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Analysing FTX’s collapse with the aid of virtue ethics theory and the capitalism


Task: The multi-billion dollar collapse of the FTX platform has been widely linked to the character of its founder, Sam Bankman-Fried. Others focus on capitalist economic systems, such as incentives to chase profit without strong regulations. Drawing especially on virtue ethics theory and the capitalism and its critic’s topic, critically assess to what extent FTX’s collapse was a failure of individual character. Your answer should be organised in essay form.


1. Introduction

This paper delves into the ethical case of FTX, the ill-famed cryptocurrency exchange that recently went bankrupt. Sam Bankman-Fried, the founder and CEO of FTX is considered the real culprit who openly upheld disclosure and transparency for the crypto players. But in reality, he confided within a close circle of people around him only(Jeans & Emerson, 2022). It is an acute case of ethical violation. The paper strives to explore the matter under the lens of virtue ethics theory and the relevance of capitalism considering the given case. Accordingly, the paper explains the ethical theory and draws the step that the CEOcould have followed abiding by the virtue ethics theory to avert the crisis.

2. Theoretical steps

Virtue ethics theory is an ethical framework that depicts the moral grounds that an individual or a business needs to follow. It champions the followers to depict a particular behaviour or pose them as virtue ethicists(Hutchison, 2021). The theoretical aspect is to determine whether the concerned person is a good human and this is to be determined by his actions. As per the theory, character and intelligence are the two elements that determine whether the action of an individual is ethical or not. In terms of character – truthfulness and courage are the requisite virtues. But if the person is aggressive and makes rash decisions, chances are higher that he may adopt unethical means. Again, the individual may have the virtue of intelligence through proper education and training(Maon, Swaen, & Lindgreen, 2017). The phenomenon helps him to differentiate right from wrong and adopt fair business practices.

3. Steps to attain Virtue Ethicist

To be a virtue ethicist, one needs to find out what one wants to be in real life. For this, he may introspect whether he hasthe required traits to be a virtue ethicist. It is the first step, he should abide by the rules to follow an ethical path. For this, his brain needs to channel him in that direction.One may belong to a different world that is utterly imbibed in the roots of capitalism that propagates self-interest. Though it is not a sin, the individual should be fair in his dealings and safeguardthe interest of other stakeholders also such as employees, investors, and company executives(Brooks & Dunn, 2018). An ethical person ought to have courage and truthfulness over rashness and boastfulness to contemplate business decisions that serve the general good. Since the individual wants to imbibe in himself the traits of a virtue ethicist, these qualities are crucial for him to flourish as a true ethical leader.

In the next step to be a virtue ethicist, one needs to have the right kind of wisdom or education to be an ethical person. He can learnthings from his accomplices or a teacher whom he had admired since his student life(De Bakker, Rasche, & Ponte, 2019). He can read about his ideal and learn from their lives and personalities to mould himself as an ethical person. He can run his imagination wide to understand how those ethical people could have behaved or acted in those particular situations wherein he faces difficulties. Ideally, ambition is a virtue(Hutchison, 2021). But in a capitalist set-up, the leaders andemployees prefer to overlook virtue. In such a scenario, whatever action the individual undertakes to determine whether he is an ethical person or not. Thus, an individual should keep virtue as a priority in whatever he does, be it facing a backlash orexploring another business idea.

4. Application of ethics theory

Virtue ethics theory is a guideline that serves as an effective way of conduct torunbusinesses or managing himself in public life. To start with, FTX collapse shows the conduct of those associated with the organization is not in congruence with the virtue ethical framework. Those practising the ethical model believe in truthfulness and courage. Bankman-Fried champions disclosure and transparency in cryptocurrency practices, but hardly implements the same in business practices. So, his action and words do not match one another. It shows his dishonesty and is in no way close to being an ideal virtue ethicist(Jeans & Emerson, 2022). To be a virtue ethicist, the leader needs to imbibe in himself the common traits of such a personality like courage, truthfulness, and prudence among others. Throughout its operations, FTX has kept a secrecy veil on its crucial information and financial database which led to its eventual collapse(Lewis-Kraus, 2022). If the leadership could have been honest in their actions, FTX would not have been in such a situation.

The next step to being a virtue ethicist is to have proper education concerning ethical aspects. But in this case, the traits of a virtue ethicist are eclipsed as Bankman-Fried is overwhelmed by his capitalist pursuit(Maon, Swaen, & Lindgreen, 2017). Capitalism itself does not promote unfair business practicesas it champions the cause of profit maximisation and abidesby prevailing laws and regulations. But corporate leaders often follow profit maximisation policy and ignore to abide by the regulations as in the case of FTX(Brooks & Dunn, 2018). It also shows the violation of capitalism ignoring the agency principle as the shareholders are kept unaware of the happenings in FTX. Thus, it is an utter failure of FTX leadership to observe the traits of an ethical leader and take a leaf out of it.

