Beware of Geeks bearing Tokens
Ouch. Well, he didn't like the book. I did (following an extremely careful, slow read). I totally loves me some CoffeeZilla, but I think he's cherry-picking Michael, 'cuz it's now canonical that we gotta be presumptively hatin' on SBF. I have a bit of the same pick with Gideon Lewis-Kraus in The New Yorker.
And, no one can accuse me of being a Sam Bankman-Fried apologist suck-up. See my prior, heavily-linked post.
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| New York Times |
"Mr. Lewis normally avoids writing books about figures who are already world-famous. In this case, the character he thought was likable and relatively fringe — Mr. Lewis had barely heard of Mr. Bankman-Fried before their hike — has become a world-renowned pariah, a stand-in for an entire industry’s technical and moral failings."Good article.
"In the book, Mr. Lewis is careful not to weigh in on whether Mr. Bankman-Fried committed the crimes he’s charged with. “I leave it to the reader,” he said. “The radical thing here is to withhold judgment.”
My summary $0.02 on crypto (irrespective of Sam):
Reading this book now. Excellent. Stay tuned…
UPDATE: JEN TAUB INTERVIEWS MICHAEL LEWIS
[NOTE: Jen (author of the fabulous Big Dirty Money) will interview Zeke Faux shortly.]
ONE EXCERPT FROM MICHAEL'S BOOK (NEAR THE END) WILL SUFFICE
“I asked Sam: ‘When you were doing this, have you ever thought how much this event will be hurting people, and does that count as part of your initial expected value calculation?’”MY AMAZON BOOK REVIEW
… [and] a different question. It preoccupied me from the moment of the collapse: Where had the money gone? It was not obvious what had happened to it. And it would be hard to understand why the effective altruists had done whatever they’d done with their customers’ money without knowing how much of it they had lost and how they had lost it. In the days after the collapse, I created what might have been the world’s crudest financial statement. It treated FTX and Alameda Research as a single entity: Sam’s World. One column listed all the money that had entered Sam’s World since its inception, in April 2019; a second column listed all the money that had exited Sam’s World. Both ignored the year and a half of Alameda’s existence before the creation of FTX, as the numbers involved were relatively small. All the numbers were obviously very rough estimates. Some came from Sam, but all were confirmed by former insiders who had no reason to lie to me. At any rate, when I was done, my extremely naive money-in, money-out statement looked like this:MONEY IN:Obviously, this wasn’t the way Ernst & Young would have drawn it up—though these lists I made for myself didn’t look much different than Sam and Caroline’s various attempts to summarize their affairs. In the previous three and a half years, nearly $9 billion more had entered Sam’s World than had exited it. When FTX stopped returning funds to customers, on Tuesday, November 8, it still had $3 billion on hand. That dropped the missing sum to $6 billion. (The roughly $450 million stolen in the hack three days later is irrelevant to this calculation.)
Net customer deposits: $15 billion
Investments from venture capitalists: $2.3 billion
Alameda trading profits: $2.5 billion
FTX exchange revenues: $2 billion
Net outstanding loans from crypto lenders (mainly Genesis and BlockFi): $1.5 billion
Original sale of FTT: $35 million
Total: $23,335,000,000
MONEY OUT:
Returned to customers during the November run: $5 billion
Amount paid out to CZ: $1.4 billion (Just the hard cash part of the payment. I’m ignoring the $500 million worth of FTT Sam also paid him, as Sam minted those for free. I’m also ignoring the $80 million worth of BNB tokens that CZ had used to pay for his original stake, worth $400 million at the time Sam returned them as part of his buyout of CZ’s interest.)
Sam’s private investments: $4.4 billion (The whole portfolio was $4.7 billion, but at least one investment, valued at $300 million, Sam had paid for with shares in FTX. He likely did the same with others, and so this number is likely bigger than it actually was.)
Loans to Sam: $1 billion (Used for political and EA donations. After his lawyers explained to him that taking out loans was smarter than paying himself a stock dividend, as he’d need to pay tax on the dividends.)
Loans to Nishad for same: $543 million
Endorsement deals: $500 million (This is likely generous too, as in some cases—Tom Brady was one of them—FTX paid its endorsers with FTX stock and not dollars.)
Buying and burning their exchange token, FTT: $600 million
Corporate expenses (salaries, lunch, Bahamas real estate): $1 billion
Total: $14,443,000,000
There were some likely explanations for the missing money. The more you thought about them, however, the less persuasive they became. For example, Alameda traders might have gambled away $6 billion. But if they had, why did they all believe themselves to be so profitable, right to the end? I’d spoken to a bunch of them. Several were former Jane Streeters. They weren’t stupid. They’d all been chirpy and upbeat and even a bit boastful about how much more money Alameda made per trader than Jane Street. Alameda may have lost a lot of money trading, but how those losses occurred was not easy to see. The most hand-wavy story just then being bandied about was that the collapse in crypto prices somehow sucked all the money out of Sam’s World. And it was true that Sam’s massive holdings of Solana and FTT—and other tokens of even more dubious value—had crashed. They’d gone from being theoretically worth $100 billion at the end of 2021 to being worth practically zero in November 2022. But Sam had paid next to nothing for these tokens; they had always been more like found money than an investment he’d forked over actual dollars to acquire. He’d minted FTT himself, for free. For his entire haul of Solana tokens, he’d paid no more than $100 million. His fleece cloud fortune had evaporated, but that didn’t explain where all those hard dollars had gone.
Lewis, Michael. Going Infinite: The Rise and Fall of a New Tycoon (pp. 223-226). W. W. Norton & Company. Kindle Edition.
5.0 out of 5 stars
There's a REASON I've bought and read all of Michael Lewis' books
Reviewed in the United States on October 5, 2023
Verified Purchase
I just finished. A great job. Thank you Michael. I've been following this debacle closely for a long time (I used to work in financial risk management). Everything in this book squares closely. And, there was much I could not have known but for Michael's penetrating interactions with Sam and his cohort. The entire "Effective Altruism" is preposterous on its face, as is the absurd "cryptocurrency" fallacy (it's simply "gambling"). I will leave it to the legal system to determine Sam Bankman-Fried's criminal culpability. At a minimum I regard him and his crew as having indulged in egregious, ruinous global recklessness. I also note that the FTX bankruptcy CEO brought in to deal with the mess, John Ray, does not come off looking very well here—and I seriously doubt Michael Lewis would go anywhere near defamation. Ray's cynical bias is rather disturbing. It will not help matters going forward.
I agree with another reviewer about the obvious 1-star negative "review" trolling. I would broadly favor all reviews be limited to "verified purchasers" and legit "advance comp copy" reviews. This is hardly the first time I've seen partisan disinfo "reviews" on Amazon where topics are controversial.
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OK it's Saturday morning, Oct 7th. Woke up to news that Hamas has launched a full-scale surprise land-sea-air attack on Israel. Netanyahu's government was caught napping. The FTX debacle can wait.
Below, the taller kid standing in front of the tank. Israeli Defense Force (IDF) Tank Commander, then-19 yr old Dov Gropper, son of my NJ high school garage band sax player Mike Gropper. (Dr.) Mike is now a noted Israeli clinical psychologist. This photo was taken several dozen miles miles inside Lebanon during the 2006 IDF incursion fighting Hezbollah. I despair that there will ever be a durable peaceful solution over there.
UPDATE
Sunday morning headline: Sadly, this is where our U.S. "conservatives" are at amid this catastrophe.
