Updated on 14h Dec. 2022. Why am I authoring this article “From effective altruism to defrauding people around the world”? Recently everyone hiding their real motives behind different “I will save the world” tags. So, I thought it is a nice idea to uncover how people hiding their real motives, why it is happening and what can we do to prevent this happens with us.
Let’s start with the basics: what is altruism?
Disinterested and selfless concern for the well-being of others described in the Oxford Languages.
Who are altruistic people?
People who are practicing altruism. It is an act to promote someone else’s welfare, even at a risk or cost to us.
Why are altruists doing what they are doing?
To save the world. You know the way as Beauty Queens trying to save the world by advertising World Peace…✌️ Obviously that not happening, but “sounds so good”.
Why should they do what they are doing?
To make money and tell their audience why to buy their products or services. If a product or service
- a piece of junk or
- unsellable then owners advertise it several times with a support of a charity.
You can replace the charity with an animal rescue center, or orphanages from Africa just to buy from them. However, help will almost never happen. Even if it happens hard to tell whether the donation will reach its end point.
Blocks on effective altruism
Why not always possible to help effectively?
I won’t go into details why people are advertising consumer products and services, with charities. It can be greed and million other reasons.
The intention would be good if that would work, but it is not working million times…
Why are they not working?
First you have no idea if donations/aids e.g.: food, water, health materials whether reach their end goals or not.
Several times those countries where humanitarian aids intended to be transported cannot be reached due to wars.
For example, safe transportation & routes not exist at all. This can be, because of wars or other economic problems. These issues block aids to achieve their final destinations.
Just because a product or a service advertised it will support a charity in the other side of the world DO NOT buy it. Buy if you think it has sense to buy something.
Most of the time people hiding real intentions e.g.: greed behind helping.
In addition to this you have no idea where your money will land at the end of transactions. Advertising with charity to help people, animals and using them for these kinds of goals is pretty disgusting.
Still a lot of people are doing as those people interested only in results. I do not recommend selling your soul, but you can try if that makes you happy.
As I wrote sometimes
- there are no real intentions of helping others,
- other times supply chains are broken due to missing logistics, operations, and security.
Even if you solve logistics, still who knows how long will aids be enough for those people.
Who know’s what else happen while you (or people because of you) are trying to help?
Things can go wrong even when you think you are helping. Interventions sometimes create bigger problems than they have been before.
How to help then?
Suppprt & donate charities in your country
If you want to really helpful then go to an animal rescue center or orphanage in your city/country and bring food. That is true altruism, good intentions and help.
Not when you do something in exchange for something else. That’s called business, and there is not really true altruism inside business’ motives.
I do not say do not donate people and charities.
Do it! Donate, but at first look around in your neighborhood and district, then the city you are living in. I am sure there are enough problems already what your help can partly solve.
You cannot supervise whether your donations on the other side of the world will reach their final destinations through products or services. Those will either reach end goal or not. The former has sense, the latter not so much.
Altruistic intentions and the crypto world
Why should we speak about altruistic intentions and the crypto world? Due to one of the biggest scams happened by people who had not real “altruistic intentions”. It turns out was a huge lie.
Let’s clarify first basic definitions.
What is a cryptocurrency?
A cryptocurrency, crypto-currency, crypto is a digital currency. It is designed to work as a medium of exchange through a computer network. Not reliant on any central authority, e.g.: a government, bank, to uphold or maintain it. That is why it is advertised as a decentralized system.
What does it mean “decentralized” cryptocurrency?
A decentralized cryptocurrency resists control of central authority. If you are holding a currency like Bitcoin in a private wallet
- it can’t be taken or
- seized by an outside authority, or the developers of those currencies themselves.
You can store your funds knowing that they are safe if you protect your private keys written in bitsgap.
Individual coin ownership records are stored in a “digital ledger“. It is a computerized database using strong cryptography
- to secure transaction records to control the creation of additional coins and
- to verify the transfer of coin ownership.
What is a cryptocurrency exchange?
A digital currency exchange, is a business that allows customers to trade cryptocurrencies for other assets, such as
- conventional fiat money or
- other digital/crypto currencies.
What is/was FTX?
FTX was a centralised cryptocurrency exchange (CEX) specialized in derivatives and leveraged products, in addition to this supported commonly traded cryptocurrencies.
In the FTX case
- decentralized cryptocurrencies have transferred on a
- a centralised crypto derivatives exchange, which was centralised in the palm of the hand of few people.
Altruism fraud “Oscar” goes to Sam Bankman-Fried
Do you remember the Tinder Swindler? Simon Leviev?
