When I first read about the bankruptcy of the cryptocurrency exchange FTX and the arrest last December of its then 30-year-old billionaire CEO and co-founder Sam Bankman-Fried , my immediate thought was: “Well, there’s a story for Michael Lewis.” Because who else apart from Lewis – the author of Liar’s Poker, The Big Short and Flash Boys – with his uncanny gift for finding human tales in the opaque machinations of the world’s money markets, could do full justice to Bankman-Fried’s mythological catastrophe?
The curious thing, as it turned out, was that I was not alone in that thought. It seems Sam Bankman-Fried had it too. In April 2022, he effectively gave Lewis the journalistic keys to his kingdom. The exact motivation for that invitation is not quite explained here, though you suspect Bankman-Fried understood that Lewis was perhaps the only writer around who could unravel the extreme financial fantasy land he had willed into life and explain it to the world.
Lewis spent eight months observing Bankman-Fried’s wildly chaotic empire at first hand, partly at the compound of jungle huts in the Bahamas from which he ran FTX. This extraordinary book is the tale of those months, and of the steps by which Bankman-Fried, the wild-haired maths prodigy, made a fortune of tens of billions of dollars in his 20s and lost it all in a long weekend, financially ruining employees and investors.
For all the futuristic scope of this tale, there was, inevitably, a much older kind of tragicomedy also at play. Bankman-Fried’s downfall could be partly traced to a secretive affair with a young woman called Caroline Ellison, the CEO of the investment wing of his empire – Alameda Research. It is alleged he used billions of dollars from FTX to repay loans owed by Alameda. Lewis has got hold of the love letters exchanged between them – weird bullet-point confessionals of anguish and cost-benefit analysis. Bankman-Fried went on trial this week in a New York courtroom, facing seven charges of conspiracy and defrauding investors that could see him jailed for decades. Ellison is among those expected to give evidence against him.
The backdrop for that intimate drama is the cryptomania that began with the launch of bitcoin, the first decentralised digital currency, in 2009. As Lewis writes, evangelists argued that here, finally, was a currency you could trust – while at the same time buying and selling versions of it in unregulated markets manipulated by anonymous global speculators. In reality, Lewis writes, “government-backed money wasn’t what bitcoin most easily replaced. Gambling was.”
Bankman-Fried, the son of a pair of Stanford law professors, was equipped to exploit those “meta games”. On leaving MIT, he quickly established himself as a player in the niche world of high-frequency automated trading; when those markets frustrated him, he established his own. He recruited a coding genius called Gary Wang to build an algorithm to exploit the wrinkles in crypto’s imperfect markets. Quickly, that program was bringing in millions of dollars a day.
The twist in Bankman-Fried’s story – one that mostly emerges intact in Lewis’s telling – is that he was never in it for the money, at least in the traditional sense. He was the poster boy for the effective altruism movement, an idea seeded by Peter Singer, the Australian ethicist, and propogated by the fresh-faced Oxford academic William MacAskill in his book Doing Good Better. The philosophy argued that if young radicals really wanted to make positive change in the world – specifically by saving the maximum possible number of vulnerable lives – they should not, say, qualify as doctors and practise in Sudan, they should, logically, use their education for maximum gain on Wall Street and employ that wealth to sponsor 100 doctors in Sudan.
When the money started cascading in at FTX, Bankman-Fried brought in MacAskill and others to sit on an advisory board. Lewis has lots of subtle fun with the effective altruists, working 24/7 to give fortunes away according to utilitarian principle. His account of their cultish relationship with Bankman-Fried reminded me of Tom Wolfe’s eyewitnessing of Ken Kesey and the Merry Pranksters in The Electric Kool-Aid Acid Test. As in that book, here was a mini-religion organised around a messiah-like figure; but whereas the secret sauce in Kesey’s 1960s cult had been LSD, here it was dollars, billions of them, which Bankman-Fried conjured up and distributed freely to anything that caught his scattershot attention. (At one point, he floated the idea of simply paying Donald Trump to give up on politics. Surely there was a number that could persuade him to do so? Sources reported to him that the figure was $5bn.) In this private mission, he saw no point in boards of directors – or, generally, adults. He was reorganising the world according to his own sleepless logic.
When karma arrived for Bankman-Fried and the effective altruists, it burst in all guns blazing. With crypto markets crashing, he was forced to abandon his seat watching the quarterback Tom Brady (whom he allegedly paid $55m for 20 hours work a year endorsing FTX) win another American football game and try to immediately find a “missing” $9bn to pay the investors scrambling for their money. It seems the run on his exchange revealed the hollowness of his accounting and his ethics. As fantasy collapses into law-enforced reality, Lewis ends up wandering the swiftly abandoned jungle compound alone, like some anthropologist sifting the curious relics of a lost civilisation: “to many of its former inhabitants,” he writes, “it was all starting to feel as if it had been a dream”. As Bankman-Fried perhaps envisaged, Lewis’s presence guarantees at least one unlikely certainty: this all actually happened.
Going Infinite: The Rise and Fall of a New Tycoon by Michael Lewis is published by Allen Lane (£25). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply
