A Letter to the Jury

Michael Lewis is a financial journalist and author of over a dozen books including the Big Short, Liar’s Poker, and most recently: Going Infinite: The Rise and Fall of a New Tycoon, about Sam Bankman-Fried. Going Infinite came off the presses on October 3, the same day that SBF’s criminal trial opened. That seems to have been intentionally timed, as Lewis himself described his “ambition for the book” in a 60 Minutes interview as being a “letter to the jury.” He explained: “I mean there’s gonna be this trial. And the lawyers are gonna tell two stories. And so there’s a story war going on in the courtroom. And I think neither one of those stories is as good as the story I have.”

Jurors were of course barred from reading any news, much less books, about Sam Bankman-Fried. Nevertheless, Lewis is hoping to at least shape the jury of public opinion. The crux of his narrative: “The story of Sam’s life is people not understanding him. Misreading him. He’s so different, he’s so unusual. I mean, I think in a funny way that the reason I have such a compelling story is I have a character that I do come to know, and that the reader comes to know, that the world still doesn’t know.”

In fact, Lewis’s name came up during the trial on at least a couple occasions. I first heard it on October 11, when the prosecution was examining their star witness, Caroline Ellison, ex-CEO of Alameda Research, the trading firm founded and owned by Bankman-Fried.

“How would you generally describe the defendant’s approach to public relations?” the prosecutor asked. Ellison replied: “He said that he believed in a very proactive approach to public relations. He spent a lot of time cultivating relationships with reporters and on tweeting, maintaining his Twitter presence.” The government then introduced Exhibit 1619, one of a heaping pile of Signal text messages included as evidence.

This chat was among a Signal group titled “fellowship discussion.” Along with SBF and Ellison, it also featured FTX’s former engineering director Nishad Singh; Claire Watanabe, FTX’s former head of marketing and HR; Nick Beckstead, who led FTX’s charitable arm; and Will MacAskill, the intellectual figurehead of the effective altruism (EA) movement. In addition to being part of Sam’s inner circle, the group’s members were all effective altruists — followers of the trendy new philosophy among the young and rich, which promises to save the future of humanity by maximizing the utility of its adherents.

“FWIW,” wrote Sam to the group chat last January, “Feb 8-16, Michael Lewis is going to be in The Bahamas profiling us.”

Caroline Ellison, responded: “Yep makes sense. I feel like my instincts are more toward under the radar but I might just be irrationally biased toward that in general :P”

Sam replied, “same, except exactly the opposite”

Will MacAskill, the altruist who had recruited Sam to the EA movement back in college replied: “I think either approach is reasonable, should just be a deliberate, coordinated plan. But if a whole bunch of attention is going to be on FTX Sam and EA whatever happens, then getting ahead of the game and controlling the narrative is ~necessary.”

“yup,” responded Sam.

The prosecutor followed with questions about SBF’s approach to public relations. Ellison explained, “He was trying to cultivate an image of himself as sort of a very smart, competent, somewhat eccentric founder.” I was sitting in an overflow room on that day, so when the prosecutor asked, “How would you describe the defendant’s personal appearance throughout 2022?” the room was allowed to erupt into laughter.

Ellison replied, “He looked like he didn’t put a lot of effort into his personal appearance. He dressed sort of sloppily and didn’t cut his hair often. . . . He said he thought his hair had been very valuable. He said ever since Jane Street, he thought he had gotten higher bonuses because of his hair and that it was an important part of FTX’s narrative and image.”

If SBF’s intent was to sell himself as a “nerdy genius who was too busy changing the world to brush his hair,” as crypto critic Molly White put it, he certainly succeeded in convincing Lewis. In Going Infinite, Lewis writes about Sam’s “hairdo of a lunatic” and declares, “like everything about Sam’s appearance [it] felt less like a decision than a decision not to make a decision.”

The prosecution, for its part, seemed to think that giving Lewis an all-hours backstage access to his life was part of SBF’s deliberate maneuver to sell this image to a wide audience — as MacAskill had phrased it, to get ahead of the game and control the narrative. Going Infinite certainly seems to corroborate this claim.