Undoubtedly, FTX leadership could not live up to the expectation of a virtue ethicist as they failed in both steps to attain the virtue ethical guidelines. The first step shows that individuals like Bankman-Fried and others associated with FTX failed to cultivate among themselves the traits owing to virtue ethicists. Their dishonestyin business dealings paved a debacle in their strategy that led to the organization’s ultimate collapse(, 2021). Again, the team failed to inculcate the second step to being a virtual ethicist as they failed to have a mentor around who could be their guiding force. It is disappointing to see that FTX leadershipeven violated the fundamentals of capitalism like agency relationships(Hartman, DesJardins, & MacDonald, 2018). The company executives had no clue what the leadership is up to and its ultimate collapse led to a breach of trust of the employees laid on the company and its management.

5. Critical analysis

Ideally, abiding by every aspect of virtue ethics theory leads to a utopian state. It is nearly impossible in the contemporary business scenario. Some of the traits may align with an individual wherein some modifications are merely accepted given the current business scenarios. With time, the theoretical models need changes and so applies to virtue ethics model and capitalism as well. For instance, capitalism has been criticised for promoting self-interest leaving aside the interest of other stakeholders(Maon, Swaen, & Lindgreen, 2017). In an intense competitive set-up, businesses across the industry strive to earn maximum profit and for that, they do not abide by the prevailing ethical boundaries.The given ethical framework may be inflexible to provide certain relaxations to the business to survive the market competition(Hutchison, 2021). Simultaneously, these aspects cannot be an excuse for people like Bankman-Fried to do such frauds and risk the fortune of the investors and employees working in the organisation.

The FTX scenario establishes that capitalism promotes unhappiness and it holds profiteering does not survive in the long run. In the contemporary scenario, the virtue ethics model needs to modify itself as per the market needs(Brooks & Dunn, 2018). But it should not do away with important traits like integrity, self-control, and fairness. These elements still hold relevance in current times. It could have been more meaningful if companies like FTX would have incorporated those elements in their corporate missions and goals (, 2021). It would have created a definite path and moral ground for FTX management to follow and abide by the prevailing rules and regulations. In this way, they could have abided by the capitalist fundamentals and high ethical grounds in line with virtue ethics theory. Though the current scenario does not expect Bankman-Fried to undergo a total change in theirpersonality trait, certain modifications in characteristics would have saved the day.

6. Conclusion

The collapse of FTX is an acute example of the failure of high ethical grounds like virtue ethics theory. Corporate leaders like Bankman-Fried champion the abidance of trust and transparency in business operations and seldom implicates the same in their business activities. The team not only violated the basic elements of virtue ethics theory, but they also ignored the fundamental of capitalism philosophy like agency relationship. FTX and Bankman-Fried failed to abide by the steps of virtue ethics theory and their failure depicts the gloomy state of ethical relevance in the corporate scenario. The situation could have changed if they wouldhave incorporated the ethical elements in their corporate practices, but utterly failed to do so.


Brooks, L., & Dunn, P. (2018). Business and Professional ETHICS FOR DIRECTORS, EXECUTIVES &CACCOUNTANTS. Boston: Cenage Learning.

De Bakker, F., Rasche, A., & Ponte, S. (2019). Multi-stakeholder initiatives on sustainability: A cross-disciplinary review and research agenda for business ethics. Business Ethics Quarterly, 29(3), 343-383.

Hartman, L. P., DesJardins, J., & MacDonald, C. (2018). Business Ethics – Decision Making for Personal Integrity & Social Responsibility (4th ed.). Boston: McGraw Hill Education.

Hutchison, C. (2021). Corporate Leaders Lack of Ethics. Fairfield: DigitalCommons@SHU.

Jeans, D., & Emerson, S. (2022, November 22). 'The Devil In Nerd's Clothes': How Sam Bankman-Fried's Cult Of Genius Fooled Everyone. Retrieved from Forbes:

Lewis-Kraus, G. (2022, December 01). Sam Bankman-Fried, Effective Altruism, and the Question of Complicity. Retrieved from The New Yorker:

Maon, F., Swaen, V., & Lindgreen, A. (2017). One vision, different paths: An investigation of corporate social responsibility initiatives in Europe. Journal of Business Ethics, 143(2), 405-422. (2021). A Framework for Ethical Decision Making. Retrieved from Markkula Center for Applied Ethics:


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