Going Infinite: The Rise and Fall of a New Tycoon

by Michael Lewis

The very first question on the final exam set him off. What’s the difference between art and entertainment? “It’s a bullshit distinction dreamed up by academics trying to justify the existence of their jobs,” wrote Sam, and handed the exam back.

“The game is shallow if you know when you create it what the best play is,” he said. “There should exist within the game a scenario where it is impossible to determine a winning strategy.”

This was how Sam figured out who he was: by thinking about things for himself, without a whole lot of concern for the thoughts of others.

You might surmise that they wouldn’t much care who wound up with the money, as it all would go to saving the lives of the same people none of them would ever meet. You would be wrong: in their financial dealings with each other, the effective altruists were more ruthless than Russian oligarchs. Their investors were charging them a rate of interest of 50 percent. “It wasn’t a normal loan,” said Nishad. “It was a shark loan.”

How did everyone’s actions reflect on the probability distribution of their future behavior. The sentence told you a lot about how Sam viewed other people, and maybe himself too. Not as fixed characters—good or bad, honest or false, brave or cowardly—but as a probability

In early 2021, Jump Trading—not a conventional venture capitalist—offered to buy a stake in FTX at a company valuation of $4 billion. “Sam said no, the fundraise is at twenty billion,” recalled Ramnik. Jump responded by saying that they’d be interested at that price if Sam could find others who were too—which told you that the value people assigned to new businesses was arbitrary.

There was one question he dwelled on: Why had neither he nor anyone else he knew seen this coming? He had the beginning of an answer. “Sam’s oddness,” he said. “His oddness mixed with just how smart he was allowed you to wave away a lot of the concerns. The question of why just goes away.”

Inside the US bankruptcy system, there existed a frustrating and often frustrated character called the trustee. Employed by the US Department of Justice, the trustee was meant to serve as a check on the insiders who profited from the bankruptcy. (And who controlled the evidence for any criminal cases.) But the only power the trustee had been given by law was the power to bitch and moan to the bankruptcy judge, himself usually a former bankruptcy lawyer. The US Trustee assigned to the FTX case, Andrew Vara, had written a strongly worded letter to the judge, John T. Dorsey, arguing that Sullivan & Cromwell shouldn’t be allowed to run the bankruptcy, and that an independent examiner should be brought in to police it. Dorsey had denied the request. He did the same with Dan Friedberg’s.

The first one had to do with financial incentives. None of the characters in this financial drama had behaved as financial characters are expected to behave. Gary had owned a piece of Alameda Research, but his stake in FTX was far more valuable. Nishad owned a big chunk of FTX and none of Alameda Research. Ditto Caroline, who ran Alameda Research but owned shares only in FTX. None of these people had any interest in moving money out of FTX into Alameda Research in a way that put FTX in jeopardy. Just the reverse: it might as well have been their money that was being moved. And yet at least up until late spring of 2022, when crypto prices began to plunge, and possibly much later than that, none of them expressed disapproval of the risk being taken with their fortunes. Why not?