Book: Going Infinite

Michael Lewis was on the talk shows Wednesday flogging his new book, about the meteoric rise and equally meteoric fall of Sam Bankman-Fried and the whole crypto-currency thing.

Lewis is usually great at explaining things I don't understand. It arrived yesterday and I can't wait to dive into it.

Like Lewis's other books it's unputdownable. I'm a quarter way through it and I just wanted to sample it.

Sam is the typical autistic boy genius, bored with school but a straight-A student, somebody who's puzzled at the world and the astounding number of numbskulls in it.

I'm not in his class of course, but I felt similar discombobulation growing up.

I'll say one thing, the absolutely insane valuations of crypto exchanges, in the tens of billions of dollars, over their ability to trade shadow currency that nobody understands or can even explain, makes Trump's blatant inflation of his net worth seem like small potatoes.

Of course real estate is a lot more "real," and the square footage of an apartment can be measured. And the whole point of crypto is that it's outside the regulatory/taxation framework.

He's either a math nerd or a crypto criminal.

Lewis's book paints him as a painfully naïve genius, without a venal bone in his body.  It'll be interesting to see what the jury decides.

He was definitely not of the same ilk as Elizabeth Holmes or Bernie Maddoff, intentionally selling snakeoil to get morbidly rich.  Bankman-Fried gave all of his money away, and was intending to continue to do so. He was a devotee of effective altruism.

Yeah, a lot of people lost a lot of money on crypto. That was the fairydust nature of Bitcoin — not any malignity on Bankman-Fried's part.

When Sam was having new offices designed in the Bahamas, one of the things he wanted for sure was a place to display his 14-1/2" tungsten cube.

I've wanted to buy a tungsten cube -- they're one of the heaviest items per cubic inch you can buy (1.7 times heavier than lead).  Also among the most expensive.  A 1" cube weighs 300 grams (2/3 of a pound) and costs $60. A 2" cube weighs 5.2 lbs (2.36kg) and costs $475. A 3" cube weighs 17.6 lbs and costs $1800.  A 4" cube—the largest sold online—weighs 41.62 lbs and costs $4000.

They're totally useless of course, just a nerdy conversation piece. Sam's cube cost a cool quarter mil.

FTX, Sam's crypto business, was headquartered in the Bahamas, incorporated in Antigua, and had offices in Hong Kong. Most of the employees were Chinese.  The company was actually legally barred from doing business in the US, but wily investors found ways around it.

So when the crypto market imploded on November 9, 2022—it was all built on trust and promises—it was the Bahamanian authorities who wanted to arrest Bankman-Fried.

But US bankruptcy lawyers smelled money—a LOT of money—and convinced the US Justice Dept to bring the case. Bankman-Fried was still a US citizen, even though he hadn't lived here in over five years.

I read until midnight last night, unable to quit.  Around 11:45 I realized I was reading the same page over and over, trying to understand what I was reading, unsuccessfully. I only had 20 pages left—the company had already collapsed—but I had to hit the pillow.

That's good writing. The equivalent of an "NPR Driveway Moment."

The law firm handling FTX's bankruptcy has some SERIOUS conflicts of interest. They formerly represented FTX, they formerly lost money through FTX, and one of their partners had been on retainer for Sam.

They included in the bankruptcy filing some FTX subsidiaries (of which there were almost 200) who were independent, and financially solvent. Why?

Because they billed almost $1b in legal fees, and wanted to make sure they got paid.

A lot of the wooly finances of FTX, and the reason they collapsed literally overnight, derives from the fact that a lot of what they traded, bought and sold, were futures—the right to buy some cryptocurrencies or stock options at a set price in the future.

100% pure trust.  Fairydust.  All made up out of thin air by Sam.

Cost = $0.  "Value" = anywhere from millions to many billions, depending on who you ask when.

I knew there was a reason I didn't trust the crypto market.

Part of the madness is this: hedge fund managers sold shorts on banks dealing in crypto. They then did whatever they could to upset the crypto apple cart so their short positions would profit. They not only bet against crypto, they did their best to manipulate the market to their own advantage.

Finance at this level (shorts, futures, hedge bets) is a cesspool.

Yeh, fabulous book. I haven't enjoyed anything that much in a couple years. I was delaying finishing it this morning because I didn't want it to end.

Sam Bankman-Fried was found guilty today.  Maybe the era of accountability for conmen (& women) is really beginning.

Sentenced to 25 years in prison today.

Meanwhile, another serial fraudster runs free.