The Myth of Utilitarianism: The Rise of SBF and the Fall of FTX

The cryptocurrency industry is always full of drama. In just two and a half years, the market value of a startup can soar to $28 billion; in only 36 months, the company's valuation skyrocketed from $800 million to $32 billion, an astonishing increase. However, what is even more shocking is that this company went from industry leader to near bankruptcy in less than a week. There is even a joke circulating online that during this week, most people's performance surprisingly exceeded that of a top trader who graduated from MIT.

The mastermind behind all of this is that man with the iconic afro hairstyle—SBF.

The Myth of Effective Altruism

SBF claims to be an effective altruist. This label not only became a personal trait of his but also a life creed he adheres to.

Effective altruism originates from utilitarian thought, advocating for "the greatest happiness for the greatest number." SBF interprets it as a contextual application of utilitarianism, meaning making decisions that can maximize overall benefits based on specific circumstances, even if this may mean overlooking the interests of a minority or certain moral principles.

Effective altruists emphasize cost-effectiveness in doing good and pursue value maximization. However, this way of thinking may lead to some controversial views, such as believing that high earners can do more good through donations than by directly engaging in charitable work.

SBF is not only a believer in this theory but also an active practitioner. However, it is this very belief that ultimately led to the rapid collapse of FTX.

The Source of Faith

SBF's belief in effective altruism can be traced back to his teenage years. Around the age of 14, he began to take an interest in utilitarianism spontaneously. This idea gradually took root in his young mind.

As a graduate of the Massachusetts Institute of Technology, SBF has demonstrated exceptional mathematical and physical talents. His blog posts cover topics such as utilitarianism, baseball, and politics, reflecting his inner world and thoughts.

Guided by effective altruism, SBF's career has been like a cheat code, earning him reputation, status, and wealth. However, as time went on, his obsession with this ideology deepened, reaching a level that is difficult for ordinary people to comprehend.

SBF promised to donate the majority of his wealth to effective charities. His company FTX also allocates 1% of its revenue for charitable donations. During the 2020 U.S. presidential election, he became one of the CEOs who donated the most to Joe Biden.

However, SBF's lifestyle also reflects his extreme interpretation of effective altruism. He is a vegetarian, sleeps only four hours a night, lives in a shared apartment, and hardly drinks or goes on vacation.

The Trap of Success

SBF's successful trajectory is similar to that of Do Kwon, both being young and talented tech elites. However, it cannot be ignored that the overall cryptocurrency market has been in an upward trend since 2018, with two bull markets occurring in 2021.

The continuous profits and accumulated success inflated SBF's inner belief, making him more convinced that effective altruism is the key to victory. To further validate this theory, he needed more funds to support charitable causes, political activities, and company expansion.

This explains why SBF has been continuously seeking financing at high valuations over the past two years. However, in the context of the overall downturn in the crypto market, the capital reserves are severely inadequate. In order to quickly achieve personal goals, SBF began to choose to conceal the company's financial reports and use platform tokens as collateral.

Awakening and Reflection

In the face of the FTX crisis, SBF began to awaken and conducted a profound self-examination with employees and the outside world. He admitted to making mistakes and stated that he is seeking rescue financing of up to $9.4 billion.

Whether utilitarianism or effective altruism, for individuals, it is merely a tool of thought. Excessively pursuing benefits or detaching from reality is undesirable. Effective altruists may feel a great sense of satisfaction when practicing this theory, but they can also easily overlook real conditions and issues.

SBF's success is by no means accidental, and similarly, the fate of FTX is not yet determined. Whether SBF can truly change and rise again in the future, we will wait and see.