WEBVTT - Judging Sam: Michael Lewis Talks Money with Matt Levine 0:00:15.316 --> 0:00:20.716 Pushkin. Hey there, it's Michael Lewis. Before we get to 0:00:20.756 --> 0:00:22.636 this episode, I want to let you know that you 0:00:22.636 --> 0:00:25.916 can listen to each episode of Judging Sam The Trial 0:00:25.956 --> 0:00:29.476 of Sam Bankman Freed ad free by becoming a Pushkin 0:00:29.556 --> 0:00:33.516 Plus subscriber, and with your subscription you'll also get exclusive 0:00:33.516 --> 0:00:37.356 access to ad free and early bingeable podcasts like Paul 0:00:37.436 --> 0:00:42.236 McCartney's new podcast, McCartney A Life and Lyrics, Malcolm Gladwell's 0:00:42.236 --> 0:00:46.716 revisionist history, The Happiness Lab from Doctor Lorie Santos, and 0:00:46.836 --> 0:00:49.956 tons of other top shows from Pushkin. Sign up an 0:00:49.996 --> 0:00:55.596 Apple Podcasts or at Pushkin, dot fm, Slash Plus. Welcome 0:00:55.636 --> 0:00:58.796 to Judging Sam The Trial of Sam Bankman Freed. I'm 0:00:58.836 --> 0:01:02.676 Michael Lewis, and we're recording this on October seventeenth today 0:01:02.716 --> 0:01:06.276 on the show Matt Levine. Matt's a business columnist at 0:01:06.276 --> 0:01:10.116 Bloomberg News, where he writes the terrific newsletter Money Stuff. 0:01:11.276 --> 0:01:14.516 He's covered SPF and FTX closely, and he knows more 0:01:14.556 --> 0:01:17.236 about how crypto markets work than just about anybody else. 0:01:17.876 --> 0:01:19.596 I wanted to talk to him about a lot of things, 0:01:19.596 --> 0:01:23.076 among them how his early conversations with Sam might have 0:01:23.196 --> 0:01:26.916 foreshadowed the FTX collapsed and where are the eight billion 0:01:26.996 --> 0:01:30.236 dollars this whole trial is about actually went And I 0:01:30.276 --> 0:01:32.276 also wanted to talk to him about how is reading 0:01:32.276 --> 0:01:34.396 of the portrait I painted of Sam in my book 0:01:34.516 --> 0:01:39.556 has changed now that Sam's on trial. I have a 0:01:39.636 --> 0:01:41.516 question to you. I don't want to forget you were 0:01:41.556 --> 0:01:44.476 bewildered by the response to the book, like it was 0:01:44.516 --> 0:01:47.556 just weird the initial response to the book. Am I 0:01:47.596 --> 0:01:48.356 misquoting you? 0:01:48.396 --> 0:01:49.876 I don't know, Like the days lying after the trial, 0:01:49.876 --> 0:01:51.956 I think there was like a desire for people to 0:01:51.996 --> 0:01:55.836 either be pro or anti SPF. And to be clear, 0:01:56.676 --> 0:01:58.836 everyone in the world except for like his parents, is 0:01:58.836 --> 0:02:01.116 anti SPF, and so it was sort of convenient for 0:02:01.156 --> 0:02:03.836 you to be the pro SPF guy, even if he 0:02:03.956 --> 0:02:06.116 were being like, yeah, I think this guy's innocently like, 0:02:06.356 --> 0:02:09.436 is not that necessary to get mad at that, Like 0:02:09.636 --> 0:02:13.596 it's okay, everyone thinks he guilty, but people were about it. 0:02:13.676 --> 0:02:16.276 You for like kind of defending him. 0:02:16.596 --> 0:02:18.676 But you said something interesting to me when I sent 0:02:18.716 --> 0:02:20.756 you this note asking you to come on. You said 0:02:20.956 --> 0:02:24.996 that when you finished the book, just on the basis 0:02:25.036 --> 0:02:28.756 of the facts in the book, you thought, I don't 0:02:28.756 --> 0:02:31.276 want to put words in your mouth, but it actually 0:02:31.316 --> 0:02:33.996 sort of like convinced you even more of his guilt, 0:02:34.516 --> 0:02:37.596 maybe slightly changed the way you felt about what he'd done. 0:02:38.476 --> 0:02:40.316 I feel like there have been two narratives of this, 0:02:40.556 --> 0:02:45.716 which are one his narrative, which is, I like made 0:02:45.756 --> 0:02:49.436 a series of understandable mistakes and lost all that money, 0:02:49.796 --> 0:02:52.396 and then everyone else's narrative, which is he's an evil 0:02:52.436 --> 0:02:55.836 genius who stole all this money to spend on political 