Interpreting the Maneuvering Tactics of Crypto New Rich from a Postcolonial Perspective: Taking SBF and Sun Yuchen as Examples

Author: Beichen, Chain Teahouse

Although the title's structure may seem like a dull academic paper, and the content appears to be sensational tabloid gossip, there is truly no more fitting expression to summarize this article.

The collapse of FTX and Alameda, controlled by SBF, has sent ripples through the market, which seems to be caught between an "institutional debt crisis" and "industry recovery" (we will release a relatively in-depth analysis this week).

With explosive news breaking daily, it is easy to get caught up in the information black hole regarding the financial bills, political donations, hackers, and even orgies of that group, automatically switching to the role of a bystander, thus neglecting the fact that this incident actually relates to the direction of the industry and missing the opportunity to participate in the industry process as practitioners.

Arthur Hayes, the founder of the crypto derivatives exchange BitMEX, wrote an article titled "White Boy" last Friday, discussing how he observed SBF rise and fall. I believe it is a rare and profound reflection (although the original text is quite lengthy and repetitive).

In summary, "White Boy" explains that the author, as an African American, interprets the rules and background of the fame and fortune arena from TradFi to crypto (which is why SBF succeeded), and then, as a financial elite from Wall Street, reveals the financial magic of FTX and Alameda (which is why it was destined to collapse).

Reading it will leave one astonished—if he doesn't succeed, who will? If he doesn't play to the end, who will? This reminds me of another crypto newcomer, Sun Yuchen. Although they have many differences (at least Sun Yuchen hasn't played to the end yet), they are both adept at maneuvering and have a following.

I believe that reviewing their paths of maneuvering and analyzing the reasons for their different circumstances can help us observe the landscape of the fame and fortune arena more clearly, thus recognizing our own position and finding feasible paths to the future.

1. Postcolonialism and the "Correct White"

Arthur Hayes believes that SBF gained recognition on Wall Street because he is a "correct white," meaning he belongs to the highest caste alongside those who truly hold the power of discourse.

He spends a lot of time analyzing the hidden caste system under American democracy, which is a form of systemic discrimination, exclusion, and exploitation. This discourse is a typical postcolonial narrative, which, although popular in the 1970s and 1980s, can still effectively explain the operational rules of this world today.

According to postcolonial theory, although the colonial rule of great powers has long ended, the discourse, power structures, and social hierarchies from the colonial era continue to persist today, albeit in a more implicit form. This is why it is difficult for Chinese people to have a voice in the crypto industry, while SBF can easily become a crypto genius and the future of Western-dominated financial institutions.

So how are these rules formed? It is necessary to start from the establishment of the United States… Although Arthur Hayes' version of American history is quite unconventional, it is indeed factual.

A group of wealthy white men who did not want to pay taxes sought to break away from British rule by persuading the vast majority of people on this land—poor, landless white settlers—to join the fight, promising that this would turn their miserable fate around.

However, after American independence, the vast majority of Americans (those poor whites) still did not have the right to vote, and the simple way to prevent them from continuing the revolution was to make poor whites feel that they were not at the very bottom of society. You see, even if life is tough, at least it is much better than that of the increasing number of black slaves.

Thus, the government supported the systematic vilification of blacks, and enslaving them indeed provided free labor for Southern agriculture. This was the early caste system in America, where the discourse power was still held by wealthy white men.

As the American economy developed, more cheap labor was needed. Starting from the mid-19th century, Chinese immigrants were allowed to enter as "coolies" to build railroads, and from the late 19th century to the early 20th century, many poor whites from Europe (such as those from Ireland, Southern Italy, and Eastern Europe) poured in, along with a continuous influx of South Americans.

At this point, the caste system needed to be adjusted. The newly arrived Chinese workers were undoubtedly placed at the bottom of society, but with many new poor whites, there needed to be a further social hierarchy within the white community to ensure the superiority of the original wealthy or poor whites (Anglo-Saxon Protestants). The story of "The Godfather" vividly illustrates this hierarchy among white groups, but unfortunately, Chinese movie fans think those are all powerful people in America.

