1 00:00:02,040 --> 00:00:06,000 Speaker 1: This is Master's in Business with Barry rid Holts on 2 00:00:06,240 --> 00:00:08,240 Speaker 1: Bloomberg Radio. 3 00:00:09,320 --> 00:00:13,040 Speaker 2: This week. On the podcast, Michael Lewis out with a 4 00:00:13,039 --> 00:00:16,919 Speaker 2: brand new book on Sam Bankman, Freed and FTX doing 5 00:00:17,000 --> 00:00:19,520 Speaker 2: the circuit. We managed to get him right after his 6 00:00:19,640 --> 00:00:24,560 Speaker 2: Sixty Minutes podcast and he was completely open and unguarded 7 00:00:24,880 --> 00:00:28,280 Speaker 2: and talked about everything. Talked about the process of writing 8 00:00:28,320 --> 00:00:32,360 Speaker 2: the book, what it's like to go on sixty minutes 9 00:00:32,600 --> 00:00:35,640 Speaker 2: and know that social media is going to come at you. 10 00:00:36,280 --> 00:00:39,159 Speaker 2: People would much rather go to the outrage machine than 11 00:00:39,200 --> 00:00:43,200 Speaker 2: actually learn the details and argue from a factual perspective. 12 00:00:43,680 --> 00:00:46,400 Speaker 2: He doesn't have an opinion on whether or not Sam 13 00:00:46,440 --> 00:00:49,120 Speaker 2: Bankman Freed is going to be found guilty or not, 14 00:00:49,560 --> 00:00:52,560 Speaker 2: and the book is similar. He just lays it out 15 00:00:52,640 --> 00:00:54,840 Speaker 2: as he saw it as a fly on the wall 16 00:00:54,960 --> 00:00:58,880 Speaker 2: and lets you the reader figure it out. So all 17 00:00:58,920 --> 00:01:02,840 Speaker 2: of you haters out there, he's just shaking it off 18 00:01:02,920 --> 00:01:05,280 Speaker 2: and moving on with whatever is going to be his 19 00:01:05,400 --> 00:01:09,320 Speaker 2: next book project. I found the book to be absolutely fascinating, 20 00:01:09,720 --> 00:01:12,600 Speaker 2: really enjoyed it, although I read it, you know, quickly 21 00:01:12,640 --> 00:01:15,760 Speaker 2: in a weekend. Normally I luxuriate in Michael Lewis, and 22 00:01:15,800 --> 00:01:20,080 Speaker 2: I found our conversation to be completely delightful, and I 23 00:01:20,120 --> 00:01:23,120 Speaker 2: think you will also, So with no further ado, my 24 00:01:23,319 --> 00:01:27,120 Speaker 2: discussion on going Infinite with Michael. 25 00:01:26,880 --> 00:01:29,200 Speaker 1: Lewis it's good to see you Berry, good to. 26 00:01:29,160 --> 00:01:32,319 Speaker 2: See you again. So let's start out talking about how 27 00:01:32,360 --> 00:01:35,520 Speaker 2: this landed in your lap. A friend is thinking about 28 00:01:35,520 --> 00:01:38,240 Speaker 2: doing a deal with FTX, and he contacts you, says, 29 00:01:38,520 --> 00:01:41,000 Speaker 2: I can't get a read on this guy, Sam bankmin 30 00:01:41,040 --> 00:01:44,680 Speaker 2: Freed tell us about that first meeting with SBF. What 31 00:01:44,760 --> 00:01:45,240 Speaker 2: was that like. 32 00:01:45,400 --> 00:01:48,400 Speaker 1: So this friend reaches out in September of twenty twenty one, 33 00:01:49,400 --> 00:01:52,440 Speaker 1: and I never heard of Sam bankmcfreed or FTX. I 34 00:01:52,440 --> 00:01:56,680 Speaker 1: hadn't been paying much attention to crypto and Sam BEKMCFREEDA 35 00:01:56,720 --> 00:01:59,080 Speaker 1: a few weeks later ends up on my front porch 36 00:01:59,360 --> 00:02:02,000 Speaker 1: and I take him for a hike in the hills 37 00:02:02,040 --> 00:02:05,160 Speaker 1: of Berkeley. I think it's the first hike he ever 38 00:02:05,200 --> 00:02:08,120 Speaker 1: went on. He was always dressed for the hike, but never. 39 00:02:08,080 --> 00:02:09,680 Speaker 2: Actually goes speakers cargo short. 40 00:02:10,600 --> 00:02:11,920 Speaker 1: I had no idea it was gonna turn up, and 41 00:02:11,919 --> 00:02:14,119 Speaker 1: what turned up was this kind of kid. He's twenty 42 00:02:14,200 --> 00:02:17,680 Speaker 1: nine years old, so I wasn't thinking this is literary material. 43 00:02:17,800 --> 00:02:19,400 Speaker 1: I was thinking my friend wants to know what I 44 00:02:19,440 --> 00:02:23,600 Speaker 1: think of this guy. But an hour into the walk, 45 00:02:24,040 --> 00:02:27,280 Speaker 1: after I've discovered that Forbes has decided he's worth twenty 46 00:02:27,320 --> 00:02:29,960 Speaker 1: two and a half billion dollars, he's kind of amused 47 00:02:30,000 --> 00:02:33,360 Speaker 1: by his whole situation. It's gone from zero. This has 48 00:02:33,360 --> 00:02:35,480 Speaker 1: happened in eighteen months. He's gone from zero to twenty 49 00:02:35,480 --> 00:02:37,880 Speaker 1: two and a half billion in eighteen months. And he's 50 00:02:37,919 --> 00:02:41,000 Speaker 1: describing what is going on in crypto where he intends 51 00:02:41,040 --> 00:02:44,720 Speaker 1: to use this money. Kind of his background, where he 52 00:02:44,760 --> 00:02:47,360 Speaker 1: came from. There is his child of these two Stanford academics. 53 00:02:47,639 --> 00:02:50,360 Speaker 1: His parents were just completely bewildered by what had happened 54 00:02:50,360 --> 00:02:52,760 Speaker 1: to their child because they weren't like they weren't money people, 55 00:02:52,960 --> 00:02:56,440 Speaker 1: they weren't materialistic people, people who just kind of lived 56 00:02:56,440 --> 00:02:58,760 Speaker 1: in their heads. And he said, they don't quite understand 57 00:02:58,800 --> 00:03:00,640 Speaker 1: what to make of all this, And I thought it 58 00:03:00,680 --> 00:03:03,400 Speaker 1: was kind of funny. So I called my friend at 59 00:03:03,440 --> 00:03:06,000 Speaker 1: the end of it. I said, go ahead, to do 60 00:03:06,040 --> 00:03:08,040 Speaker 1: the deal. What could go wrong? And he did the deal. 61 00:03:08,400 --> 00:03:10,560 Speaker 1: But I turned to Sam Bangunfred at the end of 62 00:03:10,600 --> 00:03:14,080 Speaker 1: it and I said, I don't know where this is 63 00:03:14,120 --> 00:03:16,600 Speaker 1: going to end, but I just want to watch can 64 00:03:16,639 --> 00:03:18,119 Speaker 1: I just tag along. 65 00:03:18,200 --> 00:03:20,200 Speaker 2: Like that first meeting you actually set this up? 66 00:03:20,240 --> 00:03:22,440 Speaker 1: And if he was that fascinating, he was that fascinating. 67 00:03:22,480 --> 00:03:24,640 Speaker 1: And I know this because I said. I gave some 68 00:03:24,680 --> 00:03:26,400 Speaker 1: interview right after this and someone said, do you know 69 00:03:26,440 --> 00:03:28,760 Speaker 1: what your next book project might be? And I said, 70 00:03:28,880 --> 00:03:30,200 Speaker 1: you know, I just had a two hour walk with 71 00:03:30,240 --> 00:03:32,680 Speaker 1: a guy, and I think I might have found it. 72 00:03:32,760 --> 00:03:35,880 Speaker 1: But I didn't know what the book was. I didn't 73 00:03:35,920 --> 00:03:38,720 Speaker 1: know much more about him than you can learn in 74 00:03:38,760 --> 00:03:40,920 Speaker 1: two hours. I just knew I had this. I had 75 00:03:40,920 --> 00:03:42,760 Speaker 1: a theory of I had a theory about how I 76 00:03:42,800 --> 00:03:45,680 Speaker 1: wanted my next book to work before COVID. I don't 77 00:03:45,680 --> 00:03:48,000 Speaker 1: want to bore you with this, but before COVID, I 78 00:03:48,040 --> 00:03:51,080 Speaker 1: had made a decision that I wanted to walk into 79 00:03:51,080 --> 00:03:53,640 Speaker 1: books with characters that I was gonna I wasn't gonna 80 00:03:53,840 --> 00:03:55,840 Speaker 1: know what the story was. I wasn't gonna have a 81 00:03:55,880 --> 00:03:57,640 Speaker 1: theory of the case. I was gonna have an argument. 82 00:03:57,840 --> 00:04:00,000 Speaker 1: I was going to attach myself to characters the interest 83 00:04:00,160 --> 00:04:01,240 Speaker 1: who interested. 84 00:04:00,840 --> 00:04:04,600 Speaker 2: Me, as opposed to as a well, there's a narrative 85 00:04:04,760 --> 00:04:07,040 Speaker 2: and the characters flesh out, flesh. 86 00:04:06,760 --> 00:04:11,280 Speaker 1: It out well in the kind of I'd always kind 87 00:04:11,320 --> 00:04:13,440 Speaker 1: of done this. I was just making a bigger point 88 00:04:13,440 --> 00:04:17,039 Speaker 1: of it. And my prior books that I felt they 89 00:04:17,080 --> 00:04:20,360 Speaker 1: were less fun to write were books where I had 90 00:04:20,360 --> 00:04:23,360 Speaker 1: to strain to make the characters characters, like, to make 91 00:04:23,440 --> 00:04:24,279 Speaker 1: them live on the page. 92 00:04:24,320 --> 00:04:28,320 Speaker 2: But really, because I find all your characters leap off 93 00:04:28,320 --> 00:04:28,719 Speaker 2: the page. 94 00:04:29,080 --> 00:04:32,720 Speaker 1: Maybe that's just it's there. I think I think that 95 00:04:33,160 --> 00:04:36,200 Speaker 1: there is a weakness, for example, the Flashboys in the 96 00:04:36,279 --> 00:04:38,200 Speaker 1: character of Brad Katsiyama, because. 97 00:04:38,000 --> 00:04:40,880 Speaker 2: He's he's a chill exactly precisely. 98 00:04:41,160 --> 00:04:44,960 Speaker 1: He's a simply nice, decent guy that he's very I 99 00:04:45,000 --> 00:04:48,919 Speaker 1: love him, but he's doing something really so it works 100 00:04:48,960 --> 00:04:52,160 Speaker 1: only because when you drop that character into the middle 101 00:04:52,160 --> 00:04:54,159 Speaker 1: of modern Wall Street, it gets very interesting. 102 00:04:54,200 --> 00:04:57,160 Speaker 2: He's very Canadian. He's very Canadian, right, and that doesn't come. 103 00:04:57,320 --> 00:04:59,400 Speaker 1: Nice Canadian guy is not where I wanted to ever 104 00:04:59,440 --> 00:05:03,480 Speaker 1: start again, and I wanted to start with complicated, interesting people. 105 00:05:04,120 --> 00:05:07,680 Speaker 1: And I had an idea. Uh my idea was Mike Leach, 106 00:05:07,760 --> 00:05:10,840 Speaker 1: coach of the Mississippi State Bulldogs at the time, was 107 00:05:10,880 --> 00:05:12,400 Speaker 1: going to let me move into his life for a 108 00:05:12,440 --> 00:05:15,520 Speaker 1: season in the in SEC football could have been fun 109 00:05:15,680 --> 00:05:21,119 Speaker 1: and so's character and situation. College football isn't turmoil because 110 00:05:21,160 --> 00:05:23,920 Speaker 1: of the name, image and likeness stuff. But the transfer 111 00:05:24,000 --> 00:05:29,320 Speaker 1: portals and it's becoming ever more professionalized. The schools are afterthought, 112 00:05:29,680 --> 00:05:32,000 Speaker 1: you know, you know, they're sort of like, you have 113 00:05:32,080 --> 00:05:34,320 Speaker 1: the school to have a football team. And Mike Leach, 114 00:05:34,400 --> 00:05:36,880 Speaker 1: who is a one who had written about once, uh, 115 00:05:37,440 --> 00:05:40,440 Speaker 1: is a delightful character who would provide a view on 116 00:05:40,480 --> 00:05:43,400 Speaker 1: it that would be so good. He died, Uh, That's 117 00:05:43,400 --> 00:05:45,320 Speaker 1: what I would have done if he had lived. 118 00:05:45,360 --> 00:05:47,560 Speaker 2: You could have found some other coach to track though, 119 00:05:47,600 --> 00:05:49,200 Speaker 2: if you really wanted to go that route. 120 00:05:49,240 --> 00:05:50,960 Speaker 1: But you need to find a coach who you really 121 00:05:51,040 --> 00:05:53,560 Speaker 1: could light up on the page and who would let 122 00:05:53,600 --> 00:05:55,479 Speaker 1: you in. So who would let who would let me 123 00:05:55,520 --> 00:05:57,760 Speaker 1: see everything? And Mike Leach, I knew, would let me 124 00:05:57,839 --> 00:05:58,360 Speaker 1: see everything. 125 00:05:58,800 --> 00:05:59,920 Speaker 2: And he's quite a character. 126 00:06:00,120 --> 00:06:03,880 Speaker 1: Oh my god, I'm yes. So anyway, so I had 127 00:06:03,880 --> 00:06:05,320 Speaker 1: that in mind when I met Sam, and I thought 128 00:06:05,480 --> 00:06:09,120 Speaker 1: the character in the situation, he's like walking social satire. 129 00:06:09,720 --> 00:06:11,720 Speaker 1: He acquired twenty two and a half billion dollars in 130 00:06:11,800 --> 00:06:14,760 Speaker 1: a flash, and the world was reorganizing itself around him. 131 00:06:15,120 --> 00:06:17,719 Speaker 2: Everybody wanted to everybody want by the way, the twenty 132 00:06:17,760 --> 00:06:19,480 Speaker 2: two point five and I don't know if this is 133 00:06:19,520 --> 00:06:23,400 Speaker 2: from the book or my research. Forbes settled on that number. 134 00:06:24,680 --> 00:06:27,240 Speaker 2: They suspected it could have been high as one hundred billion, 135 00:06:27,520 --> 00:06:30,320 Speaker 2: but they just couldn't come up with ways. 136 00:06:30,120 --> 00:06:33,039 Speaker 1: Of showing how do you value piles of serum and 137 00:06:33,080 --> 00:06:36,599 Speaker 1: Solana and FTT and who knows what the hell's the 138 00:06:36,600 --> 00:06:38,240 Speaker 1: inside of Alameter research. 139 00:06:38,160 --> 00:06:41,839 Speaker 2: Which raises an interesting question. Once you decide to write this, 140 00:06:42,000 --> 00:06:44,760 Speaker 2: you have to know you're going to be going to 141 00:06:44,839 --> 00:06:49,600 Speaker 2: be discussing crypto. But before you began work on Going Infinite, 142 00:06:50,000 --> 00:06:54,640 Speaker 2: did you have any thoughts on bitcoin, blockchain, NFTs, ether, Like, 143 00:06:54,720 --> 00:06:56,520 Speaker 2: what were you thinking about prior? 144 00:06:56,720 --> 00:06:59,840 Speaker 1: So going back to about I don't know, maybe two 145 00:06:59,839 --> 00:07:04,640 Speaker 1: thy twelve. I had made several runs at writing about crypto, 146 00:07:04,920 --> 00:07:08,799 Speaker 1: mainly at the behest of crypto people because they wanted attention. 147 00:07:09,560 --> 00:07:11,400 Speaker 1: And I mean the first one was funny. 148 00:07:11,440 --> 00:07:12,960 Speaker 2: I hadn't noticed that. 149 00:07:12,680 --> 00:07:14,880 Speaker 1: I never wrote it. Oh okay, I mean I went 150 00:07:14,920 --> 00:07:17,000 Speaker 1: and spent time in interview people, and I just thought. 151 00:07:16,840 --> 00:07:19,600 Speaker 2: So, you never put anything out, so you had some well, 152 00:07:20,560 --> 00:07:21,040 Speaker 2: I said. 153 00:07:21,440 --> 00:07:25,280 Speaker 1: The first time, I make it, make some bid to 154 00:07:25,880 --> 00:07:27,720 Speaker 1: get to know the people and to write the story 155 00:07:27,760 --> 00:07:30,440 Speaker 1: about it. A guy called me up from Palo Alto. 156 00:07:30,680 --> 00:07:34,440 Speaker 1: He had a legitimate crypto business. He said, if you 157 00:07:34,520 --> 00:07:36,560 Speaker 1: come down, there's some people. Just come down in the 158 00:07:36,600 --> 00:07:39,200 Speaker 1: next few days to this house. There's some people I 159 00:07:39,200 --> 00:07:41,640 Speaker 1: want you to meet. One of them is Satoshi. And 160 00:07:42,800 --> 00:07:46,680 Speaker 1: I fell for it. You know, I thought, well, but 161 00:07:46,680 --> 00:07:49,640 Speaker 1: but you know, it was twenty twelve, so maybe maybe 162 00:07:49,640 --> 00:07:52,280 Speaker 1: Stoshi's going to reveal himself to me. And so I 163 00:07:52,360 --> 00:07:54,400 Speaker 1: went down and I got out of the car about 164 00:07:54,400 --> 00:07:56,600 Speaker 1: a block from the house, and you could smell the 165 00:07:56,600 --> 00:07:58,680 Speaker 1: weed from a block of the house. And I got 166 00:07:58,680 --> 00:08:01,440 Speaker 1: in thousand and they were like twelve entrepreneurs with sleeping 167 00:08:01,480 --> 00:08:04,520 Speaker 1: bags and this crashing in this multimillion dollar house in Paloratto. 168 00:08:04,880 --> 00:08:07,160 Speaker 1: And some of them turned out to be quite prominent 169 00:08:07,240 --> 00:08:10,080 Speaker 1: in crypto. But the problem was this is this is 170 00:08:10,080 --> 00:08:12,840 Speaker 1: would turn me off. They said at that moment. They 171 00:08:12,840 --> 00:08:15,480 Speaker 1: were selling crypto as it's going to replace Viat currency, 172 00:08:15,520 --> 00:08:16,960 Speaker 1: it's going to be the means of exchange. 