There are three things commonly known about Sam Bankman-Fried. The first is he led one of the biggest derivative cryptocurrency exchanges in the world. The second is he will be tried for eight counts of money laundering, financial and elections fraud.
Together, these charges – to which Bankman-Fried has pleaded not-guilty – carry a possible penalty of 115 years in prison.
The third thing people often know is that he was a so-called effective altruist. As an industry professional who has been devoted to impactful applications of new technologies for a number of years, this last act of personal branding troubles me greatly.
Lucía Gallardo is the founder of regenerative finance climate project Emerge.
Effective altruism, in case you’ve never heard of it, is a philosophical and social movement that applies reason and evidence to determine, and then act upon, the most effective ways to benefit others. Peter Singer, a major advocate of the movement, said “effective altruism is about doing the most good you can, and that means being strategic and focused in your efforts. It means finding out where you can have the biggest impact, and then doing everything you can to make that impact as big as possible.” And Sam certainly went big.
He signed a Giving Pledge commitment of over $100 million. He supported effective altruism organizations, institutions focused on global catastrophic events and worked with charities such as Charity Science. He was also an advocate of animal welfare causes. How truly effective those acts were is still to be determined, but what is clear is that he was on a mission to be known as philanthropic, altruistic and good.
There is a long-standing debate in moral philosophy about whether actions can be considered moral if they have questionable underlying motivations. Both Socrates and Plato believed that acting morally required considering the broader well-being of others and the common good.
Someone should ask the millions of FTX users how they feel Sam scored on that requirement. But to those paying close attention, Sam’s underlying motivations began way before he could donate $100 million here or there. In fact, to me, Sam’s obsessive emphasis on his altruism was one of the most effective impact washing strategies we’ve seen in recent history.
See also: Is Sam Bankman-Fried Losing His Mind? / Opinion
Impact washing is the practice of misleading customers, donors, investors and/or the general public about the environmental or social benefits of a product, service or organization in order to attract them, as well as to maintain a positive reputation.
Impact washing can take many forms – from making false claims to using vague or misleading language, or even greatly exaggerating claims of impact efficacy. Impact washing misleads people, and it diverts resources and attention from truly impactful and effective initiatives. Worse, it erodes trust in those of us who are genuinely committed to doing good. Impact washing is prevalent across every sector, including the blockchain sector. FTX and Sam Bankman-Fried exemplify the very worst of it.
When adding up Sam’s philanthropic narrative with the actual measures taken to deliver impact outcomes, it becomes clear that the strategy was likely to make FTX, and even Sam himself, too good to be fraudulent. Sam’s narrative attracted investors excited about ESG. It drew in millennials and Gen-Z users, whom Nielsen has found are often willing to pay more for the products or services of companies they believe to be sustainable. And it drew in brand ambassadors like Gisele Bündchen, who is fiercely passionate about environmental causes.
Sam’s allegedly fraudulent donations to political campaigns drew in high-level politicians. And he used a number of donations in The Bahamas – including churches, schools and governmental bodies (including the local police) to build local favor that lingers even after his arrest. Yet, there seems to be little-to-no information on what actual impact outcomes FTX and Sam’s donations had.
FTX Climate, the company’s major initiative to allegedly build a better future for all of the planet’s inhabitants spent over $1 million on a one-time purchase of 100,000 tons worth of CO2 offsets from BurnStoves and Pachama yet made zero attempts to reduce their own carbon footprint. In fact, they made a statement about how “80% of all deposits and withdrawals on FTX are done using proof-of-stake blockchains, meaning they have no meaningful climate or carbon impacts, they are like sending an email.”
The statement is not only ridiculous, it’s also misleading because it doesn’t factor in the environmental footprint of all the computational power required to maintain their off chain systems and storage. For context, data centers currently consume around 200 terawatt hours (TWh) of energy per year, but we generate about 2.5 quintillion bytes of data daily which means the energy required by the technology sector increases steadily by 8% annually. Sending email after email has aggregated environmental consequences. And so did FTX.
In other words, for all of his altruism, I can’t for the life of me figure out where the effectiveness was – except in how he used it to mislead investors, users and the public about how he was worthy of their support and money.
See also: Anyone Who Took Money From FTX Ought to Repay It | Opinion
Sam was a strategically precise impact-washer. And industries are riddled with lesser versions of him – effective at crafting narratives about building a better world yet silently lacking in whatever words are supposed to come after that. It’s time we hold ourselves and others accountable to the ways we deliver on the promise of the technology designed to change the world. And if you’re building alongside us, consider the following:
- Map the existing positive, negative and neutral impacts of your entire supply chain.
- Bring innovative impact experience into your decision-making room. Embed impact into your core business objectives as more than a mission and vision. Turn it into concrete business-aligned strategies, with measurable actions and public transparency and accountability. When thoughtfully designed, impact is effective and profitable (it’s what we do every day at Emerge).
- Deliver carbon reduction before carbon off-setting.
- Learn about existing measurement frameworks, new updates on ESG reporting requirements in jurisdictions like the U.S. and Europe.
- Assess your unintended consequences and then mitigate them.
Sam was not an effective altruist. His faux altruism undermines the credibility of the broader impact our innovation can have. Yet there is no causal relationship between impact and innovation, unless we, as driving forces of innovation, make it so – effectively.