DEI Weekly: November 18, 2022
Our favorite reads from the past seven days
FTX's Bankman-Fried begged for a rescue even as he revealed huge holes in firm's books
As customers withdrew billions of dollars from crypto exchange FTX one frantic Sunday this month, founder Sam Bankman-Fried worked the phones in a futile bid to raise $7 billion in emergency funds.
A review of dozens of company documents and interviews with current and former executives and investors provide the most comprehensive picture so far of how Bankman-Fried, the 30-year-old son of Stanford University professors, became one of the richest men in the world in just a couple of years, then came crashing down.
The documents, reported here for the first time, include financial statements, business updates, company messages and letters to investors. They, along with the interviews, reveal that:
-- In presentations to investors, some of the same assets appeared simultaneously on the balance sheets of FTX and of Bankman-Fried's trading firm, Alameda Research – despite claims by FTX that Alameda operated independently.
-- One of Bankman-Fried's close aides tweaked FTX's accounting software. This enabled Bankman-Fried to hide the transfer of customer money from FTX to Alameda. A screenshot of FTX's book-keeping system showed that even after the massive customer withdrawals, some $10 billion in deposits remained, plus a surplus of $1.5 billion. This led employees to believe wrongly that FTX was on a solid financial footing.
-- FTX made about $400 million in "software royalty" payments to Alameda over the years. Alameda used the funds to buy FTX's digital coin FTT, reducing supply of the coin and supporting its price.
-- In the second quarter of this year, FTX posted a $161 million loss. Bankman-Fried, meanwhile, had spent some $2 billion on acquisitions.
-- As Bankman-Fried tried to rescue FTX in its frantic final days, he sought emergency investments from financial behemoths in Saudi Arabia and Japan – and was joined at his Bahamas headquarters by his law professor father.
Bankman-Fried told Reuters in an email that due to a "confusing internal account," Alameda's leverage was substantially higher than he believed it was. He added that FTX processed roughly $6 billion of client withdrawals.
He said FTX and Alameda together made a profit of roughly $1.5 billion in 2021, which was more than all of the expenses put together of both organizations since their founding. "I was unfortunately unable to communicate much of what was going on to the broader company in real time because much of what I posted in Slack appeared on Twitter soon after," he added.
The People Who Never Were
Machine learning can create fake medical images and histories that look real. They may transform research.
During his keynote lecture at a 2022 conference on medical images, Alex Frangi projected scans of the vasculature of two brains. Although the luminous tangle of blood vessels appeared to be all but identical in the two images, even to this audience of medical and computer science experts, only one image depicted a real human. The other had been created by a computer algorithm, mimicking what might be captured from a real patient through magnetic resonance angiography.
“I asked, which of these is real and which is synthetic?” says Frangi, who directs the Center for Computational Imaging and Simulation Technologies in Biomedicine at Leeds University in the United Kingdom. “It’s very, very difficult to tell.”
The creation of a brain image real enough to fool experts was far from an academic curiosity. Rather, it is central to a flourishing new field of synthetic data, which could change the way patients are diagnosed, how clinical trials are conducted and especially how artificial intelligence–driven tools—an arsenal proliferating across the medical landscape—are trained and perform.
Why the Emoji Skin Tone You Choose Matters
WIRED's spiritual advice columnist on whether to use the tone that most resembles your own—or to stick with the original Simpsons-esque color.
The existence of a default skin tone unavoidably calls to mind the thorny notion of race neutrality that crops up in so many objections to affirmative action or, to cite a more relevant example, in the long-standing use of “flesh-colored” and “nude” as synonyms for pinkish skin tones. The yellow emoji feels almost like claiming, “I don't see race,” that dubious shibboleth of post-racial politics, in which the ostensible desire to transcend racism often conceals a more insidious desire to avoid having to contend with its burdens. Complicating all this is the fact that the default yellow is indelibly linked to The Simpsons, which used that tone solely for Caucasian characters (those of other races, like Apu and Dr. Hibbert, were shades of brown). The writer Zara Rahman has argued that the notion of a neutral emoji skin tone strikes her as evidence of an all-too-familiar bad faith: “To me, those yellow images have always meant one thing: white.”
Twitter and Free Speech: What Is Musk’s Plan?
As Twitter’s new owner, Elon Musk must reconcile his dream of a free-speech paradise with the reality of a business based on ad revenue. With so much money on the line, the billionaire is changing his approach, says Wharton’s Pinar Yildirim.
Twitter, or any social media platform, could invoke an outright ban on any conversation regarding certain hot-button topics or offensive viewpoints. But that’s an extreme approach to content moderation, she said. A more consumer-friendly approach would be to allow users to curate content to filter out what they do not want to read or what they may find offensive. Or Twitter could enable users to set up their own sub-communities where they could control the members and the topics up for discussion or debate.
“This is a much more market-based approach to content moderation,” she said. “My feeling, based on the statement that came out, is that this is the approach they are going to take, creating these spaces that are driven by the preferences of individual users.”
The professor said a curated design could be successful for Twitter because it would keep consumers on board, which would be attractive to advertisers.
Welcome to the Ambaniverse
From food to gadgets to sports, explore how the business empire of one of the world’s richest men touches the everyday lives of millions in India.
Imagine if everything in your home came from just one company. Or, to be more precise, from companies that are ultimately led by one individual: a single person whose brands sell you the food you eat, the clothes you wear, the fuel you fill your car with, and even the internet you’re reading this with.
That’s the reality for many Indians, who rely on products, food, and services from the vast array of companies controlled by or partnered with Mukesh Ambani. He’s not just among India’s richest men, according to Forbes; with a net worth of $90.7 billion, he’s also been in the top 10 of its Billionaires List for the past three years.
Ambani’s wealth comes from the enormous Reliance Industries conglomerate. Since taking over from his father, Ambani has turned Reliance — once known for textiles and petrochemicals — into a digital powerhouse. He’s grown the company’s reach through acquisitions and partnerships to reach retail, telecommunications, media, and so much more, creating an empire with unimaginable reach.
Don’t believe us? We’ll show you. Scroll down and join us for an illustrated journey through the lives of ordinary Indians — and the many, many ways in which Ambani touches their world.
Where do we go when the seas rise?
After learning how long it will take the Earth's ice sheets to melt in the previous episode, we continue our journey in Greenland. As world leaders gather in Egypt for the annual UN climate conference, listener Johan isn't too optimistic about governments' ability to curb greenhouse gas emissions and get a handle on climate change.
So from his coastal perch in Denmark, he has asked where we should live when the poles have melted away and coastlines creep inland. Along with the help of BBC correspondents around the world, Marnie Chesterton scours the globe for the best option for listener Johan's new home.
BBC Mundo reporter Rafael Rojas takes us to a manmade island off Colombia's Caribbean coast to see how we might be able to live with the seas. Meanwhile, reporter Furkan Khan takes us into the high, cold desert region of Ladakh to see if heading for the hills might be the answer. As Marnie searches for a climate-proof destination, she speaks to conservation biogeographer Matt Fitzpatrick, from the Appalachian Laboratory at the University of Maryland Center for Environmental Science. He's made a map that shows what towns and cities will feel like in 60 years and where you should visit in order to get a preview of your home's future climate.