Life After the Con

November 18th, 2022 —

4 Minute Read

SBF story arc is interesting and enlightening, despite being extremely depressing. I see him as the least sophisticated pattern matcher of this new capitalist villain we’ve seen, notably demonstrated by Trump, and Musk.

The pattern is:

The reason this works so much better than actually having a plan or doing a good thing, is that the ambiguity allows optimists from all areas of the spectrum believe that your weird behavior benefits them, so they let you continue just in case. Nobody will get what they want, but you’ll be rich and popular for a while because everyone will care about what you do.

In reality, you’re just running a con, but you’re also a folk hero. This is the part of the movie where the con artist hops on a train with the suitcase of money, never to be seen again, or is caught, and goes to jail forever or something.

However, what if you ran this con on the internet? What if you narrated the whole thing on Twitter, so you don’t really have anywhere to go? What if you felt appreciated for the first time as a folk hero, and didn’t want to shrink back into obscurity?

In theory, an interesting approach to staying popular after the con might be to say “I was trying to do the right thing, but the environment I was doing it in made me do the bad thing, let’s change the system” - I bet this would work well, but has the unfortunate side effect of obligating you do do anything other than run off with the money.

In any case, if you’re not very creative, the best you can do is to say “actually, you’re all the real idiots, I never meant to do the good thing, you just optimistically hoped that I would, but my plan this whole time has been to do the bad thing, and now you’re the suckers and should let me walk away with my winnings”.
So far, it’s unclear if this scam works in the long run, but it has been very successful so far for those two men. So much so that Elon decided to run it back and double his Tesla winnings down on a Twitter scam that looks pretty similar to his existing playbook.

I think you could see FTX/Alameda as a far less sophisticated version of this same con, in that Bankman-Fried was explicit about doing the good thing, and probably never even planned on doing the bad thing. So, he was able to run the con for quite a long time, because unlike Trump and Musk, nobody had a super good reason to say “look this is obviously a scam, stop being so optimistic and look at the reality” - it looked like he was doing the right thing, and he said he was, and it was making him very rich. Why would he do a bad thing when the incentives prefer a good thing?
Well, it turns out, known or not known to him, he ran an extremely over-engineered Ponzi scheme, that’s why.

This week, SBF reached out to a journalist in what I can only assume is an attempt to retroactively change the narrative to become a Trump or Musk-style capitalist anti-hero. This is distinctly a different version of the post-con tactic, but I think it makes sense given his options, and probably points to him attempting to find a way to hold on to some of the cash he owes his customers. The real story here is likely:

Is it a 4D chess move? Probably not. The world of finance is pretty regulated and this scam is far too similar to a Ponzi for him to claim some bad-faith-but-very-smart credit here. I think he’ll either go to jail or he’ll go on an Assange-esque tiresome Carmen Sandiego tour of totalitarian countries until he finds a place that will give him asylum, just to troll US politicians. But in this context, the act of setting your own reputation on fire on your way down almost makes sense.

I’m sure the other post-con villains will have plenty to say about it too.