173 00:08:16,960 --> 00:08:20,320 Speaker 2: And you've talked about how the narrative has changed consistently. 174 00:08:20,360 --> 00:08:23,600 Speaker 2: They keep changing and just never never finds the narrative 175 00:08:23,600 --> 00:08:24,000 Speaker 2: that sticks. 176 00:08:24,080 --> 00:08:26,320 Speaker 1: It's not that there's nothing there, it's just that whatever 177 00:08:26,400 --> 00:08:29,360 Speaker 1: is there has not clicked with with like a serious 178 00:08:29,400 --> 00:08:32,000 Speaker 1: problem in a serious way. But at that moment it 179 00:08:32,080 --> 00:08:34,760 Speaker 1: was I spend the day with him, and they're selling 180 00:08:34,760 --> 00:08:36,000 Speaker 1: me as hard as they can sell me that this 181 00:08:36,080 --> 00:08:37,640 Speaker 1: is going to be We're not going to need dollars 182 00:08:37,720 --> 00:08:40,120 Speaker 1: very soon. And I said, what can you use it? 183 00:08:40,400 --> 00:08:42,600 Speaker 1: And they said, here, we'll show you, and they put 184 00:08:42,640 --> 00:08:45,360 Speaker 1: some bitcoin on my phone and we walked into Palo 185 00:08:45,400 --> 00:08:48,920 Speaker 1: Alto to the one coffee shop that accepted bitcoin as currency, 186 00:08:49,559 --> 00:08:51,200 Speaker 1: and I bought a latte. 187 00:08:51,360 --> 00:08:53,280 Speaker 2: Which probably costs you a million dollars. 188 00:08:53,280 --> 00:08:56,640 Speaker 1: A no, no, this gets better. The coffee shop, though 189 00:08:56,840 --> 00:09:00,200 Speaker 1: in theory, accepted bitcoin. It took ten minutes and they 190 00:09:00,200 --> 00:09:01,880 Speaker 1: gave up. They couldn't do it. And I said, I 191 00:09:01,880 --> 00:09:03,600 Speaker 1: got an idea. I have this thing called a dollar. 192 00:09:04,280 --> 00:09:06,559 Speaker 1: I'll just use this. It's a miracle. And I had 193 00:09:06,559 --> 00:09:09,600 Speaker 1: this thought, I thought, like, they're selling this thing, but 194 00:09:09,679 --> 00:09:13,440 Speaker 1: if it's some wacky world. Bitcoin was the first currency, 195 00:09:13,800 --> 00:09:17,640 Speaker 1: and then someone came along and invented dollars everywhere to go, 196 00:09:17,760 --> 00:09:20,800 Speaker 1: Thank God, right, right, So so I just thought it's 197 00:09:20,880 --> 00:09:23,720 Speaker 1: not right. It's like there's something to lampoon, but it's 198 00:09:23,920 --> 00:09:24,640 Speaker 1: I don't want to do that. 199 00:09:24,679 --> 00:09:26,080 Speaker 2: It was it wasn't ready for you. 200 00:09:26,000 --> 00:09:27,840 Speaker 1: To write whatever me to write about it. 201 00:09:27,880 --> 00:09:33,760 Speaker 2: So, Sam bankmin Freed, is this fascinating, quirky character you 202 00:09:33,880 --> 00:09:37,560 Speaker 2: decide to embed with him, like a military journalist embedding 203 00:09:37,600 --> 00:09:42,320 Speaker 2: with the troops, So while they're covering a war. What 204 00:09:42,440 --> 00:09:45,640 Speaker 2: was that like? Was it difficult to maintain arm's length 205 00:09:45,720 --> 00:09:49,720 Speaker 2: objectivity because you're a journalist essentially so and you're you're 206 00:09:49,920 --> 00:09:51,000 Speaker 2: like trailing this. 207 00:09:50,880 --> 00:09:52,920 Speaker 1: Guy, right? So the first thing, I mean, if I 208 00:09:53,640 --> 00:09:55,400 Speaker 1: go back, a hard time remembering it, but if I 209 00:09:55,440 --> 00:09:57,360 Speaker 1: go back and I think, what was it that made 210 00:09:57,440 --> 00:10:01,840 Speaker 1: me think not just this character, but this situation, that 211 00:10:03,080 --> 00:10:05,640 Speaker 1: what part of it was he wasn't trying to sell 212 00:10:05,679 --> 00:10:09,640 Speaker 1: me crypto, that he himself didn't completely swallow crypto. He 213 00:10:09,679 --> 00:10:12,280 Speaker 1: wasn't a religionist, he said, basically, I am using it 214 00:10:12,320 --> 00:10:14,760 Speaker 1: to make money because there are all these inefficiencies. I 215 00:10:14,760 --> 00:10:16,440 Speaker 1: don't know what's going to happen with it. He wasn't. 216 00:10:16,760 --> 00:10:19,080 Speaker 1: It was the first crypto person not to pitch crypto 217 00:10:19,160 --> 00:10:21,400 Speaker 1: to me interesting and it was interesting. It made him 218 00:10:21,440 --> 00:10:23,720 Speaker 1: more interesting to me, and it was the first time 219 00:10:23,760 --> 00:10:26,520 Speaker 1: I thought, ah, this may be the way into crypto 220 00:10:26,720 --> 00:10:29,840 Speaker 1: because to me, what was interesting about crypto at that 221 00:10:29,960 --> 00:10:34,080 Speaker 1: point was I mean, the technology is interesting. Fact, the 222 00:10:34,120 --> 00:10:38,040 Speaker 1: whole financial structure that's arisen in crypto, it's interesting. It's 223 00:10:38,080 --> 00:10:40,160 Speaker 1: not a book by me. What's interesting and is a 224 00:10:40,160 --> 00:10:42,920 Speaker 1: book by me? Are the social consequences of all of 225 00:10:43,000 --> 00:10:45,160 Speaker 1: a sudden there being three trillion dollars of new wealth. 226 00:10:45,240 --> 00:10:49,600 Speaker 1: That's just it's randomly distributed and not so random? 227 00:10:49,880 --> 00:10:51,880 Speaker 2: Are it's mostly dudes? 228 00:10:51,920 --> 00:10:53,560 Speaker 1: It's cryptoz that's right. 229 00:10:53,640 --> 00:10:56,800 Speaker 2: And there's a reason why Lamborghini sold out for two years. 230 00:10:56,880 --> 00:10:57,600 Speaker 1: That's right. That's right. 231 00:10:57,679 --> 00:10:58,880 Speaker 2: So it's fun being poor. 232 00:10:58,960 --> 00:11:00,520 Speaker 1: So I didn't answer your question, but so this is 233 00:11:00,559 --> 00:11:03,720 Speaker 1: the why of it. So embedding I always in bed, right, 234 00:11:03,760 --> 00:11:06,120 Speaker 1: that's what I do. And then the goal is to 235 00:11:06,160 --> 00:11:09,080 Speaker 1: get to a point with the subject where you're sitting 236 00:11:09,080 --> 00:11:11,199 Speaker 1: in their office with a desk and they don't even 237 00:11:11,240 --> 00:11:11,640 Speaker 1: know you're there. 238 00:11:11,800 --> 00:11:14,920 Speaker 2: So does that compromise your objectivity as a journalist? 239 00:11:15,040 --> 00:11:16,000 Speaker 1: Never? As before? 240 00:11:16,200 --> 00:11:17,600 Speaker 2: Okay, that's a fair answer. 241 00:11:18,000 --> 00:11:20,600 Speaker 1: I mean I've never nobody's cause people. 242 00:11:20,360 --> 00:11:24,040 Speaker 2: Are saying, oh, Michael got so close to SBF and 243 00:11:24,080 --> 00:11:26,760 Speaker 2: he's defending him. I didn't read the book that way. 244 00:11:26,960 --> 00:11:29,640 Speaker 2: I read it as an explanatory, not a defense. No, 245 00:11:29,920 --> 00:11:31,120 Speaker 2: it was, that's the accusation. 246 00:11:31,240 --> 00:11:33,839 Speaker 1: The radical act was just to tell the story as 247 00:11:33,880 --> 00:11:38,880 Speaker 1: I saw the story. What possible purpose, what possible good 248 00:11:38,880 --> 00:11:42,760 Speaker 1: would it do me to set myself up as Sam's bankman, 249 00:11:42,840 --> 00:11:45,440 Speaker 1: Freed's defense counsel. And that's not what it was. And 250 00:11:45,440 --> 00:11:46,280 Speaker 1: in fact, it's all kind. 251 00:11:46,160 --> 00:11:48,240 Speaker 2: Of people ask me find out what he got paid. 252 00:11:48,280 --> 00:11:49,200 Speaker 2: I'm like, are you kidding? 253 00:11:49,280 --> 00:11:52,200 Speaker 1: People said this about Flashboys? Oh really? A Wall Street 254 00:11:52,280 --> 00:11:54,880 Speaker 1: firm published a note that I had been given shares 255 00:11:55,080 --> 00:11:57,520 Speaker 1: in IEX to write Flashboys. 256 00:11:57,520 --> 00:12:00,960 Speaker 2: Not true, right, of course, not true. And disclosure, Not 257 00:12:01,040 --> 00:12:03,680 Speaker 2: only did you get a butt on selling the book, 258 00:12:03,720 --> 00:12:06,160 Speaker 2: you sold the movie rights before this even came out. 259 00:12:06,600 --> 00:12:08,920 Speaker 2: Why would anyone else have to pay you for this? 260 00:12:09,800 --> 00:12:11,520 Speaker 2: It's such a silly question. 261 00:12:11,559 --> 00:12:14,920 Speaker 1: So it's people, Well, let me say, let's just actually 262 00:12:15,040 --> 00:12:19,120 Speaker 1: establish the relationship. So of course I don't get paid anything. 263 00:12:19,920 --> 00:12:23,160 Speaker 1: Of course I didn't have any financial interest in ft excerpt. 264 00:12:23,240 --> 00:12:25,680 Speaker 1: In fact, I'm a creditor. I have two thousand dollars 265 00:12:25,679 --> 00:12:27,520 Speaker 1: on the US Exchange that I'm waiting to get out 266 00:12:27,520 --> 00:12:29,520 Speaker 1: of the bank round because I wanted to see how 267 00:12:29,520 --> 00:12:35,280 Speaker 1: it worked, you know, and the the Sam bankman free 268 00:12:35,320 --> 00:12:38,960 Speaker 1: Neither Sam bankman freed, nor anyone in his operation ever 269 00:12:39,080 --> 00:12:41,640 Speaker 1: asked me what I was doing, asked me why I 270 00:12:41,679 --> 00:12:47,280 Speaker 1: was doing it, question the questions I was asking forbid 271 00:12:47,320 --> 00:12:49,880 Speaker 1: me from seeing. There's only one moment, one part of 272 00:12:49,920 --> 00:12:52,880 Speaker 1: his empire that I had to fight to see, like 273 00:12:53,080 --> 00:12:54,560 Speaker 1: he had to say he at first he said, I 274 00:12:54,559 --> 00:12:56,200 Speaker 1: can't let you into that meaning because the people are 275 00:12:56,200 --> 00:12:59,200 Speaker 1: going to be too uncomfortable. But other than that, it 276 00:12:59,280 --> 00:13:02,319 Speaker 1: was just like, it's here. You just watch you, ask you, 277 00:13:02,360 --> 00:13:04,520 Speaker 1: and ask anybody any question you want to ask. And 278 00:13:04,760 --> 00:13:06,120 Speaker 1: it took me a while to get to that point. 279 00:13:06,480 --> 00:13:09,440 Speaker 1: But so they had no finger they as far as 280 00:13:09,480 --> 00:13:12,160 Speaker 1: I know, they haven't read it. So nobody nobody reads 281 00:13:12,160 --> 00:13:14,160 Speaker 1: the book until it comes out right. And that's the 282 00:13:14,200 --> 00:13:16,439 Speaker 1: deal I've had with everybody I read about. And it's 283 00:13:16,480 --> 00:13:18,360 Speaker 1: sort of like, at some point, you just have to 284 00:13:18,440 --> 00:13:21,560 Speaker 1: leave me alone and trust that I'm not some sinister person. 285 00:13:21,880 --> 00:13:23,200 Speaker 2: Let me ask you a question that's going to make 286 00:13:23,240 --> 00:13:27,120 Speaker 2: you feel old. Given how famous you are in Wall 287 00:13:27,120 --> 00:13:31,160 Speaker 2: Street finance circles from Liar's Poker forward, any of these 288 00:13:31,200 --> 00:13:33,480 Speaker 2: twenty somethings know who the hell you were. They all 289 00:13:33,520 --> 00:13:36,319 Speaker 2: love flashboards, they do okay, So they had a sense. 290 00:13:36,200 --> 00:13:38,280 Speaker 1: Oh no, no, no, they all had books to sign and all. Yeah. 291 00:13:38,320 --> 00:13:42,120 Speaker 1: So the so the answer is yes, it was odd 292 00:13:42,240 --> 00:13:43,199 Speaker 1: what they knew. 293 00:13:43,280 --> 00:13:46,080 Speaker 2: Sam Liar's Poker, not the Big Short, not Moneyball, those 294 00:13:46,080 --> 00:13:48,520 Speaker 2: are the really big Sam. 295 00:13:48,760 --> 00:13:50,520 Speaker 1: Sam never said this, but I found out from his 296 00:13:50,600 --> 00:13:52,679 Speaker 1: parents that he adored Moneyball when he was a little kid. 297 00:13:52,840 --> 00:13:55,040 Speaker 1: And of course he did because he was he was 298 00:13:55,080 --> 00:13:57,720 Speaker 1: a totally isolated math. He sitting alone in his room 299 00:13:57,920 --> 00:13:59,840 Speaker 1: who felt powerless, and all of a sudden this book 300 00:13:59,840 --> 00:14:02,280 Speaker 1: say as the things you can do actually could change baseball. 301 00:14:02,640 --> 00:14:07,280 Speaker 1: But that apart from that, No, that was just the 302 00:14:07,280 --> 00:14:09,439 Speaker 1: weird old guy, right. I mean, that's good, and that 303 00:14:09,559 --> 00:14:12,600 Speaker 1: was kind of what it was. They were so odd 304 00:14:12,640 --> 00:14:16,280 Speaker 1: themselves as a collection of characters. It's the best look FTX. 305 00:14:16,520 --> 00:14:19,960 Speaker 1: Never mind Sam. FTX was the best collection of characters 306 00:14:20,160 --> 00:14:22,880 Speaker 1: I've seen in a financial operation since Solomon Brothers. Wow, 307 00:14:23,040 --> 00:14:25,960 Speaker 1: because they were just like they were all these random 308 00:14:26,000 --> 00:14:28,800 Speaker 1: people like it wasn't They weren't filtered in the way 309 00:14:28,800 --> 00:14:32,120 Speaker 1: that financial form usually filters people. It was like the 310 00:14:32,200 --> 00:14:35,720 Speaker 1: odd collisions that happened between the world and FTX, and 311 00:14:35,760 --> 00:14:39,160 Speaker 1: from the world, odd people had entered FTX huh amazing. 312 00:14:39,800 --> 00:14:44,080 Speaker 2: You spend a lot of time talking about what an odd, quirky, 313 00:14:45,000 --> 00:14:49,240 Speaker 2: sort of socially misfit kid he was. What was the 314 00:14:49,280 --> 00:14:52,320 Speaker 2: source of that was that Sam has himself, was that 315 00:14:52,400 --> 00:14:54,880 Speaker 2: his parents, was that other people? How did you get 316 00:14:54,920 --> 00:14:57,680 Speaker 2: pink that picture of a young SBF? 317 00:14:57,800 --> 00:15:00,280 Speaker 1: So I think it's partly because of how I grew 318 00:15:00,360 --> 00:15:03,360 Speaker 1: up and the importance of like who my parents were, 319 00:15:03,400 --> 00:15:05,440 Speaker 1: and who my friends were, and who my coach was. 320 00:15:06,040 --> 00:15:08,200 Speaker 1: When I'm trying to get to know somebody, I go 321 00:15:08,280 --> 00:15:11,880 Speaker 1: right to the childhood and sometimes that's stuff that's a 322 00:15:12,080 --> 00:15:16,960 Speaker 1: mislead that doesn't lead you anywhere. So Sam I asked him, 323 00:15:17,400 --> 00:15:20,160 Speaker 1: I'd like it just a list of people who knew 324 00:15:20,200 --> 00:15:22,240 Speaker 1: you before the age of eighteen, who could give me 325 00:15:22,280 --> 00:15:25,240 Speaker 1: some picture of you, just to start out right, And 326 00:15:25,960 --> 00:15:27,920 Speaker 1: he said, there's nobody. I said, what do you mean, 327 00:15:27,920 --> 00:15:28,400 Speaker 1: there's nobody? 328 00:15:28,640 --> 00:15:30,120 Speaker 2: It was a guy who played the game. 329 00:15:30,400 --> 00:15:33,320 Speaker 1: I've pushed and pushed and finally it's his. The list 330 00:15:33,400 --> 00:15:36,640 Speaker 1: is his parents, who you know, they did observe him, 331 00:15:37,400 --> 00:15:39,720 Speaker 1: and his little brother who says I didn't know him, 332 00:15:40,080 --> 00:15:42,520 Speaker 1: and his h he was a tenant in the house, 333 00:15:42,560 --> 00:15:45,480 Speaker 1: his little brother said, And there was one guy named 334 00:15:45,520 --> 00:15:49,080 Speaker 1: Matt Nass who Sam met in middle school and he 335 00:15:49,160 --> 00:15:51,280 Speaker 1: became partners in playing in this game they played called 336 00:15:51,280 --> 00:15:56,360 Speaker 1: Magic the Gathering, and Matt Nass's chief attribute was he 337 00:15:56,400 --> 00:15:58,760 Speaker 1: made no emotional demands on Sam and they seemed to 338 00:15:58,800 --> 00:16:01,960 Speaker 1: hardly talk. They just sat there and played together. And 339 00:16:02,000 --> 00:16:03,920 Speaker 1: you see them together now and they still will sit 340 00:16:03,920 --> 00:16:06,600 Speaker 1: together and not hardly talk. So there was it was 341 00:16:06,840 --> 00:16:11,680 Speaker 1: that Matt would say, you know, they were Sam, they 342 00:16:11,680 --> 00:16:13,680 Speaker 1: weren't that close in some ways, they were close. They 343 00:16:13,720 --> 00:16:16,440 Speaker 1: were close playing games together. So you had this kid 344 00:16:16,920 --> 00:16:21,320 Speaker 1: who was he was totally isolated. You know, you can 345 00:16:21,360 --> 00:16:24,200 Speaker 1: imagine if other circumstances a child might end up being 346 00:16:24,240 --> 00:16:26,800 Speaker 1: very isolated. But he is the child of two very 347 00:16:26,880 --> 00:16:29,480 Speaker 1: social professors living on the Stanford campus who have a 348 00:16:29,800 --> 00:16:33,880 Speaker 1: world around of really smart and interesting people, and Sam gets. 349 00:16:33,920 --> 00:16:38,360 Speaker 1: Sam is known by nobody and the the So the 350 00:16:38,440 --> 00:16:44,760 Speaker 1: question is why he he had He still has horrible 351 00:16:44,840 --> 00:16:48,800 Speaker 1: problems with social interactions, but when he's a kid, I 352 00:16:48,840 --> 00:16:51,800 Speaker 1: mean he did. He realized, for example, that he didn't 353 00:16:51,800 --> 00:16:53,480 Speaker 1: know how to make facial expressions right. 