Rise, fall of Sam Bankman-Fried, FTX at center of Michael Lewis' new book | 60 Minutes

Michael Lewis has made a literary career finding jump off the page characters and using them to help tell complicated stories and what could be more complicated than explaining cryptocurrency Lewis gained all hours access to Sam bankman freed known for a time as the JP Morgan of crypto his sector as ungoverned as his hair bankman freed was worth more than 20 billion dollars before he turned 30. an unlikely celebrity his life braided Finance politics Sports and pop culture then the Empire crumbled and today bankman freed sits in jail on various federal charges and faces potential sentences

of more than a hundred years Lewis though didn't Panic sell he simply went where the story took him his latest book going infinite comes out Tuesday which is also the opening day in the trial of Sam backman freed the story will continue in a moment you had so much access to Sam bankman freed writing his book what ultimately is is the purpose here I realized I had an ambition for the book I saw it as a kind of letter to the jury I mean there's going to be this trial and the lawyers are going to

tell two stories and so there's a story war going on in the courtroom and I think neither one of those stories is as good as the story I have you should be willing Michael Lewis didn't set out to write this book two autumns ago he was at home in the Bay Area when he got a call from a friend interested in investing with a young billionaire could Lewis meet with this wonderkind and size him up so it was Lewis brought Sam bankman freed here in the Berkeley Hills for a hike in the park I think

I remember I knew nothing about him I all I knew was I was supposed to evaluate his character and that 18 months earlier he had nothing now he had 22 and a half billion dollars and was the richest person in the world under 30. he'd care much about like spending it on Yachts he was going to spend it to save Humanity from Extinction kind of thing so the the whole walk was like my jaw was on the floor by here after I heard all that as an author who's stock and trade is finding interesting characters

is your your story meter starting to beep about now I was a red alert and I said this to him I said I don't know what's going to happen to you something's gonna happen to you can I just come and you know ride shotgun now riding shotgun ended up being like hanging on for dear life to a you know an automobile that's going 270 miles an hour and taking every hairpin turn my instinct was we should very slowly be trickling out these positions Sam bankman freed and Lewis would end up meeting more than a hundred

times over two years speaking for countless hours as our camera rolled in July note how bankman freed shuffled cards and Jack hammered his legs and avoided eye contact Lewis considers bakeman free the most challenging and fascinating character he's ever encountered this from an author who's been writing non-fiction since the 80s I would have talked about that guy the story of Sam's life is people not understanding him misreading him he's so different he's so unusual I mean I think in a funny way that the reason I have such a compelling story is I have a character

that I do come to know and the reader comes to know that the world still doesn't know uh sorry some Japanese Yen a graduate of MIT bankman freed saw the world in numbers framing everything in his life as a probability exercise including philanthropy he committed to making as much money as possible so he could give it away as efficiently as possible Guided by a social movement effective altruism what it means in Sam's instance is you can go out and have a career where you do good you can go be a doctor in Africa or you

can go out and make as much money as possible and pay people to be doctors in Africa if you're a doctor in Africa you get you end up saving a certain number of lives but you're only one doctor but if you can pay 40 people to become doctors in Africa you're going to you're going to save 40 40 times the number of lives this is like a strategy game well you don't understand sandbagner freed unless you understand that he turns everything into a game right everything is gamified bankman freed worked as a Wall Street Trader

before moving to Berkeley at age 25 to start his own trading firm Alameda research instead of buying and selling stocks or bonds he would traffic in crypto a digital form of currency not tied to a centralized system the basic idea was to be the smartest person in the crypto markets to be the one who did who did the kind of trading in crypto that the smartest Wall Street Traders did in stocks so these quad skills he had as a Trader on regular stocks at equities markets he was going to bring to this this new ascending

crypto World correct what's the difference between crypto finance and traditional Finance well the promise of crypto Finance is the promise of an absence of intermediaries if I want to wire you ten thousand dollars a bank has to do it a bank records a transaction a bank takes some Little slice of it if I want to wire you ten thousand dollars worth of bitcoin I can just hit a button and you get it so you remove the institutions coming out of the 2008 financial crisis crypto took hold as an anti-establishment punk rock version of a financial

