Michael Lewis, “Going
Infinite: The Rise and fall of a New Tycoon,” W.W.Norton 2023, 254 pp.
Guardian
Review:
When I first
read about the bankruptcy of the cryptocurrency exchange FTX and the arrest of
its then 30-year-old billionaire CEO and co-founder Sam Bankman-Fried , my
immediate thought was: “Well, there’s a story for Michael Lewis.” Because who
else apart from Lewis – the author of Liar’s
Poker, The
Big Short and Flash
Boys – with his uncanny gift for finding human tales in the
opaque machinations of the world’s money markets, could do full justice to
Bankman-Fried’s mythological catastrophe?
As it turned
out, I was not alone in that thought. It seems Sam Bankman-Fried had it too. In
April 2022, he effectively gave Lewis the journalistic keys to his kingdom. The
exact motivation for that invitation is not quite explained in the book, though
you suspect Bankman-Fried understood that Lewis was perhaps the only writer
around who could unravel the extreme financial fantasy land he had willed into
life and explain it to the world.
At one point, Bankman-Fried floated the idea of simply paying
Donald Trump to give up on politics. Surely there was a number that could
persuade him to do so?
Lewis spent
eight months observing Bankman-Fried’s wildly chaotic empire at first-hand, partly at
the compound of jungle huts in the Bahamas from which he ran FTX. This book is the tale of those months, and of
the steps by which Bankman-Fried, the wild-haired math prodigy, made a fortune
of tens of billions of dollars in his 20s and lost it all in a long weekend,
financially ruining employees and investors.
For all the
futuristic scope of this tale, there was, inevitably, a much older kind of
tragicomedy also at play. Bankman-Fried’s downfall could be partly traced to a
secretive affair with a young woman called Caroline Ellison, the CEO of the
investment wing of his empire – Alameda Research. It is alleged he used
billions of dollars from FTX to repay loans owed by Alameda. Lewis has got
hold of the love letters exchanged between them – weird bullet-point
confessionals of anguish and cost-benefit analysis.
The backdrop
for that intimate drama is the cryptomania that began with the launch of
bitcoin, the first decentralized digital currency, in 2009. As Lewis writes,
evangelists argued that here, finally, was a currency you could trust – while
at the same time buying and selling versions of it in unregulated markets
manipulated by anonymous global speculators. In reality, Lewis writes,
“government-backed money wasn’t what bitcoin most easily replaced. Gambling
was.”
Bankman-Fried,
the son of a pair of Stanford law professors, was equipped to exploit those
“meta games”. On leaving MIT, he quickly established himself as a player in the
niche world of high-frequency automated trading; when those markets frustrated
him, he established his own. He recruited a coding genius called Gary Wang to
build an algorithm to exploit the wrinkles in crypto’s imperfect markets.
Quickly, that program was bringing in millions of dollars a day.
The twist in
Bankman-Fried’s story – one that mostly emerges intact in Lewis’s telling – is
that he was never in it for the money, at least in the traditional sense. He was the
poster boy for the effective altruism movement, an idea
seeded by Peter Singer, the Australian ethicist, and propogated by the
fresh-faced Oxford academic William MacAskill in his
book Doing Good Better. The
philosophy argued that if young radicals really wanted to make positive change
in the world – specifically by saving the maximum possible number of vulnerable
lives – they should not, say, qualify as doctors and practice in Sudan, they
should, logically, use their education for maximum gain on Wall Street and
employ that wealth to sponsor 100 doctors in Sudan.
When the
money started cascading in at FTX, Bankman-Fried brought in MacAskill and
others to sit on an advisory board. Here was a mini-religion organized around a
messiah-like figure; but whereas the secret sauce in Kesey’s 1960s cult had
been LSD, here it was dollars, billions of them, which Bankman-Fried conjured
up and distributed freely to anything that caught his scattershot attention.
(At one point, he floated the idea of simply paying Donald Trump to give up on
politics. Surely there was a number that could persuade him to do so? Sources
reported to him that the figure was $5bn.) In this private mission, he saw no
point in boards of directors – or, generally, adults. He was reorganizing the
world according to his own sleepless logic.
When karma
arrived for Bankman-Fried and the effective altruists, it burst in all guns
blazing. With crypto markets crashing, he was forced to abandon his seat
watching the quarterback Tom Brady (whom he allegedly paid $55m for 20 hours
work a year endorsing FTX) win another American football game and try to
immediately find a “missing” $9bn to pay the investors scrambling for their
money. It seems the run on his exchange revealed the hollowness of his
accounting and his ethics. As fantasy collapses into law-enforced reality,
Lewis ends up wandering the swiftly abandoned jungle compound alone, like some
anthropologist sifting the curious relics of a lost civilization: “to many of
its former inhabitants,” he writes, “it was all starting to feel as if it had
been a dream”. As Bankman-Fried perhaps envisaged, Lewis’s presence guarantees
at least one unlikely certainty: this all actually happened.
My Notes:
Pg. 85: By the end of 2018 there were 2,177 different
coins in circulation. In value they
ranged from bitcoin, with a market cap of around $60 billion, to a token called
SHADE, with a market cap of just under twenty dollars.
Pg.
104: In October 2008, someone calling
himself Satoshi Nakamoto—and who to this day, incredibly, has kept his identity
a secret—published a paper that introduced the idea of Bitcoin. It was mostly a technical description of
what would become the world’s first crypto-currency. A bitcoin was an ‘electronic coin’; it
existed on a public ledger called a proof-of-work chain’; each time it was
transferred from one person to another, its authenticity was verified by
programmers, who added the transaction to the public ledger.
Pg.
128: By 2021 global stocks traded $600
billion a day, crypto was then trading $200 billion a day. FTX was the only crypto exchange that had not
in one way or another offended US financial regulators. By the end of 2021, 16 percent of Americans
claimed to have dabbled in crypto.
Pg.
221: By late spring of 2022 the price of
bitcoin fell from just over $45,000 to under $19,000.
Addenda: Jurors convicted Bankman-Fried on 2 November 2023 on all seven fraud and
conspiracy counts he faced. Prosecutors had accused him of looting $8bn
from FTX customers.
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