A deep dive into the controversial book ‘Going Infinite’ and what it reveals about FTX and Sam Bankman-Fried
Michael Lewis’s latest book, “Going Infinite,” which chronicles the rise and fall of FTX and its founder Sam Bankman-Fried (SBF), has caused quite a stir since its release last week. The book has been met with a mix of criticism and controversy, with many questioning Lewis’s portrayal of SBF and the events leading up to FTX’s collapse.
Lewis, known for his acclaimed financial journalism and books like “Liar’s Poker,” “Moneyball,” and “The Big Short,” had been shadowing SBF for months before the collapse of FTX, making him an ideal writer to provide insight into the events that unfolded.
One of the main criticisms of the book is that Lewis was too sympathetic towards SBF, rather than portraying him as a fraud and the orchestrator of a massive Ponzi scheme, as some reports claim. However, after reading the book, I personally did not find Lewis overly sympathetic towards SBF. Instead, he painted a picture of someone who got in over their head with FTX and ultimately caused its downfall.
As an entrepreneur myself, I can relate to the idea of getting overwhelmed and out of your depth. Running a business often means having more tasks and responsibilities than time to handle them. However, it is crucial for business owners to prioritize critical tasks and externalize them if needed. SBF failed in this regard, relying on his existing entity, the hedge fund Alameda Research, to provide deposit accounts for FTX customers, instead of holding customer funds with FTX as they should have.
Furthermore, in the early days of FTX, Alameda Research served as the primary market maker, but unlike other participants on the platform, it did not comply with the same risk controls. Additionally, FTX’s exchange token, FTT, was controlled and majority-owned by SBF and his businesses, which led to customer deposits flowing between FTX and Alameda without adequate risk controls.
The collapse of FTX occurred when Coindesk published a report suggesting that the majority of Alameda Research’s balance sheet was composed of FTT tokens. CZ Binance’s founder, CZ, then announced a sell-off of their FTT position, leading to a run on FTX and the inability to honor customer withdrawals. Lewis does not shy away from these facts, painting a picture of SBF as someone who was naive and did not pay enough attention to critical operational details.
SBF’s actions and motivations are also explored in the book. He sees life as a series of trades, aiming to maximize impact on society through effective altruism. However, the actions of others in the effective altruism movement associated with Alameda Research do not necessarily align with selfless motives, highlighting the complexity of SBF’s worldview.
Critics argue that SBF must have known the fragile nature of his business and thus question Lewis’s portrayal of him as naive. However, Lewis maintains that SBF could have genuinely been naive, given his age and the unique circumstances of his success in the crypto market. While SBF’s actions and lack of separation between entities like FTX and Alameda were his responsibility, others are also to blame for ignoring warning signs in their pursuit of financial gain.
In conclusion, “Going Infinite” provides a comprehensive account of the FTX collapse and SBF’s role in it. While it would have been beneficial to release the book after SBF’s trial for a more conclusive ending, it is still worth reading to form your own opinions on the matter. Michael Lewis’s expertise in financial journalism makes him a reliable source for exploring the controversy surrounding FTX and its founder.