it was mostly the SOLANA ecosystem coins: like Oxygen, Raydium, MAPS, All of them were created with the playbook of a very low float (initial available tokens) and very high fully diluted valuation (98% of the tokens would be released to investors later on).
You could check the graph of these coins , all these dropped 95-99% in value after investor tokens unlocks started. By this time the big investors already hedged (shorted) the tokens on ftx so they could lock in the value at the higher prices.
Hey, crypto insider here.
sbf actions seem to be directly inspired by his effective altruism believes. He mentioned a few times on podcasts that his philosophy was: Make the most money possible, whatever the way, and then donate it all in the best way to improve the world. He was only in crypto because he thought this was the place where he could make the most money.
sbf was first a trader for Alameda and then started FTX
some actions that Alameda/FTX was known for:
*Using exchange data to trade against their own customers
*Paying twitter users money to post tweets with the intention of promoting ftx, hurting competitors, and manipulating markets
*Creating ponzi coins with no usage with the only intention of selling these for the highest price possible to naive users. Entire ecosystems were created for this goal.
The typical plan was:
1.Fund a team to create a new useless token. 2% of coins to public, 98% to investors who get it year later. 2. Create manipulation story for why this project is useful. 3.Release news item: Alameda invested in x coin (because alameda had a good reputation at first). 4. pump up the price as high as they can using twitter influencers. 5. list the coin on FTX so investors can hedge position. 6. Alameda has another coin they can trade around and liquidate speculators based on the data they get from ftx.7. repeat x20
*Lying and predatory behavior
It seems like they took most actions based on a “expected value” approach, calculating which of possible options would on average make them more money.
including decisions like lying or telling the truth , breaking the law yes or no ,and building reputation for only goal of being more effective at manipulation later on.
I think this expected value approach made them super succesful traders. And they stayed with strictly the same approach when running the exchange. This is where things are going wrong. In social interactions and situations when your actions impact other people you should also think about things like your reputation, or what would happen if everyone starts acting like you.
Otherwise, you could rationalize pretending to be friends with your neighbours and then murdering them to give their money away to the poor.Maybe it seems like a good action on paper for a naive utilitarian but if everyone would act like this things would break down.
I think another factor of this outcome with sbf is narcissistic personality. Something like Effective Altruism can feel emotionally attractive for people like this because it implies, they can do things “better”, or “more effective”. It feeds the need for superiority. And then they rationalize everything with, its good for the world, i will be 10x as effective with the money than others etc. It could be true, but it could also not be true and it might not be the real reason why they are acting in this way.
I think effective altruism works better when blended with normal human behavior and moral principles like: “try generally to tell the truth”, “dont steal from your users.”