It's December 13, 2022 at 12:13 PM. I started writing this article about a week ago and set it aside, without having any idea that things would have escalated so quickly today. The whole world is commenting on Sam Bankman-Fried (SBF), the disgraced former CEO of FTX. There is also a concurrent tsunami of righteous criticism against the Ponzi-scheme ecosystem that is crypto. The lessons learned from this will be the subject of cautionary documentaries, sensational reporting, legal theory, investor risk mitigation, and society at large - once the digital dust settles. Learning from this disaster will be vital to preserving the integrity of American innovation in the digital space. Additionally, there were also some very clear indicators of leadership failures that could have easily been detected with just a pinch of analysis. We'll point to one manipulation that was central to the way FTX philosophically weaponized their deception, called "Effective Altruism (EA)".
While this descriptive label might sound new to you, it has been the practice of toxic leaders for quite some time under the more familiar phenomena we call "virtue signaling". The core premise of EA is to market the idea that your business solely exists for the betterment of society. It hinges on and tempts the better angels of our humanity to simply bypass any analysis of the company leadership itself and instead focus on all the "good" it claims to do. For example, SBF went well out of his way to offer that he was driven to be a global change agent for a variety of causes he pretended to care about. By dumping money into panel sponsorships, sporting events, and celebrity endorsements - he was able to market himself as a pseudo religious figure who was going to selflessly tackle the globe's biggest issues. He acted as a true martyr for "the cause". Who wouldn't want to support a crypto superhero that was not only building a platform to make everyone rich, but in the process become the harbinger of massive societal improvement? If it all sounded too good to be true, then why did everyone still follow SBF into a rabbit hole of deception?
This question must be at the pinnacle of every business paradigm moving forward. Any firm that promises to fundamentally change the world in some overly virtuous way, requires deeper scrutiny. As society has become more knowledgeable on how marketing works, we know that the photo-ops and paid magazine articles crafted either by firms or their network - don't always match reality. More frequently these direct marketing ploys are opaquely engineered to combat a clear truth which would expose bad management and poor treatment of their workforce or customer base. As we've seen, sites like Glassdoor and Indeed are becoming strong barometers to warn potential employees about the realities of a toxic corporate culture they could unwittingly be walking into. It's tough to sometimes see what's real through the smoke of a collective effort to keep up the appearance of altruism - but that's the necessary work we have to do in order to avoid more instances of Crypto bros dipping their hand into the cookie jar. The entire crypto industry is in peril (which is looking more and more like a good thing), all due to the intentional hubris of SBF and cultural influencers that make heroes out of individuals profiting off of narcissistic victimhood.
"My fear is that we'll view Sam Bankman-Fried as just one big snake in a crypto Garden of Eden. The fact is crypto is a garden of snakes." - Rep. Brad Sherman
SBF showed everyone who he was, so why didn't anyone believe him? How did so many ignore the red flags along the way? This inquiry is more likely indicative of the speed of today's information cycle in combination with a lack of respect for balanced communication and debate. Couple that with the manipulation machine of EA and you have the perfect storm for people to assume that if they read an article that someone is good, then that's all the proof they need. No longer is this the case. Trust is an honor that must be earned through consistent behavior, accountability, and transparency.
It's important to call EA what it is, virtue signaling on steroids. EA is a poison that slowly erodes our innate ability to detect a bad deal. Now that SBF has shown the world who he is and more broadly exposed the nature of the crypto industry - will others be able to step away from the snares of such manipulations and look objectively at the leadership and proposed value at hand? Given how technology can exponentially impact markets at a lightening pace - objective analysis is imperative in determining a competent and reliable business leader in today's corporate ecosystem.