To simplify understanding Sam Bankman-Fried (SBF) can be compared to “effective altruism” equally as Simon Leviev (the Tinder Swindler) compared to being rich. They were both stating something about themselves, which were true until the point others investing into them.
We all know that sometimes “the road to hell is paved with good intentions” or at least the road to hell can be covered with good intentions. This happened in the following case too.
Who is Sam Bankman-Fried?
Sam Bankman-Fried also known SBF is an American entrepreneur, investor, founder,
- former CEO of the cryptocurrency exchange: FTX,
- Co-founder (with Gary Wang) of FTX.US (Crunchbase).
- Founder of the private equity firm: Alameda Research (Crunchbase).
His net worth peaked at $26 billion.
In October 2022, he had an estimated net worth of $10.5 billion published in Bloomberg.
On November 8, 2022, amid the bankruptcy and crisis of FTX, his net worth dropped 94% in a day to $991.5 million. That was the largest one-day drop in the index’s history.
By November 11, 2022, Bloomberg Billionaires Index considered Bankman-Fried to have no material wealth. Before his wealth disappeared, he was a major donor to Democratic & according to latest news Republican Party candidates too.
Within 2 months his $10.5 billion wealth melted down to net zero or close to it.
FTX cryptocurrency exchange’s token FTT still has a market value of $500 millions reported by Bloomberg. After SBF filed Chapter 11 bankruptcy in November 2022.
It just has almost no sense.
Biography of SBF & Effective altruism
Bankman-Fried attended the Massachusetts Institute of Technology (MIT). He graduated with a bachelor’s degree in physics and a minor in mathematics His career started in 2013 as an intern at Jane Street Capital, a proprietary trading firm stated in Nikkei Asia and Yahoo Finance.
Career and connection with effective altruism
In September 2017, he left Jane Street Capital and moved to Berkeley. Gossips tell it happened because the work there for him was not challenging. In Berkley he worked at the Centre for Effective Altruism as Director of development from October to November 2017. In that month he co-founded Alameda Research, a quantitative trading firm according to Wikipedia.
Yahoo Finance reported in January 2018, that Bankman-Fried organized an arbitrage trade, moving up to $25 million per day, to take advantage of the higher price of bitcoin in Japan compared to in America. Late 2018, he attended a cryptocurrency conference in Macau, then moved to Hong Kong, where he founded FTX, a cryptocurrency derivatives exchange, in April 2019.
The next place he moved was the Bahamas – the tax heaven as stated in the dailymail, where he lived in a $40 million penthouse, with Caroline Ellison in a 10-person ‘polycule‘ made up his inner circle of FTX and Alameda executives.
If you ever wondered where they were living until the FTX exchange collapsed and made investors and founders poor. Here are some pictures form dailymail‘s collection:
Now it’s your turn to find out: is that effective and real altruism or borrowing from others to live as a royalty?
The latter would not be the problem if the person who “played” with investors’ money wouldn’t say a “game over.”
Effective altruism to cover greed
Bankman-Fried stated he is a supporter of effective altruism. He is pursuing “earning to give as an altruistic career”. He is a member of “Giving What We Can” and stated “planned to donate most of his wealth to effective charities over the course of his life” reported by the New Yorker.
Bankman-Fried founded the FTX Future Fund for this purpose, which included William MacAskill, one of the founders of the effective altruism movement. After the collapse of FTX, the entire team resigned.
Future Fund committed $160 million in charitable grants and investments by September 1, 2022, confirmed by the project’s website…
Confirmation from SBF that altruistic intentions were not sincere
In November 2022, Bankman-Fried confirmed the altruistic and woke appearance he and his company displayed was not sincere; he told “it was a dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us” – according to Vanity Fair. (Shiboleth refers to shared beliefs.)
Loans to a media company from Alameda Research
It turns out not only investors, but another company’s CEO’s been involved in the Alameda Research and Sam Bankman-Fried’s story. SBF’s Alameda Research secretly funded crypto media site The Block and its CEO Michael McCaffrey. He resigned while it turns out no one knows at the company that the CEO received a $43m loan for three times
- to buy out other investors from the Block in 2021,
- to fund day-to-day operation in 2022,
- for McCaffrey to purchase personal real estate in the Bahamas in 2022,
from Sam Bankman-Fried reported Coindesk today on 9th Dec. 2022.
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Investors who believed in effective altruism and its representative lost
As we can see good guys are not always good. Not the ones who advertise themselves as good ones. Not even the ones who are telling they would sacrifice their wealth to charities and to practice effective altruism until the end of their life.
FTX collapsed and with this collapse a lot of exchange’s investor’s dreams and future collapsed. People were not able to withdraw money from the exchange after filing for bankruptcy except the ones who were living in the Bahamas for one more day.
