The Kwisatz Haderach Who Failed: Why Sam Bankman-Fried Did What He Did

Scientism, Effective Altruism, and Frank Herbert’s Dune

Welcome to the Sunday edition of Dark Markets, when I generally share a draft portion of my Sam Bankman-Fried book in progress with my premium supporters - with a partial preview for free subscribers. This chapter is an exploration of the philsophical “theory of the case” of Sam Bankman-Fried’s criminal fraud - an exploration of the complex ideological threads that convinced him that what he did was never actually a crime.

You can find a fairly up-to-date directory of all published draft exceperts in this post.

“He was viewing the cost of getting caught, discounted against the gain of not getting caught. It started at least as early as Jane Street, and it continued to the very end. It’s in his nature. You don’t have to believe me, everyone says this.”

- Judge Lewis Kaplan, Sam Bankman-Fried sentencing hearing, March 28, 2024

Just over a week ago, the story of Sam Bankman-Fried drew to an effective close. In a sentencing hearing at the Southern District of New York, Bankman-Fried was remanded to Federal prison for a term of 25 years.

His defense merely reiterated the framing that Bankman-Fried has clung to, barely wavering, since the November 2022 collapse of the FTX cryptocurrency exchange. His lawyers argued that victims didn’t actually suffer any losses, and praised Bankman-Fried’s generous character. Bankman-Fried also spoke. He blamed the collapse on a “liquidity crisis,” proposed restarting the exchange, and didn’t at any point admit to the crimes he’d been convicted of.

Judge Kaplan righteously disemboweled the whole embarrassing mummer show. Kaplan called the claim that victims would be made whole “misleading, logically flawed, and speculative.” It was also legally irrelevant - Kaplan quipped that “A thief who takes his loot to Las Vegas and successfully bets the stolen money isn’t entitled to a reduction of his sentence.”

But Kaplan went further in that hearing – he eviscerated Sam Bankman-Fried’s character, his worldview, and his honesty. He described Bankman-Fried as essentially a sociopath, willing to risk other people’s safety on his own calculation of the odds. He added sentencing points for perjury and witness tampering. Kaplan verged on directly condemning the “Effective Altruist” movement which had shaped Bankman-Fried’s thinking and eased his path.

Kaplan was articulating the clear but complex answer to a question that remained strangely unanswered over 18 months of furious discourse about Sam Bankman-Fried and the massive FTX fraud: Why did this young man, running what at least could have been a successful business¹, choose to commit massive fraud?

The psychological key to that question can be found by digging into Bankman-Fried’s own incessant claims of innocence. Those continued during and after his sentencing: he told the New York Post last week that he “never thought that what I was doing was illegal.”

More broadly, Bankman-Fried seems to have believed that the very concept of something being “illegal,” or even unethical, was irrelevant to him. He seems to have believed, in a substantial sense, that he simply didn’t have to follow normal human rules. This is why he still thinks of himself as innocent.

He thought he was above the conventional law because he saw himself as uniquely brilliant, and because his long-term intentions were good – always a dangerous combination. Added to that was a utilitarian and mechanistic worldview instilled in him by his parents. They, and mother Barbara Fried in particular, seem to have been deeply committed to a mechanistic and scientistic worldview – one that implicitly accepted the complete predictability of the future consequences of present actions.

Foundation vs. Dune

The question of determinism has been widely debated for millennia. But SBF’s determinism is specific to the context of the computing and statistics revolution, which holds out the promise that humans in a deterministic universe might be able to predict the future.

This specific flavor of determinism was the subject of two vital 20^th century fiction series: Isaac Asimov’s Foundation and Frank Herbert’s Dune. Asimov’s Foundation is centered around a utilitarian ethos embodied in the hypothetical science of “psychohistory,” which allows the prediction and manipulation of the future path of human society. Herbert wrote Dune at least in part as a rebuttal to Foundation: Paul Atreides is surrounded by would-be psychohistorians seeking to shape the future, but he survives because rather than trying to influence anything, he accepts his terrible fate and, so to speak, rides the worm.

The mechanistic, science-worshipping theories of (fictional) psychohistory are being laundered into a real-world pseudo-philosophy under the label Effective Altruistm – with credit to Edward Ongweso for making this beautiful, powerful connection during my episode of This Machine Kills.

The EAs played a direct role in creating Sam Bankman-Fried, but ultimately Bankman-Fried is a mere symptom of their deeply flawed ideas. In this chapter, I dig into the work of EA cofounder Toby Ord, and reach the same effective conclusion that Frank Herbert did: that claims to a science of human history are fundamentally a mask for the authoritarian will to power.

Sam Bankman-Fried was caught, but many others who think exactly as he does still walk the Earth. As Judge Kaplan made explicit in his statements during Bankman-Fried’s sentencing, they must be shown that their beliefs are dangerous to humanity.

1This is not to say that it already was a successful business, as partisans like Michael Lewis have claimed. FTX’s fraud began very early in its existence, and every metric that could be cited to argue that it was actually “a good business” is tainted by that deep, structural fraud. But it certainly could have been successful, if Bankman-Fried had made entirely different decisions at nearly every point.

Crimes of the Future: On Believing You Are the Chosen One

Sam Bankman-Fried does seem, at certain points, to have been genuinely and literally unaware he was breaking the law.