it seems more likely that the quote above is an example of cognitive guilt rather than affective guilt.

This seems to require a very large correlation between DAEmpathy and DAGuilt. Why couldn't he have one but not the other?

When I wrote the above, I was just going by your stated definition of DAE; after going to the page you linked, which I should have done earlier, a lot of your evidence seems to cover the facets of psychopathy other than DAE; you could argue they are correlated, but it seems replacing DAE with psychopathy (as defined there) in theories B and C would make the evidence fit strictly better.

I'm surprised you didn't mention the Kelsey Piper interview, which strongly supports C.

"So the ethics stuff is mostly a front" -- "Yeah".

This is a tremendous over-complication of SBF’s motives

SBF believed in effective altruism, but had the mindset of a degenerate gambler when it came to came to taking risk. He think of his actions as defrauding anyone because in his mind he was going to take customer money, use it to make high risk crypto trades (which he was convinced he’d win), venture capital investments, and pay off loans thus growing FTX and make several times the customer money he spent. He didn’t worry about the risk of a panic run on customer deposits. Basically he thought he’d just steal the money gamble it win his bets give back the money before anyone noticed and pocket the difference

So yes he did believe in effective altruism but he A) thought his goals were so lofty the ends justify the means B) horrible approach to risk C) arrogance

I also just wanna say the whole idea of DAE is absurd, you’re literally describing sociopathy but giving it a nice sounding name. I’m not even arguing that SBF is a sociopath. I think he’s definitely narcissistic but I wouldn’t go as far as to say he’s a sociopath, although who knows I’m not his shrink maybe he is. Anyways stop giving age old things fancy nice sounding names

Edit: I also want to point out that if your goal is to make a ton of money and use it to do good in the world I think opening an off shore casino and marketing it to unsophisticated retail investors is pretty questionable. Like we all know crypto is a highly speculative high risk asset class, and it’s speculative to the point where investing in it can resemble gambling more so than investing especially for retail investors

Sam marketed it as a place where you didn’t have to know anything to invest well. In the add steph curry literally says “I don’t know anything about crypto and with FTX I don’t need to”

I’m not saying that running a casino is inherently unethical, but if you’re such a “do gooder” whose goal in life is to make the world better it seems like a overall negative contribution to society you know what I mean? Like for him FTX was just a means to an end, and I’m sure in his mind he calculated at “I’ll do more good with the money I make than the bad of encouraging retail investors to gamble so it’s okay” and that line of thinking is just so flawed. It’s very very rare that the ends do justify the means, that mindset has been used to justify so many atrocities

It just seems like a very odd Career choice for an espoused do gooder

The cryptocurrency sector is completely and totally unable to see any merit in using cryptocurrency mining to solve a scientific problem regardless of the importance of the scientific problem or the complete lack of drawbacks from using such a scientific problem as their mining algorithm. Yes. They would rather just see Bitcoin mining waste as much resources as possible than put those resources to good use. Since the cryptocurrency sector lacks the characteristics that should be desirable, FTX should not have surprised anyone.