FTX Is Where Gambling and Wall Street Collided
Modern attitudes recognize the similarities between taking risks in the casino and the financial markets.
Gambling skills can come in handy on Wall Street.
Photographer: Ting Shen/Bloomberg via Getty Images
One of the sidelights to the the sudden collapse of Sam Bankman-Fried’s $32 billion crypto empire is the gambling-related tweets by Sam Trabucco, the former co-head of Alameda Research, the trading arm of FTX. Trabucco claimed to have learned his craft trading cryptocurrencies at the blackjack and poker tables. This revelation has been treated as a novelty, alongside reports that FTX’s company psychologist thought the 20- and 30-something employees were undersexed nerds and complaints that locals were priced out of Bahamian real estate when FTX was riding high. But I think Trabucco’s gambling history is worth more serious consideration if we want to understand what happened at FTX.
When I grew up in the 1960s the only legal gambling in the US was mob-controlled Las Vegas, plus some horse racing and bingo. Small-stakes recreational gambling was widespread and mostly tolerated — if illegal — but public attitudes toward people who gambled for meaningful personal stakes were strongly negative. You were either a winner or a foolish loser. Winners exploited the weaknesses of others at best and were cheaters at worst.