354 00:16:53,480 --> 00:16:56,360 Speaker 2: He teaches himself to smile and finds out that that 355 00:16:56,680 --> 00:17:00,920 Speaker 2: solves a problem within the game that is the simulation 356 00:17:01,000 --> 00:17:01,360 Speaker 2: of life. 357 00:17:01,400 --> 00:17:03,520 Speaker 1: That's exactly right. He sits in front of a mirror. 358 00:17:03,640 --> 00:17:06,080 Speaker 1: It's not till college and learns to make the facial 359 00:17:06,119 --> 00:17:09,960 Speaker 1: expressions that are appropriate to what someone says. He's irritated. 360 00:17:10,000 --> 00:17:12,359 Speaker 1: He has to do it, he doesn't. He realizes he 361 00:17:12,359 --> 00:17:15,879 Speaker 1: doesn't have a full compliment of human feeling, that he 362 00:17:15,920 --> 00:17:20,280 Speaker 1: doesn't feel happiness, he doesn't feel pleasure. Really, he doesn't 363 00:17:20,320 --> 00:17:24,840 Speaker 1: feel empathy, and that this is you know, it's just 364 00:17:24,880 --> 00:17:29,840 Speaker 1: like and he realizes the people around him see him 365 00:17:29,840 --> 00:17:30,879 Speaker 1: as not completely human. 366 00:17:31,119 --> 00:17:32,439 Speaker 2: So I have a question that I was going to 367 00:17:32,440 --> 00:17:34,560 Speaker 2: ask you later on, but I might as well bring 368 00:17:34,600 --> 00:17:37,720 Speaker 2: it up here, so it's already come out. He's being 369 00:17:37,760 --> 00:17:41,760 Speaker 2: treated with the m SAM patch for adderall and adderall 370 00:17:41,880 --> 00:17:45,199 Speaker 2: for ADHD and depression. The persona in the book that 371 00:17:45,280 --> 00:17:48,480 Speaker 2: you just described kind of reminded me a little bit 372 00:17:48,680 --> 00:17:51,040 Speaker 2: of the reference you make in The Big Shorts of 373 00:17:51,040 --> 00:17:54,280 Speaker 2: Michael Burry, who, when he finds out his son has Asperger's, 374 00:17:54,280 --> 00:17:57,640 Speaker 2: has himself tested and he's on Asperger's. So the obvious 375 00:17:57,720 --> 00:18:00,520 Speaker 2: question is I have seen no mention of this anywhere 376 00:18:01,000 --> 00:18:04,639 Speaker 2: Sam on the autism slash Asperger's spectrum. 377 00:18:05,200 --> 00:18:09,000 Speaker 1: Whatever it is that he's diagnosable with is so much 378 00:18:09,040 --> 00:18:13,160 Speaker 1: more extreme than Michael Berry. Really, oh yeah, and it's 379 00:18:13,680 --> 00:18:16,400 Speaker 1: I don't know, so I don't use any of those 380 00:18:16,440 --> 00:18:17,200 Speaker 1: words in the book. 381 00:18:18,119 --> 00:18:20,760 Speaker 2: I noticed that, which was what made me ask the question. 382 00:18:20,880 --> 00:18:23,119 Speaker 2: By the way, nobody has brought that up anywhere in 383 00:18:23,200 --> 00:18:26,440 Speaker 2: any interview. I found something buried in a reddit where 384 00:18:26,480 --> 00:18:28,760 Speaker 2: someone brought it up, but other than that, because I 385 00:18:28,800 --> 00:18:33,320 Speaker 2: was hunting to see, hey, this guy. I'm not a diagnotician, 386 00:18:33,440 --> 00:18:36,160 Speaker 2: but I've read enough about this. I've worked with enough 387 00:18:36,200 --> 00:18:38,679 Speaker 2: of those folks. I've had enough people with Asperger's on 388 00:18:38,760 --> 00:18:39,160 Speaker 2: the show. 389 00:18:39,320 --> 00:18:41,320 Speaker 1: You know, the word that it's funny, whatever word you 390 00:18:41,359 --> 00:18:44,280 Speaker 1: would use, would put him in a box that probably 391 00:18:44,440 --> 00:18:47,560 Speaker 1: he doesn't belong in, because it feels different from what 392 00:18:47,600 --> 00:18:52,600 Speaker 1: I've seen before Thosetario. It seems different. He's very very 393 00:18:52,680 --> 00:18:54,160 Speaker 1: good at reading you. 394 00:18:55,280 --> 00:18:57,680 Speaker 2: With which people on the spectrum generally are not. 395 00:18:57,680 --> 00:19:00,240 Speaker 1: So there's this odd one way thing. He read you 396 00:19:00,400 --> 00:19:03,520 Speaker 1: very well, but he's hard to read as a kid. 397 00:19:04,280 --> 00:19:06,760 Speaker 1: So the other thing about it, the important beats in 398 00:19:06,800 --> 00:19:10,439 Speaker 1: his childhood, I think are one. His parents don't think 399 00:19:10,480 --> 00:19:12,680 Speaker 1: of him as gifted. They worry about him, they think 400 00:19:12,720 --> 00:19:16,359 Speaker 1: of him, and his parents' friends said to me they 401 00:19:16,400 --> 00:19:19,800 Speaker 1: thought the parents were both afraid for and of him, 402 00:19:20,359 --> 00:19:22,320 Speaker 1: which was a curious thing to say about a parent 403 00:19:22,480 --> 00:19:25,520 Speaker 1: and child. And it's not until he's in middle school 404 00:19:25,560 --> 00:19:27,840 Speaker 1: when his mom finds him sobbing in his room alone 405 00:19:28,400 --> 00:19:31,800 Speaker 1: and he says, I'm just so bored that she realizes 406 00:19:31,840 --> 00:19:34,320 Speaker 1: that he's an average student. And he's an average student 407 00:19:34,359 --> 00:19:36,320 Speaker 1: because whenever's coming out of teacher's mouth just did not 408 00:19:36,600 --> 00:19:37,120 Speaker 1: interest tell. 409 00:19:37,560 --> 00:19:40,160 Speaker 2: There's a piece in the book where he is mom 410 00:19:40,240 --> 00:19:43,320 Speaker 2: is going to give a paper somewhere, and like the 411 00:19:43,359 --> 00:19:46,320 Speaker 2: eight year old gives her a read on the paper 412 00:19:46,600 --> 00:19:49,480 Speaker 2: more sophisticated than the PhD candidates gave her. 413 00:19:49,600 --> 00:19:53,439 Speaker 1: As a cris it was a bit like he was waiting. 414 00:19:53,600 --> 00:19:55,639 Speaker 1: He wasn't living his childhood. He was waiting for it 415 00:19:55,720 --> 00:19:58,399 Speaker 1: to end so that he could start talking to people. 416 00:19:58,920 --> 00:20:04,400 Speaker 1: And in any case, he's eventually he's identified as gifted mathematically, right. 417 00:20:04,240 --> 00:20:06,679 Speaker 2: So he's brilliant at math. He goes to MIT just 418 00:20:06,720 --> 00:20:08,320 Speaker 2: does he study physics and math? 419 00:20:08,920 --> 00:20:12,040 Speaker 1: It so brilliant, but not that brilliant, so brilliant enough, 420 00:20:12,080 --> 00:20:14,359 Speaker 1: really so brilliant enough so that sure he goes to 421 00:20:14,400 --> 00:20:16,880 Speaker 1: math camp in the summer and kind of finds his tribe. 422 00:20:17,160 --> 00:20:19,800 Speaker 1: But in math camp, he's not the best. He's he's 423 00:20:19,880 --> 00:20:24,080 Speaker 1: kind of just average among the brilliant math kids. He's average. 424 00:20:24,160 --> 00:20:27,399 Speaker 1: So he has no sense of himself as special until 425 00:20:27,400 --> 00:20:28,920 Speaker 1: he collides with Wall Street. 426 00:20:28,960 --> 00:20:30,320 Speaker 2: So that's where I was about to go. So he 427 00:20:30,359 --> 00:20:32,800 Speaker 2: goes from MIT to Jane Street Trading, which is a 428 00:20:32,880 --> 00:20:38,760 Speaker 2: high frequency trading shop where it's really partly about math 429 00:20:38,840 --> 00:20:45,320 Speaker 2: but mostly about probabilities and problem solving and gameplaying where 430 00:20:45,359 --> 00:20:46,720 Speaker 2: he excels. 431 00:20:46,280 --> 00:20:50,879 Speaker 1: And quantifying what usually doesn't get quantified, quantifying things that 432 00:20:50,920 --> 00:20:53,280 Speaker 1: seem to be sort of subjective. The test that he 433 00:20:53,320 --> 00:20:55,560 Speaker 1: gets this is where he finds out, oh my god, 434 00:20:55,600 --> 00:20:58,480 Speaker 1: I'm actually off the charts good at this. The Jane 435 00:20:58,480 --> 00:21:00,480 Speaker 1: Street interviews where they're making him do all kinds of 436 00:21:00,520 --> 00:21:03,119 Speaker 1: weird puzzles and solve puzzles and play games and make 437 00:21:03,160 --> 00:21:06,720 Speaker 1: bets that he just he flies through the thing and 438 00:21:06,760 --> 00:21:09,440 Speaker 1: he realizes that what he's good at is not it's 439 00:21:09,480 --> 00:21:13,400 Speaker 1: not chess he's good at. It's it's chess where you're 440 00:21:13,400 --> 00:21:15,399 Speaker 1: on a clock. You're gonna let you have five seconds 441 00:21:15,400 --> 00:21:18,679 Speaker 1: to make the move, and every five minutes someone shouts 442 00:21:18,680 --> 00:21:21,240 Speaker 1: a rule change, so the queen is now a rook, 443 00:21:21,520 --> 00:21:23,600 Speaker 1: and so every it's it's semi chaos. 444 00:21:23,640 --> 00:21:24,520 Speaker 2: Now he can manage that. 445 00:21:25,000 --> 00:21:27,639 Speaker 1: He can manage that. It's not that he's better than 446 00:21:28,000 --> 00:21:30,240 Speaker 1: than when he's playing chest regular chests. It's that everybody 447 00:21:30,240 --> 00:21:30,760 Speaker 1: else is worse. 448 00:21:31,160 --> 00:21:33,000 Speaker 2: And it's a quote right from the book. It wasn't 449 00:21:33,000 --> 00:21:35,200 Speaker 2: that he thrived on the pressure. He just didn't feel it. 450 00:21:35,359 --> 00:21:38,800 Speaker 2: He wasn't better than usual. He just wasn't worse. Most 451 00:21:38,840 --> 00:21:42,480 Speaker 2: people felt emotions, he did not, and therefore performed poorly 452 00:21:42,480 --> 00:21:43,000 Speaker 2: in the pressure. 453 00:21:43,000 --> 00:21:44,760 Speaker 1: And you know what I think. I think this is 454 00:21:44,800 --> 00:21:47,760 Speaker 1: a This is a really important key to everything that 455 00:21:47,840 --> 00:21:50,600 Speaker 1: happens next in Sam Bankruin Free's life, because once he 456 00:21:50,680 --> 00:21:53,359 Speaker 1: discovers that, it's this environment. It's sort of the semi 457 00:21:53,440 --> 00:21:58,360 Speaker 1: chaotic environ environment where mathematical aptitude, ability to quantify, ability 458 00:21:58,400 --> 00:22:02,240 Speaker 1: to make quick judgments about probabilities really benefit you, but 459 00:22:02,359 --> 00:22:07,120 Speaker 1: there's no clear, perfect right answer. He's so good compared 460 00:22:07,119 --> 00:22:10,360 Speaker 1: to other people in that environment. He creates that environment 461 00:22:10,480 --> 00:22:12,679 Speaker 1: over and over and over so he can be the best. 462 00:22:13,000 --> 00:22:15,440 Speaker 1: I think it's that's like the beginning of the understanding 463 00:22:15,440 --> 00:22:17,720 Speaker 1: of Sam Bangmun freed. He loves that feeling of being 464 00:22:17,720 --> 00:22:20,919 Speaker 1: the best. Who doesn't. It's a weird environment, and he 465 00:22:21,000 --> 00:22:24,040 Speaker 1: realizes what it is, so he creates it. Jane Street. 466 00:22:24,200 --> 00:22:27,000 Speaker 1: The market's created for him. So it's a really good 467 00:22:27,840 --> 00:22:30,679 Speaker 1: you know, it's he's a natural in the markets. But 468 00:22:31,040 --> 00:22:33,960 Speaker 1: even in his own company. The reason there's chaos in 469 00:22:34,000 --> 00:22:36,439 Speaker 1: his company, I would tell you there are reasons. We 470 00:22:36,480 --> 00:22:38,520 Speaker 1: don't have job titles, and we have no organization chart, 471 00:22:38,520 --> 00:22:40,280 Speaker 1: and there's no list of employees, and nobody knows who's 472 00:22:40,280 --> 00:22:43,480 Speaker 1: supposed to be doing what. But in fact, he wanted 473 00:22:43,520 --> 00:22:46,560 Speaker 1: everybody to be in the same state of chaos. That's 474 00:22:46,600 --> 00:22:47,040 Speaker 1: where he won. 475 00:22:47,200 --> 00:22:50,359 Speaker 2: Allows him to thrive. I love the story at Jane 476 00:22:50,359 --> 00:22:54,520 Speaker 2: Street where he figures out that they can scrape each 477 00:22:54,680 --> 00:23:00,240 Speaker 2: state's presidential election data. Oh yes, and figures out a 478 00:23:00,280 --> 00:23:04,040 Speaker 2: five minute lead on CNN and they start trading futures 479 00:23:04,080 --> 00:23:07,240 Speaker 2: overnight in twenty sixteen in the presidential election, they're up 480 00:23:07,440 --> 00:23:09,240 Speaker 2: three hundred million dollars. 481 00:23:09,480 --> 00:23:11,679 Speaker 1: Tell us what happens. This is an amazing story. 482 00:23:11,760 --> 00:23:12,400 Speaker 2: I love that part. 483 00:23:12,440 --> 00:23:14,600 Speaker 1: So this is there's some scoops in the Jane Street 484 00:23:14,680 --> 00:23:16,800 Speaker 1: part of the book. I think, I mean just assembling 485 00:23:16,800 --> 00:23:18,480 Speaker 1: a portrait of Jane Street is not easy because they 486 00:23:18,560 --> 00:23:21,680 Speaker 1: just won't talk to you. But Sam sort of created 487 00:23:21,680 --> 00:23:24,080 Speaker 1: the portrait because he hired so many former Jane Street 488 00:23:24,080 --> 00:23:26,399 Speaker 1: people and they felt free to talk. But there was 489 00:23:26,480 --> 00:23:28,960 Speaker 1: the trade, the Trump trade. So Sam becinfhree is partly 490 00:23:28,960 --> 00:23:31,840 Speaker 1: responsible for the worst trade in Jane Street history as 491 00:23:31,880 --> 00:23:32,199 Speaker 1: far as he. 492 00:23:32,200 --> 00:23:34,200 Speaker 2: Knew, which started out as a giant winner. 493 00:23:34,280 --> 00:23:36,720 Speaker 1: That's right, but if you really think about it, it's 494 00:23:36,720 --> 00:23:39,320 Speaker 1: a wild trade. So going into the twenty sixteen election 495 00:23:39,400 --> 00:23:42,440 Speaker 1: Hillary Clinton Donald Trump, it looks like every time there's 496 00:23:42,440 --> 00:23:44,040 Speaker 1: good news for Trump in the week's running up to 497 00:23:44,080 --> 00:23:46,879 Speaker 1: the election, the market's tank. It looks like that's the 498 00:23:46,920 --> 00:23:49,480 Speaker 1: trade if you can The trade is can you get 499 00:23:49,560 --> 00:23:53,080 Speaker 1: election information before the rest of the market. Now it 500 00:23:53,200 --> 00:23:57,320 Speaker 1: seems like a wild idea, that seems like information that 501 00:23:57,480 --> 00:23:59,960 Speaker 1: is everybody's going to get basically at the same time, 502 00:24:00,440 --> 00:24:02,720 Speaker 1: But in fact where everybody's getting it is from John 503 00:24:02,800 --> 00:24:05,480 Speaker 1: King on CNN, and John King has commercials, and John 504 00:24:05,560 --> 00:24:07,640 Speaker 1: King has to walk from getting the data to get 505 00:24:07,720 --> 00:24:09,320 Speaker 1: to his board. The data is slow to get the 506 00:24:09,400 --> 00:24:14,200 Speaker 1: John King. So Jane Street creates its own data gathering 507 00:24:14,240 --> 00:24:15,879 Speaker 1: system in the important states. 