Just an Oddball Kid

Lewis’s book is, no doubt, a fun read, full of fascinating anecdotes and tidbits that help paint a fuller picture of the most explosive rise and fall in crypto’s wild history. And Lewis’s portrait of Sam Bankman-Fried is not altogether flattering. SBF even admits, late in the book, that had Lewis asked him directly about Alameda using FTX customer funds, he would have changed the subject or rustled up a word salad.

Among other things, Bankman-Fried also divulges to him (and through the pages of his journal) that he feels no emotions, that he rehearses facial expressions that he thinks others want to see, and that his utilitarian “morality” hinges not on a love of actual people, but on a mathematical equation that would deduce how to do the greatest good for the greatest number. “He might not have felt connections to individual people,” writes Lewis, “but that only made it easier for him to consider the interest of humanity as a whole.” Or as Sam explained it to Lewis: “It felt unambitious to not care about what happened to the rest of the world.” And ambitious he was.

As Ellison would also repeat in court, Sam thought that “the only moral rule that mattered was doing whatever would maximize utility, so essentially trying to create the greatest good for the greatest number of people or beings.” And Sam had relayed to her, “he didn’t think rules like ‘don’t lie’ or ‘don’t steal’ fit into that framework.”

Plenty of anecdotes in the book do not reflect particularly well on SBF either, beginning with an episode early on in Alameda’s history. Within a few months of its founding, the company lost track of $4 million dollars’ worth of a Ripple token. SBF thought it wasn’t a big deal, and that there was about an 80 percent chance that the tokens would eventually turn up. “Thus,” he argued, “they should count themselves as still having 80 percent of it.”

The rest of the management team didn’t think the math added up that way and wanted to report the loss to investors, lest they find themselves guilty of investor fraud. When SBF refused, they tried first to oust him. Failing that, they quit, in what would later be referred to as “the schism.” This was not just a schism in the company, but a schism in the EA movement. The vast majority of Alameda’s managers and employees were effective altruists. They planned to make as much money as possible through trading cryptocurrency so that they could give it away (in large part to charities run by, or connected to, Will MacAskill).

What happened after the schism, Lewis reports, “in retrospect, seems faintly incredible.” Unhindered by the rest of the management team, Sam, and a small team that had stuck it out around him, leapt headfirst into an aggressive trading strategy, which made them lots of money. Eventually they also found the missing $4 million worth of tokens. To those that remained (and perhaps to Lewis, it seems), Sam had “been right all along!”

But whatever the interesting details and plot twists within the pages of Going Infinite, the main thrust of the narrative mimics two central storylines told or implied by Bankman-Fried and his lawyers in his defense.

First, Sam was a misunderstood, oddball kid, who had just barely grown up before stumbling into running a multibillion-dollar company. Whatever mistakes he made (or others made without his knowledge) were the result of being in over his head. Lewis repeats the narrative that FTX operated without “adult supervision,” i.e. without even a board of directors or a CFO. Various venture capitalists who had invested in FTX suggested that he hire “a serious grown-up to act as the company’s chief financial officer.” But grown-ups, Sam concluded, “didn’t do anything” besides worry.

Second, there was no criminal intent at play, but a series of accounting errors, investment and coding missteps (carried out by others), and misunderstandings. Even the $8 billion hole in customer deposits: Lewis himself tries to track it down and comes to the dubious conclusion that — like the Ripple tokens — the funds may not be missing at all.

The last few chapters of the book are dedicated to assessing what went wrong. Lewis seems to have accepted Bankman-Fried’s version of the events hook, line, and sinker. Lewis refers to FTX as “a real business,” but one that was too complicated for simpleminded accountants and lawyers to understand —  people like John Ray III, who was appointed CEO of FTX after its bankruptcy and tasked with recovering assets for investors and customers. Ray, according to Lewis, was “like an amateur archaeologist [who] had stumbled upon a previously unknown civilization. Unable to learn anything about its customs or language, he just started digging.”

