The CryptoDevil's Bargain

Over the next several months many will try to figure out how precisely Bankman-Fried fooled so many. Some will investigate conspiratorial explanations focussed on his political connections and connections to Ukraine. There may well be very fishy reasons for how Bankman-Fried succeeded in rapidly accumulating so much wealth and power. But on the face of it, the mechanics seem straightforward. Bankman-Fried ran a hedge fund and a cryptocurrency exchange. His fund was beginning to tank, and rather than simply close it down — which would have been painful but not illegal — he doubled down, and withdrew funds from the accounts of users of his cryptocurrency exchange to prop it up.