In April 2022, Tony Blair and Bill Clinton performed on the FTX stage at the Crypto Bahamas conference. They sat next to Sam Bankman-Fried, the founder and then CEO of crypto exchange FTX. The presence of Blair and Clinton added credibility to FTX and the burgeoning crypto industry. A few short months later, FTX collapsed abruptly.
The company could owe more than a million FTX investors money, according to bankruptcy filings. It has emerged that FTX and its sister companies have allegedly failed to comply with standard financial reporting procedures. Describing how bad things had gotten under Bankman-Fried’s leadership, FTX’s current CEO, John Ray, said: “Never in my career have I seen such a complete failure of corporate controls and such a complete lack of trustworthy financial information like here.”
Why did so many people fall under the influence of Bankman-Fried and overlook signs that things were too good to be true?
Psychoanalysis observes that followers unconsciously identify with – or imagine themselves to be – leaders whose behavior violates socially accepted norms and standards. The behavior of such leaders resonates with unconscious aspects of ourselves that date back to early in our lives, before we were socialized and internalized to society’s norms.
As infants and young children we were governed by the pleasure principle of immediate gratification and escape into wishful fantasies. Although as adults we increasingly accept the reality principle of delayed gratification and with it the truth that not all desires can be gratified, evolutionarily earlier aspects of ourselves are never fully relinquished. Under the hypnotic influence of an unrestrained leader, we behave in ways that we would otherwise see as irrational or harmful.
On the surface, the intellectual tech brother leader appears to be the antithesis of the traditional powerful leader in which his followers lose themselves. But we can see Sam Bankman-Fried as an executive connecting with his followers and FTX investors not despite, but because of his tech bro persona.
1. Bankman-Fried is no exception to the trend that tech leaders are braving for the occasion– a trend that goes back at least as far as Steve Jobs and the black turtleneck that was the backbone of his business wardrobe. Bankman-Fried’s particularly sloppy style of dress is an even greater affront to the more sophisticated style we associate with traditional businessmen.
On stage at the Nassau meeting, Tony Blair and Bill Clinton wore well-tailored suits as they sat next to Bankman-Fried, who wore his signature baggy T-shirt, oversized shorts and sneakers. Blair admitted to feeling “a little overdressed”. The contrast on stage that day illustrates the freedom Bankman-Fried was given to forego social norms built into the business world. We unconscious—or even consciously – to identify with it to the extent that this freedom resonates with our own repressed longing to live our lives on the pleasure principle of immediate personal gratification, doing exactly what we please, when we please.
2. Bankman-Fried crossed the work-life line that defines life for most adults. That became clear during a Zoom meeting with investors from Sequoia Capital. FTX Head of Product Ramnik Arora sat in the same room as Bankman-Fried and thought he was “absolutely fantastic” at answering investors’ questions.
When Arora later crossed over to Bankman-Fried, he found that the CEO had been playing League of Legends the whole time. Bankman-Fried enjoyed the freedom to make his working life playful and unencumbered by external realities. Most of us lack that freedom, and we connect with Him on a deep level if we want to be in His position.
3. Bankman-Fried spoke as if he had created a new magical reality in which it is possible to transcend the limits of contentment inherent in the world we all live in. In an interview with Bloomberg, Bankman-Fried was asked to explain the concept of “yield farming,” which is the method he’d allegedly mastered to earn massive fortunes.
Basic reading on psychoanalysis
He responded that crypto earnings could be “squeezed” out of a metaphorical black box that does “nothing.” When we listen to this, the adult aspects of ourselves can see how improbable this sounds. But because aspects of us tend to take refuge in the magical thinking of childhood, we identified with Bankman-Fried’s approach to reality and happily allowed it to guide us into the future.
Bankman-Fried’s freedom of influence as a powerful technology leader has been halted, at least for the time being. He was arrested in the Bahamas on December 12, 2022 and has since been transferred to the United States. There he will remain locked up in his parents’ home in California until he stands trial.
The story of his rise and fall should make us look inward and ask what it was about him that touched us. We are being led into the future by technology leaders who are different from the traditional leaders who have wielded power throughout human history.
However, the influence of these contemporary leaders on their followers relies on well-known psychological mechanisms. Without self-awareness and critical thinking, we can hypnotically follow the bad ideas of a technology leader. Only when it is too late do we break away from it and realize that the utopia that was promised to us actually led to more suffering than happiness.
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