In Lewis’s (and also conveniently Bankman-Fried’s) version of the events, “there was a decent argument to be made that FTX was solvent right up to the moment it collapsed.” Its loans had simply been overly collateralized by cryptocurrency tokens. And those tokens had lost their value during last spring’s crypto crash. When SBF’s rival, Changpeng Zhao, the CEO of Binance, announced that he would sell off his large share of FTT tokens — tokens that had been generated by FTX, and which made up a large share of Alameda’s collateral — this announcement triggered an effective “bank run” at FTX. Suddenly, the exchange was unable to meet the demand of withdrawals.

Inconveniently, approximately $8.8 billion of FTX customer deposits were also in an account controlled by Alameda. Years prior, before FTX had access to its own bank account, FTX had directed its customers to wire their deposits to Alameda, where they were held in an account labeled @Fiat. Sometime later, when FTX did eventually set up its own bank account, leaders of Alameda and FTX had simply forgotten to transfer the $8.8 billion from Alameda’s @Fiat account back into customer custody.

Oops. Innocent mistake.

Ultimately Thin

Michael Lewis could be forgiven (maybe even applauded) for getting close enough to his subject to try to genuinely understand and learn from his perspective. If he got too close to remain objective, then this is “the price of immersive reporting,” as Lewis told the Guardian. But as many reviewers have noted, “The main hazard in telling a big story through the eyes of its main participant is the need to rely on his version as the honest truth.”

In fact, the book’s introduction lays out the problem from the start. Lewis describes the long walk and conversation that he had with SBF the first time they met — back when FTX was valued at more than $25 billion, and Sam looked on track to becoming the richest man in the world.

Sam told him about the astonishing rate of profits piling in from FTX, the hundreds of millions being thrown at him by venture capitalists, his intention to use his newfound wealth (plus “infinity dollars” more) to tackle “the biggest existential risks to life on earth.” Relaying all of the seemingly unbelievable things that SBF communicated to him on their walk, Lewis asserts, “All of which, I should say here, turned out to be true.” Perhaps most unbelievable of all: the impression that Sam “hadn’t been warped by money,” a point he would repeat throughout the book.

“By the end of this walk,” declared Lewis, “I was totally sold.” Being sold is perhaps not a good look for an introduction. Especially since a few months after his journey with Sam began, FTX would fall apart, and all signs pointed to fraud. Lewis, who had already pegged SBF as his story’s protagonist, seemed unwilling to pivot to another possible narrative.

But beyond questions of credulity and objectivity, what is mostly unsatisfying about Going Infinite is its absence of analysis. Lewis is at his best when he’s telling the stories of financial greed and drama, and seeking out the most intriguing characters within them. But through Lewis’s many books, he weaves these narratives together into a map of financial capital. As readers we find ourselves not only captivated by characters, but also coming out with a clearer understanding of the complicated machinations and greed of Wall Street, capitalism, and moneyed interests.

Lewis, who outside the pages of his book has been critical of cryptocurrencies, spends no more than a paragraph explaining how crypto works or why. He doesn’t excavate, for instance, why it might be problematic that large bundles of FTT tokens on the FTX exchange could be “worth between zero dollars and $80 billion, depending on who was doing the counting.”

He also mentions the clearly tangled relationship between Alameda and FTX, but never stops to highlight or explain what this could mean. “It was never clear where Alameda Research stopped and FTX started,” Lewis writes. “Legally separate companies, they were both owned by the same person. They occupied the same big room on the twenty-sixth floor of an office building. . . . Sam’s desk was positioned at one end of the identical long trading desks used by both Alameda and FTX, with a clear view of both.” Go on?

Ultimately, Michael Lewis, like many of his own characters in over a dozen books, took a bet — a “highly contrarian position on the margin,” as Gideon Lewis-Kraus put it in the New Yorker. “The trial will make him look like a fool or it will make him look like a genius.” I’d be the last person to call Lewis a fool. But with a one-month shelf life, Going Infinite is already not aging well.