system which Lewis finds ironic in the beginning especially it's a crowd of people who are incredibly mistrustful of Institutions what attracts them to it is they hate the government they hate Banks but then they somehow this pool of incredibly mistrustful people proceed to trust each other in ways that I wouldn't trust you they're parking their money in a sector that's unregulated they're no physical properties probably Squirrely and unreliable over and over but it's predicated on trust they are Charlie Brown kicking the football right that that they're sure that this time Lucy's gonna hold it still

bankman freed made a fortune at Alameda research and then he really got rich instead of Simply trading bankman freed seized on the idea of opening his own cryptocurrency exchange one of the things he notices is that all the crypto exchanges are screwed up in one way or another there are dozens of these places where you can trade crypto but they are they're not structured for a professional Trader the technology is bad they'll lose their customers money it's the Wild West he realizes that if you built a better exchange he wanted to build an exchange he

could trade on so he creates FTX and once he created it it went boom and when it went boom he realized that well that's the you know that's the gold mine it actually isn't trading the crypto this is owning the casino in the casino he started as a gambler and he realized that you know building the better Casino was actually going to be more valuable after has seen explosive growth soon roughly 15 billion dollars a day in trades were executed on his new exchange FTX if you're sitting in the middle of those transactions and you're

taking out even a tiny fraction of a percentage Point uh there's a lot of money to be made indifferent to the outcome of the trade he's just you're taking no risk you're taking no risk at all it didn't matter to him whether crypto went up or crypto went down as long as people are trading crypto it made money it's the best business I had one venture capitalist tell me that several Adventure capitalists thought that Sam might be the world's first trillionaire trillionaire yeah they're looking for the next Google they're looking for the next apple they

thought FTX had that kind of possibility that it had a chance to be the single most important financial institution in the world as he began accumulating billions as if they were Pokemon cards bankman freed began attracting something else he wasn't accustomed to there's a lot of Leverage in cryptocurrency markets attention he changed not at all you know he'd never been on TV he goes on TV in his cargo shorts and his messy hair and he's playing video games while he's on the air by the way he's playing video games on the air you would think

your first television appearance you might be a little a little a little uptight a little nervous and you if you watch the clip you can see his eyes going back and forth this is because he's trying to win his video game at the same time he's on the air whether it was his smarts his Fierce indifference to appearance or simply his vast wealth The Beautiful People suddenly found him irresistible as his net worth goes up so does his Social Capital you you write about a zoom meeting you walked in on he says I got to

go to a zoom I said what is it and he says there's this person named Anna Wintour and and he didn't know who she was he had no idea who she was no so I sat off to one side where she couldn't see me and I watched this Zoom now your thing what is what does Anna Wintour want to do with a celeb like Sam exactly he is the worst dressed person in America he is the worst dressed billionaire in the in the history of billionaires which he wants him to do is to sponsor the

Met Gala for a great ball that she throws every year which is like you know all about dress and appearances Sam was a social experiment he is person who has nothing all of a sudden has seemingly infinite dollars will give it away is unbelievably open-handed about it and doesn't ask a whole lot of questions what that attracts who shows up when that when this person exists everybody everyone comes with a trial everybody comes to the trough everybody wants to be his best friend FTX is the safest and easiest way to buy and sell crypto bankman

freed wanted it known that FTX was the go-to player in crypto hey it's Shaquille O'Neal and I'm excited to be partnering with FTX he turned to the Sports World to bring his exchange both legitimacy and Edge Lewis saw the FTX internal marketing documents he paid Tom Brady 55 million dollars for 20 hours a year for three years he paid Steph Curry 35 million dollars for same thing for three years pretty good hourly win he spent 100 and something million dollars buying the naming rights for the Miami Heat arena I don't think so he spent 25

million dollars making a Super Bowl ad with Larry David it's FTX yeah I don't think so for which he then paid Larry David another 10 million dollars you know his breath taking what's on that list did any of surrounding him these celebrities do it because they found him interesting or was it all because he's worth 20 some billion dollars it's probably not fair for Meek to speak for them but I will speak for them Tom Brady I think adored him I think Tom Brady thought he was just a really interesting person I think he'd like

to hear what he had to say what's up guys I'm here with my boy Sam from FTX and he really liked Tom Brady and Sam wasn't like a big Sports person so it was funny to watch that interaction it was like these two people actually get along it's like the class nerd and the quarterback two High School tribes the nerd of all nerds like even the Nerds don't hang out with this nerd he's such a nerd the quarterback somehow likes him and he somehow likes the quarterback Lewis writes in his book that bankman Freed's philanthropic