0:02:55.836 --> 0:02:59.876 donations and Bahama's real estate and like, you know, cackled 0:02:59.876 --> 0:03:02.476 gleefully as he stole the money. And neither of those 0:03:02.516 --> 0:03:05.156 is that compelling. And like between those two his like, ah, 0:03:05.196 --> 0:03:08.396 I'm just an innocent guy, you know, had had some legs. 0:03:08.556 --> 0:03:11.396 But I think that like what came clear came clear 0:03:11.396 --> 0:03:12.956 to me in the book, and like the somethings that 0:03:12.996 --> 0:03:14.796 I should have known this already. He's sort of a 0:03:14.836 --> 0:03:19.116 classic scammer figure in the sense of, like the core 0:03:19.196 --> 0:03:24.436 thing he did was take ridiculous risks with his investors, 0:03:24.436 --> 0:03:30.796 with his customers money while saying and probably believing himself 0:03:31.076 --> 0:03:33.916 that he wasn't right. Like part of the problem is 0:03:33.916 --> 0:03:35.636 that the guy loves taking risks, but part of the 0:03:35.636 --> 0:03:37.236 problem is that like he can sort of like sit 0:03:37.236 --> 0:03:38.916 down and look at you in the eye and say, oh, no, 0:03:38.996 --> 0:03:41.116 I'm not taking risk. This was all totally safe and 0:03:41.156 --> 0:03:43.436 like kind of believe it himself. And I think that's 0:03:43.476 --> 0:03:45.396 like the what I got from the book is like 0:03:45.436 --> 0:03:46.916 a real portrait of a guy who is like that, 0:03:46.996 --> 0:03:49.436 who is a wild risk taker who sort of doesn't 0:03:49.476 --> 0:03:51.716 perceive it that way. And like that's like a really 0:03:51.716 --> 0:03:54.556 classic profile of someone doing a financial fraud, right, Like 0:03:54.596 --> 0:03:56.876 that's that's kind of how everyone does it. And so 0:03:57.916 --> 0:04:00.196 to me, reading the book like like sort of made 0:04:00.196 --> 0:04:02.156 sense of what happened in a way that is like 0:04:02.236 --> 0:04:04.796 less bad than like the worst story people tell about 0:04:04.796 --> 0:04:06.956 Sam bekmunfreed, but also in a way that is like 0:04:07.196 --> 0:04:10.116 fully sufficient to convict him of fraud, like and like 0:04:10.276 --> 0:04:12.236 and is in fact the normal way forra it happens. 0:04:12.636 --> 0:04:14.876 What was the emotional takeaway when you when you look 0:04:14.916 --> 0:04:16.716 at what's happening now and you look at the likely 0:04:16.756 --> 0:04:18.356 that he's going to go to jail for forty years 0:04:18.436 --> 0:04:21.396 or whatever, how do you feel about it? 0:04:21.596 --> 0:04:24.116 Look, I feel bad for everyone to whom bad things happen, 0:04:24.156 --> 0:04:27.196 which includes you know, the people who lost money on 0:04:27.276 --> 0:04:28.916 ft X and also him and his parents. You know, 0:04:28.956 --> 0:04:31.036 like I think that, don't you know, it's it's sad 0:04:31.076 --> 0:04:33.556 for anyone to go to prison. But that said, I 0:04:33.556 --> 0:04:35.596 mean like it did like make like a little bit 0:04:35.676 --> 0:04:37.356 make me a share in like the outrage that people 0:04:37.396 --> 0:04:40.076 have at him, because like, you really can't do that. 0:04:40.876 --> 0:04:42.956 You're not supposed to do that. You know. I've talked 0:04:42.956 --> 0:04:45.156 to him, you know, not like this week, but in 0:04:45.436 --> 0:04:48.116 the past, and I think that he he does like 0:04:48.156 --> 0:04:51.876 really coherently and convincingly present this picture of like, oh no, 0:04:51.956 --> 0:04:54.356 it all made sense. And I think that like having 0:04:54.356 --> 0:04:56.436 the fuller portrait of like what he thought all made 0:04:56.476 --> 0:04:58.476 sense makes me kind of mad and like, you know, 0:04:59.556 --> 0:05:03.116 it didn't make sense. You just were you know, you 0:05:03.236 --> 0:05:05.996 just you had like a blind spot in your mind 0:05:06.236 --> 0:05:09.356 about like the risks you were taking and like and 0:05:09.396 --> 0:05:12.316 like your own sort of status is a charmed