In financial frauds, the core promise is always essentially the same: profit without risk. But the details of how that promise gets packaged are telling. Bernie Madoff’s Ponzi scheme worked on people who wanted to believe that money and status could buy safety: that if you were one of the chosen few allowed to invest with him, then your financial worries would be over, forever. Elizabeth Holmes offered something similar: a cargo-cult version of start-up culture for investors who did not understand technology but still wanted to share in the wealth of Silicon Valley — and to feel as brilliant as the people who had seen early promise in Apple or Google. “Bad Blood,” by John Carreyrou, details how her investors were so desperate to believe in her, and, by extension, in their own good judgment, that they disregarded warnings from scientists, employees and even their own family members. In America, claims of meritocracy have been used to justify widening inequality in recent decades, with the consequence that being rich is often treated as a sign of intelligence and personal value, while being poor is often viewed as a personal or even moral failing. Madoff and Holmes profited by promising wealth and validation to elites who feared that not having enough of one meant they couldn’t really have the other. Bankman-Fried, by contrast, seems to have invented himself as the fulfillment of a very different desire: success outside the bounds of powerful institutions. As Zeke Faux details in “Number Go Up,” his engaging book about the rise and fall of cryptocurrency, Bankman-Fried, who was convicted last week on seven counts of fraud and conspiracy, presented himself as a boy-wonder business genius who had made billions of dollars without having to work for a boss, follow social conventions or even wear long pants. In retrospect it was a perfect pitch for cryptocurrency speculators who wanted to believe that they, too, could make a fortune without any traditional financial background or connections.
Reading List: Scams and Scammers
