:( , of, oof – don’t think I have anything particular?

Political philosopher Hannah Arendt’s 1963 book Eichmann in Jerusalem: A Report on the Banality of Evil became a classic in part by introducing the concept in noted its subtitle. She argued that the full context of Eichmann’s actions in helping organize and carry out the Holocaust weren’t fully elucidated by his trial, which thus obscured, “the lesson that this long course in human wickedness had taught us—the lesson of the fearsome, word-and-thought-defying banality of evil”.

Not to say that what FTX founder Sam Bankman-Fried is currently on trial for rises to the level of evil, but I’ve been struck over and over by the banality and seemingly utter disregard for the impact his hubris and incompetence had on the many victims of not just FTX’s collapse (more than 1 million creditors), but the 130 affiliated entities also forced to declare bankruptcy. The former high-flying boy genius has pleaded not guilty and took the stand today in a highly unusual hail mary by his defense, after weeks of punishing testimony by his former friends/colleagues/roommates Gary Wang, Nishad Singh and Caroline Ellison, each of whom pleaded guilty to fraud, money laundering and conspiracy charges.

Take for example Government exhibit 1621, which illustrates an exchange three of the four executives had November 6, 2022 via a Signal chat group that someone brazenly – yet also presciently – named “Wirefraud”. (See our cover image and this example to the left; The New York Times has posted the full exhibit here.)

That was the day that Changpeng Zhao (known as “CZ”, a moniker even shorter than Bankman-Fried’s 3-letter one), the founder and CEO of FTX rival exchange Binance tweeted, “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.”

FTT being the bullshit token Bankman-Fried and FTX had created ostensibly as a kind of loyalty program – it allowed customers to make discounted trades, earn increased commissions on referrals, and they could use it as collateral; the company website described it as “the backbone of the FTX ecosystem” – but which they used to inflate the value of FTX and Alameda Research as companies (40% of the assets on Alameda’s balance sheet as of June 30, 2022 were FTT tokens; $292 million in locked FTT being listed among its liabilities).

So the withdrawals that Nishad Singh (FTX co-founder and director of engineering) notes are coming in so fast that the company can’t process them fast enough – even in the case of wallets that contain enough funds to do so – were the result of FTX customers trying to get out while they could. That is, before news of Binance preparing to liquidate tanked the price. (For his part, CZ knew that was most likely to happen, thus weakening or taking out his rival – notwithstanding his follow-up tweet, “We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.” Reuters detailed earlier in 2022 how Binance “drove its explosive growth while maintaining weak anti-money laundering controls and withholding information from regulators”, and this June the US Securities and Exchange Commission filed 13 charges against the company for operating unregistered financial entities, misrepresenting trading controls and selling unregistered  securities.)

Caroline Ellison testified on October 10th that she was “in sort of a constant state of dread” by June 2022, because she and Bankman-Fried had lied for years, misleading lenders and creating phony financial documents – belied by the detailed spreadsheets she’d kept of what Alameda owed various lenders and how the companies were using customer deposits for a variety of company purposes, including venture capital investments, political donations and paying celebrity endorser/enablers more per hour than they’d ever made in their lives.

So to see graphic evidence that her response to the flood of panicked withdrawals that would bring down FTX and Alameda in a matter of days, leaving customers locked out and shellshocked, was “thx”, then “(:” and finally a banal, “don’t think I have anything in particular?” is maddening.

And Bankman-Fried – lauded by venture capitalists, journalists and speculators for being so boldly insouciant as to play video games during pitch meetings and interviews – appears unable to summon the effort to type the three whole letters he corrects with a laconic “oof”. Before going on to wonder how CZ will react and then finally posting the tweet they are crafting he muses, “maybe something like ‘we can meet a ton [of withdrawals] but it’s already getting large’? idk”

IDK indeed.

We’ll give the last word to Ms. Arendt (while adding that Modern Consensus has more to report on this topic in the coming weeks): “it was difficult indeed not to suspect that he was a clown. And since this suspicion would have been fatal to the entire enterprise [his trial], and was also rather hard to sustain in view of the sufferings he and his like had caused to millions of people, his worst clowneries were hardly noticed and almost never reported”.