HomeMarket NewsBlockchainSam Bankman-Fried and the Chaotic World of Crypto

Sam Bankman-Fried and the Chaotic World of Crypto

Actionable Trade Ideas

always free

While many insiders in the crypto industry have a negative opinion of Sam Bankman-Fried, it came as a surprise when author Michael Lewis spoke in favor of him during an interview on 60 Minutes. Lewis referred to FTX, the cryptocurrency exchange founded by Bankman-Fried, as “a great real business.” This statement sparked controversy, as Bankman-Fried has been associated with the disappearance of billions of dollars and growing regulatory scrutiny of the crypto industry. So why does Lewis seem to be on his side?

Unraveling the Complexity

Lewis’s book, “Going Infinite,” was released on the first day of Bankman-Fried’s trial and was described by the author himself as “a letter to the jury.” Lewis’s fame and accessible writing style have the potential to influence public opinion, even if he doesn’t convince the jury. It is worth noting that Lewis’s book offers a more nuanced view of FTX and its sister company, Alameda Research. He portrays Bankman-Fried as an agent of chaos rather than someone with criminal intent.

The book delves into the blurry line between FTX and Alameda Research, noting that over $10 billion meant to be custodied by FTX somehow ended up in Bankman-Fried’s private trading fund. Lewis explores the question of why all of this happened and suggests that Bankman-Fried’s messy management style and disregard for others were major factors. However, Lewis does not see him as a thief but rather as someone who unintentionally caused significant damage.

Moreover, Lewis highlights Bankman-Fried’s lack of empathy and explains that his actions were never personal, but rather based on calculations of whether someone was worth his time. Despite Bankman-Fried’s commitment to “effective altruism,” his behavior did not demonstrate a concern for others. Lewis even suggests that Bankman-Fried set out to establish FTX as the most regulated and law-abiding crypto exchange, which ultimately failed.

A Tale of Contrasts

The book’s sympathetic treatment of Bankman-Fried is particularly striking when compared to the less favorable portrayals of his adversaries, such as Binance CEO Changpeng Zhao. Lewis likened Bankman-Fried and Zhao to the Luke Skywalker and Darth Vader of the crypto world. He depicted Binance as the class bully and FTX as the class nerd, both using their powers to torment each other. Lewis also suggested that Bankman-Fried focused on the size of the pie, while Zhao cared more about the size of his own piece.

The Fallout and CoinDesk’s Role

Lewis’s book also delves into the downfall of FTX and the role of CoinDesk, the author’s employer. CoinDesk published an article revealing that Alameda’s balance sheet depended heavily on FTT, a token minted by Bankman-Fried. This raised questions about Alameda’s viability and its relationship with FTX. Lewis downplays the significance of the article, even though it received substantial attention, citing only one reaction. However, the article was a significant revelation that cast doubt on FTX’s once untouchable empire.

Despite initially falling for Bankman-Fried’s charms, Lewis acknowledges that many others were enchanted by him as well. Celebrities, politicians, venture capitalists, and even the fashion industry were drawn to Bankman-Fried’s influence. However, Lewis emphasizes that the concentration of power in one individual, especially in an industry that promotes decentralization, was problematic. The crypto world’s anger towards Bankman-Fried may seem like progress, but it also indicates underlying issues within the industry.

A Lesson in Trust

Lewis’s book offers a profound insight into the world of blockchain technology and its reliance on trust. The concept of removing intermediaries and trusting technology instead of humans was overshadowed by the excessive trust placed in Bankman-Fried’s ability to navigate a complex web of companies and save a troubled industry. The consequences of this misplaced trust continue to haunt the crypto world.

In the end, as Lewis notes, the crypto finance industry, built on a foundation of mistrust, ironically placed vast sums of money in the hands of strangers.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.