I Mistrusted SBF After an Hour With Him. Michael Lewis Had More Than a Year.

This is part of Slate’s daily coverage of the intricacies and intrigues of the Sam Bankman-Fried trial, from the consequential to the absurd. Sign up for the Slatest to get our latest updates on the trial and the state of the tech industry—and the rest of the day’s top stories—and support our work when you join Slate Plus.

Sam Bankman-Fried deduced at an early age that neither Santa Claus nor God is real. “Mass delusions are a property of the world, as it turns out,” he tells Michael Lewis. It’s an insight into the power of myth-making that would eventually serve the crypto mogul well.

By the time he became famous as an oddball billionaire, SBF was casting his own reality-distortion field, and its effect on Lewis appears to have lingered. In Going Infinite, the author applies his long-standing brilliant-underdog formula to a study of the FTX founder, who now stands accused of committing one of the largest financial frauds in American history. Lewis had unparalleled access to Bankman-Fried, including during his companies’ dramatic downfall last year. The result, unfortunately, is dissonant hagiography of the world’s most boring second-tier villain.

Bankman-Fried’s early years are somehow eccentric yet unremarkable, according to the subject himself. “I’m a little confused about my childhood. I just can’t figure out what I did with it,” he tells the author. Lewis details Sam’s many dislikes (books, fashion, Europe, facial expressions) while sketching his family’s unusual dynamics. His brother Gabe says of Sam: “We weren’t close growing up … I would interact with him as another tenant in my house.” Like the peevish alien Roger from American Dad, Sam’s general attitude toward the human world in which he finds himself is equal parts incomprehension and condescension. His fellow students are stupid, school is boring, religion is absurd.

Lewis hammers on two things that young Sam does like: math camp and games. At math camp, Bankman-Fried finally finds his tribe alongside fellow nerds who model probabilities rather than expressing opinions (Sam does not like opinions). Their thinking is quantitative instead of qualitative, appealing to Sam’s upbringing as a utilitarian. Plus, they play games. Sam loves playing games. His cool, analytical mind functions well under pressure (or so he thinks) and his risk tolerance is off the charts. A singular focus on producing the highest expected value turns every interaction at math camp into the video-game version of real life: The only goal is to rack up the highest score.

At MIT, Bankman-Fried stumbles into an internship at Jane Street Capital, a prestigious trading firm. His gaming obsession proves well-suited for Wall Street, and initially he thrives. But he rubs some colleagues the wrong way. He outfoxes and humiliates a fellow intern.
He’s overly brusque with a superior. When given some constructive criticism from his bosses, Bankman-Fried begins practicing facial expressions so as to more closely resemble an empathetic human being. It’s like watching the formation of a serial killer over 250 pages: Patrick Bateman as played by Jesse Eisenberg with a Jewfro.

As with everything else, Bankman-Fried soon gets bored of Jane Street and leaves—but not before making “the single worst trade in Jane Street history” on a bet that U.S. markets would turn south with Donald Trump’s victory in 2016. Instead, they do the opposite, and the firm loses $300 million. For most people, costing your employer that much money might serve as a cautionary tale. For Bankman-Fried, the takeaway is that he needs to dream bigger.

A third of the way through the book, SBF’s boundless confidence finally meets its absurdist match in Bitcoin, a fictitious “currency” devoid of any real-world use cases other than gambling and crime. Its price is determined solely by the supply of greater fools willing to buy it. Bankman-Fried is unmoved by the Bitcoin community’s libertarian ideals, but he spots an arbitrage opportunity: exploiting the difference between the price of Bitcoin in one place and another. He creates a hedge fund, Alameda Research, to take advantage of it, and recruits a motley group of millennials to join him.

Initially they have some success. In 2017, the crypto market is even more dysfunctional than its current manifestation. Sam and the gang buy Bitcoin in the U.S. and sell it in Asia, taking the spread as profit. Looking to increase profits further, Sam creates an automated trading program called ModelBot. It fails repeatedly, and the outcomes it produces are so volatile that an employee frets that if it were left unguarded it could bankrupt the company within an hour. Alameda’s co-founder, Tara Mac Aulay, pleads with Sam to keep ModelBot turned off when there is no employee to supervise it. Bankman-Fried initially agrees, but then flips it on anyway and falls asleep. He quickly manages to piss off the majority of his colleagues.
The company’s internal controls and record-keeping are nonexistent; $4 million of a token called XRP goes missing. At the same time, the Bitcoin arbitrage opportunity vanishes, and with it, Alameda’s profits. Much of the staff flees.

The only ones left are the true believers in the genius of Sam. Among them are Gary Wang, the coder; Nishad Singh, another coder who served as Sam’s fixer; and Caroline Ellison, a former fellow trader at Jane Street. As Lewis puts it, “The people inside were those most able to tailor their thoughts and feelings to those of its creator.” In other words, Alameda was now a cult.