person 0:05:12.316 --> 0:05:13.796 who would definitely get all the money back and it 0:05:13.836 --> 0:05:15.356 was no problem. I mean, the story in your book 0:05:15.356 --> 0:05:18.676 that is so damning, I think is the thing about 0:05:19.036 --> 0:05:21.756 the very early days of Alameda where they like, thank 0:05:21.836 --> 0:05:24.836 he just placed some money, and he's like, oh, it's 0:05:24.876 --> 0:05:26.516 like an eighty percent chance we'll get it back. It's 0:05:26.516 --> 0:05:27.756 no problem. We don't have to tell you about it. 0:05:27.796 --> 0:05:29.036 And then like they get it back and he's like, 0:05:29.036 --> 0:05:31.316 ah see, I'm always right, and like that's like that's 0:05:31.316 --> 0:05:33.356 like the worst possible lesson for him to learn, right, 0:05:33.516 --> 0:05:36.836 Like had like had they never gotten the money back, 0:05:37.036 --> 0:05:39.356 and like, had he been fired, that would have been it. 0:05:39.396 --> 0:05:40.956 He would be like, go be a trader at Jane 0:05:40.956 --> 0:05:43.076 Street orriever, right, Like he'd been fine, right, But instead 0:05:43.116 --> 0:05:45.636 he's like, I can never mess up. And then he 0:05:45.716 --> 0:05:47.956 lost like eight billion dollars instead of four million dollars, 0:05:48.036 --> 0:05:49.476 and now he's like gonna go to job forever. 0:05:49.956 --> 0:05:52.916 So I think that's exactly right. When people ask me 0:05:52.996 --> 0:05:55.756 what chapter to if they're going to excerpt a chapter 0:05:55.836 --> 0:05:57.436 or read a chapter, you get a feel I say 0:05:57.476 --> 0:06:00.476 that chapter because that's the foreshadowing of what's going to happen. 0:06:00.756 --> 0:06:03.996 And what also happened in that moment was, you know, 0:06:04.036 --> 0:06:06.836 he had this pool of twenty effective altrus who were 0:06:06.876 --> 0:06:08.996 working with him. Half of them decide he's like a 0:06:09.196 --> 0:06:12.596 criminal or are so catastrophically sloppy that he might as 0:06:12.636 --> 0:06:15.196 well be a criminal. But the half who stay in, 0:06:15.236 --> 0:06:18.356 you know, including Caroline and his shot and Gary, they 0:06:18.476 --> 0:06:22.436 become convinced to the narrative that like Sam's right all 0:06:22.476 --> 0:06:25.236 the time, that becomes the new rule. So that that 0:06:25.316 --> 0:06:29.956 creates kind of the psychology of FTX that it's it's 0:06:29.996 --> 0:06:34.476 sort of like that Sam is beyond questioning, and that 0:06:34.996 --> 0:06:38.276 obviously that leads to what it leads to. Anyway, you mentioned, 0:06:38.436 --> 0:06:40.756 I want to talk about your interactions with Sam bankman 0:06:40.836 --> 0:06:43.316 Free for a bit. One of your actual interactions with 0:06:43.396 --> 0:06:45.556 Sam Bcmanfree has become evidence in the trial. Can you 0:06:45.596 --> 0:06:49.036 explain this interaction and can you explain how the prosecutors 0:06:49.036 --> 0:06:49.556 have used it. 0:06:49.996 --> 0:06:54.836 So I've done two Bloomberg podcasts with him, and the 0:06:54.916 --> 0:06:57.276 first of them it was like maybe a little early 0:06:57.316 --> 0:06:59.476 in his celebrity. I was twenty twenty one, I want 0:06:59.476 --> 0:07:01.796 to say, and we just like we just have like 0:07:01.836 --> 0:07:04.836 a very geeky conversation about crypto market structure, just like 0:07:05.636 --> 0:07:08.676 how do these exchanges work? And I didn't really know anything, 0:07:08.716 --> 0:07:10.556 but like I come from a sort of you know, 0:07:11.116 --> 0:07:14.516 traditional finance equity market structure background, so we could have it. 0:07:14.556 --> 0:07:15.916 And you know he does too, right, he came from 0:07:15.956 --> 0:07:18.516 Chan Street, so we could have an interesting conversation about like, 0:07:18.956 --> 0:07:22.116 you know, pre funding trades on exchanges, and like, you know, 0:07:23.596 --> 0:07:25.756 one thing we talked about a lot was there had 0:07:25.796 --> 0:07:29.916 been this