RISE FROM YOUR GRAVE: The Future of Flesh/Markets

I Am An Altered Beast. Plus: Why Sam Bankman-Fried should sell out his Dad, and your first crypto news catch-up.

Hello all, hope you’re coming back from a well-deserved Labor Day weekend. As an employment-challenged American, I deserved nothing ... and enjoyed it all the more.

But now, back to work. With CoinDesk in the rearview mirror, I’ll be ramping up activity here, and activating a paid tier starting next week. This newsletter includes a deep dive into the format and coverage of that product.

The goal here, just to spell it out, is to keep doing exactly the same thing I’ve been doing for the past ten years – being ahead of the curve on changes in technology, finance, and society broadly.

But now I’d like to do it without the overhead of investors and upper management leeching off my work. The plan is not to rely on media income entirely, but hey, some people pull it off, so we’ll see.

I hope that’s a mission you can support, by one means or another.

But first: a roundup (for now known as The Skim), with commentary, on some of the most important crypto, finance, and tech news of the past few weeks. Starting next week, these updates will go out twice a week – Tuesday and Thursday – and they will be paywalled. The free versions this week will hopefully give you a decent sense of what you’re paying for.

Sometimes, I’ll feel inspired to write something longer. This week, I was inspired to meditate on Sam Bankman-Fried’s life in jail, and why his legal defense should – but won’t – focus on depicting his father as the real villain.

The Skim

Today: SEC vs. Greyscale; Tornado Cash; Burning Man Ebola Disinfo as Art

SEC Defeats Grayscale Defeats SEC

In an incredibly important development, an appeals court has issued a strongly-worded and unanimous rebuke of the SEC’s rejection of a Bitcoin Exchange Traded Fund. The gist of the decision is that the SEC was inconsistent in accepting a futures ETF while rejecting the spot ETF.

This lays the groundwork for some crazy stuff to happen IF there is another round of Bitcoin Mania. I’m sympathetic to the idea that this may never happen again, that retail speculators are now completely burned out on crypto. I would in fact love to live in that world – if people were more skeptical of Bitcoin, they’d be less likely to get ripped off by crypto in general.

But back in reality, the sad truth is that most people have the intellectual capacity of pet-store guppies and operate out of a sad and self-defeating mix of fear and greed. Crypto will have another cycle, and at least if there’s a Bitcoin ETF fewer people will be out there giving their money to dipshits like Do Kwon and SBF.

In this case, then, it’s the court that’s accomplishing actual investor protection by telling the Gensler SEC to go pound sand. Ironic.

And on that note, the Grayscale decision seems to cap off the narrative that Gary Gensler’s SEC is both misguided and weak. The biggest tell is that two of the three judges who handed down this decision were Democratic appointees, and anti-crypto politics fuelled by the Warren wing of the Dems is really the only ground Gensler had left to stand on. But it seems that even his nominal allies have had enough.

Tornado Cash Charges and “Decentralization”

On August 23^rd, the U.S. Department of Justice filed criminal money laundering charges against the founders of Tornado Cash, a so-called “mixer” that works to anonymize funds on Ethereum. Mixers are not just valid but practically necessary tools on blockchains, which by and large don’t offer built-in privacy. Crypto Twitter is righteously outraged at the charges, since they can be seen as blaming the creator of a tool for the use it was put to by a third party – in this case, specifically, North Korea.

But the truth, as recently highlighted by Nic Carter, may be a bit more complicated than that. Fundamentally, that’s because Tornado Cash has a token. It’s billed as a governance token, but for now I’m not interested in the tokenomics.

Instead, what matters is the premine allocation. According to one report, 30% of the TORN token was granted to founders and investors. This is where you get into real problems with claiming decentralization, because the founders didn’t just create a tool that North Korea used to launder money, they stood to directly profit from that criminal activity. That can only dramatically erode the decentralization defense.

I’ve been thinking about this quandary in the smart-contract space for years: Yes, anyone can build a piece of open-source software, with at least notional free-speech protections against being blamed for what people do with it. But financially incentivizing such building requires some degree of centralization. It’s a tough circle to square.

More on this soon, I’m sure.

Ebola at Burning Man: Disinformation as Art

The Burning Man situation has been fascinating not because of what it is (a rainstorm at a festival, rough but not a huge deal) than for how it has been received, interpreted, and recycled. The indictment of the rich is fun – particularly the savage internet beating issued to this incredibly annoying corporate slavery defender in a propeller beanie.

But the most interesting thing to emerge is a flood of ironic disinformation about an Ebola outbreak on the playa. This was amplified (though not seemingly initiated?) by the Trueanon Twitter account. They’re playing 4-D chess over there (of a goofy sort), for instance with their producer “calling them out.”

