Sam Bankman-Fried (SBF) took a chance by taking the witness stand. Just like he has continually taken chances his entire life thus far. By all accounts he didn’t come off well as normal people would judge him. He is anything but normal on his best day, under cross examination he didn’t have a chance.
“He came up with a tale that was conveniently put together to exclude himself from the fraud” Assistant US Attorney Nicolas Roos told jurors. “Over three days he took the stand and he lied.”
“It was uncomfortable to watch.”
Early in Michael Lewis’s book Going Infinite: The Rise and Fall of a New Tycoon, the author describes SBF as looking “less like a crypto tycoon than a first grader who needed to pee.” Commitments were made via dial in Sam’s head where he assigned “some non-zero probability to the proposed use of his time.” The generations of these calculations happened “right up until the moment he honored it or didn’t.”
Lewis has been criticized for not being harder on the ex-crypto tycoon in his book. Lewis admits to genuinely liking Bankman-Fried. But, he must know deep down, malintent or not, SBF committed what the courts say is fraud and he told Fareek Zakaria there is foreshadowing throughout the book to that effect.
If Lewis vents his spleen at anyone it’s John Ray who became CEO of Bankman-Fried’s FTX when Sam docusigned the company into bankruptcy. Ray is famous for recovering money in the Enron case, something Lewis doesn’t mention. Ray came to FTX via law firm Sullivan & Cromwell which would make hundreds of millions on the case.
Ray didn’t know a thing about crypto or Bankman-Fried, but a guy doing his job must make quick judgments while the trail to the assets is still warm. So, people were either good, bad (a crook), or naive. Ray wouldn’t talk to Sam for fear of being misled which made finding the assets that much harder.
As for Sam’s insiders, Ray described Nishad Singh as naive. “You ask him for a steak and he puts his head up the bull’s ass.” As for Caroline Ellison, sometimes girlfriend to Sam and the head of Alameda Research, “You have had to buy words by the vowel. An obvious complete F**king weirdo.” Sam, in Ray’s view, became a criminal and he didn’t know why.
Maybe all one needs to know is FTX and related firm Alameda Research, valued at $32 billion, did their financials on QuickBooks. The company had no risk officer, no chief financial officer, or head of human resources. As for a board of directors, “we have something with three people on it,” Bankman-Fried told Lewis. “The main job requirement is they don’t mind DocuSigning at 3 a.m. DocuSigning is the main job.” SBF couldn’t remember who the other two board members were. “We tried having some grown-ups, but they didn’t do anything,” Bankman-Fried told Lewis. “”This was true for everyone over the age of forty-five.” There was a corporate psychiatrist, George Lerner, whose job was to listen to employee’s problems.
Sam had lost his entire management team and half his employees back in 2018 because his staff came to the conclusion he was “dishonest and manipulative.” A corporate coup was attempted but SBF prevailed with one person saying “the only way Sam will learn is if he actually goes bankrupt.”
Lewis’s most interesting chapter is in the first third of the book, relating Bankman-Fried’s hiring and work at high-frequency trading firm Jane Street Capital. MIT physics majors, if they didn’t go to work for Google, went to work on Wall Street. His interview amounted to mental math questions that became increasingly more difficult. The day was spent solving puzzles and playing games. There were coin-flipping games and poker games, with the rules constantly changing. As the author describes, “games within games, or games about games.” According to Sam, “A median American would take twenty minutes to just figure out what the game was.” And the applicants were constantly on the clock. Sam didn’t feel pressure or emotion.
Effective altruism (EA) is also a big part of the story. Sam and the inner circle around him believed in making as much money as possible and giving it all away to benefit the largest number of people. Bankman-Fried might be the most well-known utilitarian since John Stuart Mill. The ends justifies the means.
Sam Bankman-Fried was found guilty on all seven counts in very quick fashion. SBF reportedly stared ahead showing no emotion. Sentencing on March 28th of next year.
