Economy

Takeaways From a New Book on Sam Bankman-Fried

On the same day that Sam Bankman-Fried’s trial on federal fraud charges begins, the best-selling author Michael Lewis is set to publish a widely anticipated book on Tuesday about Mr. Bankman-Fried’s failed cryptocurrency exchange, FTX.

Mr. Lewis, the author of “The Blind Side,” “The Big Short” and “Moneyball,” spent months interviewing Mr. Bankman-Fried and other top FTX executives, and had access to the company’s headquarters in the Bahamas for the book, “Going Infinite.”

The book features previously unreported details about Mr. Bankman-Fried’s empire, from its founding in the Bay Area to its epic collapse in the Bahamas last year. Here are some takeaways.

Is Bankman-Fried guilty?

Mr. Lewis does not offer a “yes” or “no” answer. He depicts Mr. Bankman-Fried as delusional and often callous in his treatment of co-workers, a young entrepreneur who “thought grown-ups were pointless” and left messes for other people to clean up.

But Mr. Lewis also expresses skepticism about the lawyers and executives who were brought in to manage FTX’s bankruptcy and have become some of Mr. Bankman-Fried’s fiercest public critics. Toward the end of the book, Mr. Lewis writes that Mr. Bankman-Fried’s explanations for the collapse of FTX, as implausible as they sound, have “remained irritatingly difficult to disprove.”

Early days at Alameda

Mr. Bankman-Fried started his first company, the hedge fund Alameda Research, alongside Tara Mac Aulay, an Australian mathematician who moved in the same philanthropic circles. At one point, Mr. Bankman-Fried “revealed his romantic interest in her,” before shifting attention to her trading skills, Mr. Lewis writes. Ms. Mac Aulay quit Alameda during a staff exodus in early 2018 that came to be known as “the schism.” The fund was losing money: At one point, $4 million in digital coins simply disappeared from its accounts.

According to the book, Ms. Mac Aulay grew to consider Mr. Bankman-Fried “dishonest and manipulative,” and other senior figures at Alameda accused him of mismanagement. (The missing cryptocurrency eventually turned up at a South Korean exchange.)

“I made people hate each other a little more and trust each other a little less,” Mr. Bankman-Fried later wrote of the split. “I severely curtailed my own future ability to do good.”

Political ambitions

When FTX was thriving, Mr. Bankman-Fried became a prolific political donor, contributing more than $5 million to Joseph R. Biden Jr.’s 2020 presidential election effort. He also held meetings with Senator Mitch McConnell, the minority leader, and Gov. Ron DeSantis of Florida. And according to the book, Mr. Bankman-Fried explored “the legality of paying Donald Trump himself not to run for president.” Some advisers to Mr. Bankman-Fried informed him that Mr. Trump’s price was $5 billion, Mr. Lewis writes.

Relationship with Caroline Ellison

One of Mr. Bankman-Fried’s closest business associates was also his on-and-off girlfriend, Caroline Ellison. After FTX imploded, Ms. Ellison pleaded guilty to fraud and agreed to cooperate with the federal prosecutors who have accused Mr. Bankman-Fried of stealing funds from customers to finance political donations and other lavish spending.

Mr. Lewis cites numerous messages that Mr. Bankman-Fried and Ms. Ellison exchanged about their relationship. In one, Ms. Ellison described things that Mr. Bankman-Fried had done and that bothered her, including “telling me that he felt conflicted about having sex with me, then having sex with me, then ignoring me for a few months.”

In a memo to Ms. Ellison, Mr. Bankman-Fried laid out the pros and cons of continuing a romantic relationship with her. The pros included that she was smart, impressive and a good person, and that he enjoyed having sex with her. Among the cons were the uncomfortable power dynamics in the relationship, as well as the possibility of negative publicity if their dating life ever became public.

“In a lot of ways I don’t really have a soul,” he wrote. “My feelings are fake, my facial reactions are fake. I don’t feel happiness. What’s the point in dating someone who you physically can’t make happy?”

Panic in the Bahamas

Mr. Lewis spent time with Mr. Bankman-Fried at FTX’s headquarters in the Bahamas just hours after the company filed for bankruptcy in November. He describes a panicked text that Mr. Bankman-Fried received from Nishad Singh, a top FTX executive who later pleaded guilty to fraud.

“Can you make it you, or you and Gary who people blame?” Mr. Singh wrote, referring to another executive who has pleaded guilty, Gary Wang.

Later, according to the book, Mr. Singh asked Mr. Bankman-Fried in person, “How do we all make sure we say the other ones are innocent?” (A footnote says that account of the conversation came from Mr. Bankman-Fried.)

Michael Lewis spent months interviewing top FTX executives for “Going Infinite.”Credit…Jutharat Pinyodoonyachet for The New York Times

FTX’s bankruptcy

After FTX filed for bankruptcy last year, a veteran corporate turnaround expert, John Jay Ray III, took over the company. Mr. Lewis draws from a series of unusually candid interviews he conducted with Mr. Ray, who has said little about FTX outside legal filings and congressional testimony.

In the interviews, Mr. Ray described Ms. Ellison as “cold as ice” and an “obvious complete weirdo,” using an expletive for emphasis. He also noted that FTX had invested $500 million in Anthropic, an artificial intelligence start-up, before dismissing the project as “just a bunch of people with an idea. Nothing.”

A few weeks after that interview, Mr. Lewis writes, a group of companies including Google invested nearly $500 million in Anthropic, raising the value of Mr. Bankman-Fried’s stake to $800 million. Mr. Lewis criticizes Mr. Ray’s handling of the bankruptcy, likening him to an “amateur archaeologist” who had stumbled upon artifacts he didn’t understand.

Other tidbits

The book is full of other colorful details that shed light on Mr. Bankman-Fried’s personality and how he managed his business empire.

  • When he worked at the high-frequency trading firm Jane Street Capital, some executives were “disturbed by Sam’s indifference to other people’s feelings,” Mr. Lewis writes. They cited an incident in which Mr. Bankman-Fried publicly humiliated another trader in a complex gambling game that was popular in Jane Street’s offices.

  • Mr. Bankman-Fried paid the comedian Larry David $10 million to appear in a now-infamous Super Bowl commercial for FTX. The company also tried and failed to sponsor stadiums used by two National Football League teams, the Kansas City Chiefs and the New Orleans Saints.

  • The architects designing a new FTX headquarters in the Bahamas were asked to structure the side of the building so it would evoke Mr. Bankman-Fried’s “unruly hair.”

  • Mr. Bankman-Fried couldn’t name two of the people on FTX’s three-person board of directors. “The main job requirement is they don’t mind DocuSigning at 3 a.m.,” he said. “DocuSigning is the main job.”

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