Sam Bankman Fried (SBF) was the precocious child of Stanford professors. He attended a school for gifted children, went to math camp and landed at MIT. There he aced the rigorous recruitment process of the quant hedge fund Jane Street and joined the world of cutting edge finance. When that was not exciting enough he plunged head long into the world of crypto currencies founding the crypto hedge fund Almeida Research and the crypto exchange FTX. In the process and within a few years he became one of the wealthiest men in the world with a net worth in the ball park of $ 30 Bn. He was not only rich but, with his cargo shorts and crumpled T-shirts, gave the impression of being one of those rich people who don't care about money.
Anyway all the money he was earning was in the service of effective altruism - a philosophy which, in a nut shell, dictated that a talented person was better off using their time to make a lot of money and give it off rather than standing in a soup kitchen. Like a real life Sheldon Cooper he was supremely talented and casually irreverent - playing video games as he spoke to powerful people. He gave money not only to worthy causes but also to celebrities and politicians - at one point entertaining the idea of paying Donald Trump $5 bn not to run for the US Presidential elections. At the peak of his powers he was hailed as a modern day J P Morgan - the man who would single handedly save the crypto world.
But when the proverbial tide went out - he was found to be swimming without his shorts. FTX - which was an exchange, was never supposed to take market risk. It was supposed to liquidate the positions of its clients when they made losses ensuring that it took no risk on itself. That is what it always did , except for one client - Almeida research. When the crypto cycle turned Alameda research was out of pockets for $ 8bn , financed by customers of FTX. Within days he and his companies were bankrupt and the dream up in smoke. The book evokes a sense of disbelief in someone like me who is not a crypto buff. It seems miraculous that so much money was being made and lost just a few years back while the rest of us were just about coping with covid.
In an amazing co-incidence, for nearly 2 years while he was at his peak till and beyond his downfall he allowed himself to be shadowed by Michael Lewis - that veteran chronicler of the excesses of capitalism. This book is the result of those 2 years of access. Like 'Liar's Poker' or 'Big Short' Michael gets us a good sense of what was happening , even more so this time since he has the ring seat.
I recently read the book The Innovators - by Walter Isaacson that covers a whole gamut of , specially American, inventors behind the computer, internet, digital revolution like J Eckert, Bill Gates, Steve Jobs etc. I was struck by how similar these stories were to that of SBF till things went bad. Its not clear from the book if SBF was like a later day Steve Jobs undone by events or like an Elizabeth Holmes who was knowingly perpetrating a fraud. Michael Lewis, while not stating it, obviously seem to lean towards the former explanation. White stating his flaws - he does seems indulgent of SBF in the book.
