A GUT of the FTX Disaster Followup

The Wars of Wars Part 7ish

Many RTE articles can be found in a semi-organized way here (not all the early ones are there yet).

My last article generated a lot of attention and communication. It took 34ish hours to work up over 2.5 days, which was pretty exhausting. I canceled my Monday podcast and rested, but many messages and emails rolled in, and more information has come to light.

One thing that I would like to warn people about is something J.J. Couey and I independently came to understand about the Pandemic: There is very likely a coordinated fluff "First Layer" propaganda story (e.g., zoonotic origins) and a more complex "Second Layer" propaganda story (e.g., GoF lab leak) that disguises the root source code of the Matrix (e.g., infectious clones, gene drive tech? other?). This story is certainly that large.

I want to share three other perspectives.

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A Great Video

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Arthur Hayes' Perspective

Hayes writes a lot of great articles. His thoughts on the FTX-A blow up are worth reading. I don't agree fully with his slant on America's founding (I view the Founders as highly philosophically varied), but we more closely align with his view on present day Pax Americana. Our co-utilization of the Death Star analogy is entirely coincidental, oddly enough.

So how does this all relate to SBF? Well, he’s the right kind of white. Below is a short passage from a Bitstamp article about SBF’s background that explains all you need to know about why the people and institutions who control the finance, tech, media, and cultural organs of Pax Americana fell head over heels for him whenever he walked into the room and started talking crypto.

Bankman-Fried was born in 1992 in California to two law professors at Stanford Law School. Both of his parents subscribe to the philosophy of utilitarianism — that actions are right if they are useful or for the benefit of a majority. This moral philosophical upbringing set the foundation for Bankman-Fried’s later philanthropy.

Growing up, Bankman-Fried hated school, finding it boring and overly structured. He attended the Canada/USA Mathcamp over summers in high school, which provided the intellectual challenge he needed. He attended the Massachusetts Institute of Technology (MIT) and graduated in 2014, earning a degree in physics and a minor in mathematics. He remains dismissive of formal education, noting that nothing he learned in school ended up being useful in his professional life.

In his sophomore year of college, Bankman-Fried attended a talk by Will MacAskill, a founder of effective altruism. Bankman-Fried considers this introduction a turning point in his life, embodying his long-held beliefs with a name and a movement.

Let’s go down the checklist for social acceptance by the establishment.

Coastal “educated” White — Check

Professional Parents — Check

Educated at “top” university — Check

Bonus round: Has a penis — Check

These characteristics are particularly attractive to people in industries like finance, law, and tech, which tend to be filled with folks whose life goal is to be viewed as high achievers themselves (i.e., those who aspire to be at the top of the pecking order and, by the transitive property, want to be the right kind of white).

So, when a man with the pedigree of SBF begins shilling his bags, you sit up and listen. You don’t question why this guy was allowed in the room. You don’t question whether he actually knows his shit. You don’t question anything, because you are pre-wired — due to a racial and social caste system many hundreds of years in the making — to believe whatever SBF says at face value.

In short, you fail to engage the rational thinking part of your brain because this is how humans cope with an uncertain world filled with too much information. We use heuristic shortcuts and stereotypes to more easily make decisions. Without them, we would be unable to make sense of our surroundings quickly enough to function normally in our society.

SBF recognised this and capitalised on it by leaning into his “right kind of white boy”-ness. That is how he grew the Death Star from his middling prop trading firm, Alameda, into the global financial powerhouse that was (emphasis on was) FTX.

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An RTE Reader Email

Hi Matthew,

Hope all is well. I enjoyed your recent Substack article about the FTX Disaster and its consequences; it filled in a few of the gaps I'd perceived in the story and seemed reasonably upfront about which aspects were (reasonable) conjecture rather than factual assertions.

That said, I was wondering whether you have any more background on the "Ukraine put vast sums in the hands of FTX" aspect of the saga? As you allude to ("Numerous others writing about the FTX scandal have explained..."), I've seen versions of this claim since Nov 12th - with https://ussanews.com/2022/11/12/ukraine-military-aid-from-usa-was-invested-in-crypto-ftx-by-kiev/ being the earliest instance I could place.

Given the source they cited, I considered the likely chain of events as follows:

• Ukraine/FTX/Everstake set up a donation website ("bucket")

• Civilians, Ukrainian or otherwise, donate privately-held crypto to the bucket for charitable purposes

• FTX facilitates the conversion of the bucket into UAH for practical spending

• Excitable boomers find the story, don't understand crypto or buckets, and decide to conflate this endeavour with the military aid sent by the US to Ukraine

I admit I don't know what form 'military aid' usually takes, but I doubt it's some General's spare BCH - and even if it was, that'd be the opposite of the claim they're making. Is there something obvious I'm missing about this?

Your article itself is not specific about the military aid aspect, and could be interpreted as meaning simply that Ukraine's involvement in setting up the bucket had the consequence of FTX temporarily holding an assortment of donated crypto passed on from Everstake. If this never ended up getting converted into fiat and used by Ukraine (whether or not it ultimately ended up in the hands of Democrats), that in itself would be a massive and normie-friendly story - but I've not heard this claimed specifically.

What I have seen claimed is a series of slight but ever-growing embellishments on the theme of 'Ukraine put US Military Aid into FTX', with the sources all eventually tracing back to that one Coindesk article (https://www.coindesk.com/policy/2022/03/14/ukraine-partners-with-ftx-everstake-to-launch-new-crypto-donation-website/) which makes no mention of state-level foreign aid.

To be clear, I am not saying this did not happen. I would not even be particularly surprised if had happened. I note only that the only sources that claim it did happen all appear to be basing their statements on what seems more likely to be a shared misunderstanding.

In terms of memetic warfare, a friend (the same one who sent me your article) claimed that it didn't matter whether or not this detail specifically is true, and that the important result is that people start to look at the story as a whole. I can understand his reasoning, but I disagree with it. In my own experience of such things, skeptics and fence-sitters will pounce upon any inaccuracy in even the smallest detail as 'proof' that an entire story is invalid (the infamous 'deboonking') as an excuse to perform any cognitively-costly worldview reshuffling. Regardless of whose perception of human nature is more accurate, I am personally curious about this matter and consider it good practice to pin these things down as a matter of intellectual honesty.

Is there anything else you are able to share on the 'military aid' angle that may carry more weight - especially when discussing these matters with apolitical or pedantic types - than the 'news' site you already referenced? Its inclusion of SBF as a hand-rubbing Happy Merchant does little to help the credibility issue, but is otherwise irrelevant to the core claim.

Best Regards,

REDACTED

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My Thoughts on Above Email About Money Laundering Details

That's an excellent and thoughtful email (aside from misspelling my name).

Due to the full complexity of the story, I did not want to fully dive into all the details—it's hard to research and write a full book in 2.5 days. It made me a little sick to write a third of one. I agree with REDACTED above. I do think there is plenty of money laundering in this story, but don't want to spend all day today laying out my current notes on the details—others are doing that job anyhow, so it's not much value added (and certainly subtracted once opportunity costs are factored in).