Post-World War II, America became the dominant force in the world order, and the population under its caste system expanded again—people from all over the world (especially the Third World) were incorporated into America's caste system, and they filled the bottom tier, while the true discourse power remained with the original wealthy whites.

Of course, as the American melting pot continued to stir, the boundaries between white subgroups began to blur, integrating more around educational background, wealth, and region. However, the high caste is still predominantly composed of whites educated at top universities and with top company work experience along the coasts, the so-called "correct whites." Otherwise, they are just "white trash" who know nothing.

And SBF is a "correct white," which is why he could walk into the rooms of those who control the lifeblood of American and even global finance, technology, media, and cultural institutions, selling them cryptocurrency, and they would accept it without question.

2. SBF's Financial Magic—Gambling and Betting

Although SBF's packaged resume may seem unconventional, in key aspects—top high schools in coastal areas, education at top universities, both parents working, male—these all indicate that he is a genuine "correct white."

Only a "correct white" can carry the banner of the "meta-narrative," which is the grand narrative of the legitimacy of historical progress. SBF deeply understands the social capital he possesses as a "correct white male" and then leverages it (through his exceptional social skills).

SBF promised additional attractive financial returns to those "correct whites" who already held discourse power and gained their support, but in reality, SBF is a mediocre trader and a poor risk manager. He foolishly leveraged bets on a bull market, and when the bear market arrived, he faced liquidation.

Before the collapse, SBF was seen as an outstanding financial magician in the eyes of his followers in the crypto industry and the monopolistic organizations of Western TradFi; he was both a genius in the crypto field and the future of Western-dominated financial institutions.

Now his financial magic can be revealed.

SBF was a quantitative trader at Jane Street, one of the world's top proprietary trading firms. He founded Alameda in 2017 to engage in cryptocurrency arbitrage trading and other mid-to-high-frequency predictive trading, earning his first pot of gold.

However, as those large companies dominating global stock and foreign exchange markets entered the scene (albeit only allowing small-scale internal experiments), their level was higher, and it became increasingly difficult for Alameda to make money. So SBF decided to open his own exchange, allowing Alameda to trade with clients, leading to the creation of FTX.

It is akin to a professionally trained gambler entering the casino of the crypto world, making money through betting alongside others, and sometimes even placing his own bets. Later, as competition for betting alongside became too fierce, he simply opened his own casino, naturally taking on most of the betting business.

The zero-sum game of guessing high or low requires someone to bet against; perhaps it is a bet between customers, but sometimes customers bet in the same direction, leading to a lack of opponents. In this case, the casino must arrange for betting alongside to accompany them. The reason betting alongside is not afraid of losing is that the casino not only does not take a cut from them but also shares a portion of the customers' cut with them. Thus, even though both the betting alongside and the customers have a 50% win rate, as long as the customers do not leave the table, their betting capital will gradually diminish due to the casino's cut.

Of course, there are still no major issues at this point. The problem arises from SBF's aggressive casino management. To attract customers, the betting games of guessing high or low introduced various highly volatile assets, which meant higher returns, and allowed customers to bet on all kinds of junk assets by pledging a single junk asset.

This casino became very attractive to gamblers, and customers from other casinos flocked here, depositing various assets in exchange for casino chips and playing more frequently.

For the casino, the aforementioned aggressive strategy posed no risk; the volatility was higher, and the risk was borne by the customers and the betting alongside. The casino only needed to take a cut. Moreover, in the long run, the risk was solely that of the customers, and the betting alongside could simultaneously bet against other casinos to hedge.

However, the betting alongside at SBF's casino was also made up of insiders, and this is where the problem arose.

