Skip to main content

A back-story for the fall of Sam Bankman-Fried


I remember doing an interview in September of last year with a lawyer who did a lot of work for the cryptocurrency industry. 

It was clear already that there was "trouble in River City." In July 2022, two important crypto businesses filed for chapter 11 protection: Voyager Digital and Celsius Network. Voyager Digital was a crypto broker. Unfortunately, it extended a large unwise loan to Three Arrows Capital, a crypto fund. Three Arrows defaulted, and Voyager never recovered. 

So: why did Celsius Network collapse? You ask. Well ... Celsius Network was a crypto lending company that let users deposit their digital assets into a "Celsius wallet" preliminary to pledging them as security for their borrowing.

The cause of its sudden failure is a rabbit hole I don't want to go down with you. But two quick points are observable from the surface: this failure was part of the more general cooling-off of crypto activity, in the manner that "hula-hoop lending" would surely have suffered as that fad died. Second, one of its executives may have been crooked, may have stolen tens of millions of US dollars worth of cryptocurrency from those wallets.

At any rate, in September I was talking to a prominent lawyer about the resulting bankruptcy proceedings. He said that they had plunged the whole industry into a chaos whence it could recover only by drastic measures. I pressed a little: "what does that mean?" He said that somebody has to "start writing checks to backstop" continued orderly activity. Specifically, he suggested that the renowned crypto billionaire Sam Bankman-Fried could take over all the productive assets of the industry, buying them at firesale prices through bankruptcy trustees. 

THAT is the backstory. When things started to go south for cryptos, SBF was seen by many, intelligent and well-versed people, in almost messianic terms as the only one who could save them. 

Instead, he turns out to have been part of the problem. Fancy that.  


Labels:

Comments

Post a Comment

Popular posts from this blog

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.   We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majesti
9 comments
Read more

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere.  At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak
17 comments
Read more

Five Lessons from the Allegory of the Cave

  Please correct me if there are others. But it seems to be there are five lessons the reader is meant to draw from the story about the cave.   First, Plato  is working to devalue what we would call empiricism. He is saying that keeping track of the shadows on the cave wall, trying to make sense of what you see there, will NOT get you to wisdom. Second, Plato is contending that reality comes in levels. The shadows on the wall are illusions. The solid objects being passed around behind my back are more real than their shadows are. BUT … the world outside the the cave is more real than that — and the sun by which that world is illuminated is the top of the hierarchy. So there isn’t a binary choice of real/unreal. There are levels. Third, he equates realness with knowability.  I  only have opinions about the shadows. Could I turn around, I could have at least the glimmerings of knowledge. Could I get outside the cave, I would really Know. Fourth, the parable assigns a task to philosophers
Post a Comment
Read more