In the lead-up to its eventual collapse in November 2022, crypto exchange FTX was ensnared in a web of increasingly perilous decisions, fueled by the ideology of effective altruism, according to a former software engineer at Alameda Research, Aditya Baradwaj.
Just days before FTX founder Sam “SBF” Bankman-Fried’s trial on October 3, Baradwaj provided insights into the role this philosophy played in the demise of the company, shedding light on his experiences working under the former billionaire.
Effective altruism, which encourages individuals to amass wealth to later donate for the greater good, took hold at FTX, gradually shifting the decision-making process towards irrationality.
Baradwaj remarked, “This ideology was used to justify increasingly risky and ridiculous actions that, honestly, should have been looked at with a saner mind.”
Despite being prevalent in Silicon Valley and quantitative finance circles, effective altruism led to a skewed perspective at FTX and Alameda Research.
Baradwaj highlighted the allure of the ideology, saying, “All of us at the company had this vision of, ‘I think altruism is good, and I think doing things effectively is good.’
So, you put these things together, and it’s like, ‘Obviously this thing is good.'”
However, he emphasized the danger when this philosophy turns into a means-to-an-end mentality, especially when the ends are bizarre and irrational.
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Under the guise of effective altruism, Bankman-Fried made substantial donations to prevent pandemics and combat malaria in developing nations.
He was also a major donor to the Democratic party but later admitted to contributing to Republicans as well.
Notably, he even proposed paying Donald Trump $5 billion not to run for president in 2024, claiming it was to “protect democracy,” as revealed by Big Short author Michael Lewis in a recent interview.
Despite allegations that Bankman-Fried hid behind a fabricated altruistic persona, Baradwaj maintained that the former FTX founder genuinely believed in his mission.
He described Bankman-Fried as highly motivated and trustworthy, which may explain his staunch denial of the charges pressed against him.
Baradwaj reflected on Bankman-Fried’s possible mindset, stating, “Maybe he does genuinely believe that what he did was fine, or he actually believes that he did nothing wrong.”
He emphasized the importance of the truth and expressed hope that the trial would provide clarity on the events that transpired, leaving many questions unanswered.
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