I do see a significant moral difference between allowing people to make potentially risky decisions and deceiving them about how much risk is involved. As an exchange, FTX was theoretically just serving to coordinate buyers and sellers who wanted to transact in the first place. If you believe that at least a portion of crypto is merely volatile and not fraudulent, then you’re just facilitating risky decisions, not scamming people. Doubly so if you believe even a tiny subset of DeFi provides net value, as many of FTX’s customers still believe.
But in practice FTX was taking much more risky behavior, without telling its users, and in fact explicitly denying that such behavior was occurring. Nobody thought it was risky to deposit USD into FTX, if you hadn’t bought any crypto. FTX assured users it wasn’t. But if you have USD sitting on the site right now, there’s a good chance you’re never getting it back. To state the obvious: that’s fraud, and it’s wrong. And I think it’s different than letting people take risks if they want to.
I do see a significant moral difference between allowing people to make potentially risky decisions and deceiving them about how much risk is involved.
To be clear, I completely agree that the latter is worse than the former. I am arguing that the two wrongs (the known Ponzi schemes and the unknown-till-now squandering of depositor funds) exist on the same spectrum of “dishonesty” and “cheating people”.
That said, “allowing people to make potentially risky decisions” is not a fair representation of promoting and benefitting from Ponzi schemes. Ponzi schemes are fraud. People who knowingly promote them are acting as con men when they do so. SBF has publicly described the process and its absurdity in great detail… he knew exactly what he was selling.
I’m disturbed by the inability of many even now to acknowledge, in retrospect (and independent of whether they ‘should’ have known before the collapse), that these known schemes were fraudulent. I see a lot of scrambling to justify them under the guise of “they weren’t technically lying” or “they weren’t technically illegal” (which isn’t entirely clear to me, though it is clear that if the same schemes had been happening in the open in US jurisdiction and not within the crypto-realm they would have been massively and obviously illegal, and the FTC/SEC would have destroyed them).
If you believe that at least a portion of crypto is merely volatile and not fraudulent, then you’re just facilitating risky decisions, not scamming people
This statement does not logically follow, and does not align with finance industry norms (and laws) which obligate brokers to conduct due diligence before selling a given security. If the head of NASDAQ went on the news and said “Yeah, XYG [traded on our exchange] is basically a total Ponzi scheme, lol” (as SBF basically did with Matt Levine), there would be an immediate and colossal legal and ethical shitstorm. The existence of all the remaining, legitimate companies also being traded on the NASDAQ would not be relevant for the ensuing lawsuits. You appear to be arguing that as long as SBF wasn’t dealing solely in frauds, it’s okay; whereas the sensible view for someone taking a strong moral stance is that it’s only okay if SBF wasn’t knowingly dealing in any frauds.
I do see a significant moral difference between allowing people to make potentially risky decisions and deceiving them about how much risk is involved. As an exchange, FTX was theoretically just serving to coordinate buyers and sellers who wanted to transact in the first place. If you believe that at least a portion of crypto is merely volatile and not fraudulent, then you’re just facilitating risky decisions, not scamming people. Doubly so if you believe even a tiny subset of DeFi provides net value, as many of FTX’s customers still believe.
But in practice FTX was taking much more risky behavior, without telling its users, and in fact explicitly denying that such behavior was occurring. Nobody thought it was risky to deposit USD into FTX, if you hadn’t bought any crypto. FTX assured users it wasn’t. But if you have USD sitting on the site right now, there’s a good chance you’re never getting it back. To state the obvious: that’s fraud, and it’s wrong. And I think it’s different than letting people take risks if they want to.
To be clear, I completely agree that the latter is worse than the former. I am arguing that the two wrongs (the known Ponzi schemes and the unknown-till-now squandering of depositor funds) exist on the same spectrum of “dishonesty” and “cheating people”.
That said, “allowing people to make potentially risky decisions” is not a fair representation of promoting and benefitting from Ponzi schemes. Ponzi schemes are fraud. People who knowingly promote them are acting as con men when they do so. SBF has publicly described the process and its absurdity in great detail… he knew exactly what he was selling.
I’m disturbed by the inability of many even now to acknowledge, in retrospect (and independent of whether they ‘should’ have known before the collapse), that these known schemes were fraudulent. I see a lot of scrambling to justify them under the guise of “they weren’t technically lying” or “they weren’t technically illegal” (which isn’t entirely clear to me, though it is clear that if the same schemes had been happening in the open in US jurisdiction and not within the crypto-realm they would have been massively and obviously illegal, and the FTC/SEC would have destroyed them).
This statement does not logically follow, and does not align with finance industry norms (and laws) which obligate brokers to conduct due diligence before selling a given security. If the head of NASDAQ went on the news and said “Yeah, XYG [traded on our exchange] is basically a total Ponzi scheme, lol” (as SBF basically did with Matt Levine), there would be an immediate and colossal legal and ethical shitstorm. The existence of all the remaining, legitimate companies also being traded on the NASDAQ would not be relevant for the ensuing lawsuits. You appear to be arguing that as long as SBF wasn’t dealing solely in frauds, it’s okay; whereas the sensible view for someone taking a strong moral stance is that it’s only okay if SBF wasn’t knowingly dealing in any frauds.
I agree here, since I don’t think crypto is at all viable without crimes.
Here’s a link to why I dislike crypto:
https://www.currentaffairs.org/2022/05/why-this-computer-scientist-says-all-cryptocurrency-should-die-in-a-fire