Ambitions kept pace with his wealth never mind doctors in Africa he set out to confront what he saw as existential threat to all of humanity the sandbag and freed ends up with a portfolio heavily concentrated in two things pandemic prevention because there really are things the government should be doing and the other thing that made his list that was so interesting was Donald Trump he took the view that all the big existential problems are going to require the United States government to be involved to solve them and if the democracy is undermined it like we

don't have our democracy anymore all these problems are less likely to be solved and he saw Trump trying to undermine the democracy and he thought Trump is belongs on the list of existential risks why is that end Lewis writes that in 2022 bankman freed met with the most unlikely of allies Republican Senate minority leader Mitch McConnell you're flying with Sam and he tells you about a meeting he's going to have with Mitch McConnell well the interesting thing starts before we even get on the plane I meet him at the airport and he comes tumbling out

of a car and he's in his cargo shorts and his T-shirt and he's got balled up in his hand uh it takes me a while to see what it is but it's a blue suit it's got more wrinkles than any blue suit ever had it's like it's been it's just jammed in his little ball and a shoe like falls out of the pile and he's got in his arms and I said like what why you have a suit he says Mitch McConnell really cares what you wear when you meet with him and he's having dinner

in six hours with Mitch McConnell and I I said well you got the suit is there you got belt I guess no I have a belt I said you got you have a shirt he goes no no shirt and the suit you really can't really wear that suit and he goes yeah but they told me to bring a suit according to Lewis bankman freed wanted to help McConnell fund Republican candidates at odds with Donald Trump what is the subtext of this dinner is Sam is going to write tens of millions of dollars a check to

a Super PAC that Mitch McConnell is then going to use to get elected people who are not hostile to democracy wait so Mitch McConnell has a list of Republican candidates who are sort of on the playing field for democracy versus what he deemed outside he and his people had done the work to distinguish between actual deep trumpers and people who are just seeming to to approve of Donald Trump but were actually willing to govern Bateman freed ended up giving multi-millions in support of Republican candidates back in 2020 bankman freed had ranked among Joe Biden's biggest

donors as 2024 approached he planned on spending more albeit in the most unconventional way one of the most shocking passages in this book I thought came with this Revelation that Sam had looked into paying Donald Trump not to run that only shocks you if you don't know Sam Sam's thing we could pay Donald Trump not to run for president like how much would it take did he get an answer so he did get an answer he was floated there was a number that was kicking around and numbers kicking around when I was talking to Sam

about this was five billion dollars Sam was not sure that number came directly from Trump anyways so Sam's looking into paying Trump not to run and he actually get didn't have come from trouble himself but he actually got a price he got one answer yes the question Sam had was not just his five billion dollars enough to pay Trump not to run but was it legal why didn't this happen why did you follow through well they were still having these conversations when FDX blew up so why didn't happen he didn't have five billion dollars anymore

approach for comment by 60 Minutes neither former president Trump nor Senator McConnell responded last November in a matter of days Mega billionaire Sam bankman freed lost virtually everything and he soon faced an onslaught of federal fraud charges when we return the fall of Sam bankman freed meteoric as the rise of Sam bankman freed was the fall came faster still in a span of days a celebrity multi-billionaire became a pariah his wealth largely evaporated as Federal prosecutors mounted a case against him in his new book out this week Michael Lewis details the crash and leaves it

to readers to decide if Sam bankman freed was a cryptocurrency con man in cargo shorts or a really smart guy singularly ill-equipped to run and manage a business the story will continue in a moment spring of 2022 Sam bankman freed had planted his flag in the Bahamas he decided to move his high-flying cryptocurrency exchange FTX to the islands not for the beaches but for the friendly regulatory climate with the Prime Minister on hand they put shovels on the ground for a new headquarters bankman freed openly discussed paying off the country's 9 billion dollar national debt