The collapse now when here is the “crypto winter” already not help on anyone and when not just digital, but traditional financial institution’s assets are depreciating in value too because of the economic problems.
Restoring trust in altruism
- The big question after this well-played theater scene that how people can restore trust in altruistic intentions, companies, and charities?
- How can we be sure that a person, a company, or a charity will do what it has promised or promoted or at least half of it?
Probably no one can confirm that when we start to support a company, a charity who support sick kids, African or Asian orphanages or pets like dogs, and cats will really support those poor people and pets.
No one else can guarantee that whatever we do or try will help them except us.
Only we can guarantee that our help is real. If we are that humanistic that we want to help and do something good and altruistic better if we confirm this really happen.
Confirm that the act is real and not just looking good on paper or on social media, but we are really doing good and helping others. You don’t need to share it on everywhere in the digital world. That has the most sense.
How to re-establish trust in altruism?
Exactly in a way that we do not give our trust to everyone. Not believing in every people, companies and charities who tell “help charities by buying from us”, because we support this or that. I don’t say they don’t do, but sometimes they don’t.
If someone use the charity, orphanage or animal shelter or any other words, where your feelings will have been woken up then you need to double your attention and give less trust than previously did.
It is because, that can be a big fraud and a huge lie to buy products or services what otherwise you would never buy from others. This applies to not just or only for digital products and services, but physical too.
Digital and crypto world: decentralized cryptocurrency exchanges (DEX) on the rise
Inside the digital and crypto world people need to find out
- whether products and services are advertised, because of real value and sense,
- or are they only advertised because people are greedy to make more money.
I do not think all cryptocurrencies or exchanges are bad. This is not the case, but there is substantial risk to invest in those digital assets.
After this the following trends are showing people gain more interest in
decentralized cryptocurrency exchanges (DEX).
I am trying to refer that just because someone advertises something with
- “Good intentions” or
- with celebrities on huge sport events
e.g.: FTX has been advertised with Gisele Bündchen, and Tom Brady and other celebrity investors, it doesn’t mean those products/services have the added value behind, which align with investor’s core values.
Humans learn and learn again throughout their life and history that
“All that glitters not gold.“
Advertising effective altruism intentions like
- supporting charities,
might catch your attention, create impacts on feelings. Although this could hide real intentions, which were not helping on those who lost all their investments due to the collapse and the bankruptcy of the FTX exchange.
Updates on the Bankman-Fried story: arrest on the Bahamas
Bankman-Fried was arrested on the Bahamas on 12th December 2022 according to Wikipedia. Charges against him are
- wire fraud,
- wire fraud conspiracy,
- securities fraud,
- securities fraud conspiracy and
- money laundering and
- campaign law violations.
Bankman-Fried faces up to 115 years in prison if convicted on all eight counts.
The Ponzi scheme story, which made FTX a fraud
Investigation is ongoing and information came out slowly that is why we are updating the story with time.
In mid-2020, FTX’s chief engineer Nishad Singh made a secret change on FTX code – the cryptocurrency exchange’s software and writing a comment into the code: “Be extra careful not to liquidate,” according to Reuters.
The newsportal wrote the exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the U.S. Securities and Exchange Commission (SEC), which charged Bankman-Fried with fraud. The SEC told Alameda had a “virtually unlimited line of credit.”
That means they could borrow infinite amount of money from Alameda (comment by the author.)
“The billions of dollars that FTX secretly lent to Alameda Research over the next two years didn’t come from its own reserves, but rather were other FTX customers’ deposits”, the SEC said.
As we all see this what Ponzi schemes used to have.
What is a Ponzi scheme?
Ponzi scheme is a form of fraud that lures investors in a way that earlier investor’s profits paid from more recent investor’s funds.
Reuters reported that there were 2 ways how Bankman-Fried diverted customer funds to Alameda
- The auto-liquidation exemption written into FTX code allowed Alameda Research to increase its line of credit until it “grew to tens of billions of dollars and effectively became limitless,” the SEC complaint said.
- The other was a mechanism where FTX customers deposited $8 billion in traditional currency into bank accounts secretly controlled by Alameda. Deposits were reflected in an internal account on FTX that was not tied to Alameda, which concealed its liability, the complaint said.
Sam Bankman-Fried wrote in his testimony that he planned to give to the Congress by starting “I fucked up…“, which now everyone can read on Forbes that he made several mistakes and was not able to fully focus on risk management than he did in the previous years according to him.
Story updated on 14th Dec. 2022
To learn more about what happened at tech companies read this article regarding tech layoffs in 2022.