508 00:24:15,960 --> 00:24:18,120 Speaker 2: People took right, it's just Florida and Ohio. 509 00:24:18,200 --> 00:24:23,440 Speaker 1: And there sometimes moments and sometimes hours ahead of CNN 510 00:24:23,640 --> 00:24:26,720 Speaker 1: in knowing what just happened in the election and how 511 00:24:26,720 --> 00:24:29,800 Speaker 1: the odds shifted, and what John King's going to say next, 512 00:24:30,040 --> 00:24:31,520 Speaker 1: and what that's going to do it to S and 513 00:24:31,560 --> 00:24:35,160 Speaker 1: P futures. So their bet they put on in retrospect, 514 00:24:35,160 --> 00:24:37,199 Speaker 1: they should have maybe thought more about the bet, But 515 00:24:37,280 --> 00:24:40,399 Speaker 1: it was good for Trump. Short S and PS in 516 00:24:40,440 --> 00:24:43,440 Speaker 1: a big way, and short in foreign markets like Mexican 517 00:24:43,440 --> 00:24:47,320 Speaker 1: markets or whatever in a less big way. And during 518 00:24:47,359 --> 00:24:50,639 Speaker 1: the night, as it progresses, it looks like the Genius trade. 519 00:24:50,720 --> 00:24:53,560 Speaker 1: The markets collapse. Sam Bankfree goes home at like three 520 00:24:53,560 --> 00:24:55,479 Speaker 1: in the morning and they're up three hundred million dollars. 521 00:24:55,600 --> 00:24:58,399 Speaker 1: He sleeps for six hours and comes back. And the 522 00:24:58,440 --> 00:25:02,080 Speaker 1: problem is the international market stayed down, but the US 523 00:25:02,119 --> 00:25:03,240 Speaker 1: Dotorg popped back up. 524 00:25:03,160 --> 00:25:05,200 Speaker 2: Tax cuts and fiscal stimulus. What's not going to be 525 00:25:05,240 --> 00:25:05,879 Speaker 2: good for equity. 526 00:25:06,040 --> 00:25:07,960 Speaker 1: And so it went from a three hundred million dollar 527 00:25:08,119 --> 00:25:09,320 Speaker 1: win to a three hundred million. 528 00:25:09,160 --> 00:25:11,560 Speaker 2: Dollar loss and biggest in Jane Street history. 529 00:25:11,600 --> 00:25:13,639 Speaker 1: So not much of this makes it into the book, 530 00:25:13,840 --> 00:25:16,640 Speaker 1: but there were these long memos that were written about 531 00:25:16,680 --> 00:25:19,680 Speaker 1: in Jane Street about the trade. Oh really, yeah, I got. 532 00:25:19,640 --> 00:25:22,000 Speaker 2: Them because there was no post mortem. No one ever 533 00:25:22,000 --> 00:25:24,639 Speaker 2: pulled him aside and said, so hey, you blew us up. 534 00:25:25,280 --> 00:25:27,720 Speaker 1: Just like Sam wrote these long memos to his boss 535 00:25:27,720 --> 00:25:29,800 Speaker 1: about we need to write long memos about this because 536 00:25:29,800 --> 00:25:31,320 Speaker 1: we ought to understand what we did, because this is 537 00:25:31,359 --> 00:25:34,560 Speaker 1: a wild opportunity we got. We succeeded. We got the 538 00:25:34,600 --> 00:25:37,240 Speaker 1: information before anybody else. It wasn't in the market. Nobody 539 00:25:37,240 --> 00:25:39,440 Speaker 1: else had it. You didn't see the markets move when 540 00:25:39,440 --> 00:25:41,240 Speaker 1: we got the information. We were the only ones there. 541 00:25:41,800 --> 00:25:44,440 Speaker 1: So he describes like how they should have thought about 542 00:25:44,480 --> 00:25:45,560 Speaker 1: the trade and what they should have done is they 543 00:25:45,600 --> 00:25:48,160 Speaker 1: should have shortened international markets. That was this that that 544 00:25:48,240 --> 00:25:51,440 Speaker 1: was and maybe even hedged it against with the US markets. 545 00:25:52,880 --> 00:25:56,359 Speaker 1: That's his view. But he can't get his superiors to engage. 546 00:25:56,440 --> 00:25:59,199 Speaker 1: They just like think, as he put it, that we 547 00:25:59,240 --> 00:26:02,000 Speaker 1: just shouldn't be doing this, like this is not our wheelhouse. 548 00:26:02,520 --> 00:26:04,720 Speaker 1: And it disappointed him. I mean I think he. 549 00:26:04,680 --> 00:26:06,960 Speaker 2: Thought set the grounds for him to exit. 550 00:26:06,960 --> 00:26:10,880 Speaker 1: It was one of several things. But yes, he which 551 00:26:10,920 --> 00:26:13,000 Speaker 1: is And if you think about this, you got kind 552 00:26:13,000 --> 00:26:18,120 Speaker 1: of love Jane Street that in my in my day, 553 00:26:18,200 --> 00:26:20,919 Speaker 1: if someone had done this they would have been a scapegoat. 554 00:26:21,200 --> 00:26:23,320 Speaker 2: So absolutely someone had been strung, there would have been 555 00:26:23,359 --> 00:26:25,359 Speaker 2: a committee that would have been reviewed. Someone would have 556 00:26:25,359 --> 00:26:29,000 Speaker 2: been fired, tart and found feathered, drummed out of Wall Street. 557 00:26:29,040 --> 00:26:31,760 Speaker 1: This is a very smart place because the process was right, 558 00:26:31,800 --> 00:26:35,200 Speaker 1: the outcome was a problem. Process was mostly right, and 559 00:26:35,320 --> 00:26:36,000 Speaker 1: it wasn't. 560 00:26:36,119 --> 00:26:39,040 Speaker 2: No second level thinking. They no stop and say, all right, 561 00:26:39,119 --> 00:26:40,800 Speaker 2: so what happens if he's elected? 562 00:26:40,880 --> 00:26:45,600 Speaker 1: That's right, and but that they don't go punish Sam 563 00:26:45,880 --> 00:26:47,359 Speaker 1: and the handful of people who are really at the 564 00:26:47,400 --> 00:26:50,120 Speaker 1: center of it. If I were Sam, it would cause 565 00:26:50,200 --> 00:26:52,800 Speaker 1: me to love my employer for sure. Right, it'd be 566 00:26:52,840 --> 00:26:55,679 Speaker 1: a reason to stay, and for him it becomes a 567 00:26:55,720 --> 00:26:59,000 Speaker 1: reason to leave, and that's our part of a reason 568 00:26:59,040 --> 00:27:00,359 Speaker 1: to leave. That's curious. 569 00:27:01,040 --> 00:27:05,760 Speaker 2: So let's talk a little bit about Alameda Research and FTX. 570 00:27:06,359 --> 00:27:11,520 Speaker 2: Alameda predates FTX. It's the sort of hedge fund trading 571 00:27:11,560 --> 00:27:16,080 Speaker 2: operation that Sam Benkmin Freed is operating under. And it 572 00:27:16,160 --> 00:27:20,879 Speaker 2: begins arbitrage and crypto between like Asia and the United 573 00:27:20,920 --> 00:27:25,200 Speaker 2: States and making a ton of money in what should 574 00:27:25,200 --> 00:27:28,280 Speaker 2: be something that in the equity markets there wouldn't be 575 00:27:28,280 --> 00:27:29,000 Speaker 2: that big a gap. 576 00:27:29,400 --> 00:27:32,919 Speaker 1: So the basic idea he's sitting at Jane Street and 577 00:27:34,040 --> 00:27:37,159 Speaker 1: his financial ambition is limitless, not because he wants to 578 00:27:37,200 --> 00:27:39,320 Speaker 1: buy a yacht, but because he wants to save humanity 579 00:27:39,359 --> 00:27:42,480 Speaker 1: from existential risk. But never mind that for a minute, 580 00:27:43,640 --> 00:27:46,520 Speaker 1: and he looks at the crypto markets and this is 581 00:27:46,560 --> 00:27:51,359 Speaker 1: two late twenty seventeen, and they're exploded right that year, 582 00:27:51,600 --> 00:27:54,400 Speaker 1: and there it's a trillion dollar market and the Jane 583 00:27:54,440 --> 00:27:57,200 Speaker 1: Streets of the world which are engaged in this sort 584 00:27:57,240 --> 00:28:01,440 Speaker 1: of radical, radical efficiency inside of financial markets, like efficient 585 00:28:01,480 --> 00:28:05,160 Speaker 1: to a microsecond, but heavily regulated, but heavily regulated. But 586 00:28:05,800 --> 00:28:10,360 Speaker 1: that getting information into the markets as fast as information 587 00:28:10,400 --> 00:28:14,160 Speaker 1: can be gotten into the markets, that isn't happening in crypto. 588 00:28:14,440 --> 00:28:17,199 Speaker 1: It's not happening to the extent that you know, a 589 00:28:17,200 --> 00:28:21,080 Speaker 1: bitcoin is trading for one thousand in Japan and eight 590 00:28:21,160 --> 00:28:22,120 Speaker 1: hundred in the United. 591 00:28:21,960 --> 00:28:23,160 Speaker 2: States, and literally that's the gap. 592 00:28:23,920 --> 00:28:24,760 Speaker 1: It's it's huge. 593 00:28:24,840 --> 00:28:28,000 Speaker 2: Sometimes it's like it would be twenty cents in the inequities, 594 00:28:28,080 --> 00:28:29,560 Speaker 2: and it's it's two hundred dollars. 595 00:28:29,640 --> 00:28:32,000 Speaker 1: That's right. It's so Sam looks at that and says, 596 00:28:33,040 --> 00:28:35,960 Speaker 1: we can be I can be Jane Street for crypto U. 597 00:28:36,520 --> 00:28:40,280 Speaker 1: And but then from then it becomes high comedy because 598 00:28:40,440 --> 00:28:44,680 Speaker 1: he's doing it on behalf of his movement, effective altruism, 599 00:28:45,360 --> 00:28:47,320 Speaker 1: and his idea of starting it is to start it 600 00:28:47,320 --> 00:28:50,800 Speaker 1: with a bunch of effective altruists in Berkeley, where there's 601 00:28:50,920 --> 00:28:53,640 Speaker 1: money from effective altruists to supply the capital. 602 00:28:53,680 --> 00:28:56,760 Speaker 2: So let's define effective altruists. Because I read a lot 603 00:28:56,800 --> 00:28:59,200 Speaker 2: of stuff about it, and I don't think people really 604 00:28:59,280 --> 00:29:02,520 Speaker 2: get it. This is a philosophical movement that really began. 605 00:29:03,160 --> 00:29:05,800 Speaker 2: It was a Cambridge, Oxford. 606 00:29:05,480 --> 00:29:09,920 Speaker 1: And it migrates, it grows out of utilitarianism and the 607 00:29:10,120 --> 00:29:11,920 Speaker 1: general eyed I mean you think about it is sort. 608 00:29:11,840 --> 00:29:14,200 Speaker 2: Of getting maximize the benefit for the most amount of people. 609 00:29:14,280 --> 00:29:18,840 Speaker 1: That's right, and be actually mathematically rigorous about how you 610 00:29:18,880 --> 00:29:19,480 Speaker 1: do your good. 611 00:29:20,160 --> 00:29:22,360 Speaker 2: You you call that into question also as I thought, 612 00:29:22,440 --> 00:29:24,000 Speaker 2: but we'll talk about. 613 00:29:23,760 --> 00:29:26,120 Speaker 1: That lab Never mind what you think of effective altruism 614 00:29:26,160 --> 00:29:28,120 Speaker 1: made up numbers. You just need to do it, yes you, 615 00:29:28,480 --> 00:29:31,640 Speaker 1: but you need to just accept this. This has captivated 616 00:29:31,640 --> 00:29:34,800 Speaker 1: the minds of the twenty people who Sam bankmanfree gather 617 00:29:35,360 --> 00:29:38,240 Speaker 1: to create the first Jane Street for Crypto in Berkeley, 618 00:29:38,280 --> 00:29:39,360 Speaker 1: California in two thousand se. 619 00:29:39,520 --> 00:29:42,320 Speaker 2: And these folks are literally they set up charities, people 620 00:29:42,320 --> 00:29:44,880 Speaker 2: are donating money, and they figure out what are the 621 00:29:44,880 --> 00:29:47,840 Speaker 2: biggest threats to to humanity and will donate money to 622 00:29:47,920 --> 00:29:48,600 Speaker 2: those causes. 623 00:29:48,760 --> 00:29:51,400 Speaker 1: We'll find smart ways to donate money to those causes. 624 00:29:51,440 --> 00:29:54,000 Speaker 1: That's right, and. 625 00:29:53,040 --> 00:29:54,680 Speaker 2: We'll go out and make a ton of money and 626 00:29:55,400 --> 00:29:55,920 Speaker 2: give it away. 627 00:29:55,960 --> 00:30:00,320 Speaker 1: At that moment, they were pretty focused on existing human 628 00:30:00,360 --> 00:30:02,520 Speaker 1: beings and saving their lives. So it was like a 629 00:30:02,520 --> 00:30:05,840 Speaker 1: lot of public health in Africa, so which is pretty straightforward. Sure, 630 00:30:06,040 --> 00:30:10,560 Speaker 1: the movement was about to jump the shark and focus 631 00:30:10,600 --> 00:30:16,320 Speaker 1: on future humans who never been born by preventing existential catastrophe. 632 00:30:16,560 --> 00:30:20,200 Speaker 1: For preventing so they stop giving money for bed nets 633 00:30:20,240 --> 00:30:23,000 Speaker 1: to prevent malaria in Africa, and they start giving money 634 00:30:23,000 --> 00:30:28,040 Speaker 1: to anthropic or whatever to AI out people who are 635 00:30:28,040 --> 00:30:32,880 Speaker 1: thinking about AI risk. So it becomes a more complicated thing. 636 00:30:33,480 --> 00:30:36,720 Speaker 1: In any case, they have appetite for virtually unlimited dollars. 637 00:30:36,960 --> 00:30:39,320 Speaker 1: Sam is making a pitch to his fellow effective Altrus, 638 00:30:39,520 --> 00:30:41,680 Speaker 1: this is a market in which we can make unlimited dollars. 639 00:30:42,400 --> 00:30:45,520 Speaker 1: Almost none of them have a financial background. All of 640 00:30:45,520 --> 00:30:48,080 Speaker 1: them are kind of under thirty, some of them are 641 00:30:48,120 --> 00:30:52,080 Speaker 1: basically twenty. And they gather together and it works for 642 00:30:52,120 --> 00:30:54,960 Speaker 1: a bit like weeks. For a few weeks they're able 643 00:30:55,000 --> 00:30:57,360 Speaker 1: to do some trades that make I think half a 644 00:30:57,360 --> 00:30:58,760 Speaker 1: million dollars a day kind of thing they would do 645 00:30:58,800 --> 00:31:02,520 Speaker 1: pretty well. And but very quickly Sam has created his 646 00:31:02,560 --> 00:31:05,680 Speaker 1: semi chaotic environment in which only he can operate and 647 00:31:05,720 --> 00:31:09,160 Speaker 1: stay sane, and he's driven everybody else bad. Uh, And 648 00:31:09,600 --> 00:31:11,880 Speaker 1: half of the people in the there's a management committee 649 00:31:11,880 --> 00:31:13,680 Speaker 1: of five people and the other four think he is 650 00:31:13,720 --> 00:31:16,880 Speaker 1: either insane or criminal or both. And because they've start 651 00:31:17,240 --> 00:31:18,680 Speaker 1: can't they don't even know where the money is, like 652 00:31:18,680 --> 00:31:19,160 Speaker 1: it's out of. 653 00:31:19,200 --> 00:31:21,000 Speaker 2: Us right at this point, they go from winning to 654 00:31:21,040 --> 00:31:21,360 Speaker 2: lose it. 655 00:31:21,480 --> 00:31:23,280 Speaker 1: Here if from winning the trades start to go bad 656 00:31:23,360 --> 00:31:24,800 Speaker 1: or it looks like they go bad. And some of 657 00:31:24,800 --> 00:31:27,200 Speaker 1: that they don't have a record of some meaningful number 658 00:31:27,200 --> 00:31:27,920 Speaker 1: of trades. 659 00:31:27,640 --> 00:31:29,880 Speaker 2: Which is a little foreshadowing in the book that oh 660 00:31:29,920 --> 00:31:32,680 Speaker 2: my god, that there's no we'll talk about this. There's 661 00:31:32,680 --> 00:31:35,120 Speaker 2: no record keeping, there's no CFO. That is, none of 662 00:31:35,160 --> 00:31:36,600 Speaker 2: the normal controls. 