[Author’s note: This is a parody. I don’t know these people. I took artistic liberties with characters, timelines, and plot. The jargon is based on my own background as an MIT alumna, algo trader, tech founder, and reader of EA/ rationalist writings.]
NYC, 2017.
We’re in a big office space. The windows are darkened. It’s like a casino— we don’t know what time of day it is. Clusters of desks sport 2 to 11 monitors each, screen after screen of financial charts, models of financial data, computer code. This is Jane Street, a quantitative trading firm.
A young trader turns to a middle aged trader, points to a graph on his computer screen, “Does this analysis show the lead lag correlation between ETF—”
The older trader says without looking up, “Ask SBF.”
We cut to a cluster of young traders sitting around the desk of a crazy-haired, sloppily dressed 25 year old. This is SBF, aka Sam. He’s playing a video game while fielding questions, his fingers flying over the keyboard, clicking on macros on his custom gamer mouse to quickly execute multiple complex commands with a single touch.
A trader asks SBF, “The exchange confirmed the positions. What do you want to do to offset the risk on these overnights?”
SBF doesn’t look up from his video game, “Hedge it with SPY’s. But not 100%. Our models picked off those orders before their cancel messages were executed so we should have some edge.”
The traders around him take notes. One of the traders whispers to another, “I heard he was the highest paid trader of his class.”
A trader asks SBF, “How do I make as much money as you? I’ve been here longer and you’re tracking to make 20X more than me.” He looks around, embarrassed, then shrugs. “Not like our bonuses are secret.”
SBF says, “I work hard. And I try not to be wrong about important stuff.”
The traders take notes. “And how do you do that?”
SBF shrugs. “I guess… I always think about work. And I make sure to be right and smart and rational.”
“But… what if you want to go have fun?”
“What do you mean?”
“Like… go to a party, or a date.”
“Just don’t do that.”
“Don’t you get tired?”
“Oh. I take nootropics and drugs for that.”
The traders take notes.
A frizzy-haired girl with glasses and buck teeth asks, “Sam, the algorithm you were talking about today that only works in high vol environments… Are you going to run it tomorrow?”
Hearing her voice, SBF does look up from his video game. He says, “Why not, Caroline?”
Caroline is the only girl in the room. She stammers, “Well, if the economic release tomorrow is like the last one, your analysis showed it might fluctuate by a whole day’s PNL in a few minutes. Is it worth risking all our other models’ performance-”
SBF talks excitedly, jabbing his finger down onto his leg for emphasis. “If it’s positive expected value and has long term potential for good risk adjusted returns, it’s our job to figure out the trade. If the numbers check out, it’s our moral duty as traders- nay- as rational actors, to stomach the risk. Otherwise another firm could build it out and eventually crush us.”
Caroline gulps. The other traders look at SBF with admiration and respect. He’s got nerves of steel and thinks so strategically. It’s impossible to argue with his logic.
Caroline presses, “But why not try it with smaller size first?”
SBF says, “Some things work best if you go… big.”
Caroline blushes.
SBF’s eyes widen. He abruptly goes back to coding and playing his game with renewed vigor.
===
Palo Alto, 2017.
SBF is home for the holidays. His parents’ advanced degrees and photos with Steve Jobs, Nobel laureates, and famous Stanford alumni line the walls. The modified-Eichler house is beautiful, warm, and very Bay Area with its skylights, glass walls, compost bins, solar power, natural textiles, redwood floors. Everyone is sitting down for a vegan dinner.
SBF’s dad says, “I talked with Professor Gordon today. His son’s nonprofit’s doing well. Did you know he started one? They’re working with the Gates foundation on tackling malaria.”
SBF nods, eats hurriedly without tasting anything.
SBF’s mom says, “How’s your work, Sam? Are you having fun? Making friends? It’s still a surprise to me that you’re a trader, whatever that is. I was telling my friend today I was sure you’d be a professor like us.”
SBF’s dad says, “I’m glad he went into something different. Not everyone has to worry about saving the world.”
SBF protests, “I care about the world! I earn to give. I donate a majority of my income-”
SBF’s mom soothes him, “Of course you do, honey. No one has a bigger heart than you. You’re our star.”
Everyone keeps eating.
SBF’s mom says, “So how involved is Bill Gates with that project? I heard malaria was one of his highest priorities.”
