I was skeptical about Michael Lewis’ new book, Going Infinite. I thought I knew enough about FTX and Sam Bankman-Fried (SBF) that reading a book wasn’t a great use of my time. More importantly, I already had a negative opinion of the crew behind the implosion of FTX based on things I had read last year. Here are a few of my Tweets as FTX imploded: [1], [2], and [3].
After hearing interviews with Lewis, I decided to give the book a try. I’m glad I did! Going Infinite provides an inside view into what happened during the rise of FTX through the early days of its eventual implosion. You will gain a better understanding of SBF, the dynamics of his relationship with people in his inner circle as well as with other key FTX employees.
Lewis describes how a crisis during the early days of Alameda shaped how SBF managed FTX and Alameda afterwards. You’ll learn about how decisions were made, and why things that appear so sloppy seemed natural internally. For a writer like Lewis, this eccentric and funny cast of characters was like manna from heaven.
Effective altruism (EA) was pivotal in Sam Bankman-Fried’s and FTX’s ethos. SBF and other EA adherents believe in maximizing global good over mere wealth accumulation. The book underscores the irony of SBF: a man disinterested in personal wealth yet part of a movement urging high earnings for greater donations. Lewis amusingly captures SBF and his team’s quantitative deliberations on FTX’s financial allocations, subtly critiquing EA’s relationship with wealth and altruism. Lewis highlights how EA shifted from emphasizing the present to perceived future risks:
- ❛ One day some historian of effective altruism will marvel at how easily it transformed itself. It turned its back on living people without bloodshed or even, really, much shouting. You might think that people who had sacrificed fame and fortune to save poor children in Africa would rebel at the idea of moving on from poor children in Africa to future children in another galaxy. They didn’t, not really—which tells you something about the role of ordinary human feeling in the movement. It didn’t matter. What mattered was the math. Effective altruism never got its emotional charge from the places that charged ordinary philanthropy. It was always fueled by a cool lust for the most logical way to lead a good life. ❜
If you’re looking for a book that casts SBF as a clear villain, this is not the book for you. But if you want to learn how a talented group of software engineers and traders built one of the most successful crypto exchanges virtually overnight, and laugh and be entertained at the same time, you’ll love this book. I found it hard to put down.
But what about all the money they supposedly embezzled? Lewis notes that the asset recovery efforts have actually gone quite well:
- ❛ At the end of June 2023, John Ray filed a report on his various collections. “To date, the Debtors have recovered approximately $7 billion in liquid assets,” he wrote, “and they anticipate additional recoveries.” Seven point three billion, to be exact. That haul didn’t include the Serum, or any large clawbacks, or the money stolen by the guy in Mauritius, or the stake in Anthropic, or most of the other private investments. An investor who was hoping to bid for the remaining portfolio told me that, if it was sold intelligently, it should go for at least $2 billion. That would raise the amount collected to $9.3 billion—even before anyone asked CZ for the $2.275 billion he’d taken out of FTX. ❜
Despite the possibility of FTX returning funds to all its depositors, members of SBF’s inner circle have become government witnesses, admitting to using FTX customer funds to directly benefit Alameda Research. Incompetence and lack of proper controls might be the key reason behind many of their problems. Lewis points out that key FTX stakeholders outside of SBF would have not benefited at all from Alameda embezzling money from FTX. This means that had they known this was happening, they were incentivized to do something about it right away:
- ❛ Why not take that money and move the $8.8 billion of customer money back into FTX, so that if Alameda blew up it would take the crypto banks, rather than FTX, with it? … None of the characters in this financial drama had behaved as financial characters are expected to behave. Gary had owned a piece of Alameda Research, but his stake in FTX was far more valuable. Nishad owned a big chunk of FTX and none of Alameda Research. Ditto Caroline, who ran Alameda Research but owned shares only in FTX. None of these people had any interest in moving money out of FTX into Alameda Research in a way that put FTX in jeopardy. Just the reverse: it might as well have been their money that was being moved. ❜
Going Infinite is a fascinating and engaging book that provides a well-rounded perspective on the rise and fall of FTX. It’s not a perfect book and the ongoing trial may surface information that counters some of its key narratives.
Whether you’re a crypto enthusiast or skeptic, an SBF detractor or supporter, or simply someone who enjoys a compelling narrative, I wholeheartedly recommend this riveting book.
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