by this point Michael Lewis and bankman freed had a dynamic that went beyond author subject he started using me as a sounding board for what for just like decisions he was making should I join Elon Musk in buying Twitter you know should we do this should we do that what'd you tell them mostly my answers were no no and no and he would look at me and say you're born grown up in Beekman freed now 31 told Lewis now 62 that anyone older than 45 was useless but Lewis noted that if ever there were a

corporate leader in need of adult input to manage 400 employees it was Sam bankman freed what kind of a manager was he horrible I mean even his best friends inside the company said Sam has just not built to manage people had Sam managed anything before his sole experience of leadership was running puzzle hunts for math nerds at high school and actually thought deep down if you asked him people shouldn't need to be managed so he proceeded to act on that and basically didn't manage them is there any checks and balances happening in this environment then

well what checks and balances would you imagine there might be in a corporation Chief Financial Officer no there's no Chief Financial Officer HR department no there was no HR department compliance office oh no no there was no board of directors or rather I yes Sam I said who's your board of directors and he said we don't really have one I said we don't have one everyone has over he says there are two other people on something called a board of directors but it's changed and I don't even know their names and their job is just

to DocuSign do you know the name of the board of directors no you know who was on it so he's running this like a lemonade stand and he's doing enough volume of business this could be a public traded company if you wanted to oh if it was a publicly Trader company would be a publicly traded company worth 40 billion dollars no it was all Sam's world and there was nobody there to say like don't don't do that FTX purchased a 30 million dollar executive Penthouse in the Bahamas resort flush with an exclusive Marina it was

lost on Sam who worked feverishly in the office and slept on a beanbag chair but there was another reason he avoided the Lux Penthouse his girlfriend Caroline Ellison a former Wall Street Trader herself had kicked him out compounding matters he had put her in charge of running Alameda research bankman Freed's privately held trading firm so the romance between Sam and Caroline go sideways how does that impact what happens to FTX and Alameda research coincidentally the romance more than goes sideways they have a falling out where they're basically not speaking to each other she's not speaking

to him uh at precisely the time crypto collapses explain why that's a problem problem because Alameda research is one of the Traders on FTX translation though bankman freed owned the FTX exchange he was also trading crypto on FTX through his other business Alameda research and he was gambling in his own Casino uh and it created conflicts of interest so he owns the casino but he's still gambling yes he didn't stop gambling crypto is destabilized the value of crypto had been eroding throughout the summer of 2022 then came a one-two punch a leak of alameda's unflattering

balance sheet in early November and Days Later Chiang Pang Zhao head of a rival Exchange took to Twitter to question ftx's viability this triggered a classic Panic run digital Style on FDX how fast was money flowing out of FDX in the run you know a billion dollars a day was leaving and billion dollars a day this thing's gushing yeah it unravels because of the deposit at FDX want their money back and it's not all there it wasn't all there in large part because the investors money intended for FTX had wound up in bankman Freed's privately

held fund Alameda research more than eight billion dollars do you think he knowingly stole customers money Sam put that way no so there's another side of this in the very beginning if you were a crypto Trader who wanted to trade on FTX and wanted to send dollars or Yen or Euros onto the exchange so you could buy crypto FTX couldn't get bank accounts so allow me to research which could get bank accounts created bank accounts for people to send money into so that it would go to FTX but it was held in Alameda research Alameda

research bank accounts and 8 billion something dollars piles up inside of Alameda research that belongs to FTX customers that never gets moved it never gets transferred it never gets transferred that sounds like a problem it's a huge problem what's the toughest question you think Sam's gonna have to answer how do you not know that eight billion dollars that's not yours is in your private fund I mean really how do you not now explain eight billion dollars is in your private fund that belongs to other people and you're saying you didn't know please explain how that's

possible did you do that yeah I did what do you say he said you have to understand that when it went in there it was a rounding era that I felt like we had Infinity dollars in there that I wasn't even thinking about it I could see people watching this saying like come on guys this is Elizabeth Holmes and cargo shorts and this is is all a ruse don't fall for the stick this is a bad actor it is a little different supplying you know phony medical information to people that might kill them and in