When the market suddenly turned downward, the vast majority of customers were betting low. At this time, there were not many large bets in other casinos to hedge against, but Alameda, as the main betting alongside for the casino, had to bet high; otherwise, the casino could not continue to operate. Thus, Alameda chose to hold firm.

Alameda simply did not have enough money to bet alongside all the customers in the casino, so SBF transferred the casino's money to the betting alongside's account. Note that the money being transferred was not from the casino owner's pocket but from the customers' money. However, this could not be discovered until the customers exchanged their chips for cash.

Worse still, Alameda abandoned the market neutrality and short-term trading iron rule of being a betting alongside and directly bet on long positions in junk coins, which later lost at least 50% of their value, if not going to zero. But Alameda did not stop; instead, it aggressively merged and acquired, with the money still being transferred from the casino's account. Additionally, a large amount of funds was used by SBF for political investments and transferred to his private accounts.

Ultimately, Alameda created a deficit of over ten billion dollars, merely misappropriating the casino's funds to cover it, until later when Coinbase exposed the casino's balance sheet, leading customers to exchange their chips for cash and flee the casino, resulting in the situation we see today.

This is the story of how SBF rose through the caste system but collapsed due to a lack of respect for the market. However, to be frank, aside from demystifying it, it has little to do with us because we are not "correct whites," while Sun Yuchen's experience is truly of reference value.

3. Micro-businessman Sun Yuchen—Climbing and Hype

Before SBF's financial magic was exposed, there were comparisons made between him and Sun Yuchen on social networks. Regardless of the outcome of the comparison, it at least shows that they can be compared together.

Although SBF indeed has social skills, his success largely stems from his background and luck—"correct whites" needed to enter the crypto field, and SBF was chosen. Sun Yuchen, however, is different; he chose crypto while bouncing up from the cracks of stones to reach the sky.

According to Sun Yuchen's account in "Lu Yu Has a Date," when he couldn't even get into a third-tier university, he signed up for a new concept essay competition and won first prize, which allowed him to be recommended for a first-tier university. However, he still chose Peking University, which only allowed a 20-point drop, and eventually managed to get into Peking University after a year of cramming.

Compared to others who won awards in the new concept essay competition, it was not the new concept that chose Sun Yuchen; rather, Sun Yuchen chose the new concept. When Go was popular among elementary school students, he specifically went to Wuhan to study Go for three years, only to find he wasn't cut out for it and gave up. He also participated in computer Olympiads in middle school but gave up as well.

After entering the Chinese department at Peking University, Sun Yuchen found it difficult to stand out, repeated a year, and transferred to the history department, where he became the top student. After a semester of exchange at CUHK, during a time when "public intellectuals" were still seen positively, Sun Yuchen transformed into a young KOL.

He imitated Chen Duxiu's "Weekly Review," publishing a series of articles criticizing campus and social realities, signing them "Sun Yuchen at the News Department of Southern Weekend," where he was an intern. Later, he created a buzz for his campaign to become the president of the Peking University Student Union but did not attend the event, later explaining that he was detained by the school. He then went to the University of Pennsylvania for graduate studies in East Asian studies, again imitating Chen Duxiu's "New Youth" by publishing "New New Youth," and was later accused of plagiarism.

Sun Yuchen's public intellectual persona collapsed, and the era could no longer accommodate public intellectuals, so he began transitioning to a financial elite, taking courses at Wharton and interviewing for internships at financial institutions. At this point, Sun Yuchen finally followed the original trajectory of SBF, but with little success, returning to the money-laden domestic market as the self-proclaimed representative of Ripple in Greater China, establishing himself as a post-90s business leader.

Sun Yuchen's first project was the distributed financial technology company RippleCN, led by IDG, which was essentially an exchange for buying Ripple with RMB. In the subsequent crypto bear market, it did not flourish, but the wave of mobile internet entrepreneurship was surging, and Sun Yuchen immersed himself in the stranger social app "Accompany Me" (which was later taken down for involving adult content) and became "Jack Ma's youngest disciple" at Hupan University.