epidemic of crypto exchanges blowing up, and like 0:07:29.956 --> 0:07:31.796 one thing that FCX was promising is we have a 0:07:31.796 --> 0:07:36.876 better sort of risk management system. And he, in his 0:07:37.436 --> 0:07:39.356 role as sort of like an elder statesman of crypto, 0:07:39.476 --> 0:07:42.156 like walked through all the bad ways that all the 0:07:42.196 --> 0:07:44.396 other exchanges did it, which is basically like they didn't 0:07:44.436 --> 0:07:46.516 have any system. They like blew people out of trades 0:07:46.556 --> 0:07:48.756 sloppily and then lost a lot of money. They didn't 0:07:48.756 --> 0:07:50.596 have any sort of insurance fund, and so they had 0:07:50.636 --> 0:07:53.876 to like basically haircut winning traders in order to you know, 0:07:53.916 --> 0:07:57.396 make up for losses by losing traders. And he was like, 0:07:57.436 --> 0:07:59.436 and we have a different system. We have an intelligence 0:07:59.436 --> 0:08:01.996 system for blowing people out. We don't just like put 0:08:02.036 --> 0:08:04.116 in market orders to sell stuff on the exchange. We 0:08:04.196 --> 0:08:07.876 like have liquidity providers who like step in, and we 0:08:07.916 --> 0:08:09.796 have an insurance fund too, but we never really had 0:08:09.836 --> 0:08:11.636 to draw on that. And so the interaction that gets 0:08:11.636 --> 0:08:14.476 played at the trial is him saying we've never really 0:08:14.836 --> 0:08:16.756 essentially says, we've never really had losses in a day, 0:08:16.836 --> 0:08:20.116 like we've always been able to stop losing trades before 0:08:20.116 --> 0:08:23.636 they cause any material loss to FTX, And what prosecutors 0:08:23.636 --> 0:08:25.636 say is that that's not true, and they had a 0:08:25.636 --> 0:08:27.676 big loss early on that sort of like ate away 0:08:27.716 --> 0:08:30.036 at their entire insurance fund. This is in the context 0:08:30.076 --> 0:08:34.036 of like also Gary Wan testifying that the insurance fund 0:08:34.156 --> 0:08:36.556 was essentially a fake and that they like displayed on 0:08:36.596 --> 0:08:39.236 their web page a fake number that was generated by 0:08:39.236 --> 0:08:41.516 a random number generator to say, this is how much 0:08:41.556 --> 0:08:44.636 money we have backing FTX trades. So the thing that 0:08:44.676 --> 0:08:47.996 he told me about like ftx's risk management was in 0:08:48.036 --> 0:08:52.476 the prosecution story essentially false, and it's like, you know, 0:08:52.556 --> 0:08:54.156 that's like sort of the heart of the fraud is 0:08:54.556 --> 0:08:57.516 that he was telling everyone not only are we like 0:08:57.556 --> 0:08:59.436 not stealing the money, but we're like doing an extra 0:08:59.516 --> 0:09:02.356 good job of risk management to make sure that your 0:09:02.356 --> 0:09:05.076 money doesn't get lost. And in fact, it turns out 0:09:05.076 --> 0:09:06.636 they were doing kind of an extra bad job. 0:09:07.676 --> 0:09:09.476 You had this other interaction with it than that. It 0:09:09.516 --> 0:09:13.356 gets repeated over and over and I think slightly misconstrued, 0:09:13.356 --> 0:09:16.796 but maybe I'm wrong. Like our listeners if they if 0:09:16.836 --> 0:09:19.876 they're loitering in the vicinity of this subject for very long? 0:09:20.116 --> 0:09:22.436 Are going to run across this thing that you did 0:09:22.436 --> 0:09:24.076 with him all night? It must have been the second 0:09:24.116 --> 0:09:26.916 podcast interview you did, Yeah, exactly, and it was on 0:09:26.956 --> 0:09:29.556 the odd Lots podcast, the Bloomberg on Lots podcast. Can 0:09:29.596 --> 0:09:32.436 you explain what you were talking about and what he 0:09:32.556 --> 0:09:34.356 said and how it's been misconstrued? 