After dinner, SBF calls his friend, another Sam, nicknamed Trabs. SBF fidgets and starts playing a computer game as he waits for the call to connect.
Trabs answers, “Hey, Sam.”
“Hey Sam. What’s up?”
SBF pauses. He abruptly minimizes the game from his screen. He leans forward and speaks with a new intensity, “Do you ever think about what this is all for?”
“You mean, the meaning of life?”
“Yeah.”
“Um… not really. I mean… isn’t it about having fun and learning and stuff?”
SBF starts fidgeting and pacing. “I know we’re not supposed to talk about work because we’re from rival firms, but I’m one of the top at my firm. I know you must be crushing it too. This field is just not that deep. No one really knows what they’re doing. I built our derivatives platform in my 2nd year. Junior lab was harder than this. We had problem sets freshman year that were harder than this. Think what we could do if we took more risk.”
Trabs hesitantly replies, “What do you mean more risk? We take risk every day-”
SBF cuts in, “We take risk on behalf of the firm, but not in our own lives. Don’t you see? There’s more to life than making millions of dollars a year.”
Trabs laughs. “You mean like… making billions of dollars a year?”
SBF chuckles but is serious. “Right. That’s literally impossible if we stay at our trading firms.”
“People would say we’re crazy to walk away from-”
“We’re not ‘people.’ Normal people are struggling to pay rent. Our BATNA is that we move in with our infinitely supportive parents and live amazing lives. Or just get other jobs making at least a few hundred grand a year. People of our opportunity, privilege, and talent have a duty to take more risk, to be more.”
“So… how do we do that?”
===
1 year later…
Berkeley, 2018. The office is crowded, desks jammed right against each other, monitors everywhere. There’s a small sign written in sharpie that says Alameda Research on the door, otherwise it’s nondescript. SBF is sleeping in the office on a bean bag. The vegan protein drinks he subsists on are littered everywhere. It’s past midnight and his coworkers whisper so as not to disturb him. The office is full, everyone still working, unkempt, long hair, dirty hair and feet.
Caroline and Trabs are interviewing a candidate who’s dressed in a suit while they wear gym shorts and MIT/ Stanford t-shirts. The candidate stifles a yawn and says, “The answer is root n over e.” Caroline and Trabs look at him, impressed.
Trabs says, “Did you do that in your head?”
The candidate nods, “Yes.”
Trabs looks over at Caroline, who says to the candidate, “Can you please wait outside for a moment while we confer?”
The candidate exits. Caroline turns to Trabs, who looks excited. He smiles at her hopefully, “Well?”
Caroline says, “Send the candidate home. Not worth waking up Sam over.”
Trabs protests, “But no one else has ever gotten those answers that fast. I think we might’ve postulated a new theorem. And look-“ Trabs gestures to the candidate’s resume. “International math Olympiad, international informatics Olympiad, international physics Olympiad-”
Caroline interrupts, “Sounds great for a sleepy monopoly like Google that just needs to not die too fast. You know what Sam says. We have to have the whole trifecta.” She counts them off on her hands to demonstrate, “Super genius, crazy hard working, and self sacrificing. This person isn’t inspired by a huge mountain of work and the prospect of saving humanity. Most people just want to make enough money to go home to their families and enjoy their lives.”
Trabs pulls at his hair. “So?”
Caroline retorts, “Which isn’t enough for our mission! Sam says once you have kids, you can no longer think rationally. Your utility function gets warped into prioritizing your own kid over random strangers. You start valuing your first million dollars more than the next million dollars. That’s irrational. We need people who are monkishly devoted to work, who always want the next million as much as they wanted their first million, who see the importance of making more money so they can save more lives today, who feel as urgently about saving a stranger’s kid as they would about saving their own kid. You can’t be a monk if you have kids. Even if you’re smart and hard working, you can’t save all the suffering strangers in the world if you’re not willing to take a massive calculated risk.”
Trabs sighs, defeated. “I’ll just say, ‘not a culture fit.’”
===
2 years later…
Hong Kong, 2020.
The office is again packed with desks and nerds hard at work. The city glitters below them. It’s past midnight. The employees are kids who wear t-shirts that say “FTX.”
SBF sits with a serious, thin, middle aged Chinese man. The Chinese man sizes up SBF, who plays a computer game. SBF’s hair is longer and unrulier than ever.
The Chinese man says, “So, what make you think your exchange will survive? Why people use FTX instead of Binance?”
