Michael Lewis is a renowned author and journalist known for his insightful and engaging non-fiction books. He has written several best-selling books that explore various topics, including finance, sports, and technology. Lewis is widely respected for his ability to provide in-depth analysis and storytelling that captivates readers.
My first bump with Michael Lewis was through the book “Liar’s Poker”, an insider’s perspective on the world of Wall Street and the culture of investment banking in the 1980s. The book is based on Lewis's own experiences working as a bond salesman for Salomon Brothers. If you enjoyed the movie Wall Street (”Greed is good”), then Liar’s Poker is a page-turner.
Lewis produced many great books after that one, and, as a person working & interested in technology, I especially enjoyed the Flash Boys.
It was a no-brainer to immediately snatch his book on Sam Bankman-Fried (SBF) and the rise and fall of FTX.
In the book "Going Infinite: The Rise and Fall of a New Tycoon," Lewis delves into the world of cryptocurrency and explores the story of Sam Bankman-Fried, the founder and CEO of FTX. Lewis's writing style combines meticulous research with compelling narratives, offering readers a unique perspective on the subject matter. He actually spent time with SBF and his team while FTX was still in power, and all the way through the fall.
SBF (was)is a prominent figure in the cryptocurrency industry. He gained significant attention and success through his involvement in the crypto space, particularly in the derivatives market.
SBF's journey and rise to prominence in the book may provide insights into his peculiar mindset, business strategies, and the impact he has had on the cryptocurrency ecosystem and American (and thus global) politics.
While he might be considered a weirdo, he is probably a genius who might have been the richest person in the world at the top of his game.
Despite his high-profile career, Bankman-Fried is known to lead a simple personal life. He is a vegetarian and has been known to sleep in his office on a beanbag. He prioritizes his work, aiming to make the maximum positive impact possible through his various endeavors.
And he wasn’t your typical crypto billionaire. First, he didn’t care about his looks, and second, he was working to give away as much money as possible to maximize his positive impact in the world, in line with the Effective Altruism (EA) movement. WTF is that, you might say. Let me try to explain.
Effective Altruism, as described in the book, is a philosophy and social movement that aims to maximize the impact of one's charitable efforts. It involves applying evidence and reason to determine the most effective ways to help others and alleviate suffering in the world.
The core idea of Effective Altruism is to use resources, such as time and money, in a way that generates the greatest positive impact. This involves weighing different causes and interventions, considering their cost-effectiveness, and directing resources toward areas where they can make the most significant difference.
In the context of the book "Going Infinite," the concept of Effective Altruism provides insights into how individuals or organizations apply this approach to address real-world problems, such as nuclear war, pandemics, and the potential risks associated with artificial intelligence.
(emphasis are mine)
… the hundreds of millions being thrown at him by leading Silicon Valley venture capitalists who (as one later told me) thought Sam had a real shot at being the world’s first trillionaire. FTX’s revenues were growing at an astonishing rate: from $20 million in 2019 to $100 million in 2020 to $1 billion in 2021.
Doing arbitrage between different US and Korean crypto exchanges
It wasn’t Sam’s first thought, but he considered buying a jumbo jet and flying it back and forth from Seoul, filled with South Koreans carrying suitcases, each holding $10,000 worth of won, to a small island off the coast of Japan. “The problem is that it wasn’t scalable,” said Sam.
“Bitcoin often gets explained but somehow never stays explained."
(except in this 40000-word crypto piece by Matt Levine)
The tungsten cube in the FTX’s new office design:
The tungsten cube was a bit of a head-scratcher. The imaginations of crypto people everywhere, it turned out, had been gripped by tungsten cubes. Tungsten, the architects now learned, was the planet’s trendiest dense metal. Crypto people were then memeing about “the intensity of the density.” A company in the Midwest had supposedly created the world’s biggest tungsten cube. A mere fourteen inches, it had cost a quarter of a million dollars and weighed two thousand pounds. Sam had apparently ordered up such a cube, flown it into the Bahamas, and wanted it displayed on a plinth in his mini-city. The architects never were shown Sam’s dense and precious cube, but they nevertheless incorporated it into their drawings.
(read the whole book to find out if there really was the tungsten cube!)
Considering paying Trump not to run
“… he was exploring the legality of paying Donald Trump himself not to run for president. His team had somehow created a back channel into the Trump operation and returned with the not terribly earth-shattering news that Donal Trump might indeed have his price: $5 billion. Or so Sam was told by his team.”
Giving $1M to 100 people (FTX Foundation)
… they’d concluded that conventional philanthropy was kind of dumb. Just to deal with the incoming requests—most of which they had no ability to evaluate—would require a big staff and lots of expense. Much of their money would end up being used on a vast bureaucracy. And so they had just recently adopted a new approach: instead of giving money away themselves, they scoured the world for subject matter experts who might have their own, better ideas for how to give away the money. …one hundred people with deep knowledge of pandemic prevention and artificial intelligence had received an email from FTX that said, in effect: Hey, you don’t know us, but here’s a million dollars, no strings attached. Your job is to give it away as effectively as you can. The FTX Foundation started in early 2021, would track what these people did with their million dollars, but only to determine if they should be given even more.
Infinity dollars for Effective Altruism
… here was yet another game. … to generate hundreds of billions of dollars and use it to reduce the likelihood of the grand experiment coming to an end. Like all the games that Sam loved, this game was played on a clock. He’d somehow decided that the odds were low that he, or really most people, would do anything important after the age of forty. If he didn’t sleep, or exercise, or eat properly, and always preferred action over inaction, here was why. … To do their best to save the species, he figured they had maybe ten or at most fifteen years.
As it would turn out, they had five weeks.
Sandor, the killer German shepherd
He’d come full circle. He was back to where he started, only now he wore an ankle monitor and was guarded by a German shepherd. Unable to afford security, his parents had instead bought this extremely large dog named Sandor. Sandor had been flown in from Germany, where he had been trained to kill on command. The commands were in German, however, and while Sam’s parents had learned them, Sam had not.
… But it would have been very Sam Bankman-Fried to have been eaten by his own guard dog.
Lifetime behind bars
SBF was found guilty on multiple felony charges for which he could face up to 115 years in prison. It’s no surprise that he’s not the kind of a guy who would do good in jail (whatever that means), and he doesn’t even understand what sort of jail time he’s looking at (lifetime).
After reading the book, it’s not very clear whether the money is actually gone (and if so, where!), but it’s clear that the world of Effective Altruism and, consequentially, the “real” problems they are trying to address, has lost a huge beneficiary.
P.S.: on crypto
By this time next year (December-ish 2024), everyone will be talking about Bitcoin and crypto again. We’ll have Bitcoin halving, potential Bitcoin ETF approval, and other events that might shoot the BTC price to the moon. Mark my words (not investment advice).