0:09:35.316 --> 0:09:37.596 We had him on odd loads repeatedly because he would 0:09:37.676 --> 0:09:39.676 just sort of like talk about whatever you wanted to 0:09:39.876 --> 0:09:42.276 in like the crypto world, in a way that seemed 0:09:42.396 --> 0:09:45.676 very like open and candidate and not always in his 0:09:45.716 --> 0:09:50.796 best interests. Yes, in hindsight, it was not as open 0:09:50.796 --> 0:09:52.876 and candidate as I thought, but it was even more 0:09:52.996 --> 0:09:55.076 not in his best interest to me. I don't remember 0:09:55.116 --> 0:09:56.796 what the topic of this. It was just like we 0:09:56.796 --> 0:10:00.196 were like, hey, let's like, you know, talk about crypto stuff. 0:10:00.636 --> 0:10:02.836 And so one thing that was on my mind at 0:10:02.836 --> 0:10:05.476 the time was like a corner of decentralized finance called 0:10:05.796 --> 0:10:10.436 yield farming, which is basically I mean, you can read 0:10:10.476 --> 0:10:12.436 his explanation because it's famous now, but I was like, 0:10:12.556 --> 0:10:15.236 explain to me yield farming, and he was like, well, 0:10:15.396 --> 0:10:18.196 it's like you have a box and you have you 0:10:18.276 --> 0:10:20.196 put some token, you get some money in the box. 0:10:20.236 --> 0:10:23.276 Then you're just some tokens, and you say the box 0:10:23.356 --> 0:10:24.716 is like the greatest thing in the world and it's 0:10:24.716 --> 0:10:26.836 going to replace all banks. And then you sell the 0:10:26.836 --> 0:10:28.236 tokens for a lot of money and you can put 0:10:28.276 --> 0:10:30.356 more money in the box, and then like the tokens 0:10:30.356 --> 0:10:31.636 go up and people are like, oh, I should buy 0:10:31.676 --> 0:10:33.236 some more of this, and like that's the sort of 0:10:33.316 --> 0:10:35.356 explanation of yield farming. And if you're like, that doesn't 0:10:35.356 --> 0:10:37.036 make any sense, like that's what I said, and that's 0:10:37.036 --> 0:10:40.636 what everyone said. I said to him something like you 0:10:40.716 --> 0:10:42.996 just said I'm in the ponzi business and it's pretty good, 0:10:42.996 --> 0:10:44.676 and he was like, yeah, I kind of what I 0:10:44.716 --> 0:10:46.876 think that, Like people misinterpreted from that is like, if 0:10:46.916 --> 0:10:49.276 you take that out of context, it sounds like I'm 0:10:49.316 --> 0:10:52.556 saying to him, your business is a ponzi And he's like, yeah, 0:10:52.596 --> 0:10:54.756 but that's not true at all. What he was saying 0:10:54.876 --> 0:10:58.396 is that a lot of this, like yield farming, like 0:10:58.516 --> 0:11:02.116 token stuff in crypto in like decentralized finance, is pretty 0:11:02.156 --> 0:11:04.996 ponzi ish. Yeah, And when I said it sounds like 0:11:05.036 --> 0:11:06.916 you're in the ponzi business, I just meant like he was, 0:11:07.516 --> 0:11:09.876 you know, running in exchange where you could train those tokens. 0:11:10.316 --> 0:11:13.236 But I think that at the time, when people listen 0:11:13.316 --> 0:11:16.676 to this, when people who like are involved in crypto 0:11:16.756 --> 0:11:19.156 listen to this, what they what they took away was 0:11:20.276 --> 0:11:24.636 Sam Bankman Fried is trash talking his competition, right, Like 0:11:24.716 --> 0:11:28.276 his competition in some sense is decentralized finance. Right, Like 0:11:28.276 --> 0:11:31.276 he runs one of the biggest at the time centralized exchanges. 0:11:31.556 --> 0:11:33.836 He wants people to trade with him rather than on 0:11:33.916 --> 0:11:36.436 the blockchain and decentralized finance exchanges, which like at the 0:11:36.476 --> 0:11:40.476 time seemed like a real competitor to the more traditional 0:11:40.596 --> 0:11:43.836 financial system that he was kind of imitating at FDx. 0:11:44.196 --> 0:11:48.676 And so he's saying all that stuff is like Ponzi stuff, 0:11:48.956 --> 0:11:51.396 and I'll trade the tokens. But like, I don't, you know, 0:11:51.556 --> 0:11:55.196 like he was not he was not putting it in 0:11:55.236 --> 0:11:57.716 its best light. And I think people he wasn't confessing 0:11:57.756 --> 0:12:00.716 to run now, he wasn't confessing, and he was being 0:12:00.796 --> 0:12:03.516 very cynical about crypto, right, he was being