663 00:31:36,200 --> 00:31:38,720 Speaker 1: None of the normal controls. And Sam has created this 664 00:31:39,160 --> 00:31:43,320 Speaker 1: algorithm rhythmic algorithmic trading bought you called it model bot 665 00:31:43,320 --> 00:31:44,840 Speaker 1: that he wants to it's like release the krack, and 666 00:31:44,880 --> 00:31:46,760 Speaker 1: he wants to release in the markets and make two 667 00:31:46,840 --> 00:31:48,480 Speaker 1: hundred and fifty thousand trades a day. 668 00:31:48,640 --> 00:31:51,200 Speaker 2: And they're and they're going to crash and burn. 669 00:31:51,400 --> 00:31:53,600 Speaker 1: Well. They have been given one hundred and seventy five 670 00:31:53,600 --> 00:31:57,080 Speaker 1: million dollars from fellow rich effective Altruis, and they're thinking, 671 00:31:57,280 --> 00:31:59,320 Speaker 1: we're supposed to be making money to give away and 672 00:31:59,320 --> 00:32:02,400 Speaker 1: we're losing a active Altro his dollars and gets everybody's 673 00:32:02,480 --> 00:32:05,719 Speaker 1: everybody gets upset, and there comes a moment where they 674 00:32:05,760 --> 00:32:09,240 Speaker 1: realize that actually four million dollars of Ripple XRP is 675 00:32:09,240 --> 00:32:12,560 Speaker 1: the token, but of Ripple is missing, and they just 676 00:32:12,760 --> 00:32:15,280 Speaker 1: literally they can't have much. Four million for them, it 677 00:32:15,320 --> 00:32:18,040 Speaker 1: was a lot, but it's like gone, like we we 678 00:32:18,080 --> 00:32:20,880 Speaker 1: don't know where it went and how much more is gone. 679 00:32:21,000 --> 00:32:23,480 Speaker 1: And Sam's attitude is, I don't worry, Let's keep trading 680 00:32:23,480 --> 00:32:25,200 Speaker 1: because the markets are only going to good for so 681 00:32:25,200 --> 00:32:26,640 Speaker 1: long and Jane Street is going to come out, come 682 00:32:26,640 --> 00:32:29,040 Speaker 1: out and wipe us out, and so let's and their 683 00:32:29,040 --> 00:32:31,960 Speaker 1: attitude is, no, we need to stop trading and find 684 00:32:31,960 --> 00:32:35,080 Speaker 1: the ripple. And this becomes a war. In the end, 685 00:32:35,480 --> 00:32:38,200 Speaker 1: every all the rest of the management team quits, takes 686 00:32:38,320 --> 00:32:42,360 Speaker 1: big severance packages and quits. Half the firm leaves. I 687 00:32:42,400 --> 00:32:45,800 Speaker 1: interviewed all these people you interview. Now, one of them 688 00:32:46,480 --> 00:32:48,680 Speaker 1: will say, I still think he's kind of crooked. The 689 00:32:48,720 --> 00:32:52,920 Speaker 1: other say, we overreacted. But in any case, the punchline 690 00:32:52,960 --> 00:32:56,640 Speaker 1: was it is total chaos. They were probably right. I mean, 691 00:32:56,680 --> 00:32:59,440 Speaker 1: they were huge risk. He created his environment in which 692 00:32:59,440 --> 00:33:02,480 Speaker 1: he flourished. But once they leave, they find the money. 693 00:33:02,920 --> 00:33:05,960 Speaker 1: It's there. It's the ripple is on some South Korean exchange, 694 00:33:06,000 --> 00:33:08,960 Speaker 1: and the South Korean Exchange is bewildered that no one coming. 695 00:33:10,320 --> 00:33:12,200 Speaker 2: We found, which is the theme that keeps. 696 00:33:12,000 --> 00:33:14,240 Speaker 1: Repeating, repeating itself, like, hey. 697 00:33:14,120 --> 00:33:15,960 Speaker 2: Is this your one hundred and fifty million dollars? 698 00:33:16,080 --> 00:33:19,840 Speaker 1: That's right and uh. And so that was a moment 699 00:33:19,840 --> 00:33:23,160 Speaker 1: where you had a foreshadowing of what might happen later 700 00:33:24,000 --> 00:33:26,800 Speaker 1: in Alameter research. But it gets it finds its footing, 701 00:33:27,160 --> 00:33:29,600 Speaker 1: and it's kind of fine. It does well for the next. 702 00:33:29,800 --> 00:33:33,200 Speaker 2: The next day, after everybody leaves, he turned. He releases 703 00:33:33,240 --> 00:33:33,760 Speaker 2: the Krackt. 704 00:33:33,800 --> 00:33:36,160 Speaker 1: He releases the Krackt and it starts killing. 705 00:33:36,240 --> 00:33:37,400 Speaker 2: It's taking a ton of money. 706 00:33:37,400 --> 00:33:39,080 Speaker 1: It does well, Yes, it does well. 707 00:33:39,240 --> 00:33:41,600 Speaker 2: When does he come to realize, hey, you know, some 708 00:33:41,640 --> 00:33:44,000 Speaker 2: of the other players are coming in and these big 709 00:33:44,040 --> 00:33:46,280 Speaker 2: fat arbitrage opportunities are going away. 710 00:33:46,400 --> 00:33:49,240 Speaker 1: So he was the one who made markets. He was 711 00:33:49,280 --> 00:33:52,800 Speaker 1: the one who everybody noticed in crypto what just happened 712 00:33:52,800 --> 00:33:55,720 Speaker 1: to the spreads? Oh my god, like some something just 713 00:33:55,800 --> 00:33:57,640 Speaker 1: happened and all of a sudden start to look like 714 00:33:57,720 --> 00:34:00,720 Speaker 1: a real Wall Street market. And it took a while 715 00:34:00,720 --> 00:34:03,560 Speaker 1: people figure out that there was this wholly anonymous operation 716 00:34:03,680 --> 00:34:07,640 Speaker 1: called Alomedy Research with this vegan twenty six year old 717 00:34:07,880 --> 00:34:12,520 Speaker 1: who was behind it. So it's about what is it 718 00:34:12,560 --> 00:34:16,440 Speaker 1: about nine months where Sam and Alameda starts to realize 719 00:34:16,440 --> 00:34:19,160 Speaker 1: they have a lot of competition and it is not 720 00:34:19,480 --> 00:34:22,120 Speaker 1: the markets will never be as fat as they were. 721 00:34:22,440 --> 00:34:24,799 Speaker 1: It's going to be more complicated, and they start thinking 722 00:34:24,840 --> 00:34:26,680 Speaker 1: about other ways to make money and. 723 00:34:26,840 --> 00:34:29,279 Speaker 2: Different and that's the genesis of this is so ft. 724 00:34:29,640 --> 00:34:32,200 Speaker 1: It's important to know that this is how FTX comes about. 725 00:34:32,239 --> 00:34:35,000 Speaker 1: And it's also important to know that they didn't think 726 00:34:35,200 --> 00:34:39,600 Speaker 1: they had the capacity to actually run an exchange. Running 727 00:34:39,640 --> 00:34:42,640 Speaker 1: exchange meant having customers and meant dealing with ordinary people. 728 00:34:42,719 --> 00:34:44,239 Speaker 2: That was the big issue. How are we going to 729 00:34:44,239 --> 00:34:44,680 Speaker 2: get people? 730 00:34:45,080 --> 00:34:47,000 Speaker 1: People are going to I don't know how to talk 731 00:34:47,040 --> 00:34:49,200 Speaker 1: to people. I don't know what people feel. How on 732 00:34:49,239 --> 00:34:51,000 Speaker 1: earth am I going to be like a Carnival Barker 733 00:34:51,080 --> 00:34:53,640 Speaker 1: at the middle of an exchange. So he knew he 734 00:34:53,680 --> 00:34:55,360 Speaker 1: had the ability to create the software. 735 00:34:56,080 --> 00:35:01,919 Speaker 2: His CTO brilliant guy Gary Wang, basically one guy writes 736 00:35:01,960 --> 00:35:04,800 Speaker 2: all the code better than everybody else. 737 00:35:04,160 --> 00:35:08,239 Speaker 1: Which apparently didn't take much but was true. And their 738 00:35:08,280 --> 00:35:11,000 Speaker 1: thinking is, we'll get some We'll get people who understand 739 00:35:11,000 --> 00:35:13,399 Speaker 1: people to do this for us. They went to all 740 00:35:13,400 --> 00:35:16,000 Speaker 1: the other exchanges and said, we'll sell you this and 741 00:35:16,040 --> 00:35:18,719 Speaker 1: we'll keep a kind of licensing fee, but we don't 742 00:35:18,719 --> 00:35:21,200 Speaker 1: want to run it. And nobody wanted it, and so 743 00:35:21,239 --> 00:35:22,799 Speaker 1: they get that. All of a sudden, it's like, oh 744 00:35:22,880 --> 00:35:24,759 Speaker 1: my god, if we're going to do this, we got 745 00:35:24,760 --> 00:35:28,200 Speaker 1: to do it ourselves. So they really back into creating 746 00:35:28,239 --> 00:35:31,360 Speaker 1: an exchange. It's not. It was not, and he really 747 00:35:31,400 --> 00:35:33,440 Speaker 1: had severe doubts about whether he's gonna be able to 748 00:35:33,440 --> 00:35:33,759 Speaker 1: pull this out. 749 00:35:33,800 --> 00:35:36,040 Speaker 2: That's interesting. There are two things that really leapt out 750 00:35:36,040 --> 00:35:39,719 Speaker 2: about the launch of FTX. The first is all these 751 00:35:39,760 --> 00:35:44,040 Speaker 2: other exchanges sort of socialized losses, so you're doing futures 752 00:35:44,080 --> 00:35:49,040 Speaker 2: trading and every customer effectively is putting up money. And 753 00:35:49,120 --> 00:35:53,480 Speaker 2: if somebody has a big loss and it drops way 754 00:35:53,520 --> 00:35:57,560 Speaker 2: below the collateral they put up. That loss gets spread out. 755 00:35:57,680 --> 00:36:00,960 Speaker 2: So his brilliant idea is, hey, well tight stops. If 756 00:36:01,000 --> 00:36:04,640 Speaker 2: someone loses money, we liquidate the collateral. They're done. We're 757 00:36:04,680 --> 00:36:05,520 Speaker 2: not going to have losses. 758 00:36:05,800 --> 00:36:08,719 Speaker 1: That's right. They built a better risk engine. This is 759 00:36:08,760 --> 00:36:11,080 Speaker 1: funny given what happened, but yes. 760 00:36:11,440 --> 00:36:14,839 Speaker 2: Well, on the futures trading, that risk engine was very 761 00:36:14,880 --> 00:36:15,919 Speaker 2: professional and well done. 762 00:36:15,960 --> 00:36:18,640 Speaker 1: That's right, and it was it was the chief There 763 00:36:18,640 --> 00:36:20,919 Speaker 1: were other selling points, but it was probably the chief 764 00:36:20,960 --> 00:36:24,239 Speaker 1: selling point. Was all you crypto traders have now had 765 00:36:24,239 --> 00:36:26,880 Speaker 1: the misery of socialized losses on all these exchanges, and 766 00:36:26,880 --> 00:36:29,000 Speaker 1: you've just lived with it. You know, you get these 767 00:36:29,040 --> 00:36:31,960 Speaker 1: clawbacks of forty and fifty percent of your trades because 768 00:36:32,040 --> 00:36:34,879 Speaker 1: somebody blew up, and we're not going to have that 769 00:36:35,280 --> 00:36:37,720 Speaker 1: and that. So that that is what they were selling. 770 00:36:38,000 --> 00:36:41,160 Speaker 1: But problem with Sam is he never sold anything, and 771 00:36:41,920 --> 00:36:45,399 Speaker 1: he had If you think about his background, not only 772 00:36:45,440 --> 00:36:48,359 Speaker 1: is he entirely isolated as a child when he gets 773 00:36:48,360 --> 00:36:50,680 Speaker 1: to Jane Street, he's in a culture where it's disregarded 774 00:36:50,719 --> 00:36:53,160 Speaker 1: as the most foolish thing in the world to say 775 00:36:53,160 --> 00:36:56,120 Speaker 1: anything to anyone about what you do. They are phobic 776 00:36:56,160 --> 00:37:00,760 Speaker 1: about media attention. It's all bad and it's attitude towards 777 00:37:00,760 --> 00:37:04,520 Speaker 1: the world is is suck information out of it, don't 778 00:37:04,520 --> 00:37:07,759 Speaker 1: put information into it. But you can't sell that way. 779 00:37:07,840 --> 00:37:10,200 Speaker 1: You have to go out and present yourself to people. 780 00:37:10,640 --> 00:37:12,560 Speaker 1: And this is the big moment in Sam Bankman Tree's 781 00:37:12,600 --> 00:37:15,080 Speaker 1: life when all of a sudden he realizes that I 782 00:37:15,200 --> 00:37:17,960 Speaker 1: have to be a character or I have to be 783 00:37:17,160 --> 00:37:19,160 Speaker 1: a person out there. 784 00:37:19,760 --> 00:37:23,400 Speaker 2: And so he starts going to conferences and he's the 785 00:37:23,440 --> 00:37:26,520 Speaker 2: guy that was scalping all of that cash and suddenly 786 00:37:26,600 --> 00:37:28,600 Speaker 2: he kind of becomes a bit of a star. Well, 787 00:37:28,600 --> 00:37:31,080 Speaker 2: Bloomberg launches him the first first TV show. 788 00:37:31,160 --> 00:37:34,600 Speaker 1: Right, that's right in the place that launches him that 789 00:37:34,760 --> 00:37:39,080 Speaker 1: he goes on TV. He is, by my lights, very 790 00:37:39,120 --> 00:37:40,040 Speaker 1: awkward on TV. 791 00:37:40,239 --> 00:37:40,319 Speaker 2: Right. 792 00:37:40,440 --> 00:37:43,000 Speaker 1: I mean in a video games he's playing. He's on 793 00:37:43,080 --> 00:37:45,520 Speaker 1: live TV at his computer monitor playing a video game. 794 00:37:45,640 --> 00:37:47,440 Speaker 1: At the same time. You see his eyes going back 795 00:37:47,480 --> 00:37:50,800 Speaker 1: and forth. You can see him stall not half listening 796 00:37:50,800 --> 00:37:54,120 Speaker 1: to the questions he's being asked. He always says, you can, well, 797 00:37:54,120 --> 00:37:57,279 Speaker 1: that's a really good question. So that just he give 798 00:37:57,360 --> 00:38:00,799 Speaker 1: himself a little beat. He's not and he's a he 799 00:38:00,920 --> 00:38:03,480 Speaker 1: just he gives a little soliloqual in in response to 800 00:38:03,480 --> 00:38:06,879 Speaker 1: every question. But he doesn't seem guarded in any way. 801 00:38:07,120 --> 00:38:10,760 Speaker 1: He seems completely open and is probably much more open. 802 00:38:10,920 --> 00:38:14,719 Speaker 1: And although he's a litle jittery right his your knee 803 00:38:14,760 --> 00:38:17,960 Speaker 1: is bumping, bouncing up and down, Jack Cameron, Yeah, but 804 00:38:17,960 --> 00:38:22,440 Speaker 1: but it works. It's like the person who his PR 805 00:38:22,480 --> 00:38:25,279 Speaker 1: person she'd never done PR before they'd hired Natalie now 806 00:38:25,360 --> 00:38:27,440 Speaker 1: Lautianna said she looked at Sam and said, you know, 807 00:38:27,600 --> 00:38:32,120 Speaker 1: when people meet Sam, they feel some they sense his vulnerability. 808 00:38:32,320 --> 00:38:34,160 Speaker 1: They're really interested in what comes out of his mouth. 809 00:38:34,360 --> 00:38:37,359 Speaker 1: They see is odd, but they kind of like his oddness. 810 00:38:37,520 --> 00:38:39,720 Speaker 1: I'm just going to see if that oddness works on TV. 811 00:38:40,280 --> 00:38:43,040 Speaker 1: And it did. I mean it just did. Uh. 812 00:38:43,120 --> 00:38:46,040 Speaker 2: And so so he goes from there to every major 813 00:38:46,120 --> 00:38:51,440 Speaker 2: crypto exchange and suddenly every major crypto conference in Asia. 814 00:38:51,600 --> 00:38:53,960 Speaker 2: They're located in Hong Kong. Certainly they start to get volume, 815 00:38:54,080 --> 00:38:56,319 Speaker 2: right and if you. 816 00:38:56,320 --> 00:38:57,920 Speaker 1: Look at if you look at the way people have 817 00:38:57,960 --> 00:39:01,560 Speaker 1: made money in crypto, they are like two basic strategies. 818 00:39:01,560 --> 00:39:04,040 Speaker 1: You bought bigcoin and zero, or bought it low and 819 00:39:04,040 --> 00:39:06,600 Speaker 1: it went way up. Or you created an exchange the 820 00:39:06,640 --> 00:39:09,759 Speaker 1: exchanges have been the sources of great fortunes and it's 821 00:39:09,960 --> 00:39:12,880 Speaker 1: it's and it's such a simple, easy business if you 822 00:39:12,960 --> 00:39:15,680 Speaker 1: manage the risk right. It's like you take you take 823 00:39:15,719 --> 00:39:19,880 Speaker 1: a you're the casino. You're the casino, that's right. Instead 824 00:39:19,880 --> 00:39:22,720 Speaker 1: of getting your money by playing games with better odds 825 00:39:22,719 --> 00:39:25,680 Speaker 1: against your customers, you're just taking a slice of each transaction. 826 00:39:26,000 --> 00:39:30,479 Speaker 1: But you're the casino. And he was FTX appealed because 827 00:39:30,520 --> 00:39:32,000 Speaker 1: of where Sam came from and because of the way 828 00:39:32,040 --> 00:39:35,920 Speaker 1: it was designed immediately to big institutional trading which was 829 00:39:35,920 --> 00:39:39,000 Speaker 1: coming in the jump tradings, the tower researches, so you 830 00:39:39,480 --> 00:39:43,080 Speaker 1: had started to have volume there. It was slower to 831 00:39:43,120 --> 00:39:46,319 Speaker 1: appeal to the retailed people who who the institutional people 832 00:39:46,360 --> 00:39:49,279 Speaker 1: want to interact with, but they it. I mean, it 833 00:39:49,320 --> 00:39:52,759 Speaker 1: was the fastest growing exchange, and it is. 834 00:39:53,000 --> 00:39:56,279 Speaker 2: And to put some flesh on those bones, two BIPs. 835 00:39:56,400 --> 00:39:59,680 Speaker 2: They were earning on two hundred and fifty billion dollars 836 00:40:00,239 --> 00:40:03,839 Speaker 2: a month, which meant they're doing you do the man, 837 00:40:03,960 --> 00:40:06,719 Speaker 2: a few billion dollars in revenue and four hundred million 838 00:40:06,760 --> 00:40:07,400 Speaker 2: in profits. It was. 839 00:40:07,560 --> 00:40:09,960 Speaker 1: It ended up being I think in twenty twenty one 840 00:40:10,000 --> 00:40:13,399 Speaker 1: it's a billion and a billion in revenues and I've 841 00:40:13,440 --> 00:40:16,800 Speaker 1: about four underd million in profits. So you've got this business. 