Simpletons will hand-wring over this, worrying that ‘you’re going to confuse people.’ But this is the pea-brained lib perspective, going all the way back to Aristotle, that those who behave wrongly are merely misinformed.

The Trueanon joke is funny because it operates from the more nuanced and correct assumption that people are actively collaborating in their own brain-poisoning. Most of them should know better, and frankly, it’s funny to drive them further insane.

Furthermore, there’s an accelerationist angle here: The more bullshit is out on the internet, the more people will realize that reputable sources are valuable. (The irony here is that if I have one beef with Trueanon, it’s their disdain for journalists, by which I rationally know they mean to target mainstream institutionalists. But they’re lazy about it.)

Anyway, you heard it here first: Disinformation is praxis.

The Read: SBF in Jail

The final piece I published for CoinDesk was a preview of SBF’s bail hearing in the FTX disaster, and I could not be more proud of the title of that final missive: “Sam Bankman-Fried Could Go Back to Jail Because of His Big Fat Mouth.” For a time, I brought Gawker-style shitposting back to the respectable media, and I’ll die proud of that.

And, of course, SBF did indeed go back to jail, because he is an absolute blithering moron. There has been an immense amount of fantasizing about gang rivalries and such on Twitter, most of it probably pure speculation in Spaces that got picked up as fact by clout-chasers.

What we actually know is a lot more limited, but it does seem to at least hint at the possibility that Sam is having a Very Bad Time. Above all, he was sent to and as far as I know remains in the New York Metropolitan Detention Center (MDC), a really bad place to be. On the upside, it’s crucially distinct from the Metropolitan Correctional Center, where Jeffrey Epstein was murdered. The MDC instead hosted Ghislaine Maxwell, who was not murdered there.

Sam probably doesn’t even realize he should be thankful for that, but he should.

But there are smaller indignities. His lawyers have argued that he’s not being served vegan options in jail. To be clear, this is at least one lie, and probably two. First, because there’s no way Sam Bankman-Fried’s doughy ass is any kind of sincere vegan, and we already know he is dishonest about his ideological commitments. Second, though, it seems unlikely that there truly are no options, which is hinted at by the “sometimes he gets peanut butter” part of the defense argument.

You’re in jail, buddy. Eat the peanut butter. Things are only getting worse from here.

In related news, a few documents emerged suggesting that Bankman-Fried’s lawyers will pursue an “advice of counsel” defense – i.e., they’re going to blame FTX’s lawyers. This seems incredibly foolish on its face, since SBF has effectively admitted to mismanaging $8 billion in customer cash in ways that no lawyer would possibly have advised him to.

If I were Sam’s defense attorney, I would pursue one defense and one only, because it is the truth: Bankman-Fried is clearly mentally ill, drug-addled, and alienated from reality. He was raised in an environment that made him a kind of Manchurian Candidate for technology investment fraud, responding to triggers and keywords beyond his control.

In part, I would tell the jury about the culture of fraud and grift at Stanford, a tradition that stretches back at least to the university’s World War II-era melding with the military-industrial complex (this story is told magisterially in Malcolm Harris’ book “Palo Alto,” which I’ll be writing more about soon).

But the linchpin of this strategy would be throwing father Joseph Bankman under the bus immediately. Bankman appears to have played a direct hand in attracting investors to his son’s company. It would not be difficult to paint Joseph Bankman as a mid-earning professor, jealous of the Silicon Valley megawealth around him, unhesitating when the opportunity arose to maximally exploit his son. This also has the benefit of being well-supported by public evidence.

Unfortunately for Sam, Joseph Bankman is also currently funding Sam’s defense out of $10 million in funds stolen from FTX customers. He may also be one of the last people on Earth Sam Bankman-Fried believes he can trust.

But it’s likely that trusting his own father is yet another misjudgment by SBF, and a particularly heartbreaking one.

What To Expect from the New Flesh Markets

Finally, I want to give you a brief overview of my plan – partly to get you excited for the actual product, and partly because one of my goals here is to actually document the project and share insights.

First, very broadly, my goal is not to make a full-time living from this newsletter. Instead, at least in theory, I’ll be offering other services. But that will develop over time: The good news is I’ve got about three months of runway, give or take, so there’s time to figure all this out.

That said, if you’re curious about what I can offer, now is the time to reach out. Historically, my schedule fills up very fast when I have these windows of opportunity.

Now on to the actual content.

What will Flesh/Markets cover?

Flesh/Markets will have a substantial crypto focus, but that will be just one element. Many of you may know that while crypto is a focus for me, I also reported on tech and finance more broadly for Fortune for many years. I even spent about a year focused on biotech, covering vaccine development and distribution during the pandemic.

That said, Flesh/Markets will have three core pillars: Crypto, Artificial Intelligence, and Parafinance.