cynical about 0:12:04.036 --> 0:12:07.196 narrowly DeFi but more broadly like the philosophy of crypto 0:12:07.316 --> 0:12:09.316 that made people in crypto mad but it all so 0:12:09.396 --> 0:12:12.076 like it sort of explains why people like me found 0:12:12.116 --> 0:12:14.196 him interesting, because he just never seemed like a crypto 0:12:14.316 --> 0:12:17.316 true believer. He seemed like a guy from traditional finance 0:12:17.316 --> 0:12:19.636 who's like, Wow, here's this huge pot of money that 0:12:19.676 --> 0:12:21.636 I can make. He didn't like he was like, oh, yeah, 0:12:21.636 --> 0:12:23.156 crypto is gonna change the world. He's like, yeah, it's 0:12:23.156 --> 0:12:24.836 a box. You put money in the box. It's fine. 0:12:24.996 --> 0:12:28.716 So I think that, Like it seemed at the time 0:12:28.836 --> 0:12:31.236 like he had a sort of like charming and refreshing 0:12:31.316 --> 0:12:34.356 level of cynicism, but then of course, in hindsight, like 0:12:34.916 --> 0:12:37.116 not only did he have much more centicism, but also 0:12:37.236 --> 0:12:39.596 like the trade he described, he ends up by being like, 0:12:39.596 --> 0:12:41.716 you can put all that you can, like say, this 0:12:41.836 --> 0:12:44.316 box has like a huge market value, and then you 0:12:44.316 --> 0:12:46.836 can borrow against it, and then when you borrow against it, 0:12:46.876 --> 0:12:48.596 you never have to pay the money back, and like 0:12:48.636 --> 0:12:51.196 when the market value collapses, you have all the money 0:12:51.396 --> 0:12:53.196 and someone else has left with the losses. And he 0:12:53.276 --> 0:12:57.236 was like describing like a hypothetical trade and decentralized finance. 0:12:57.276 --> 0:12:59.516 But of course he was also like precisely describing what 0:12:59.676 --> 0:13:02.676 FTX and olimedia ended up doing, and so it is 0:13:02.716 --> 0:13:04.596 in that sense, you know it was foreshadowing. 0:13:05.516 --> 0:13:15.636 We'll be right back. Welcome back to judging Sam the 0:13:15.716 --> 0:13:20.676 trial of Sam Bankman freed. So you've taken I think 0:13:20.836 --> 0:13:24.356 more of an interest in crypto finance as serious than 0:13:24.436 --> 0:13:27.236 anybody in the world. You've described it better than anybody 0:13:27.276 --> 0:13:29.076 in the world. You've written really well about crypto. You've 0:13:29.076 --> 0:13:33.276 written sometimes kind of cynically about crypto. I'm curious when 0:13:33.316 --> 0:13:36.796 you make crypto people angry with what you write. Are 0:13:36.796 --> 0:13:39.356 they different from other groups who get angry with what 0:13:39.476 --> 0:13:41.956 you write. Is there a different kind of tone around 0:13:41.996 --> 0:13:45.636 crypto than there is around other parts of finance. 0:13:45.956 --> 0:13:49.396 It's funny. My go to example for years of people 0:13:49.436 --> 0:13:52.196 who get angriest about what I read are the people 0:13:52.236 --> 0:13:57.076 who are mad about high frequency training. That's just true. 0:13:58.396 --> 0:14:00.676 So that's like kind of your fault. It is kind 0:14:00.676 --> 0:14:02.596 of Seriously, people get really mad at me about like 0:14:02.636 --> 0:14:05.596 hiratingryto people. I don't know. I mean, like I definitely 0:14:05.716 --> 0:14:07.036 mute a lot of people on Twitter, right, but like 0:14:07.076 --> 0:14:10.676 I don't I wouldn't say that, like like contrary to stereotypes, 0:14:10.676 --> 0:14:12.196 I would not say that I get a lot of 0:14:12.236 --> 0:14:15.316 like weird or furious reactions When I write cynically about 0:14:15.316 --> 0:14:17.476 critic I think that, you know, it's a big world 0:14:17.516 --> 0:14:19.036 and there are a lot of people with different views. 