Effective Altruism" Behind FTX's Collapse: Ex-Alameda Engineer's Revelation
Summary:
Aditya Baradwaj, former software engineer at Alameda Research, sheds light on the downfall of crypto exchange FTX, attributing it to the adoption of "effective altruism". This principle, encouraging wealth accumulation for future donations, led to irrational decision-making. FTX founder, Sam Bankman-Fried, is due for trial, having pleaded 'not guilty' despite a series of allegations against him. Bankman-Fried, purported to be sincere in his altruistic beliefs, made significant donations for future pandemic prevention and malaria eradication. However, these beliefs led to risky decisions, including a proposal to pay Donald Trump to avoid a 2024 presidential run.
The collapse of crypto exchange FTX in November 2022 stemmed from reckless and preposterous actions covered up under the guise of "effective altruism", a former software engineer at Alameda Research disclosed. Aditya Baradwaj unveiled this startling revelation days before the trial of FTX founder Sam Bankman-Fried, elucidating the role played by the philanthropic beliefs in the company's downfall. Baradwaj pointed out that, though effective altruism – a term coined for encouraging people to amass wealth to later donate – had pushed rationality to the backseat, resulting in the company making irrational decisions.
The ex-software engineer reflected the enormous persuasive power of this concept in tech communities in Silicon Valley and quantitative finance sectors of New York. Evident at FTX and Alameda Research, the influence of this belief was undeniable. Baradwaj, a victim of this effective altruism charade, lost his life savings at the hands of his ex-boss, Bankman-Fried. Having regained his strength after the shocking collapse of FTX, Baradwaj is eager to disclose his experience.
Like many others in the company, Baradwaj claimed to be pulled in by the enchanting vision of unifying effective deeds with altruism. However, he realized, this approach often took an unacceptable turn toward a practice where the ends justified the means. These extreme ends were so peculiar that no rational mind would ever make such decisions.
Bankman-Fried, under the umbrella of effective altruism, made generous donations for future pandemic prevention and to eradicate malaria in developing nations. He also generously donated to the Democratic party in the U.S, but later confessed to making contributions to the Republicans. In a recent interview with Big Short author Michael Lewis, Bankman-Fried was broached the idea of offering $5 billion to Donald Trump in an attempt to dissuade him from the 2024 presidential run as part of his mission to 'protect democracy.'
Despite numerous allegations of Bankman-Fried's true intentions hid behind the high-sounding altruistic facade, Baradwaj affirms that he was sincere in his beliefs. Baradwaj's observation of Bankman-Fried was of a highly driven individual, committed to a mission. The dense trust employees placed in him was adversely exploited.
Bankman-Fried's belief in his philanthropic goals could be a reason for his perseverance in pleading 'not guilty' despite the considerable evidence stacked against him. Baradwaj suggests there may be a complex psychological battle within Bankman-Fried trying to reconcile with reality, possibly believing he did no wrong or his actions were valid. However, Baradwaj conveyed the importance of uncovering the truth through the impending trial for all the questionable incidents related to crypto deaths.
Published At
10/2/2023 5:14:39 AM
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