FTX, the world’s third-largest crypto exchange, recently witnessed a catastrophic meltdown in a few weeks. Ram Krishna asks if being genius enough – exclusively for Different Truths.
FTX, the world’s third-largest crypto exchange, recently witnessed a catastrophic meltdown in its valuation from a peak of $32bn to zero in a few weeks. The rise and fall of the company’s co-founder Sam Bankman-Fried, a poster boy of the crypto world and seen as a genius, tells a story which has some learnings for all of us.
The 30-year-old man named Sam Bankman-Fried (SBF) co-founded FTX, a crypto exchange, just in May 2019. As the company’s valuation soared in no time, the popularity and aura of SBF, too, witnessed a phenomenal rise. He was known as the crypto golden boy and was even considered a kind of crypto wunderkind, a genius destined to grow along the tech sector’s rise.
SBF was smart. He was U.S. President Joe Biden’s second-largest donor in the 2020 election…
SBF was smart. He was U.S. President Joe Biden’s second-largest donor in the 2020 election and a significant donor in the 2022 midterms. His constant presence in Washington, D.C., sought to provide a friendly face to regulators suspicious of the crypto industry. His company, FTX, sponsored several sports teams and organisations.
Great Fall
Amidst the news in October 2022 that FTX was under investigation for allegedly selling unregistered securities, media reports also revealed the close relationship between Alameda Research, a related company, and FTX. The latter had reportedly lent $10 billion of its customer assets to Alameda Research in 2022. It was alleged that FTX used software to conceal the misuse of customer funds. The world watched with dismay how amid mass selloffs and dropping liquidity SBF’s empire collapsed and shrunk his fortune from a high of $32Bn in Jan’22 to $0Bn.
The significant fall jolted 50 lakh customers worldwide…
The significant fall jolted 50 lakh customers worldwide who used the exchange to transact and invest in crypto. Not surprisingly, the collapse has been compared to the bankruptcy of Lehman Brothers and the Enron Scandal.
Disturbing Questions
Though FTX’s collapse doesn’t speak to the core technology behind any specific cryptocurrency, the unethical financial acts damaged trust and credibility in the corporate world. The picture is still emerging, with some new fact or fiction coming to the fore every day. But a few questions haunt the minds of cryptocurrency players, regulators and the public. How could the genius have allowed or didn’t see such a massive failure of corporate controls, systems integrity, and the absence of trustworthy financial information? Can concentration of power in the hands of a small group of genius techies/ “disruptors”, but imprudent and potentially compromised individuals, build trusted and sustainable businesses?
The episode depicts a story of innovation, ingenuity, ambition, the power of technology…
The episode depicts a story of innovation, ingenuity, ambition, the power of technology that can erect an empire of riches in no time. Yet, its flip side tells us a tale of imprudence, deceit, and dishonesty.
Contrasting tales of two other geniuses!
Speaking of ingenuity and super-brains, it is instructive to see the perspectives and value systems of two famed geniuses-Einstein and Tagore, for example, that get reflected so prominently in their work and life.
Einstein’s human side
The enriching book “Albert Einstein, The Human Side”, compiled by two of his closest colleagues in later life, Dukas and Hoffmann, shows what kind of a person Einstein was. The authors demonstrate the courteous, kind, and fearless side of his personality through a series of quotations from letters, jottings, and unpublished documents.
Simplicity, humility, wisdom, and compassion were some natural traits of this super genius.
Simplicity, humility, wisdom, and compassion were some natural traits of this super genius. The wonderful blend of his mind and heart and his evolved perspective on humanity, for instance, get also reflected in the book Albert Einstein, The World as I See It “How strange are many us mortals! Each of us is here for a brief sojourn; for what purpose he knows not, though he sometimes thinks he senses it. But without deeper reflection, one knows from daily life that one exists for other people – first of all for those upon whose smiles and well-being our happiness is wholly dependent, and then for the many, unknown to us, to whose destinies the ties of sympathy bind us.”
Tagore – A healer to humanity!
The world knows so well about this poetic genius-Tagore! A man who created a panorama of literature comprising about 55 books, drama, dance-drama, plays and volumes of letters of literary and civilisational value. Yet, for Tagore, there was no point in writing if it did not lift the human spirit and restore human dignity. Through his inspiring songs, he transformed social inertia into hope and action. Urging us to identify with our common humanity, he inspired millions to renounce narrow self-interest and self-indulgence to embrace equality, solidarity, and morality. He penned so beautifully:
Shubho kormopothe, dharo nirbhoyo gaan
Shob durbol, shongshoy hok oboshaan
(One should proceed on the path of good deeds resolutely and overcome all weaknesses and doubts in the endeavour).
Super-smart neo-geniuses, obsessed with ‘market valuations’, may take a leaf out of such great geniuses’ book.
Super-smart neo-geniuses, obsessed with ‘market valuations’, may take a leaf out of such great geniuses’ book. But for them to internalise values on human well-being, they may need to have ‘realisation”. Tagore, however, seeing how in the modern, consumerist society such virtue is becoming a rarity, bemoaned, “The newer people of this modern age, are more eager to amass than to realise.”
The creative mind can be a bit unruly. It may show quirkiness or eccentricities. Yet, all of these may find social acceptance, as society pays a high premium on IQ or talent. But it would be tragic if a genius slips on fundamental human values and ethics. Such moral lapses can also be devastating for large followers and fans, who may look up to such a genius with awe and for inspiration. It was not for nothing that George Bernard Shaw famously said, “The most tragic thing in the world is a man of genius who is not a man of honour.”
Picture design by Anumita Roy
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