Without looking over, SBF says, “With all due respect, CZ, sir, because we let them trade cheaper and faster.”
CZ rubs his chin, looks skeptical. “How you give better price?”
SBF says, “The full details are proprietary, but our liquidity engine funnels the tough to match orders to Alameda, who’s better able to internalize that flow because it trades a larger basket.”
“And you let the customers trade with leverage? How you collateralize?”
“Same way everyone else does.”
CZ grins for the first time. “Yes. Tokens. We both discovered alchemy- the secret of turning shit into gold!” CZ cackles and makes money gestures with his hands.
“I don’t want that. I’m in it to make an impact.”
CZ scoffs. “Come on.”
“It’s true! I want to do the right thing. The logical thing. The right business choice.”
CZ smiles knowingly. “You want me show you right way do business in Asia?”
SBF nods earnestly. “Yeah. Of course.”
We cut to CZ and SBF in a casino sitting at a betting table surrounded by dancing women. Chinese music blasts and CZ takes a shot. The scantily clad women rub themselves against CZ and spill alcohol. SBF sits on his hands, nervously shaking his legs. His fingers itch for the comfort of his gaming mouse. A woman strokes his hair and he shrinks from her touch.
A woman approaches with a whole roast pig. CZ says to SBF, “Eat the face. Best part.”
Grey faced, SBF shakes his head and swallows an urge to vomit.
“Which girl you like?”
“I’m good. No thanks.”
“You ever go to casino? Splash cash?”
SBF shakes his head no.
“You should spend more time here. This is the business we’re in. Gambling. You know how I learned about crypto? While playing poker! I was degen. I went homeless to buy crypto. Have you heard more degenerate shit than that? Like addict. Crypto religion. That’s why I know my customers. Everyone in crypto because like us. Dream of big money, better life.”
SBF demurs, “I just want to add liquidity to markets-”
CZ leaps up and throws the roast pig off the table, stunning SBF into silence. A woman runs to clean it up, wiping on her knees, picking up the food with her hands. CZ ignores her. “You pretend you are better. Better than human. You pretend you don’t like food, sex, money. You‘re a machine for altruistic purpose, a god, above base urges, right? But how will you give the people what they want if don’t admit the vice in every man?”
“I don’t— I think—”
CZ looks disgusted. “You think too much, Sam. Outside you talk pure, inside you’re dirty like the rest of us.” CZ addresses one of the scantily dressed, dancing women. “Agree? Aren’t the nastiest lovers the ones who button up and tie their ties perfectly?” CZ looks back over at Sam. “How much you want to bet she agrees? $10K? $100K?”
Sam shakes his head, “I don’t want to bet against you. I wouldn’t know. I agree with you.”
“What kind of trader doesn’t bet?”
“All my trades are automated.”
“Of course!” CZ slaps his leg. “You hide behind math and machines. But have you been tilted? Have you been stuffed with a bad order and felt the sinking in your whole body as it moved against you? Have you agonized over whether to puke out of your position and eat the loss, or to let it ride on the blind hope it’ll come back?”
“I would never do that. That’d be irrational—”
“Ha! Rationality nothing. Everyone has limit. You haven’t been pushed, but one day must. On tilt. Then learn the hard lesson we all must learn. How it feel to be horribly punished for mistake. Denial, shock, loathing, blame, doubling down, make it worse, dig in deeper…”
“I would never do that.”
“Let’s test.” CZ’s smirk drops. “I flip this coin. You call it. If you win, I give you $50MM investment for 20% of FTX. If I win, you give me 20% of FTX for free.”
Sam doesn’t hesitate. “Heads.”
CZ flips the coin into the air… It’s tails.
CZ grins, the coin in his palm. He starts to withdraw his hand when Sam reaches out to stop him. Surprised, CZ halts with the contact.
Sam says, “Again. This time, I flip, you call it, $100MM for 20% or I give you 40%.”
CZ looks intrigued. “Now wondering, do I even want 40% given this interaction? And how much you are considering how to enforce this agreement?”
Sam shrugs. CZ hands him the coin. Both their eyes are on it as Sam flips it in the air…
===
1 year later…
A montage of people talking about FTX:
A day trader signs up for FTX. “You mean I can make money fast, easily, without posting much cash upfront? Genius.”
An effective altruist admires SBF. “He’s my hero. He’s proof that if you work hard, are well intentioned, super rational, and a genius, then you win. And humanity wins. Genius.”