842 00:40:17,040 --> 00:40:20,520 Speaker 1: It's a really simple business that is growing so fast. 843 00:40:20,560 --> 00:40:22,200 Speaker 1: And if you're looking at it as like what might 844 00:40:22,239 --> 00:40:25,719 Speaker 1: happen to this business, it seems to be poised. It's 845 00:40:25,760 --> 00:40:29,080 Speaker 1: only whatever eight percent of the marketplace to grow to 846 00:40:29,200 --> 00:40:32,399 Speaker 1: be twenty or thirty percent of the marketplace. The marketplace 847 00:40:32,680 --> 00:40:34,520 Speaker 1: end of twenty twenty one is a couple of two 848 00:40:34,640 --> 00:40:36,640 Speaker 1: or three trillion dollars. But that, I mean, who knows. 849 00:40:36,920 --> 00:40:39,600 Speaker 2: It's a two let People were talking about one hundred trillion. 850 00:40:40,040 --> 00:40:41,680 Speaker 1: So it's this This business is going to be in 851 00:40:41,680 --> 00:40:44,960 Speaker 1: direct proportion to that. But there's this other thing. It 852 00:40:45,040 --> 00:40:49,960 Speaker 1: is a different financial structure, this exchange. It is for 853 00:40:50,040 --> 00:40:54,400 Speaker 1: a start, it custodies the customer's money. But secondly, it 854 00:40:54,400 --> 00:40:57,120 Speaker 1: doesn't require any intermediaries. You trade directly on the exchange 855 00:40:57,120 --> 00:40:58,239 Speaker 1: and you keep it. You don't you don't go through 856 00:40:58,280 --> 00:41:00,920 Speaker 1: a broker, You don't have any high freak trader between 857 00:41:00,960 --> 00:41:04,359 Speaker 1: you and the in the marketplace. The exchange isn't selling 858 00:41:04,440 --> 00:41:09,040 Speaker 1: your data. What if this model finds its way into 859 00:41:09,080 --> 00:41:11,720 Speaker 1: the ordinary financial markets. What if they can trade stock futures? 860 00:41:11,960 --> 00:41:15,759 Speaker 1: What if they can trade commodities. Venture capitalists look at 861 00:41:15,760 --> 00:41:17,600 Speaker 1: this and thought, my god, this is a trillion dollar 862 00:41:17,600 --> 00:41:21,839 Speaker 1: company if it goes right, and and it's that's when 863 00:41:22,960 --> 00:41:26,319 Speaker 1: when when he starts to interact and it starts to 864 00:41:26,360 --> 00:41:29,680 Speaker 1: get big time venture capital money, he starts to get normalized, 865 00:41:29,719 --> 00:41:33,400 Speaker 1: it starts to become something different than an ordinary crypto exchange. 866 00:41:33,520 --> 00:41:36,440 Speaker 2: Really really intriguing. You go on sixty minutes, as you 867 00:41:36,520 --> 00:41:39,760 Speaker 2: have for some of your recent books. Yep, I thought 868 00:41:39,880 --> 00:41:43,160 Speaker 2: the interview tracked the book, which I had literally just 869 00:41:43,200 --> 00:41:45,320 Speaker 2: finished that day, very closely. 870 00:41:45,520 --> 00:41:47,880 Speaker 1: Hard to do in twenty six minutes a whole book, 871 00:41:47,920 --> 00:41:48,600 Speaker 1: but yes, they. 872 00:41:49,000 --> 00:41:51,760 Speaker 2: See, yeah, two segments. Most people will only get one segment. 873 00:41:52,200 --> 00:41:54,960 Speaker 2: What was your experience like with sixty minutes? And some 874 00:41:55,080 --> 00:41:57,160 Speaker 2: of the backlash to the interview. 875 00:41:57,880 --> 00:42:00,000 Speaker 1: Well, backlash was anticipated. 876 00:42:00,280 --> 00:42:02,960 Speaker 2: I mean really, I did not anticipate that. I read 877 00:42:02,960 --> 00:42:05,160 Speaker 2: the book and thought, this is a fun romp and 878 00:42:05,239 --> 00:42:06,520 Speaker 2: a crazy part of the world. 879 00:42:06,600 --> 00:42:08,960 Speaker 1: That's what will happen. Eventually people will read the book. 880 00:42:09,360 --> 00:42:12,879 Speaker 1: But this is how I think about it. I think 881 00:42:12,880 --> 00:42:15,520 Speaker 1: I said this on sixty minutes, that we're now in 882 00:42:15,640 --> 00:42:18,120 Speaker 1: kind of a story war. That about the story. What 883 00:42:18,239 --> 00:42:21,520 Speaker 1: is the story of Sam Bankman freed. Lots of people 884 00:42:21,520 --> 00:42:23,560 Speaker 1: who didn't know very much about him or it have 885 00:42:23,960 --> 00:42:27,600 Speaker 1: told lots of stories with great conviction. Twitter lynched him 886 00:42:27,680 --> 00:42:30,600 Speaker 1: right away without thinking very much about Islench. 887 00:42:30,719 --> 00:42:34,000 Speaker 2: We had a dinner was it last December with a 888 00:42:34,120 --> 00:42:36,480 Speaker 2: number of people who were very interested in the space, 889 00:42:37,120 --> 00:42:40,960 Speaker 2: and you kept saying, whatever you think, it's times crazy. 890 00:42:41,000 --> 00:42:43,160 Speaker 1: You think it's crazier than you imagine, it more complicated 891 00:42:43,200 --> 00:42:44,920 Speaker 1: and more fun actually. 892 00:42:44,520 --> 00:42:46,280 Speaker 2: And that turned out to be a fair description. 893 00:42:47,200 --> 00:42:49,360 Speaker 1: But the story war now is going to be a 894 00:42:49,480 --> 00:42:51,920 Speaker 1: very loud story that comes out of the prosecution, and 895 00:42:51,960 --> 00:42:54,359 Speaker 1: a story that probably presented a more muted away from 896 00:42:54,360 --> 00:42:56,440 Speaker 1: the defense. And I don't think either those stories can 897 00:42:56,480 --> 00:42:58,840 Speaker 1: be very good or full or complete. They're not going 898 00:42:58,880 --> 00:43:01,759 Speaker 1: to be nearly what I have just from having been 899 00:43:01,760 --> 00:43:03,760 Speaker 1: a fly on the wall for a year and a half. 900 00:43:04,320 --> 00:43:08,560 Speaker 1: And I know what I think like, I know I 901 00:43:08,600 --> 00:43:10,400 Speaker 1: know what I experienced. It would have felt like with 902 00:43:11,200 --> 00:43:13,440 Speaker 1: the spirit in which things were done with this guy 903 00:43:13,840 --> 00:43:15,920 Speaker 1: as best as possible, who this guy is and how 904 00:43:15,960 --> 00:43:19,319 Speaker 1: he behaves and how he thinks. Uh, interviewed all around him, 905 00:43:19,320 --> 00:43:21,480 Speaker 1: interviewed all his colleagues before they all got hold off 906 00:43:21,520 --> 00:43:23,839 Speaker 1: by the Department of Justice, and so I just had 907 00:43:24,120 --> 00:43:27,880 Speaker 1: I had a peculiar privileged view of it. Right, the 908 00:43:27,960 --> 00:43:29,880 Speaker 1: prosecutors haven't spoken to Sam. 909 00:43:30,360 --> 00:43:31,239 Speaker 2: Did they speak to you? 910 00:43:31,840 --> 00:43:34,319 Speaker 1: They asked for the book, but they didn't speak to me. 911 00:43:34,400 --> 00:43:35,959 Speaker 2: Well when did they? When did you give him the book? 912 00:43:35,960 --> 00:43:37,759 Speaker 1: We didn't give him the book. So they've got it. 913 00:43:37,760 --> 00:43:40,279 Speaker 2: Now say go to Amazon, go buy your own kind of. 914 00:43:40,640 --> 00:43:46,760 Speaker 1: And and and and the defense can't talk to Caroline 915 00:43:46,840 --> 00:43:49,360 Speaker 1: or Gary or Shot or a whole bunch of other people. 916 00:43:50,560 --> 00:43:52,360 Speaker 1: And I still have been able to talk to a 917 00:43:52,400 --> 00:43:54,680 Speaker 1: lot of the witnesses, so not all of them, but 918 00:43:54,719 --> 00:43:58,480 Speaker 1: a lot of them. And so I've got like unusual 919 00:43:59,160 --> 00:44:02,319 Speaker 1: three sixty the whole thing. And it was such an 920 00:44:02,360 --> 00:44:05,760 Speaker 1: amazing just story. I thought, I'm just gonna tell a story. 921 00:44:05,880 --> 00:44:09,640 Speaker 1: And the radical act is to withhold judgment like innocent 922 00:44:09,680 --> 00:44:10,600 Speaker 1: until proven guilty. 923 00:44:10,840 --> 00:44:13,960 Speaker 2: But that believe that jective journal. 924 00:44:13,800 --> 00:44:16,800 Speaker 1: But leave that to one side. This is just this story. 925 00:44:17,000 --> 00:44:20,600 Speaker 1: And all the books, when they work, they work. I 926 00:44:20,640 --> 00:44:23,759 Speaker 1: have this experience with every book, ten different readers read 927 00:44:23,840 --> 00:44:24,640 Speaker 1: ten different books. 928 00:44:24,960 --> 00:44:27,319 Speaker 2: We have discussed this. The book you write is not 929 00:44:27,440 --> 00:44:28,279 Speaker 2: the book people read. 930 00:44:28,400 --> 00:44:30,640 Speaker 1: That's exactly right. They come to it with their baggage, 931 00:44:30,719 --> 00:44:33,120 Speaker 1: and they supply they walk into the hole in the book. 932 00:44:33,200 --> 00:44:36,040 Speaker 1: And this came with a ready made a hole. You 933 00:44:36,040 --> 00:44:39,839 Speaker 1: you're you're the juror. You get to decide. It's you, 934 00:44:39,840 --> 00:44:41,799 Speaker 1: you decide. And I could tell you that I have 935 00:44:41,920 --> 00:44:44,640 Speaker 1: had the most radical range of responses to the book 936 00:44:44,680 --> 00:44:47,160 Speaker 1: and to the characters, more than any book you've ever written, 937 00:44:47,160 --> 00:44:49,439 Speaker 1: more than any book I've ever written. And and it's 938 00:44:49,440 --> 00:44:52,960 Speaker 1: a mistake to think that I had some ambition, some 939 00:44:53,480 --> 00:44:57,680 Speaker 1: ambition to affect like the trial outcome. That's preposterous. The 940 00:44:57,680 --> 00:44:59,920 Speaker 1: trial is going to be the trial that but I did. 941 00:45:00,000 --> 00:45:03,239 Speaker 1: I want to force the reader to grapple with how 942 00:45:03,280 --> 00:45:06,600 Speaker 1: they felt about this situation once they'd seen the situation 943 00:45:06,880 --> 00:45:11,680 Speaker 1: in full. And that seems to offend people who have 944 00:45:11,760 --> 00:45:13,319 Speaker 1: already just made up their mind about him. 945 00:45:13,680 --> 00:45:15,640 Speaker 2: Well, well, once you make your mind up, you know, 946 00:45:15,680 --> 00:45:18,360 Speaker 2: it's very hard to walk it back. You dedicate the 947 00:45:18,360 --> 00:45:21,000 Speaker 2: book to your daughter in memory of Dixie Lee Lewis, 948 00:45:21,320 --> 00:45:24,240 Speaker 2: you remain inside of me? Tell us about that, because 949 00:45:24,280 --> 00:45:29,000 Speaker 2: I recall after your daughter's accident you kind of described 950 00:45:29,000 --> 00:45:31,080 Speaker 2: yourself as I don't know if I'm ever writing again. 951 00:45:31,360 --> 00:45:35,440 Speaker 1: Yeah, that was true. I had a very specific resultse 952 00:45:35,480 --> 00:45:37,799 Speaker 1: it was the tiniest liver of my response to her death. 953 00:45:38,040 --> 00:45:40,520 Speaker 1: You know, I adored her and we were just she 954 00:45:40,719 --> 00:45:44,759 Speaker 1: was the best kid, brave and full love and just 955 00:45:44,840 --> 00:45:47,879 Speaker 1: the best kid. And I thought, up to that point 956 00:45:47,880 --> 00:45:51,080 Speaker 1: in my life that I was just that was the 957 00:45:51,160 --> 00:45:53,720 Speaker 1: luckiest person I knew. Nothing bad really had ever happened 958 00:45:53,719 --> 00:45:56,799 Speaker 1: to me. I hadn't had that kind of experience. And 959 00:45:56,840 --> 00:46:00,640 Speaker 1: I'd also thought that kind of the trick about I 960 00:46:00,640 --> 00:46:02,319 Speaker 1: think of writing is a kind of trick. It's like, 961 00:46:02,360 --> 00:46:05,000 Speaker 1: I don't know where it comes from that I can 962 00:46:05,120 --> 00:46:09,000 Speaker 1: do this thing. I don't know why, but I've always 963 00:46:09,080 --> 00:46:14,560 Speaker 1: associated with joy and pleasure and kind of happiness, and 964 00:46:14,640 --> 00:46:18,040 Speaker 1: I wondered whether i'd feel that again when I sat 965 00:46:18,080 --> 00:46:21,880 Speaker 1: down before a blank computer screen. And it was joyous 966 00:46:21,920 --> 00:46:24,920 Speaker 1: to find that I did feel it like I didn't 967 00:46:25,239 --> 00:46:28,040 Speaker 1: that I was right back in my place with maybe 968 00:46:28,120 --> 00:46:31,319 Speaker 1: a little extra thing in me when I sat down 969 00:46:31,360 --> 00:46:33,960 Speaker 1: to write this thing. But before I did that, I 970 00:46:34,000 --> 00:46:35,799 Speaker 1: just didn't know. I just didn't know whether it's like 971 00:46:35,840 --> 00:46:37,920 Speaker 1: I was so fundamentally changed that I would never want 972 00:46:37,920 --> 00:46:38,200 Speaker 1: to do this. 973 00:46:38,880 --> 00:46:41,919 Speaker 2: I very vividly a mutual friend said, hey, you should 974 00:46:41,920 --> 00:46:45,320 Speaker 2: give Michael a call. So we spoke a few months afterwards, 975 00:46:45,320 --> 00:46:48,680 Speaker 2: and you said something that you know, you're such a mensch. 976 00:46:48,760 --> 00:46:53,720 Speaker 2: I was genuinely shocked at this point when you're still mourning, 977 00:46:54,160 --> 00:46:58,400 Speaker 2: and you said, hey, this tragedy showed me that up 978 00:46:58,480 --> 00:47:02,040 Speaker 2: until this point, how long I actually was. Most humans 979 00:47:02,040 --> 00:47:06,160 Speaker 2: aren't wired to think that way. That's a very unusual 980 00:47:06,239 --> 00:47:11,160 Speaker 2: perspective to look at something that's not good and try 981 00:47:11,200 --> 00:47:13,960 Speaker 2: and find the goodness in a tragedy. 982 00:47:14,120 --> 00:47:17,319 Speaker 1: So this is the way to honor her. The way 983 00:47:17,360 --> 00:47:20,440 Speaker 1: to honor her is not to crumble, it's to build 984 00:47:20,520 --> 00:47:20,759 Speaker 1: on it. 985 00:47:20,840 --> 00:47:23,319 Speaker 2: You call her a warrior, thinking. 986 00:47:23,239 --> 00:47:26,040 Speaker 1: She was an absolute warrior. But the way to honor 987 00:47:26,080 --> 00:47:31,920 Speaker 1: her is in the spirit of improv It's you can't 988 00:47:31,960 --> 00:47:36,200 Speaker 1: say no, you can't reject this. Rejecting her death or 989 00:47:36,239 --> 00:47:39,880 Speaker 1: rejecting the feelings that go with it is to deny 990 00:47:40,120 --> 00:47:43,040 Speaker 1: her in some way. What I need to do is 991 00:47:43,280 --> 00:47:46,919 Speaker 1: accept whatever the emotions are and build on them. And 992 00:47:47,040 --> 00:47:50,080 Speaker 1: whatever I build will have a little or hurt in it. 993 00:47:50,120 --> 00:47:51,799 Speaker 1: So this book as a little of her in it. 994 00:47:51,800 --> 00:47:54,200 Speaker 1: You know what's in her about this? About her in 995 00:47:54,280 --> 00:47:58,479 Speaker 1: this book it very consciously. I knew when I wrote 996 00:47:58,520 --> 00:48:00,000 Speaker 1: this book, I was going to be in a war. 997 00:48:00,760 --> 00:48:04,960 Speaker 1: I knew that. I knew that there was a mob sentiment. 998 00:48:05,480 --> 00:48:08,440 Speaker 1: And this culture is very good at whipping up mobs 999 00:48:08,600 --> 00:48:11,360 Speaker 1: very fast. Twitter like exists for it. 1000 00:48:10,920 --> 00:48:12,120 Speaker 2: It's an outrage it'. 1001 00:48:12,040 --> 00:48:15,319 Speaker 1: An outrageing machine, and people are so sure they're right 1002 00:48:16,719 --> 00:48:20,520 Speaker 1: and that that mob. To get between that mob and 1003 00:48:20,560 --> 00:48:24,600 Speaker 1: its target is always dangerous. And Dixie would have done it. 1004 00:48:25,440 --> 00:48:28,800 Speaker 1: She shoot, She would put her body between a mob 1005 00:48:29,080 --> 00:48:31,000 Speaker 1: and had done it before, that kind of thing, and 1006 00:48:31,040 --> 00:48:33,560 Speaker 1: so I thought, it's going to be a little painful, 1007 00:48:34,400 --> 00:48:36,200 Speaker 1: but it's worth it and it will honor her. 1008 00:48:36,600 --> 00:48:39,480 Speaker 2: So when you're talking to him and thinking this is 1009 00:48:39,560 --> 00:48:43,719 Speaker 2: not long after her accident, you're thinking, I'm going to 1010 00:48:43,800 --> 00:48:48,560 Speaker 2: go for this. And she would absolutely support this decision absolutely. Huh, 1011 00:48:48,600 --> 00:48:53,800 Speaker 2: that's an amazing conversation. I remember you did a podcast. 