Bloomberg: Why Crypto Scandals Often Hold Degrees from Elite Schools

Author: Muyao Shen, Bloomberg; Translator: Wuzhu, Golden Finance

It seems that whenever there is a scandal in the cryptocurrency field, the people involved have a degree from an Ivy League or other elite school.

Just this week, Princeton graduate Nader Al-Naji was arrested on suspicion of wire fraud related to the BitClout encrypted social media platform he founded. MIT graduate brothers Anton and James Peraire-Bueno were arrested in May for allegedly exploiting a vulnerability in a software program used on the Ethereum blockchain to steal $25 million.

Stanford grad Do Kwon is being held in a Montenegrin prison for his role in the 2022 TerraUSD stablecoin collapse. Su Zhu and Kyle Davies , whose hedge fund bankrupted multiple crypto lenders, both attended Columbia University .

And of course MIT alum Sam Bankman-Fried , who has assembled a team of young professionals from other top schools, including Stanford.

This begs the question: Is the crypto industry so desperate for talent that it offers a pass to those who come from elite schools? Or is there something inherent in these institutions that encourages their alumni to take excessive risks, and in some cases even break the law? Maybe, as a friend of mine (also a Princeton alum!) put it, they just think they’re too smart to fail.

Of course, criticism of elite universities is nothing new. Generally speaking, such institutions are often seen as ivory towers, out of touch with reality. Critics say the emphasis on prestige can lead students to overestimate their status and believe they are superior to others.

MIT graduate Sam Bankman-Fried Photographer: Angus Mordant/Bloomberg

But should the culture of the crypto industry be absolved of any responsibility? The industry seems to be heavily biased towards promoting people with perfect resumes, which are often from the best schools. Yes, there are technical challenges in the crypto industry that require talent from prestigious schools. However, for a large part of the industry, it's not technology. It's finance, gaming, art and culture. Crypto’s appeal to elite schools also highlights the industry’s dramatic cultural shift since Bitcoin’s invention in 2008. What began as cypherpunk roots and libertarian, anarchist ideals has morphed into a culture increasingly dominated by elites and Wall Street. Even for influential figures who haven’t been accused of wrongdoing, the industry’s résumé reads more like that of Silicon Valley or Wall Street than the grassroots culture of crypto’s early days. Galaxy Digital’s Michael Novogratz, ConsenSys’ Joseph Lubin, and Pantera Capital’s Dan Morehead all went to Princeton. Cameron and Tyler Winklevoss attended Harvard, where Ripple Labs’ Brad Garlinghouse earned his master’s degree. Paradigm’s Matt Huang and MicroStrategy’s Michael Saylor attended MIT. Arthur Hayes attended the University of Pennsylvania… the list goes on.

However, Perhaps the problem isn’t the schools, but the industry itself — and its lazy attitude toward due diligence.

The problem is a general lack of due diligence in the crypto industry, said Shuyao Kong, co-founder of blockchain startup MegaETH and a Harvard Business School graduate. “During the bull run, founders from all backgrounds have easy access to funding, and founders from top schools naturally attract more attention, liquidity, and mind share. When they explode, they explode very thoroughly.”