0:14:19.036 --> 0:14:21.276 But I think that like, broadly speaking, people in crypto 0:14:21.796 --> 0:14:24.236 think of me as being fairly generous to them. Like, 0:14:25.316 --> 0:14:27.756 you know, there's no there's no crypto like mindset, right, 0:14:27.756 --> 0:14:29.356 Like crypto isn't a thing, right, It's just like a 0:14:29.396 --> 0:14:31.516 collection of people, right, And so it is. I think 0:14:31.556 --> 0:14:34.276 it's I think it's like really true and sociologically interesting 0:14:34.316 --> 0:14:37.556 that like the beginning of crypto is really oppositional to 0:14:37.596 --> 0:14:41.076 traditional finance, where like, you know, the openness of the 0:14:41.116 --> 0:14:45.636 blockchain and storing your money yourself rather than at a 0:14:45.636 --> 0:14:47.636 bank that's going to use it to make risky bets. 0:14:48.276 --> 0:14:50.556 Is like those are the obvious appeals of crypto, and 0:14:50.596 --> 0:14:53.116 then over time the numbers keep going up, and so 0:14:53.236 --> 0:14:56.276 all these people flock into speculate and you have people 0:14:56.356 --> 0:14:58.556 like Sam Bankman Freed who are like, I can make 0:14:59.116 --> 0:15:03.596 a fortune arbitraging bitcoin prices between you know, Asia and America. 0:15:04.156 --> 0:15:06.916 And when those people get into it, they just want 0:15:06.916 --> 0:15:09.076 to make money, and they come from in many cases, 0:15:09.276 --> 0:15:11.556 is like in his case, in three hours case, they 0:15:11.596 --> 0:15:15.076 come from traditional financial firms where the way you make 0:15:15.116 --> 0:15:17.516 money is like you spot an arbitrage and you lever 0:15:17.596 --> 0:15:20.236 it up one hundred times, and it just looks exactly 0:15:20.396 --> 0:15:23.156 like the sort of traditional financial system that blew up 0:15:23.196 --> 0:15:27.516 in two thousand and eight, except it's unregulated, it's offshore, 0:15:27.916 --> 0:15:30.676 and you know it's taking money from retail speculators, and 0:15:30.836 --> 0:15:32.676 it's like run by twenty eight year olds, and it 0:15:32.716 --> 0:15:34.636 blows up like as terribly as you could hope for, 0:15:34.676 --> 0:15:37.036 and like everyone goes to jail. Its shape is very 0:15:37.196 --> 0:15:38.476 reminiscent of two thousand and eight. 0:15:38.596 --> 0:15:40.916 Right, I want to swerve for a second and talk 0:15:40.956 --> 0:15:42.556 a bit about your career, if that's all right, Can 0:15:42.596 --> 0:15:44.276 we do that? Sure? I want to know where you 0:15:44.316 --> 0:15:46.396 come from, Like where'd you grow up and how did 0:15:46.436 --> 0:15:48.716 you end up getting into finance and then end up 0:15:48.716 --> 0:15:49.676 writing about finance. 0:15:50.756 --> 0:15:53.836 I grew up on my island. I precociously read Liar's 0:15:53.876 --> 0:15:57.156 Poker as and I was like, this sounds fun. If 0:15:57.156 --> 0:15:58.796 you had found me at some point, like in high school, 0:15:58.796 --> 0:16:02.916 I would have been like Alvia, you know, Salid Brothers, 0:16:02.956 --> 0:16:05.036 Bond Trader or whatever. But then I like got to 0:16:05.076 --> 0:16:08.636 college and very much swerved and I was a classics 0:16:08.636 --> 0:16:12.116 major and I did not take economics. I had friends 0:16:12.156 --> 0:16:14.436 who took like X ten, the big economics class, and 0:16:14.436 --> 0:16:15.956 I would like leave the lunch table when they were 0:16:15.956 --> 0:16:18.876 talking about it was like this is boring, and like 0:16:18.916 --> 0:16:21.316 there was you know, recruiting senior year when it's like, oh, like, 0:16:21.356 --> 0:16:22.916 you go work at an investment bank, and I didn't 0:16:22.916 --> 0:16:25.676 really do it. I graduated with no job. I was like, 0:16:25.956 --> 0:16:28.716 she got a job, and I was able to use 0:16:28.716 --> 0:16:31.636 connections to get a job teaching high school Latin for 0:16:31.676 --> 0:16:35.036 a year. And I did what everyone in that situation 0:16:35.236 --> 0:16:37.356 then does, which is I went to law school. And 0:16:37.436 --> 0:16:40.556 in law school I sort of rediscovered my interest in like, 0:16:41.396 --> 0:16:44.236 you know, financial markets and mergers and acquisitions and stuff. 