An early version of the new chapter has been published by the Washington Post:
https://www.washingtonpost.com/opinions/interactive/2024/sam-bankman-fried-michael-lewis-ftx/
What do other people make of it? (I have mixed feelings lol.)
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Thanks for posting. Look forward to reading it!
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I found the Opinion a bit disconcerting. He blows off Sam’s Autism diagnosis as an effort at getting the sympathy support and never considers that Sam’s behavior in court could have been a result of his neurodiversity and effected Judge Kaplan’s response to him. Lewis really missed a point there which for me colored how I considered his opinions.
I did appreciate getting some new background info, however, and agree with his conclusion that this case is a web of intrigue.
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Yes I was surprised that Lewis shared Kaplan’s derisive characterization of Sam’s testimony as constantly dodging the truth. He’s describing a communication style very common among autistic people and as far as I know, this style stems from – ironically – a strong desire to diligently stick to the truth. And with such a complex case, of course there were many questions that were phrased ambiguously or didn’t make any sense, and so of course a defendant being very careful to answer honestly is going to request a lot of clarification. Just because someone hasn’t bothered getting a diagnosis until it seemed relevant to their life, doesn’t mean the diagnosis was fake. And Lewis didn’t really give a reason for being so skeptical of the diagnosis other than that Sam has a “deep sense of irony.”
I did also appreciate Lewis’s summary of a lot of the background info, but I think he made one clear mistake. He summarizes what the prosecution and defense agreed on:
- Alameda was profitable and FTX was a real business
- FTX directed customers to wire deposits into bank accounts controlled by Alameda
- Alameda had the ability to borrow effectively unlimited amounts from FTX
- “[T]his commingling of customer funds with Sam’s didn’t register with the people who ran FTX and Alameda Research as a hugely important fact”
- They could have met a run on the exchange up until mid-June 2022 following a market crash
- When “crypto banks” loaned ~$10B to Alameda, they accepted FTT as collateral
- In mid-2022, Alameda repaid lenders with customer funds, because it didn’t have enough liquid funds otherwise
…But the defense definitely did not agree with this last one! See the transcript, page 3069.
At least Lewis acknowledges how weird it is:
The crime made no sense…The crime was unnecessary to the business in a way that, say, Bernie Madoff’s was not (which is why people guessed Madoff’s crime before it was exposed)…If someone had called [the lenders in June 2022] and said something like, “Sorry, Sam used your money to make billions of dollars’ worth of illiquid venture capital investments; you can either wait for us to sell what he bought or sue us — but if you sue us, you are less likely to get your money back,” Alameda Research possibly fails, but FTX survives, and the customers’ money is never in jeopardy.
People have been puzzled by the “Alameda repaid lenders with customer funds” story from Day One. It’s been taboo to give the most obvious answer since Day Two, but you get the feeling that a lot of people are thinking it.
Namely that it didn’t happen – there, I said it 
Anyway, I did like the other mysteries Lewis listed in this web of intrigue (good term), which seemed to range from “thing I’m honestly confused by” to “rhetorical question”:
- Why did Sam try so hard to get regulated in the US? Why didn’t he hide some money for himself? Or flee to a country without an extradition treaty?
- Why do people seem just as outraged even after hearing the news that FTX has ~$5-8B more than it needs to repay creditors (and to pay the bankruptcy team $0.5B+), given that almost all the money came from simply liquidating FTX/Alameda’s assets?
- Why did the new CEO dismiss an investment that came to be worth billions as “worthless” and tokens that 15x’d in value as overpriced “shitcoins”? And why has he not once spoken to Sam? “It’s hard not to wonder,” says Lewis, “if they had simply called Sam, what else the lawyers running the FTX bankruptcy might have learned about the contents of his lair. Also, how much more money would be on hand if, for their first 18 months on the job, the bankruptcy lawyers had simply not shown up for work.”
One last thing that stood out to me: it’s an unusual take to describe Sam as having “an intellectually defensible but socially unacceptable moral code” and simply making “a huge mistake in trying to live by it.”
I just read the afterword in the book. The passages I found most illuminating that didn’t appear in the Washington Post were about witnesses, the bankruptcy results and the public response to the book.
Lewis reports that the colleagues who testified against Sam had characterized him pre-trial as “emotionally stunted, wildly distracted and disorganized, unwary and easy to steal from, but possibly critical to the fate of our species” and that Caroline transformed on the stand from an outspoken girlfriend into a “cowering underling.”
On the bankruptcy, Lewis suggests that the estate can actually afford to repay crypto using today’s prices rather than bankruptcy date prices, it just chooses not to, and he questions whether creditors would still argue that bankruptcy date prices are the fair choice if bitcoin had since gone down rather than up. He also contrasts them with Madoff’s victims, who’ve only received 91 cents on the dollar after 16 years, mostly sourced from earlier victims.
Lewis is clearly frustrated with the reactions from “the journalism police” () and “people invested in their own outrage,” but he also tells us that he was contacted by ~12 of Sam’s ex-colleagues who said they recognized the Sam in Going Infinite and felt pity for him rather than anger.
Thank you for this. Need to read the afterword too - not just rely on the WaPo Opinion piece.