A venture capitalist: “I love the risk neutral thing. One of the reasons Sam’s my favorite founder. At a big fund like ours, we don’t care if you make a lifestyle business, or even if you sell for a hundred million. We need bets that could potentially return the fund, otherwise it’s worthless to us. And normally founder interests aren’t aligned with that, but for Sam, that’s not the case. He doesn’t want to just make a few billion and call it a day. Heck, he’s already done that. He’s a billionaire but in his mind he’s fighting for the next dollar like he’s penniless. If I had 1% of his money, I would never work again. And yet he won’t settle for anything less than making ALL the money. And it’s brilliant how he justifies his greed using arithmetic around effective altruism. I think he actually believes it too, which makes it all the more effective. Genius.”
A celebrity listens to the investor talk. They sit across from Trabs. The celebrity nods along. “So if I get people to sign up for this thing, I’ll make more money?”
Trabs says, “More money for the community.”
The celebrity nods. “Sure, for ‘the community.’” The celebrity winks at the investor. “I already have hundreds of millions of dollars, but I’ve never had a billion.”
The investor says, “This is guaranteed to score in the end zone. And who better to know about that, right? You’ll finally have billionaire status.”
===
SBF, Caroline, Trabs, Caroline’s parents, and SBF’s parents are all at dinner. SBF’s parents say, “I’m so glad we could help! Your company is world changing. I was just telling Professor Gordon that maybe his son should apply for one of your grants.”
SBF has a small smile.
He glances over at Caroline, who’s gazing into Trabs’ eyes. Trabs and Caroline laugh together at a quiet inside joke. She shoves Trabs playfully. SBF’s smile drops.
===
CZ watches SBF testify to Congress on TV. The chyron reads, “SBF lobbies against low integrity exchanges like Binance, calls for regulations, higher standards.” He throws a platter of whole roast pig across the room. He glares at SBF’s talking head on TV. “You think you’re so much better than us? You want to wipe us out? I will show you… Soon we see how each strength is also weakness. Faith in rationality blinds you to common sense. The key to your destruction is inside you. Just need to wait and help pull the trigger…”
===
1 year later…
Bahamas, 2022.
Trabs and SBF lounge are in their beautiful mansion. In contrast to the elegant molding and staircase, Trabs and SBF are dressed in slovenly clothes and are generally unkempt. The TV is behind them broadcasting how LUNA and all of crypto is tanking at a breathtaking rate.
Trabs says, “We can’t handle this toxic flow. These moves are massive, huge market gaps. And now we’re bailing out others? Where’s our bailout? All the other market makers pulled out so Alameda was left holding the bag.”
SBF shrugs, “Maybe our company doesn’t deserve to exist. If Alameda liquidity isn’t providing the FTX promise of best prices, speed, and least cash upfront, then FTX dies too. What’s the alternative to sticking it out?”
Trabs says, “The alternative is to just focus on the exchange. Being undercollateralized could kill-”
SBF interjects, “If people want to accept our token as collateral, who are we to-”
Trabs says, “I don’t want to accept it as collateral!”
SBF and Trabs look over at Caroline, who’s been sitting silently in the corner. SBF says, “What do you think, Caroline? You’re the Alameda CEO.”
Caroline squeaks, “Co-CEO.” She sighs. She hates when they fight. “I guess I don’t agree with Trabs… I think we have to keep doubling down. It’s… how we’ve gotten here. It’s the rational thing to do.”
SBF nods. He says, “The meaning of life isn’t keeping FTX alive. The bigger mission is to do as much good as possible. Even if it doesn’t work out 90% of the time, if the upside is so large that it’s positive EV, then we have a duty to do it.”
Trabs buries his face in his hands. “But now it’s so much more at risk. When is it enough? We’ve succeeded beyond our wildest dreams. When do we get to rest?”
SBF furrows his brow. “Rest? Enough? There are millions of people dying every day-”
Trabs groans. “Stop!” Everyone is silent for a moment. “What about us? I want a family one day. I want-”
SBF’s voice cuts Trabs off. “A family? That’s the most selfish thing I’ve ever heard.” He looks at Trabs with pain and betrayal. He had thought of them as a family. How could this not be enough for him? SBF’s face shows a moment of anguish before stiffening. “You want to leave? Is that what you’re saying?”