1012 00:48:54,360 --> 00:49:00,160 Speaker 2: It's three actors comedians. I don't remember SmartLess smart SmartLess. Yes, 1013 00:49:00,160 --> 00:49:04,200 Speaker 2: that's right, And I try never to listen to people's 1014 00:49:04,480 --> 00:49:08,960 Speaker 2: podcasts before I go on with them. But we were 1015 00:49:09,000 --> 00:49:12,960 Speaker 2: doing the twenty fifth anniversary of Liars Poker, and I 1016 00:49:14,760 --> 00:49:18,680 Speaker 2: listened to that and the last segment was fifteen minutes 1017 00:49:18,680 --> 00:49:24,239 Speaker 2: of you discussing Dixie. It was just the most poignant, 1018 00:49:24,680 --> 00:49:29,480 Speaker 2: beautiful conversation I've ever heard from anybody experiencing loss. So 1019 00:49:29,840 --> 00:49:32,320 Speaker 2: get do you recall that podcast? 1020 00:49:32,320 --> 00:49:34,200 Speaker 1: And I do? I do. I don't remember what I said, 1021 00:49:34,239 --> 00:49:36,600 Speaker 1: but I do remember the spirit in which I said it, 1022 00:49:36,680 --> 00:49:40,880 Speaker 1: and in life I have found and this connects to 1023 00:49:40,920 --> 00:49:44,279 Speaker 1: this book, it connects to anyway books that there's a 1024 00:49:44,400 --> 00:49:50,360 Speaker 1: richness in recognizing and really insisting on any difference between 1025 00:49:50,680 --> 00:49:54,560 Speaker 1: what you feel and what you're supposed to feel. And 1026 00:49:54,920 --> 00:49:56,920 Speaker 1: there's always pressure to feel a certain thing, like this 1027 00:49:56,960 --> 00:50:01,680 Speaker 1: pressure right now to hate Sam batmanfree. But if you 1028 00:50:01,840 --> 00:50:04,719 Speaker 1: actually feel something different, hold on to that feeling and 1029 00:50:04,800 --> 00:50:08,279 Speaker 1: explore it. And there's there's there's great stuff in it, 1030 00:50:08,640 --> 00:50:13,320 Speaker 1: great life stuff, great literary stuff. And with my grief 1031 00:50:14,440 --> 00:50:18,560 Speaker 1: right after she died, I was inundated with correspondence, very 1032 00:50:18,560 --> 00:50:22,200 Speaker 1: well meaning correspondence from people who thought they'd gone through 1033 00:50:22,600 --> 00:50:25,440 Speaker 1: the same thing and had on the surface, gone through 1034 00:50:25,480 --> 00:50:28,840 Speaker 1: something similar, lost a child, and giving me advice, sending 1035 00:50:28,880 --> 00:50:31,040 Speaker 1: me books, you know, telling me how I was going to, 1036 00:50:31,120 --> 00:50:33,680 Speaker 1: telling me how I was going to feel, and they 1037 00:50:33,680 --> 00:50:36,759 Speaker 1: were none of it rang true. I knew how I 1038 00:50:36,840 --> 00:50:40,120 Speaker 1: knew how I felt, and I knew it was different 1039 00:50:40,120 --> 00:50:43,680 Speaker 1: from how they thought I should feel. And I thought 1040 00:50:43,760 --> 00:50:46,200 Speaker 1: that's interesting. And the books just looked like dead words 1041 00:50:46,200 --> 00:50:48,160 Speaker 1: on the page to me. So I thought I felt 1042 00:50:48,160 --> 00:50:49,960 Speaker 1: this way when Dixie was born. I felt that was 1043 00:50:50,000 --> 00:50:52,640 Speaker 1: about fatherhood in the beginning. I just felt differently about 1044 00:50:53,080 --> 00:50:55,520 Speaker 1: my children than I was expected to feel. I didn't 1045 00:50:55,560 --> 00:50:57,120 Speaker 1: fel attached to them right in the beginning. It's like 1046 00:50:57,320 --> 00:50:59,640 Speaker 1: I had to learn to love my children. Love wasn't 1047 00:50:59,680 --> 00:51:01,480 Speaker 1: there in the beginning. You learn to love something, or 1048 00:51:01,520 --> 00:51:03,799 Speaker 1: you come to love something by taking care of it, 1049 00:51:03,880 --> 00:51:05,880 Speaker 1: at least in my experience, and I hadn't taken care 1050 00:51:05,920 --> 00:51:07,680 Speaker 1: of them. Oh was I taken care of me? I 1051 00:51:07,680 --> 00:51:12,360 Speaker 1: loved them. I felt with the grief, for example, a 1052 00:51:12,440 --> 00:51:14,480 Speaker 1: lot of people told me how I should I would 1053 00:51:14,800 --> 00:51:18,279 Speaker 1: feel guilty, and I thought, why would I? I didn't. 1054 00:51:18,320 --> 00:51:19,920 Speaker 2: I didn't. 1055 00:51:20,160 --> 00:51:22,440 Speaker 1: Yeah, Yeah, I didn't feel guilty. I thought she had 1056 00:51:22,440 --> 00:51:27,040 Speaker 1: a fantastic life, we had a fantastic relationship, we had 1057 00:51:27,160 --> 00:51:31,000 Speaker 1: magical amounts of time together, that she was on her 1058 00:51:31,040 --> 00:51:35,000 Speaker 1: way to a brilliant future. I feel sad, but I 1059 00:51:35,040 --> 00:51:39,279 Speaker 1: don't feel guilty. I don't feel anger. I didn't feel 1060 00:51:39,280 --> 00:51:42,600 Speaker 1: any of the toxic emotions. I felt sad and sad 1061 00:51:42,719 --> 00:51:46,680 Speaker 1: is that you can work with sad, sad and funny. 1062 00:51:47,160 --> 00:51:50,040 Speaker 1: This book I've just written is sad and funny. There's 1063 00:51:50,280 --> 00:51:53,040 Speaker 1: it's there's so much funny stuff in it, but it's 1064 00:51:53,040 --> 00:51:56,760 Speaker 1: a it's a sad story. They go together, these emotions. 1065 00:51:56,840 --> 00:51:58,880 Speaker 1: You're in a You're in an emotional space rather than 1066 00:51:58,880 --> 00:52:01,960 Speaker 1: a kind of angry You're a rich emotional space rather 1067 00:52:01,960 --> 00:52:03,400 Speaker 1: than a kind of cheap emotional space. 1068 00:52:03,640 --> 00:52:09,160 Speaker 2: Huh. That's really fascinating and unexpected. Take. Let's bring this 1069 00:52:09,280 --> 00:52:16,440 Speaker 2: back to the crew of twenty somethings running FTX. I 1070 00:52:16,600 --> 00:52:20,400 Speaker 2: read the book not so much as in a defense 1071 00:52:20,480 --> 00:52:24,440 Speaker 2: of where FTX went off the rails, but just an explanation. 1072 00:52:25,200 --> 00:52:28,480 Speaker 2: Here are people with no experience in finance, no experience 1073 00:52:28,480 --> 00:52:33,040 Speaker 2: in management, no organizational structure, none of the usual controls 1074 00:52:33,080 --> 00:52:36,920 Speaker 2: in place to run a few million dollars, much less 1075 00:52:37,280 --> 00:52:41,759 Speaker 2: hundreds of billions of dollars. How criminal was this or 1076 00:52:41,800 --> 00:52:45,879 Speaker 2: was this really just terrible management run amuck? Was there 1077 00:52:45,920 --> 00:52:47,640 Speaker 2: any criminal intent? 1078 00:52:49,880 --> 00:52:52,960 Speaker 1: That's the question at the heart of the trial, and. 1079 00:52:54,920 --> 00:52:55,880 Speaker 2: I mean clearly there was. 1080 00:52:57,080 --> 00:52:59,239 Speaker 1: I mean answer this, Oh yeah, it's all in there, 1081 00:52:59,360 --> 00:53:03,799 Speaker 1: right it's all. There's no happy story to explain it all. 1082 00:53:05,160 --> 00:53:09,040 Speaker 1: But I want to say this. I don't want to 1083 00:53:09,040 --> 00:53:11,520 Speaker 1: answer the question because I've left the question for the 1084 00:53:11,760 --> 00:53:14,640 Speaker 1: reader to answer. I intentionally didn't answer the question because 1085 00:53:14,640 --> 00:53:17,080 Speaker 1: I didn't want my thumb on the scale. So I 1086 00:53:17,080 --> 00:53:20,600 Speaker 1: don't really want to answer this in interviews. So let 1087 00:53:20,640 --> 00:53:22,560 Speaker 1: me ask also. But let me also add to that 1088 00:53:23,320 --> 00:53:26,840 Speaker 1: that it's quite possible that stuff will come out in 1089 00:53:26,880 --> 00:53:28,759 Speaker 1: the trial that has not come out yet that will 1090 00:53:28,840 --> 00:53:32,760 Speaker 1: change my views. So I don't know, so I'm withholding judgment. 1091 00:53:32,880 --> 00:53:34,480 Speaker 2: So let me pull something from the book that I 1092 00:53:34,520 --> 00:53:38,360 Speaker 2: thought was really fascinating, and I think Twitter has gotten wrong. 1093 00:53:38,800 --> 00:53:42,839 Speaker 2: It wasn't that FTX transferred money to Alameda, transferred eight 1094 00:53:42,880 --> 00:53:47,000 Speaker 2: point three billion dollars. As I read it, FTX was unbanked. 1095 00:53:47,280 --> 00:53:49,600 Speaker 2: You could give them crypto, but you couldn't give them cash. 1096 00:53:50,160 --> 00:53:54,120 Speaker 2: Alameda had a pre existing bank account, so you could 1097 00:53:54,120 --> 00:53:57,439 Speaker 2: wire money into Alameda and then they're supposed to move 1098 00:53:57,480 --> 00:53:59,640 Speaker 2: it over to FTX. Is that a fair statement. 1099 00:53:59,719 --> 00:54:02,800 Speaker 1: That's that's how eight of the ten something billion that 1100 00:54:02,880 --> 00:54:04,520 Speaker 1: got into Alimeter from FAS got it. 1101 00:54:04,600 --> 00:54:06,680 Speaker 2: And at one point in time, Alimede is sitting on like, 1102 00:54:06,760 --> 00:54:09,759 Speaker 2: I don't know ninety one hundred billion dollars worth of assets. 1103 00:54:10,239 --> 00:54:12,319 Speaker 2: It's not that eight billion is a rounding error, but 1104 00:54:12,440 --> 00:54:15,359 Speaker 2: in the grand scheme of things, yeah, yes, we'll make 1105 00:54:15,400 --> 00:54:17,640 Speaker 2: that mark to accounting eventually. 1106 00:54:17,800 --> 00:54:20,840 Speaker 1: So that would be the story Sam would tell. Yeah. 1107 00:54:20,880 --> 00:54:24,439 Speaker 1: And the way you would challenge that story and I do, 1108 00:54:25,200 --> 00:54:29,240 Speaker 1: is we're really sitting on ninety billion dollars of assets 1109 00:54:29,280 --> 00:54:32,440 Speaker 1: that was Salona and FTT and serum, and what is 1110 00:54:32,480 --> 00:54:35,279 Speaker 1: it worth? You know, yes, the market seems to say 1111 00:54:35,320 --> 00:54:38,080 Speaker 1: it's worth that, but it's not cold liquid in it. Right. 1112 00:54:38,200 --> 00:54:43,440 Speaker 1: The second thing is it's just like, unless you know 1113 00:54:43,560 --> 00:54:46,040 Speaker 1: Sam Bank and free to know what he did back 1114 00:54:46,120 --> 00:54:49,360 Speaker 1: when he was trading the ripple in Berkeley, that it 1115 00:54:49,440 --> 00:54:53,040 Speaker 1: seems preposterous that someone could not pay attention to eight 1116 00:54:53,040 --> 00:54:54,759 Speaker 1: billion dollars of other people's money that was in the 1117 00:54:54,760 --> 00:54:58,040 Speaker 1: wrong place, and that the minute they have bank accounts 1118 00:54:58,440 --> 00:55:01,440 Speaker 1: or for that matter, you know, wallets to store crypto 1119 00:55:01,560 --> 00:55:04,279 Speaker 1: in in FTX because the dollars are going to become 1120 00:55:04,280 --> 00:55:10,120 Speaker 1: a crypto that you move it over. So it's inexcusable 1121 00:55:10,280 --> 00:55:12,719 Speaker 1: that it was there. But it does seem that it 1122 00:55:12,760 --> 00:55:14,960 Speaker 1: got I mean, and how much difference. It makes how 1123 00:55:15,000 --> 00:55:17,560 Speaker 1: it got there, I'm not clear, may not make any 1124 00:55:17,600 --> 00:55:22,239 Speaker 1: difference at all legally, but that that appears to be 1125 00:55:22,320 --> 00:55:23,360 Speaker 1: how it most. 1126 00:55:23,320 --> 00:55:27,240 Speaker 2: Came into Alamo, from the client, not from FTX. 1127 00:55:27,360 --> 00:55:28,040 Speaker 1: Right. 1128 00:55:28,080 --> 00:55:31,239 Speaker 2: That sounds like that's an important distinction. It may be, 1129 00:55:31,600 --> 00:55:33,799 Speaker 2: I mean, actually it's problematic. 1130 00:55:33,880 --> 00:55:34,680 Speaker 1: Yeah, oh yeah. 1131 00:55:34,920 --> 00:55:38,880 Speaker 2: Whether that amounts to fraudulent intent is again it's for 1132 00:55:38,880 --> 00:55:39,440 Speaker 2: the jury. 1133 00:55:39,640 --> 00:55:42,040 Speaker 1: That's right. That's gonna be the interesting thing. What this 1134 00:55:42,080 --> 00:55:44,560 Speaker 1: is why you need to understand Sam Bankman Freed. If 1135 00:55:44,560 --> 00:55:48,880 Speaker 1: you're the jury, it's like, what would that mind have intended? Uh, 1136 00:55:48,960 --> 00:55:52,240 Speaker 1: And that's what they will decide. You know, his odds 1137 00:55:52,280 --> 00:55:52,839 Speaker 1: are not good. 1138 00:55:53,400 --> 00:55:57,440 Speaker 2: So so you mentioned FTT, which is the coin. This 1139 00:55:57,520 --> 00:56:00,800 Speaker 2: story was really this part of the narrative was really 1140 00:56:01,200 --> 00:56:05,480 Speaker 2: fascinating because I was unaware of this. So FTX issues FTT, 1141 00:56:05,800 --> 00:56:10,640 Speaker 2: which is effectively like equity in FTX, Yes, and they don't. 1142 00:56:12,160 --> 00:56:14,280 Speaker 1: It's got to claim on the revenues, right. 1143 00:56:14,120 --> 00:56:17,799 Speaker 2: So literally profit distributions go out to FTT. 1144 00:56:17,680 --> 00:56:19,319 Speaker 1: Holders in the form of buybacks. 1145 00:56:19,400 --> 00:56:22,480 Speaker 2: So in the form of buybacks of FTT. So that's 1146 00:56:22,520 --> 00:56:26,360 Speaker 2: how you get you get paid on that that suddenly 1147 00:56:26,760 --> 00:56:29,040 Speaker 2: and he does it at like pennies, not not a 1148 00:56:29,040 --> 00:56:31,960 Speaker 2: whole lot of money. Suddenly this runs up in price. 1149 00:56:32,480 --> 00:56:36,200 Speaker 2: Right at what point, what what is FTX holdings of 1150 00:56:36,280 --> 00:56:37,120 Speaker 2: FTT worth? 1151 00:56:38,640 --> 00:56:42,160 Speaker 1: So as long as FTX is functioning and profitable, the 1152 00:56:42,239 --> 00:56:47,280 Speaker 1: FTT is actually pretty liquid and valuable. At the minute 1153 00:56:47,280 --> 00:56:50,840 Speaker 1: FTX goes down, it's worth zero. So it's all correlated 1154 00:56:51,520 --> 00:56:54,680 Speaker 1: concern and it's sort of pretty much everything in well 1155 00:56:54,719 --> 00:56:56,960 Speaker 1: not that, not everything, but a lot that was in 1156 00:56:57,040 --> 00:57:04,040 Speaker 1: Alameda was simply one thing, Sam FTX, FTT, Solana even 1157 00:57:04,080 --> 00:57:06,759 Speaker 1: and serum, these big these other tokens were so associated 1158 00:57:06,760 --> 00:57:09,319 Speaker 1: with him that if one thing, if FTX went down, 1159 00:57:09,440 --> 00:57:12,680 Speaker 1: they were all going to go down. Uh, they're they're 1160 00:57:12,719 --> 00:57:15,000 Speaker 1: parts of the story. It's funny way I think back 1161 00:57:15,040 --> 00:57:18,720 Speaker 1: of like former financial scandals, Madeoff is not the analogy. 1162 00:57:19,800 --> 00:57:22,520 Speaker 2: Well, actually, so you've said this, and I have another question, 1163 00:57:22,600 --> 00:57:25,240 Speaker 2: so let me bring it up here. Madeoff had a 1164 00:57:25,320 --> 00:57:28,080 Speaker 2: legitimate business. He was the largest market maker on the 1165 00:57:28,120 --> 00:57:31,200 Speaker 2: nestrary way back when, way back when. And the problem 1166 00:57:31,320 --> 00:57:35,400 Speaker 2: is nobody really knows when his business turned into a 1167 00:57:35,440 --> 00:57:39,120 Speaker 2: ponzi right right, There's been multiple books, none of them 1168 00:57:39,120 --> 00:57:42,520 Speaker 2: have found that information. Right here, it's pretty clear from 1169 00:57:42,560 --> 00:57:45,840 Speaker 2: the beginning, no controls, cole mingling of funds. 1170 00:57:46,160 --> 00:57:49,320 Speaker 1: But FTX itself was never never looked like right. 1171 00:57:49,440 --> 00:57:52,040 Speaker 2: And it was a legitimate business making a lot of money. 