Crypto

Hopefully it’s no surprise that I’m very pro-crypto. The technology to transcend the technological borders of national banking systems is not going back in the box. What we need to focus on now is how to make sure it’s a benefit to humanity and not just another scourge. I’m not certain we’re currently headed in that direction – but I have a lot of ideas about what it would look like if we decided to.

Artificial Intelligence

I believe that “artificial intelligence” is essentially a parlor trick, with a few very specific applications in the medium term, and decades of work before it fulfills the promises now being spun by hype men who, without exaggeration, want to steal your money. This newsletter will chronicle the inevitable descent of AI hype into the doldrums over the next 24 months, watching both market numbers and degenerate technobabble.

In particular, I find the “AI Safety” cadre some of the most intellectually bankrupt and morally odious individuals on the planet right now. You don’t have to go much farther to reach this conclusion than their various shameful commitments: to the ridiculous and deluded case of contagious neolibtardation that is “effective altruism;” to the cloaked fascism of “longtermism;” and to the outright race science that lurks not too far from the heart of LessWrong and similar communities. In these pages, they will be flayed, cooked, and skewered in the manner they truly deserve.

Parafinance

Finally, I believe that my years studying crypto can provide big new insights into what I call “parafinance.” I draw inspiration for this term from “parapolitics,” a concept pursued among others by historian Peter Dale Scott. In both cases, “para” indicates something not just outside of the accepted norm, but actually hidden by it.

“Parapolitics” is roughly focused on the so-called “deep state,” including the subversion of civil society by imperial intelligence agencies, particularly the CIA and its postwar anticommunist terror campaign. This precise group also relied heavily on financial tools and levers, such as the criminal Bank for Credit and Commerce International, a money laundering operation linked among other activities to CIA drug running.

“Parafinance” includes these intelligence activities, but also more broadly activities that fall outside of accepted, legitimate, productive, and publicly-acknowledged financial actions. Crypto has altered the playing field for these perennial endeavors, as with the likes of North Korea’s hackers; crypto-driven capital flight from developing countries; and, far from least, the known or possible role of intelligence agencies, governments, and organized crime in larger crypto scams including OneCoin, Bitconnect, Luna, and FTX.

Specifically, I believe that the possibility of links between the FTX collapse and U.S. intelligence activities need to be taken seriously. Above all, this must be considered because of the deep links between Stanford – his parents’ employer – and the tech wing of the military-industrial complex. (Again, this is covered brilliantly in Malcolm Harris’ book “Palo Alto.”)

We know that SBF was an idiot propped up by even more idiotic investors – but what if there was more to it than that? What if – purely hypothetically – U.S. intelligence thought it might be useful to control an offshore crypto exchange?

And what if, like the overwhelming majority of intelligence operations that don’t involve tricking mental defectives into building bombs, the intelligence agencies completely fucked it up?

What’s behind the paywall?

I plan to keep philosophical deep dives and essays free. However, there will likely be intermittent finance-specific pieces of analysis and commentary behind the paywall.

Other Forthcoming Goodies

I have a lot more in mind, and there will be a bit more place-setting over the next few days. But by way of a quick and dirty preview, here’s more about what subscribers can expect from Flesh/Markets.

Deep Dives

• How the SEC used a fake company ­ Prometheum – to try and deceive elected officials.

• Why the Bitfinex Hack is still far from solved.

• Why so many frauds – including Theranos, Terra, and FTX – emerge from Stanford.

Preview Chapters of The Year of Finding Out (Working Title)

From about April to June of this year, I was putting together a proposal for a comedic and entertaining but well-informed book covering the crypto collapse of 2022. I am still working to find a publisher, but in the meantime, I’m just going to write it. This feature will be paywalled.

Thrilling Miscellany

One big add that I hope will help set this apart from scads of newsletters already out there is that I’ll occasionally have something to say about a varied and expanding bunch of fun non-finance stuff. That includes above all fiction, music, movies, and fitness, but look back through the archive: I do it all.

The Flesh/Markets Podcast

Hopefully launching by late September, this is going to be a lot of fun: A very loose format talk show featuring, at least to start, my smartest crypto and finance friends. I love talking, and I really can’t wait to dive in here.

There is also a larger ambition here. Hopefully many of you have already heard the first two seasons of Crypto Crooks, the longform documentary podcast I wrote, directed, narrated, and co-produced for CoinDesk. It completely fucking rocks.

But narrative longform audio is very difficult and expensive to produce. Because of a lack of sponsors in early 2023 (and then because I got laid off) we didn’t get to hunt our white whale: Sam Bankman-Fried. So this is my most important goal and commitment:

If Flesh/Markets is successful enough, I will self-produce, with many of the same team members, a long-form FTX podcast in the style of Crypto Crooks.

This is what we’re fighting for, people. Get out there and spread the word.