Covering SBF

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Daisy Alioto and Brady Dale discuss Dale’s new book on FTX and the downfall of Sam Bankman-Fried.

I have long enjoyed Brady Dale’s reporting on crypto for Axios as well as his sense of humor about the ups and downs of covering what otherwise might be a boring financial beat. As it is, there is never a dull moment in crypto and the implosion of FTX late last year shocked the world enough to at least jump off Twitter into your fantasy sports chat, if not the grocery store line.

For those keeping track at home, Sam Bankman-Fried’s wikipedia page now has the distinction of both a “Views on charity and market regulation” subsection and “Arrest and charges.” Of course, Dale unpacks it all in his book SBF: How The FTX Bankruptcy Unwound Crypto's Very Bad Good Guy which was published by Wiley in May 2023.

I reached out to Dale to discuss Effective Altruism, the “speed of thought,” Kurt Vonnegut, and how Katy Perry always manages to be a top signal. — Daisy Alioto

Daisy Alioto: I am fascinated by Katy Perry as a harbinger of doom to the crypto community. It really made me rethink the 2016 election.

Brady Dale: Let's see what happens if she jumps in next time.

DA: One of my favorite parts of the book was when you talk about SBF’s rationalism as a sort of cultural void. Ethereum, Bitcoin, Solana etc. are their own cultures but he bet on all of them. He was giving to both Democrats and Republicans. It makes sense for someone that is trying to maximize capital to never pick a cultural lane. But that’s more the behavior of a “thief than a prophet,” no?

BD: Well I more meant he was void to crypto. As in, each cryptocurrency represents a set of ideas, but he didn't really care about any of those ideas behind the blockchain industry. He was locked in on his own set of ideas, which was the EA ideology.

I don't think EA is vapid, I should note. But I do think the fundamental nature of Sam's viewpoint is that he thought his way of seeing everything was better than everyone else, and so he thought it was all right to take advantage of crypto traders as he pursued a higher good.

DA: You lay out in detail how SushiSwap destroyed Uniswap’s user moat with yield farming. This same dynamic played out between OpenSea and Blur around NFT trading. Where will the next vampire attack come from? What are the moats you see emerging in the bear market?

BD: If I could answer that question, I wouldn't be pursuing the not especially lucrative career path of book writing.

The bear market is still too new. All I can say is I'm spending more time talking to brand new companies now than I was, on the theory that it's a very new idea that will be important.

DA: SBF was an early backer of Solana, and the initial advantage of Solana was speed. And you echo the obvious question crypto skeptics have, which is, “If speed is that important, why even mess with blockchains?” The r/wallstreetbets of it all is that crypto can operate at the speed of thought, no matter how delayed the literal trades are, because it’s a market uniquely vulnerable to discourse.

SBF understood this to a certain extent, which is why he admired Musk. Musk bought Twitter and now Twitter moves at the speed of Musk’s thought. But the rest of the world doesn’t (see DeSantis announcement). If SBF and Musk have one shared blindspot, it has to be this self-limiting onlineness.

BD: Yes. It's an industry that serves the small but large enough set of users who care about genuine censorship resistance. So far, that still seems to be the killer app of blockchains.

DA: This is more of a comment than a question. I really enjoyed your breakdown of “market cap” and that inspired me to look up the market cap for literal dirt. It’s 7.5% of the earth’s surface, so I’m feeling pretty good about my valuation right now.

BD: Ha ha, well, good luck!

DA: I really appreciated that you put your personal experience with EA into the book and shared how it can function as a secular value system, especially in the increasingly atheistic Western world. Do you see an overlap between EA and people seeking community online? Is crypto maximalism also a potential substitute for religion, and at what cost?

BD: I def see EA as a manifestation of the internet helping people find IRL community.

The thing that makes religion tough to replace, it seems to me, is this notion that you kind of have to take part in it. If you don't feel like it's something you have to do, why would you spend time each week with a bunch of people who you don't have much in common with besides beliefs? And yet people doing that is def good for humanity.

EA people found this way to connect around a set of ideas with strong enough bonds that they can hold each other accountable to a certain ethic. So that's good.

I don't know about cryptocurrency. It does seem to have this potential to form sorts of quasi-nations that exist wholly online. If those quasi-nations start to deliver service such that people feel the need to opt into them for good or bad, like we do with dirt nations, that could be powerful.

I don't know if it will work, but in Kurt Vonnegut's SLAPSTICK, America had reached a point where they were so sick of being lonely they were happy for the government to issue them new families. Maybe he was prescient and it wasn't the government that would do it but magic space money.

DA: You write, “Regulators have a very hard time considering whether or not a new thing might introduce a new good. They are only really equipped to consider whether or not it might raise an old problem.” Can you give some more examples of this dynamic and how it has historically played out with new technologies over time.

BD: Sure, we see it right now with the notion of net neutrality. Telephone operators are treated like common carriers. You can discriminate between users for access to use the phone lines.

This is a concept that goes back to freight trains, when certain users would pay to get priority to get their goods to market. It seems pretty obvious that the internet should be a common carrier but that fight is still very much live and if I had to bet the notion of net neutrality will die before long.

The idea of the government deciding how people can transmit value seems to be basically the same issue.

And then of course there’s the classic example of the health privacy laws that require medical offices and hospitals to use fax machines to transmit patient records. They are the only people who still use fax machines and they were required to use them out of privacy concerns, but of course there is much more private ways to transmit such data now, and yet still we fax.

DA: If you could only take hopium or copium for the rest of your life, which would you choose?

BD: Copium, for sure, but I'm getting old.

DA: You dedicated your book to Michael Lewis. Do you think he will dedicate his book to you?

BD: If he found time to read it before going to print, it seems all but guaranteed, right? [Editor’s note: 100%]