Trabs looks at SBF, “You know I don’t mean that. You’re my best friends. I would never leave you.”
SBF turns his back on Trabs. “If you’re not 100% with us, you’re a liability.”
Trabs’ eyes widen in disbelief. “Don’t do this, Sam. Why is everything so black and white with you? The world isn’t like that.”
“My world is. I don’t get to be normal. I’m either the hero or the villain, the good guy or the bad guy. I either save the world, or I fail.”
“Sam, we’re your friends. We love you even if you don’t do anything.”
SBF snorts in derision. “I’ll leave you two to figure out it how to announce it to the team.”
Trabs looks hurt and disbelieving. “You can’t wait to get me out of here.” He looks at Caroline. “And you. You always choose him, don’t you?”
Trabs rushes out of the room. Caroline pauses, looks at SBF uncertainly, then follows. SBF is left alone. The sun glitters in this tropical paradise while the tv shows the crypto world crashing. He’s distraught and quickly paces around the room, not sure what to do. He pulls out his computer and starts playing a video game.
===
A few months later…
SBF’s parents call him. He doesn’t answer the phone. They leave a voicemail, “Sam, we’re all so proud we get to work with you! I told Professor Gordon you’re the only one doing the right thing in this space.”
SBF cringes, hardens his jaw, plays his video game.
===
CZ watches Sam on TV. “You betray me for the last time. Such a good mask, you fool your team, reporters, even yourself, but you can’t fool me. You say you care about humanity, but you deny part of what makes you human- ego, selfishness, fear, stupidity. Now time to call your bluff… SBF, welcome to the human race.”
CZ tweets, “Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT.”
===
Millions of traders react to CZ’s tweet and type rapidly on their computers.
In the Bahamas, Caroline’s team is in chaos. Dashboards are flashing red alerts, phones ring endlessly. An FTX employee asks Caroline, “All the customers are cashing out. Should we call Sam?”
Caroline looks like a deer in headlights.
===
Caroline and SBF pace around the room in silence.
Caroline suddenly bursts into tears and runs into SBF’s arms. He holds her.
Caroline cries. “I’ve ruined everything! I knew I wasn’t good enough. I’m just a kid. Alameda is dead. And now Trabs is gone.”
SBF’s face hardens. “We don’t need Trabs. I’ll take care of it.”
Caroline looks up at SBF and sniffles. “You’d risk FTX to save Alameda? But why?”
“There’s more to life than making billions of dollars a year.”
She looks up at him blankly. “There is?”
SBF looks at her tired, dear face. They’ve been through a lot together. Many time zones, many adventures, she’d always stuck by him. “Your utility to me is infinite.” SBF wipes the tears from her face. Cut to black.
===
A montage:
FTX-affiliated employee: “We wasted 1 to 3 years on this. That’s a long time! Now what do we do? Will anyone hire us if we don’t disavow? We always knew he was evil!”
An effective altruist: “He was evil, unlike me— I’m the good guy. It’s impossible that working hard, having good intentions, and being a genius isn’t enough. So logically he must’ve been not enough of one of those things. He’s smarter and harder working than me, so he must’ve been actively evil. He’s supposed to shut up and multiply when calculating EV, but not like that. I would never do what he did.”
MIT alum: “What if being MIT turns into a red flag for VC’s? At least we weren’t in his weird living group. You see, MIT has these houses called ILG’s—”
Celebrity: “No comment.”
FTX trader: “You mean he tried to make an easy, quick buck gambling, levered up, without posting cash upfront? What the heck? I would never do that! He’s a cheat!”
Business partner: “We were cheated.”
Warren Buffett: “My partner Charlie says you can’t cheat an honest man.”
CZ: “People say I wiped him out. I’m old man compared to SBF. Forgive me if I use old fashioned techniques like long squeeze, bank run. Not that I did. I only want to help the community.”
Trabs: “I think Sam thought of himself as a hero and acted as such. The cardinal sin of a business hero is losing money. Thou must make money, so he did what he had to do to fill that business hero role. A romantic hero must risk all to save the girl. An altruistic hero must risk all to save the world. Sam saw an opportunity to do all 3 and he had to take it. I think we put too much trust and responsibility in 1 person, which is how we got to the $30B+ valuation so fast, but it’s also how we lost it and more. It’s human to fail sometimes. And it’s human to make people into heroes and then love it when they topple off the pedestal.”