Desperate for new funds, Bankman-Fried relocates the operation to Hong Kong, where he recognizes a potential goldmine in creating a futures exchange for cryptocurrency to service the booming Asian market. He also finds a willing investor: Changpeng Zhao (known as CZ), CEO of the world’s largest crypto exchange, Binance. After initially turning him down, CZ invests $80 million in FTX and receives 20 percent of the business in return. FTX has been miraculously saved. Very quickly it balloons into one of the biggest crypto exchanges on the planet. A classic Lewis protagonist—the aberrant thinker, the guy who can hear past the noise—has done it again.

This is where things get squirrely in Lewis’ telling. Whereas before, we hear perspectives from outside of Bankman-Fried’s camp, the author now relies heavily on the CEO’s recollection of events, as well as an FTX employee named Zane Tackett. Neither should be considered reliable. Tackett previously worked as the public face of the exchange Bitfinex, which is run by the same guys who started a notoriously shady stablecoin called Tether. (In 2021, Tether paid an $18.5 million fine to settle charges brought by the New York attorney general that its coins were not fully backed by real dollars, as the company claims. It also paid a $41.5 million fine to the Commodity Futures Trading Commission to settle similar charges.) Tackett left that gig and ended up working at the “over-the-counter” desk of a company called B2C2. An OTC desk is where crypto is exchanged for real money, often without any record of the transaction having taken place, even on the blockchain. As Lewis blandly notes, OTC desks sell to private parties “who for various reasons wished to avoid revealing their hand on public exchanges.”

Lewis, who shadowed SBF for more than a year, doesn’t explain this, but I will. A good portion of what drives crypto demand is the desire of wealthy individuals and criminal organizations to transform their local currency into crypto in order to send it all over the world, with the goal of transforming it into another currency (ideally dollars) on the other end. Avoiding capital controls is one use for crypto. Money laundering, sanctions evasion, and tax evasion are others. In Going Infinite, Lewis portrays Bankman-Fried’s miraculous resurrection via FTX as a kind of deus ex machina. The fact pattern suggests a different story: He moved to Hong Kong and got into business with some folks with, let’s say, colorful histories. (CZ’s exchange Binance has been sued by both the CFTC and the Securities and Exchange Commission, and Reuters has reported that the Department of Justice is considering charging it with money laundering and sanctions violations.)

However it went down, FTX mushroomed alongside the broader crypto markets during the bull run of late 2020 and 2021. Bankman-Fried moved his operation to the Bahamas and embarked on a legendary spending spree, buying up luxury real estate, investing billions in obscure venture capital projects, gorging on celebrity endorsements, making an alleged $100 million in political donations, and giving to charitable causes. Lewis clings to that last part as proof of Bankman-Fried’s good intentions. He reminds us ad nauseam about his subject’s professed effective altruism. His mission was to “earn to give”, i.e., make as much money as he could so that he could give it all away.

For a brief, shining moment, Bankman-Fried might have appeared to have accomplished his goal. But in the fall of 2022, his empire collapsed just as spectacularly as it had arisen. On Nov. 2, Alameda’s balance sheet leaked to the crypto press. What it revealed was an unholy mess: illiquid crypto shitcoins, huge loans made to FTX employees, sunk investments. The equivalent of a bank run on FTX ensued, and Bankman-Fried was forced to declare bankruptcy nine days later. Criminal charges were filed against him the next month. It was over.

Perplexingly, Lewis spends the last 50 pages of Going Infinite attempting to explain how it all could have gone so wrong without Sam’s knowledge. He blames Bankman-Fried’s colleagues for their incompetence, despite the fact that the CEO hired them and was their boss (spare me the part about FTX and Alameda being separate companies). Lewis re-creates a conversation that was alleged to have occurred between Bankman-Fried, Nishad Singh, and Gary Wang during the final days of FTX. According to the author, Singh approaches his superiors. He asks Bankman-Fried to vouch for him if the authorities come calling. SBF refuses.

Singh appears to implicate himself in committing a crime, while Bankman-Fried appears to be ignorant, but there’s a footnote. In it, Lewis acknowledges his only source: “This conversation comes from Sam’s memory soon after. The rest of the account of the crisis was confirmed by others in Sam’s sleeping quarters.” Meanwhile, the reader is left to speculate as to Gary Wang’s recollection. I may be new to the field of journalism, but sourcing such an important exchange from one very interested person’s account strikes me as irresponsible at best.