0:16:44.236 --> 0:16:46.196 And so then I became an M and a lawyer. 0:16:46.636 --> 0:16:48.716 And in two thousand and seven, if you were an 0:16:48.796 --> 0:16:50.636 M and a lawyer, what you wanted to be was 0:16:50.636 --> 0:16:52.876 an investment banker. So then I became an investment banker. 0:16:53.036 --> 0:16:54.716 And then I did that for a while, and then 0:16:55.156 --> 0:16:56.676 I really didn't want to do that anymore, so I 0:16:56.716 --> 0:16:57.916 became a writer on the internet. 0:16:58.076 --> 0:17:01.556 So that transition, Why did you decide? 0:17:01.676 --> 0:17:03.716 So it's not like liar's poker directly sent me to 0:17:03.796 --> 0:17:06.996 investment banking, but like it did, like pave the way 0:17:07.036 --> 0:17:08.996 a little bit, And I know that that's like you 0:17:09.236 --> 0:17:11.156 regret that or whatever, but you know, it's fine. 0:17:11.636 --> 0:17:14.956 Your path resembles my own path, Like I had this 0:17:15.036 --> 0:17:17.676 hostility the economics department when I was in college and 0:17:19.196 --> 0:17:21.676 didn't have a job when I graduated and all that. Anyway, 0:17:21.996 --> 0:17:25.316 it's I'm curious about that transition out of investment banking 0:17:25.396 --> 0:17:28.996 to writing. Why did you decide you didn't want to 0:17:28.996 --> 0:17:30.356 be an investment banker anymore. 0:17:30.596 --> 0:17:32.876 I started as an investment banker as like an associate 0:17:33.396 --> 0:17:36.596 in a weird desk where I was like structuring stuff 0:17:36.956 --> 0:17:42.876 and I was doing interesting stuff involving like math and 0:17:43.356 --> 0:17:46.836 law and like getting into the guts of things. But 0:17:46.876 --> 0:17:48.836 then as you get more senior, you know the job 0:17:48.916 --> 0:17:52.676 is ultimately a sales job, and so I was spending 0:17:52.716 --> 0:17:57.596 less time, you know, learning and understanding things, and more 0:17:57.636 --> 0:18:02.036 time getting on planes to give clients updates. So I 0:18:02.076 --> 0:18:04.116 was getting worse at it. I was enjoying it less, 0:18:04.196 --> 0:18:06.756 and I vaguely imagined being a writer, and so like 0:18:06.796 --> 0:18:08.876 the sort of you know, the lines crossed and it 0:18:08.876 --> 0:18:09.916 became a good time to leave. 0:18:11.516 --> 0:18:13.476 I want to talk to you a bit about there's 0:18:13.476 --> 0:18:16.996 a there's a part of my book. I almost called you. 0:18:17.236 --> 0:18:20.436 I called you. It's just just to clear the air here. 0:18:20.476 --> 0:18:22.436 I thought it was really funny that I was a 0:18:22.436 --> 0:18:24.916 few months into like hanging around with Sam and I 0:18:24.996 --> 0:18:28.436 was questioning whether this was the character I wanted to 0:18:28.476 --> 0:18:30.916 be with. And I thought, I'll call Matt Levine and 0:18:30.956 --> 0:18:33.516 ask him for advice. You remember this call, I said, 0:18:33.596 --> 0:18:35.556 I called you, and I said, I said, I said, 0:18:35.756 --> 0:18:37.756 if you were going to put me with any character 0:18:37.796 --> 0:18:39.996 in Crypto, who would it be? And you said, we're 0:18:39.996 --> 0:18:42.876 not even thinking about Sam Bay and Freed. And it 0:18:42.916 --> 0:18:44.756 was one of those little things that gave me confidence 0:18:44.796 --> 0:18:46.516 I was in the right place because I hadn't actually 0:18:46.516 --> 0:18:48.676 been paying all that much attention to Crypto, and I 0:18:48.716 --> 0:18:50.836 thought I was in the right place. But I didn't know. 0:18:50.956 --> 0:18:52.796 And that's why you're giving me ten percent of the 0:18:52.836 --> 0:18:54.636 movie though, right, did you. 0:18:54.596 --> 0:19:05.796 Get the check yet? We'll be right back, welcome back. 0:19:06.796 --> 0:19:09.756 I'm still wrestling with this. When I all blew up 0:19:09.916 --> 0:19:14.116 and all right, there's some pile of money missing, it 0:19:14.156 --> 0:19:16.396 was a little unclear how big that pile of money 0:19:16.916 --> 0:19:19.236