Michael Lewis
Allen Lane
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About a year ago, Sam Bankman-Fried was among the richest people in the world, with an estimated wealth of $26 billion. Today, he is standing trial for allegedly stealing $10 billion in one of the biggest financial frauds in US history, according to federal prosecutors.
If you are unfamiliar with Bankman-Fried鈥檚 story, it will probably come as no surprise that he made his fortune in cryptocurrencies, perhaps the biggest boom and bust industry of our age.
His FTX exchange allowed people to buy and sell all manner of cryptocurrencies, becoming one of the largest such businesses in the world until claims emerged that many of the assets that customers held with the company weren鈥檛 where they should have been.
Bankman-Fried pleaded not guilty to all charges, his lawyers describing him as a 鈥渕ath nerd鈥� with no intention to defraud. Reading Going Infinite by Michael Lewis, it is clear that the first part of that description is definitely true.
Lewis, who also wrote The Big Short and Moneyball, had front-row access to Bankman-Fried in the months before the latter鈥檚 downfall. But if there was any sign of financial impropriety at FTX鈥檚 base in the Bahamas, Lewis didn鈥檛 seem to notice it.
鈥淎s late as the final days of October 2022, you could have ransacked the jungle huts until you were blue in the face and have had not the faintest sense that anything was amiss,鈥� he writes.
It is hard to take that statement at face value, given Lewis鈥檚 own description of the chaos at FTX. His portrait of Bankman-Fried is one of a chaotic and arrogant man with little emotional intelligence and no ability to manage his own life, let alone a multi-billion-dollar business.
Bankman-Fried is addicted to video games, playing them even while being interviewed on live TV. He conducts a secret romantic relationship with Caroline Ellison, the CEO of his crypto-trading business Alameda Research, and they send each other excruciating business memos about whether they should continue seeing each other.
He is disdainful about recruiting 鈥済rown-ups鈥� who might bring experience to his businesses, despite being in his 30s. On many occasions, it seems he is functionally unable to dress himself appropriately.
And yet despite noting all this, Lewis appears to be completely in awe of his subject. Part of that comes down to the way Bankman-Fried sees the world. 鈥淓very decision Sam made involved an expected value calculation,鈥� Lewis writes.
In other words, Bankman-Fried would estimate the probability of an event occurring and the potential cost or payoff from it and multiply the two to calculate whether it was worth his time.
In general, I think that the world would be a better place if more of us thought this way. If the outcome of an event is really bad, but unlikely, such as a plane crashing, you probably shouldn鈥檛 worry about it 鈥� the expected value of reaching your destination outweighs the downsides.
But I think there are limits to this mindset, and Bankman-Fried far exceeds them. He makes plans but says he only has a 60 per cent chance of keeping them. 鈥淗e didn鈥檛 mean to be rude,鈥� Lewis writes. 鈥淚f he stood you up, it was never on a whim, or the result of thoughtlessness. He鈥檇 done some math in his head that proved you weren鈥檛 worth the time.鈥�
Perhaps it鈥檚 just me, but I don鈥檛 think doing mathematics gives you a get-out-of-jail free card when it comes to society鈥檚 norms: if you don鈥檛 include the impact on other people, you鈥檙e not really doing the sums properly. In a way, this is an important part of what Bankman-Fried鈥檚 trial will come down to 鈥� whether his approach to life actually adds up.
As for Lewis, I don鈥檛 really know what to make of this bizarre book, which was clearly conceived as a portrait of an interesting character and entirely failed to swerve once criminal charges entered the picture.
鈥淭hey actually had a really great business,鈥� Lewis claimed in a recent interview. Perhaps, like Bankman-Fried, Lewis has simply made an expected-value calculation and decided there is more fame and glory to be had in rushing the book out as the trial starts, rather than holding back for a more thoughtful approach.