Lewis echoes SBF’s post-bankruptcy criticisms of Sullivan & Cromwell, the law firm hired by FTX. The attorneys do not exactly come across as heroes, but unless there’s an email where they counsel their client that it’s OK to commit a massive act of fraud—Bankman-Fried is accused, among other things, of having inappropriately allowed his customers’ funds to be tapped for risky bets and other uses—they aren’t culpable for something they claim to have known nothing about. Bankman-Fried had apparently been considering an advice-of-counsel defense in court, where he would need to provide evidence of Sullivan & Cromwell’s complicity. Lewis certainly doesn’t provide any.

Lewis almost completely ignores the relationship between Tether and Alameda Research. It’s a glaring omission. Alameda was one of Tether’s biggest clients. According to the crypto publication Protos, the company issued 36.7 billion Tethers to Alameda, which would mean Alameda forked over $36.7 billion in real U.S. dollars to Tether in exchange. How? Alameda never had $36.7 billion. FTX/Alameda and Tether also each had a banking relationship with Deltec Bank, headquartered in the Bahamas. Whatever was going on inside of FTX/Alameda, understanding its relationship to Tether is crucial.

By the end of the book, it’s clear Michael Lewis thinks he knows the story of FTX’s fall better than numerous former colleagues of Sam’s who saw it all go down, his former lawyers, and the CEO handling the bankruptcy, who now has access to the financial documents of FTX/Alameda. (Ray also served as the CEO of Enron during its bankruptcy process, so he might know a thing or two about fraud.)

Instead of this torturous apologia, Lewis could have acknowledged the obvious: He was duped. One of the most successful financial journalists alive appears incapable of understanding that Bankman-Fried was lying to everyone, perhaps including himself. Bankman-Fried may believe he is innocent, but four of his former colleagues are under no such illusions as to their culpability in the scheme. Ellison, Singh, and Wang all pleaded guilty to various charges of fraud and agreed to assist the prosecution in the case against their former boss. Another FTX executive, Ryan Salame, pleaded guilty to violating campaign finance laws and operating an illegal money-transmitting business.

Bankman-Fried now gets his day in court, but the jury is still out as to how crypto should be treated moving forward. After spending the past several years investigating the industry, my vote is: Burn it all down.

I first started writing about cryptocurrency with journalist Jacob Silverman almost exactly two years ago—beginning in Slate, in fact. We interviewed hundreds of people both inside and outside of crypto, from average traders to Sam Bankman-Fried himself. While the former were often sincere in their beliefs, that does not make what they believe true. SBF was something else, and the hour or so I spent with him last July was enough to convince me that he was completely full of it.

During our interview, which was conducted on camera, I started out with what I thought was a softball. Could he give me one use case for crypto, something it did that couldn’t be done better by other means? Bankman-Fried answered with remittances, sending money across borders. I replied that I had just come from El Salvador, the only country trying to use crypto as real money. El Salvador’s economy is heavily reliant on remittances, which are roughly a quarter of its GDP. Despite the Salvadoran government declaring Bitcoin as legal tender the year prior, almost no one in the country was using it to send payments back home. According to the government’s own figures, less than 2 percent of remittances used the Chivo wallet system it set up. (Now that number is less than 1 percent.)

Later, when I asked Bankman-Fried to name a single crypto project with some utility in the real world, he hemmed and hawed and mentioned the speed of the blockchain called Solana, and its associated token of the same name. That felt awfully self-serving. As Lewis points out, SBF owned a lot of Solana, as much as 15 percent of its total supply. Did he really believe in it, or was he just pumping his bags? Solana, by the way, has the unfortunate tendency to shut down. It has stopped working more than a dozen times in its history, including once for more than 18 hours straight in February of this year. How could Solana ever function at scale as a payment method?

One of the biggest tells was when I pressed SBF on his supposed effective altruism. I asked him how much he had spent in total on selfless causes (pandemic preparedness, mosquito nets, etc.). He estimated $50 to $100 million. I asked him how much had donated to politicians.
He turned 90 degrees in his seat, began fidgeting even more than usual, and refused to give me a straight answer, saying it was only “in the tens of millions of dollars.” We know now that Sam was alleged to have given $100 million to both parties, some directly and some through dark money and other means.

But it was the end of our interview that left a pit in my stomach. When Sam thought it was over, and the cameras weren’t rolling (they were), he proceeded to talk trash about Tether, arguably his biggest business partner. “Weird fucking dudes. Like really weird.” He offered an unusual comparison: “It [Tether] bears some resemblance to Binance as a company.” This was not a compliment. Sam was now slagging one of his original investors, who then became his biggest competitor. He also talked smack about another crypto mogul, Justin Sun. I left the interview in a daze. I suspected then that he was trying to direct my attention elsewhere.

The myth of Sam Bankman-Fried evaporated within moments of meeting the real deal. He was no genius, no mogul in any way that could last. I wanted to feel sorry for him, but instead I was angry that it had gotten this far.