Cryptocurrency king Sam Bankman-Fried (SBF) founded two companies, crypto-exchange FTX and Almeda Research. The thirty-year old billionaire’s house of cards recently came tumbling down when investors and customers lost confidence in FTX, pulled out their money, forcing SBF to file for bankruptcy. On December 12, 2022, SBF was arrested in the Bahamas after criminal charges were filed by U.S. prosecutors.
SBF reportedly used billions of dollars of FTX customer funds, without their knowledge or authorization, to compensate for investment losses at Alameda Research. While the collapse of FTX and Alameda is being blamed on SBF, who is certainly the core actor in the story, he did not act alone. The downfall of both companies could not have occurred in the absence of the complicity of others, among them, the FTX leadership team, venture capital funds like Sequoia Capital, celebrity “brand ambassadors,” and others whose roles reporters will undoubtedly uncover in the coming months.
[time-brightcove not-tgx=”true”]
SBF’s complicitors follow a pattern we have seen before, in fact a pattern that has existed in every major scandal in recent history. Yet, as was true of other high-profile scandals—Theranos, Harvey Weinstein, and Purdue Pharmaceuticals—to name just a few, we rarely hold complicitors accountable. At Theranos, the naïve board and Walgreens were complicit in allowing faulty medical technology to be used on Walgreens’ customers. Far too many people facilitated Weinstein’s sexual misconduct for decades. And, McKinsey played a core role advising Purdue Pharmaceutical’s path toward massive harm doing.
Among SBF’s key team members were the CEO of Alameda Research, Caroline Ellison (a former trader, and SBF’s sometimes girlfriend), Nishad Singh (FTX’s director of engineering), and Gary Wang (FTX’s chief technology officer). The group lived together in a penthouse in the Bahamas. It is hard to imagine that Ellison, Singh, and Wang weren’t aware of much of the activity that harmed FTX’s investors and customers.
Read More: SBF Is In Cuffs, But No Crypto Crackdown Is in Sight
Sequoia Capital, a fifty-year old venture capital firm with $85 billion under management, not only invested in FTX, but also published a 13,000-word glowing profile of SBF, writing that he “has amassed more wealth in a shorter period of time than anyone else, ever.” Investors often look to well-established firms like Sequoia for expertise. Now, it is reasonable to ask whether Sequoia knew as much as it should have before making such a proclamation, or if it was lauding FTX and its leader simply to protect and prop up its investment.
Some investors take cues from trusted celebrities. Which is why SBF hired quarterback Tom Brady and his supermodel wife (now separated) Gisele Bündchen to serve as “brand ambassadors.” Brady issued a press release lauding “Sam and the revolutionary FTX team (who) continue to open my eyes to the endless possibilities” of crypto. Bündchen offered that “Cryptocurrency will become more and more familiar to all of us as time goes on.” SBF hired Bill Clinton to speak at his crypto conference in the Bahamas in April, 2022. Clinton came through for his host by warning against regulation that could potentially “harm” crypto companies.
People like to explain scandals with a single explanation, and it is typically that the core harm-doer that gets the blame—Bernie Madoff, Richard Sackler, or Elizabeth Holmes. And, they are certainly blameworthy. But, they couldn’t get away with the harm they created without a series of complicitors. Complicity comes in a variety of shapes and sizes; some complicitors intentionally benefit from wrongdoing, others enable harm-doers without realizing that they are playing a part in the wrongdoing.
There are several types of ordinary complicity that are common, complicity without deliberative consideration of the harm being enabled. When we put too much trust in others, and do not check on their trustworthiness, we run the risk of allowing harm to happen. When we defer to authority and provide our loyalty to those that do not deserve it, we miss the opportunity to stop the evil. When we put faith in a visionary leader such as Elizabeth Holmes at Theranos, or SBF at FTX, and suppress our reasoning skills, we allow these evil doers to create harm.
We should hold SBF accountable. But, we should also realize that too often, many of us act as complicitors in less intentional ways. We need to audit our role in allowing corruption, discrimination, harassment, and the distribution of dangerous products to occur in our organizations. There will always be wrongdoers. But, they are less likely to create their harm if the rest of us refuse to be complicit. Being more aware of our potential complicity puts us on a path to reduce the likelihood that we will be part of the problem in the future.