I'm not sure I follow... SBF seems to be talking about the marginal utility of a dollar. True, most people think of this value as logarithmic. However, Kelly Criterion makes no such assumption: It's simply the optimal bet size (as a fraction of your bankroll) that optimally maximizes your returns over successive game plays. If you over-bet, it's much more likely that you'll blow-out -- as SBF mentions in your link (and ironically, occurred to SBF & FTX!).