When the crypto bull market arrived in 2017, Sun Yuchen quickly launched a public chain project—Tron—that was plagiarized from the white paper to the code. The subsequent story is even more exciting but is already well-known, so there is no need to write it again.

I have no doubt that if Sun Yuchen were born in a revolutionary era, he would be a progressive youth; if in the 1980s, he would be a poet. Because he always finds a specific angle to easily cut into the biggest cake of the era, and his method of entry is through climbing and hype.

First, he climbs up to gain additional resources, then uses this as proof to showcase downward to establish influence, converting this influence into currency, which serves as capital for further upward climbing.

Note that Sun Yuchen is constantly climbing upward (he has now discarded the title of "Jack Ma's disciple" to become the permanent representative of Grenada to the WTO and the ambassador with full powers, as well as a Chinese diplomat from Grenada in Geneva), but the basic base he showcases downward and harvests has remained unchanged. This is why his domestic social media accounts have been banned multiple times yet he continues to register and remain active, and why after acquiring Huobi, he must take risks to restore the domestic market.

Sun Yuchen follows the path of a micro-businessman; the relationship between him and his followers is fundamentally no different from that of "micro-business families."

In this regard, SBF and Sun Yuchen are completely different. SBF's trust and resources primarily come from those "correct whites," which is his basic base. SBF does not need to label himself like Sun Yuchen to validate his identity.

Although Sun Yuchen is constantly climbing upward, he has not established genuine trust upward; their relationship is merely limited transactions (such as auctioning a dinner with Buffett), which he then uses to promote downward.

Of course, this is not because Sun Yuchen does not want to network, nor is it because his social skills are inferior to SBF's. In fact, Sun Yuchen joined the investment association at Penn to meet wealthy Americans, but he sought IDG when starting his business back home.

However, as mentioned above, SBF was chosen by the "correct whites"; they needed someone from their ranks in the crypto field, and that person could not be Sun Yuchen. He also had no opportunity to present grand narratives to those "correct whites," as only Chinese, Southeast Asians, and other Third World individuals would be willing to pay.

Conclusion

Returning to postcolonial discourse for the final summary.

In the global caste system dominated by "correct whites," even someone as agile as Sun Yuchen cannot break through the invisible barriers. This is precisely why all Chinese crypto projects find themselves in an awkward position—unable to legally conduct business with the vast majority of Chinese but also struggling to penetrate the European and American markets.

Of course, Sun Yuchen is trying to change this; he is attempting to become a person with industry discourse power through acquisitions. However, the essence of micro-business dictates that the outcome will be similar to all micro-businesses that have made money trying to engage in capital operations—there will be no result.

It is like how Yu Minhong and Xin Ba have both engaged in live-streaming sales, and Xin Youzhi's Yanxuan seems more refined than Dongfang Zhenxuan, but without effective support (such as higher quality and cheaper products), the basic base determines everything. They occupy different ecological niches, and the ceiling of imagination is undoubtedly different. Dongfang Zhenxuan may go bankrupt, but the alternative will not be Xin Youzhi's Yanxuan.

Of course, this article is not a pessimistic lament; it merely emphasizes that as "others" in the eyes of "correct whites," it may be more promising to focus on being builders in utility-driven fields—engaging in activities related to "crypto production" and gradually mastering discourse power. This path has more opportunities (for example, the rise of Binance) rather than engaging in activities that require trust to maintain (they will certainly launch the next SBF).

As for manipulating meta-narratives, that is a matter for a long time to come.

On a side note, SBF was a chosen young man, so when he encountered large funds, it was inevitable that he would become dizzy. In contrast, Sun Yuchen, who has risen through personal struggle, has always decisively converted his influence into currency and swiftly retreated, using it as capital for his next leap. Therefore, Sun Yuchen's projects may fail, but he is unlikely to…