this case what you're doing is possibly losing some money that belonged to crypto speculators in the Bahamas on the other hand this is not to excuse he shouldn't have done that early in the morning of November 11th Sam bankman freed reluctantly docusigned FTX into bankruptcy it had taken five days for FTX to implode you you go back to the Bahamas as Pompeii is falling what'd you see when you landed I got back the day on the Friday of the collapse it was the it was the afternoon that Sam has signed the bankruptcy papers and by

then uh they'd been a mass Exodus most of the employees had fled and fled in such a way that kind of a ridiculous way they'd taken the company cars and ditched them at the airport where the keys inside or they were gonna get the hell out nobody knew what had happened but they were just scared that they were going to be detained by the local authorities we drove into the lot and Sam bankman freed is walking loops around the parking lot he'd been brought over there earlier to be interviewed by Bahamas authorities and nobody give

him a ride home and he was just sitting there all alone how do you divorce Michael Lewis The empathetic human being from Michael Lewis the journalist and author who recognizes what a third act this is pretty dramatic right if I were a better person I would have been deeply distressed by all of this it took about a nanosecond before I thought oh my God this is an incredible story a month later bankman freed was arrested in the Bahamas and extradited to New York to face federal charges that he had fraudulently used customer deposits to finance

billions of dollars of venture capital Investments real estate purchases and political donations what's your response to someone who hears us and says it's a fun story and it's crypto in the Bahamas but this is the oldest architecture of a financial collapse that's been going on for centuries this isn't a Ponzi scheme like when you think of a Ponzi scheme I don't know Bernie Madoff the problem is it's there's no real business there the dollar coming in is being used to pay the dollar going out and in this case they actually had a great real business

if no one had ever cast aspersions on the business if there hadn't been a run on customer deposits they'd still be sitting there making tons of money inside the Beltway in the Hollywood Hills and in sports Arenas suddenly if predictably it was Sam bankman who he becomes toxic like nobody wants to talk to him he has no friends you watch it you watch everybody who rushed in rush out how'd Tom Brady react to this the first reaction was very it was sadness he I clearly really liked him and he really liked the hope that he

brought I mean a lot of people wanted there to be a Sam you know there's still a Sam backman freed shaped hole in the world that now needs filling like that character would be very useful what he represented what he wanted to do with the resources and Brady was I think crushed and I think his time has gone by and he ceased to get a really good explanation about what's happened um I think he's just like he tricked me I'm angry I don't want to have anything to do with it anymore starting in December Lewis

began driving the 45 miles from Berkeley to Stanford where bankman freed was living with his parents who have also been ensnared in legal proceedings tied to FTX out on bail but wearing an ankle monitor he left the door open for Lewis so they could continue their conversations we anticipated speaking with bankman freed in August but the judge in his case instituted a gag order and then put him in a Brooklyn jail for violating terms of his release bankman freed has pled not guilty he genuinely thinks he's innocent I can tell you his State of Mind

four or five months ago it's like if you offered me plead guilty and do six months of house arrest I'd still say no what do you expect his biggest fear is if he has to go to prison not having the internet that's now that sounds crazy but I do think they've had the internet he could survive jail forever without having a constant stream of information to react to I think he he may go mad if you gave Sam Bank refreed a choice this is quite serious of living in a 39 million dollar Penthouse in the

Bahamas without the internet or the Metropolitan Detention Center in Brooklyn with the internet there's no question in my mind he'd take the jail Michael Lewis has never before written something that dovetails so dramatically with a sensationalized news event Lewis's book going infinite comes out Tuesday the same day Sam bankman Freed's trial begins he made a mockery of crypto in the eyes of many he's sort of taken away The credibility of effective altruism how do you see him everything you say is just true it's it's more interesting than that every cause he sought to serve he

damaged every cause he sought to fight he helped he was a person who set out in life to maximize the consequences of his actions never mind the intent and he had exactly the opposite effects of the ones he's set out to have so it looks to me like his life is a cruel joke Michael Lewis on why he nearly stopped writing after his daughter's death I didn't know if I ever wanted to ride again at 60 minutes overtime.com