Table of Contents
Key Takeaway
- Discover the tumultuous tale of ambition and downfall in Michael Lewis’s “Going Infinite: The Rise and Fall of a New Tycoon.”
- Dive into the captivating world of high-stakes finance and unravel the story of a crypto tycoon’s rise and fall—read on to explore the depths of human ambition and the fragility of success.
Going Infinite (2023) offers a behind-the-scenes look at the scandal surrounding Sam Bankman-Fried and the epic collapse of his cryptocurrency companies. It aims to answer the question: How can a man go from earning billions of dollars in a matter of years to losing it all in a matter of months?
Introduction: Learn the story of the rise and fall of Sam Bankman-Fried
In this summary we’ll take a quick overview of one of the bigger scandals in recent times: that of Sam Bankman-Fried, and the epic financial disaster that occurred when his international cryptocurrency trading company FTX went bankrupt. Written before the start of his trial, it isn’t able to provide any information on the criminal case that ensued, but it does highlight the chaos and confusion that surrounded his organization leading up to its bankruptcy.
The unknowable man finds his calling
How much do you know about Sam Bankman-Fried? Or, better yet, how much does anyone know about Sam Bankman-Fried? It turns out, even friends, family, and people who grew up with him find him hard to describe. As his brother put it, he keeps to himself.
What we do know is that he was raised by two parents who were both career academics. As he grew up, it was clear that he didn’t fit the conventional mold. He preferred being around adults and often questioned societal norms. He didn’t understand why anyone believed in Santa Claus or religious concepts like heaven and hell. He also had trouble connecting with people. He had to practice making facial expressions in order to make others more comfortable.
As a teenager, Bankman-Fried had better luck at math camp, where he got to indulge in his love for puzzles and games. He also met other kids his age who were drawn to utilitarianism, the philosophy that argues that the right decisions in life can be logically quantified. Just ask yourself, which actions will result in outcomes that do the most good to the most people?
Fortunes turned again in college, where, at a job fair, he encountered the financial trading firm Jane Street Capital. The interview process involved games with shifting rules that required quick decisions. He loved it. His time on Wall Street also found his utilitarian beliefs merging with the concept of effective altruism. It gave his life a purpose. Making loads of money made sense, because it meant you could give back, invest in the right causes, and make a real difference in the world.
At Jane Street Capital, Bankman-Fried learned how to make money. His salary for his second year was $600,000 and he stood to make a million-dollar bonus in his third year. But was this enough? He’d come to understand trading on a deep level. As he saw it, there was no reason he couldn’t come up with a better trading firm on his own.
Launching Alameda and FTX
Bankman-Fried took his million dollar bonus from Jane Street Capital and quit the firm. He had a hunch about cryptocurrency, a new digital currency that started out as a niche trading commodity yet was turning into a semi-serious financial market. The big draw was that crypto existed as entirely separate from other financial markets. It was a new frontier. The year was 2017 and the value of all crypto was booming, having gone from $15 billion to $760 billion.
After leaving Jane Street Capital, he started Alameda Research, a trading company specializing in cryptocurrency. He then moved to Hong Kong, where the crypto scene was really taking off, and created the first crypto futures exchange, called FTX. Alameda Research would provide the technology and the existing exchanges within the Asian markets would supply the customer trust.
Now, it’s worth noting that, in the US, cryptocurrency was still tightly regulated, and selling futures was considered illegal. But elsewhere in the world, FTX became a huge success. It minted 350 million FTT tokens, FTX’s own cryptocurrency, and experienced huge gains. It was all very impressive for a new trading startup.
But within FTX, things weren’t going so smoothly. Bankman-Fried wasn’t a great leader. He didn’t like assigning people roles or giving them job titles, and so there was no org chart to provide a clear sense of who reported to whom. He also refused to appoint a Chief Financial Officer to the company and had an annoying habit of playing video games while people tried to talk to him. And then there was his on-again off-again relationship with Caroline Ellison, the CEO of Alameda Research, which was kept secret from nearly everyone.
All of this was swirling into a chaotic brew when, in 2021, FTX took in $1 billion in revenue and Bankman-Fried moved FTX and Alameda to their new home in the resort community of Albany in the Bahamas.
It all comes crashing down
The beginning of the end can be traced to two reports in late 2022, one by Bloomberg, and another by CoinDesk. Both questioned the relationship between Alameda Research and FTX. CoinDesk pointed out that it seemed like over a third of Alameda’s assets, which totaled around $14.6 billion, were FTT tokens. At first, this didn’t seem like catastrophic news, but it soon became apparent to everyone in Bankman-Fried’s orbit that something was amiss. Everyone knew he was spending like crazy. He’d purchased dozens of smaller companies over the past couple years and was spending vast amounts of money on investments in other companies. Whether he was spending his own money, or money from Alameda or FTX – it was hard for anyone to tell. This, along with the possible illegal transfer of assets between FTX and Alameda, was about to send the precarious house of cards tumbling down.
The news struck a nerve, and in a matter of days, $200 million a day was fleeing the exchange. As the crisis deepened, the price of FTT token plummeted from $22 to a mere $7. Quickly, Sam was scrambling to try and cover $5 billion in customer withdrawals. But the money just wasn’t there.
This was essentially the end of FTX and Alameda. Unable to pay back its customers, he was forced to file for bankruptcy. But word soon spread that both the US and the Bahamas were opening investigations into what had happened. Practically overnight, the majority of his employees fled for the airport in the hopes of avoiding questions from the authorities.
As people began to pick through the evidence, it looked like $10 billion had gone from FTX into Bankman-Fried’s private investment fund, while another $8.8 billion in customer funds was hidden in the accounts of Alameda. Still another $5 billion was simply unaccounted for. It was a colossal fiasco and it wasn’t long before Bankman-Fried’s employees were lining up to point the blame at him – the man who was so confident that he could do it all himself. The man who thought he had infinite money and infinite options had run out of both.
Conclusion
The story of Sam Bankman-Fried sheds light on the inner workings of the cryptocurrency world, where billions can be made and lost overnight. It paints a picture of a man who was well-suited to making a fortune in the financial markets but was uniquely unfit for managing a multimillion-dollar company.
About the Author
Michael Lewis
Genres
Money, Investments, Entrepreneurship, Corporate Culture, Biography, Memoir, Nonfiction, Business, Biography, Finance, Economics, Crime, History, Digital Currencies, Politics, Social Sciences
Review
“Going Infinite: The Rise and Fall of a New Tycoon” by Michael Lewis is a gripping narrative that delves into the spectacular rise and dramatic fall of Sam Bankman-Fried, the enigmatic founder of the cryptocurrency exchange FTX. Lewis, known for his best-selling works such as “The Big Short” and “Flash Boys,” offers readers an intimate look into the mind of Bankman-Fried, whose journey from the world’s youngest billionaire to a central figure in a massive financial scandal provides a unique education in high-frequency trading, cryptocurrencies, philanthropy, bankruptcy, and the justice system.
The book has been described as both a psychological portrait and a financial roller-coaster ride, tracing the mind-bending trajectory of a character who never liked the rules and was allowed to live by his own—until it all came undone. Critics have praised “Going Infinite” for its entertaining storytelling, with Lewis being hailed as a world-class noticer and a gifted storyteller. However, the book has also faced criticism for being excessively credulous and overly sympathetic to Bankman-Fried, with some reviewers questioning the depth of insight despite the author’s access.
In summary, “Going Infinite” is a fascinating account of ambition, innovation, and downfall in the world of cryptocurrency, offering a cautionary tale about the volatile intersection of technology and finance.