1172 00:57:52,080 --> 00:57:56,200 Speaker 1: Right. But this thing rhymes to me with both Michael 1173 00:57:56,200 --> 00:58:00,120 Speaker 1: Milkin and with long term capital management. Long term how 1174 00:58:00,160 --> 00:58:02,480 Speaker 1: we management didn't realize that all of its stuff was 1175 00:58:02,480 --> 00:58:06,000 Speaker 1: correlated because it owned it. And once people started going 1176 00:58:06,040 --> 00:58:10,240 Speaker 1: after their positions and knew their positions, even if it was, 1177 00:58:10,680 --> 00:58:14,080 Speaker 1: you know, a position in Russian government bonds and overhear 1178 00:58:14,120 --> 00:58:16,880 Speaker 1: our position in gold, it didn't matter because everybody knew 1179 00:58:16,880 --> 00:58:18,400 Speaker 1: they were weak and these positions were going to be 1180 00:58:18,400 --> 00:58:22,400 Speaker 1: puked out. And so the collapse of Sam's world reminded 1181 00:58:22,440 --> 00:58:24,240 Speaker 1: me a little of that, and it reminded me a 1182 00:58:24,240 --> 00:58:25,720 Speaker 1: little of party. 1183 00:58:25,720 --> 00:58:27,920 Speaker 2: Well stay there before you move on. So you talk 1184 00:58:27,960 --> 00:58:32,240 Speaker 2: about CZ basically starting a run on the bank and 1185 00:58:32,360 --> 00:58:35,600 Speaker 2: or a run on FTX, because he starts saying, hey, 1186 00:58:35,600 --> 00:58:39,120 Speaker 2: ore FTT, we've sold and we have other things. We 1187 00:58:39,120 --> 00:58:44,520 Speaker 2: we're no longer trusting FTX as an exchange. Did he 1188 00:58:44,720 --> 00:58:46,720 Speaker 2: precipitate the entire collapse? 1189 00:58:48,880 --> 00:58:52,160 Speaker 1: He couldn't have done it. It's a combination of him 1190 00:58:52,200 --> 00:58:54,200 Speaker 1: and the moment in which he says what he says, 1191 00:58:55,200 --> 00:58:57,120 Speaker 1: And there's a reason I think he says what he says. 1192 00:58:57,160 --> 00:59:01,640 Speaker 1: He's even kind of hinted at this reason. Samm idiotically 1193 00:59:02,000 --> 00:59:04,440 Speaker 1: and made a trip to Dubai like the week a 1194 00:59:04,480 --> 00:59:09,040 Speaker 1: week earlier met with with Anthony Scaramucci. I was actually 1195 00:59:09,040 --> 00:59:13,440 Speaker 1: invited on this trip. I didn't go. But he tried 1196 00:59:13,480 --> 00:59:17,200 Speaker 1: to persuade the Dubai regulators to throw Binance and Sez 1197 00:59:17,360 --> 00:59:18,120 Speaker 1: out of Dubai. 1198 00:59:18,640 --> 00:59:23,760 Speaker 2: Really, and they have an ongoing relationship, both Sam and 1199 00:59:23,760 --> 00:59:27,040 Speaker 2: and Binance and Dubai and. 1200 00:59:27,400 --> 00:59:32,040 Speaker 1: Yes, and you know, Binance needs to find a home 1201 00:59:32,520 --> 00:59:35,000 Speaker 1: if by Dubai has given them a home. Caz needs 1202 00:59:35,040 --> 00:59:36,720 Speaker 1: to find a home. Dubai has given him a home. 1203 00:59:37,360 --> 00:59:43,000 Speaker 1: And so Sam was basically trying to render cz stateless 1204 00:59:43,480 --> 00:59:48,600 Speaker 1: and Uh overplayed Riley overplayed his hand. That it was 1205 00:59:48,720 --> 00:59:51,240 Speaker 1: just a dumb thing to do. I mean, it gets 1206 00:59:51,240 --> 00:59:56,640 Speaker 1: to Sam. But if he thought he was vulnerable, why 1207 00:59:56,640 --> 00:59:59,920 Speaker 1: would he have done that? Did he? So? Maybe he didn't, 1208 01:00:00,000 --> 01:00:03,800 Speaker 1: I think he was vulnerable. That moment tells you argues 1209 01:00:03,880 --> 01:00:07,600 Speaker 1: that Sam is oblivious at that moment to how weak 1210 01:00:07,680 --> 01:00:10,840 Speaker 1: his hand is, because you don't do it if your 1211 01:00:10,880 --> 01:00:13,000 Speaker 1: hand is that week. I mean, he's really not going 1212 01:00:13,080 --> 01:00:13,760 Speaker 1: to get you very much. 1213 01:00:13,760 --> 01:00:15,720 Speaker 2: Well, we were talking earlier. You go up against the king, 1214 01:00:15,760 --> 01:00:17,120 Speaker 2: you better better kill him. 1215 01:00:17,240 --> 01:00:22,080 Speaker 1: That's not miss And the other thing is Sam was 1216 01:00:22,840 --> 01:00:30,720 Speaker 1: potentially disruptive to US financial structure that he was arguing. 1217 01:00:30,800 --> 01:00:33,480 Speaker 1: He was making an argument was similar to Brad Katsiyama's 1218 01:00:33,560 --> 01:00:37,320 Speaker 1: argument flashboys. A lot of unnecessary intermediation in the markets, 1219 01:00:37,920 --> 01:00:40,080 Speaker 1: and there's a much simpler way to do this the 1220 01:00:40,120 --> 01:00:42,320 Speaker 1: structures of being built in crypto that could be poured 1221 01:00:42,320 --> 01:00:45,120 Speaker 1: it into the US stock market where all of a sudden, 1222 01:00:45,400 --> 01:00:48,360 Speaker 1: you know, the exchange isn't selling customer data for business. 1223 01:00:49,120 --> 01:00:52,720 Speaker 1: That offended and bothered a lot of existing players. 1224 01:00:53,240 --> 01:00:56,600 Speaker 2: So you talk about this specifically towards the end of 1225 01:00:56,640 --> 01:01:00,600 Speaker 2: the book. The takeaway from FTX and Crypto is the 1226 01:01:00,640 --> 01:01:04,760 Speaker 2: reason this collapse, the reason crypto had another Crypto winter, 1227 01:01:05,440 --> 01:01:08,800 Speaker 2: is there is no banker of last resort to step up, 1228 01:01:09,280 --> 01:01:14,840 Speaker 2: and that it turns out capitalism needs guardrails, banks need regulations, 1229 01:01:14,880 --> 01:01:18,800 Speaker 2: and guess what, we all need intermediaries because the supposedly 1230 01:01:18,840 --> 01:01:24,800 Speaker 2: trustless system works much worse than the system that that 1231 01:01:24,920 --> 01:01:26,960 Speaker 2: is highly regulated and supervised. 1232 01:01:27,040 --> 01:01:29,840 Speaker 1: Yes, it's it's a great irony to me of Crypto 1233 01:01:29,920 --> 01:01:34,640 Speaker 1: that it starts out with Stoci's paper, and Satoci is 1234 01:01:34,800 --> 01:01:40,480 Speaker 1: clearly obsessed with with with not wanting to have to 1235 01:01:40,520 --> 01:01:43,840 Speaker 1: trust governments and banks. The whole point of this is, 1236 01:01:44,240 --> 01:01:46,320 Speaker 1: this is a way to eliminate banks and governments from 1237 01:01:46,320 --> 01:01:51,000 Speaker 1: the monetary system. And it's a trustless system. It's peer 1238 01:01:51,520 --> 01:01:55,360 Speaker 1: you trade directly with someone else, and the transactions are irreversible, 1239 01:01:55,400 --> 01:01:58,280 Speaker 1: et cetera, et cetera. And that he must be if 1240 01:01:58,280 --> 01:02:01,640 Speaker 1: he's alive. If he's dead, he's in his grave. Because 1241 01:02:01,840 --> 01:02:05,600 Speaker 1: what happens next Crypto goes and invents a whole nother 1242 01:02:06,040 --> 01:02:08,600 Speaker 1: financial system that looks an awful lot like the existing 1243 01:02:08,600 --> 01:02:12,320 Speaker 1: financial system, except without regulators right right, and it's and 1244 01:02:12,760 --> 01:02:16,720 Speaker 1: or deposit insurance right, and it's and and. 1245 01:02:16,640 --> 01:02:18,520 Speaker 2: Which turns out to be a good thing deposit and 1246 01:02:18,560 --> 01:02:20,040 Speaker 2: show God right. 1247 01:02:19,960 --> 01:02:25,240 Speaker 1: Yes and so and regulators too it So who would 1248 01:02:25,240 --> 01:02:28,640 Speaker 1: have fought? I wouldn't have thought that crypto would end 1249 01:02:28,720 --> 01:02:30,320 Speaker 1: up in this place. It would end up with all 1250 01:02:30,400 --> 01:02:33,960 Speaker 1: the same exchanges and brokers and banks that that the 1251 01:02:33,960 --> 01:02:36,320 Speaker 1: financial system has. Turns out, their reasons for these things. 1252 01:02:36,880 --> 01:02:40,320 Speaker 2: So, so let's talk a little bit about the bankruptcy 1253 01:02:40,520 --> 01:02:44,360 Speaker 2: and the trustees and and what so far has been recovered. 1254 01:02:45,000 --> 01:02:47,200 Speaker 2: You write in the book, what there's eight point three 1255 01:02:47,320 --> 01:02:48,840 Speaker 2: billion missing. 1256 01:02:48,680 --> 01:02:51,520 Speaker 1: So there's eight point six billion in customer deposits. This 1257 01:02:51,600 --> 01:02:52,720 Speaker 1: is all from the bankruptcy people. 1258 01:02:52,800 --> 01:02:53,760 Speaker 2: That's unaccounted for. 1259 01:02:54,080 --> 01:02:57,960 Speaker 1: That they that the customers are still owed, including me, 1260 01:02:58,640 --> 01:02:59,400 Speaker 1: to under grand. 1261 01:02:59,440 --> 01:03:02,480 Speaker 2: You and most of the employees had all their network 1262 01:03:02,640 --> 01:03:05,400 Speaker 2: tied up. These people were drank the kool aid. They 1263 01:03:05,440 --> 01:03:06,840 Speaker 2: thought this was the next great thing. 1264 01:03:06,960 --> 01:03:09,760 Speaker 1: Their employees who had their whole families, had their parents, 1265 01:03:09,760 --> 01:03:12,880 Speaker 1: had their brothers and sisters in with their assets on FTX. 1266 01:03:13,000 --> 01:03:15,200 Speaker 2: Yes, right, so eight point six is zero. 1267 01:03:15,600 --> 01:03:18,760 Speaker 1: Yeah, And they've said they've found seven This is three 1268 01:03:18,760 --> 01:03:20,720 Speaker 1: months ago, and they said they were still finding it. 1269 01:03:20,960 --> 01:03:24,280 Speaker 1: Seven point three billion of liquid assets of liquid. 1270 01:03:24,320 --> 01:03:28,280 Speaker 2: And in the book you talk about other exchanges saying, hey, 1271 01:03:28,280 --> 01:03:30,840 Speaker 2: we have three hundred million of your ethereum here, come 1272 01:03:30,880 --> 01:03:31,280 Speaker 2: get it. 1273 01:03:32,320 --> 01:03:35,960 Speaker 1: When the thing is unraveling, people not not Sam, probably 1274 01:03:35,960 --> 01:03:38,040 Speaker 1: Sam too, but people not Sam are getting phone calls 1275 01:03:38,040 --> 01:03:40,160 Speaker 1: from banks saying we have we have three hundred million 1276 01:03:40,200 --> 01:03:43,280 Speaker 1: dollars of dollars in an account. Do you know? And 1277 01:03:43,280 --> 01:03:45,520 Speaker 1: they didn't know about it, right, I mean so. 1278 01:03:45,800 --> 01:03:48,160 Speaker 2: And then you talk about the dragon's layer, which is 1279 01:03:48,280 --> 01:03:51,640 Speaker 2: all these assets. So he bought one hundred million dollars 1280 01:03:51,680 --> 01:03:55,040 Speaker 2: of Twitter a year before Musk buys it at like 1281 01:03:55,160 --> 01:03:56,120 Speaker 2: twenty dollars a share. 1282 01:03:56,200 --> 01:03:58,480 Speaker 1: So this is well, the big a ton of money. 1283 01:03:58,480 --> 01:04:01,680 Speaker 1: You know, the elephant in the room is and it's 1284 01:04:01,680 --> 01:04:04,680 Speaker 1: a really interesting elephant. So Sam Bagman Freed one of 1285 01:04:04,760 --> 01:04:08,920 Speaker 1: his obsessions is artificial intelligence and making sure artificial intelligence 1286 01:04:09,000 --> 01:04:11,360 Speaker 1: doesn't slip its leash and eat us. All right, And 1287 01:04:11,520 --> 01:04:14,480 Speaker 1: this is before it's fashionable at all to think about this. Now, 1288 01:04:14,760 --> 01:04:17,680 Speaker 1: this way back when nobody was thinking about it, are 1289 01:04:17,720 --> 01:04:21,960 Speaker 1: really few people. And he buys a steak in a 1290 01:04:21,960 --> 01:04:24,880 Speaker 1: company called Anthropic. He buys it I think at the 1291 01:04:24,880 --> 01:04:27,640 Speaker 1: time as a twenty percent stake, I can't remember. 1292 01:04:27,960 --> 01:04:29,840 Speaker 2: I think it was four hundred something like that, some 1293 01:04:29,920 --> 01:04:30,880 Speaker 2: huge amount of money. 1294 01:04:30,720 --> 01:04:36,160 Speaker 1: Huge amount of money. And when the bankruptcy happens, the 1295 01:04:36,160 --> 01:04:38,240 Speaker 1: guy who's running the bankruptcy, John Ray, said to me, 1296 01:04:38,400 --> 01:04:41,680 Speaker 1: as an illustration of the idiocy of Sion Bakman, Freed 1297 01:04:42,120 --> 01:04:44,160 Speaker 1: said to me, can you believe he put like four 1298 01:04:44,240 --> 01:04:46,560 Speaker 1: under million dollars into this thing called Anthropic and it's 1299 01:04:46,640 --> 01:04:50,240 Speaker 1: just air. It's just an idea, there's nothing there. Well, 1300 01:04:50,320 --> 01:04:53,400 Speaker 1: last week Amazon has announced they're making a four billion 1301 01:04:53,520 --> 01:04:56,400 Speaker 1: up to four billion dollar investment and it's a minority stake. 1302 01:04:56,880 --> 01:04:59,520 Speaker 1: So this company is now being valued at least eight 1303 01:04:59,560 --> 01:05:02,880 Speaker 1: billion more probably, and it seems going like it's going 1304 01:05:02,920 --> 01:05:03,320 Speaker 1: to the moon. 1305 01:05:03,480 --> 01:05:04,600 Speaker 2: This is means his. 1306 01:05:06,520 --> 01:05:09,720 Speaker 1: Three or of five x yes, and it's that's right. 1307 01:05:09,880 --> 01:05:12,760 Speaker 1: So it very much looks like they may get paid back. 1308 01:05:12,880 --> 01:05:16,720 Speaker 2: Not only they may get paid back, but the implication is, hey, 1309 01:05:16,760 --> 01:05:20,440 Speaker 2: if they had accounting and a CFO, where is it 1310 01:05:20,520 --> 01:05:24,120 Speaker 2: possible that they were never truly insolvent? If you take 1311 01:05:24,160 --> 01:05:26,560 Speaker 2: all their assets and add them up, might they not 1312 01:05:26,640 --> 01:05:29,800 Speaker 2: have needed to go into bankruptcy if there was an 1313 01:05:29,840 --> 01:05:31,360 Speaker 2: adult in the room running the place. 1314 01:05:31,920 --> 01:05:33,640 Speaker 1: Well, there's an adult in the room running the place. 1315 01:05:33,680 --> 01:05:35,360 Speaker 1: The money would never have been in the wrong place. 1316 01:05:35,560 --> 01:05:38,840 Speaker 1: But the but it's it's I think that's certainly true 1317 01:05:38,920 --> 01:05:40,040 Speaker 1: of ft x US. 1318 01:05:41,680 --> 01:05:45,040 Speaker 2: The well that was tiny compared to it's hard to know. 1319 01:05:45,600 --> 01:05:47,160 Speaker 1: It'll be after the fact, we will find it. 1320 01:05:47,240 --> 01:05:49,480 Speaker 2: But it's a real This isn't like a one in 1321 01:05:49,520 --> 01:05:53,600 Speaker 2: a billion possibility. This is a realistic chance, I think. 1322 01:05:53,600 --> 01:05:55,800 Speaker 2: And I picked that number on purpose because you know why. 1323 01:05:55,880 --> 01:05:58,240 Speaker 1: Yeah, I think so. I think that's right, and I 1324 01:05:58,280 --> 01:06:02,120 Speaker 1: think you know, one way to think about this, it's 1325 01:06:02,320 --> 01:06:04,440 Speaker 1: is you talk to the people who were trading the 1326 01:06:04,480 --> 01:06:07,200 Speaker 1: claims on the on on. If I wanted to sell 1327 01:06:07,200 --> 01:06:10,720 Speaker 1: my claim on the on my deposits, I could and 1328 01:06:10,760 --> 01:06:12,640 Speaker 1: I think I get like thirty five cents on the dollar, 1329 01:06:12,720 --> 01:06:14,080 Speaker 1: not much, but some it's not. 1330 01:06:14,120 --> 01:06:16,880 Speaker 2: Zero, not two, and that's not a typical night. 1331 01:06:17,080 --> 01:06:19,520 Speaker 1: But if you talk to the people who buy those 1332 01:06:20,120 --> 01:06:21,919 Speaker 1: I had a couple tell me, we think it's maybe 1333 01:06:21,920 --> 01:06:23,360 Speaker 1: we're going to make it get one hundred cents on 1334 01:06:23,360 --> 01:06:26,200 Speaker 1: the dollar. Wow, And but it problems is going to take. 1335 01:06:26,120 --> 01:06:27,880 Speaker 2: What it made offends up. It was pretty close to 1336 01:06:27,880 --> 01:06:30,560 Speaker 2: one hundred. Yeah, I think they can clawed back a 1337 01:06:30,600 --> 01:06:31,440 Speaker 2: lot so. 1338 01:06:31,680 --> 01:06:34,440 Speaker 1: But this is without clawbacks. So the interesting thing about 1339 01:06:34,440 --> 01:06:36,560 Speaker 1: this is I don't think I mean some people like 1340 01:06:36,600 --> 01:06:39,320 Speaker 1: politicians people are embarrassed to have taken Sam's money and 1341 01:06:39,360 --> 01:06:41,840 Speaker 1: can give it back. Have given some of it back. 1342 01:06:41,880 --> 01:06:45,120 Speaker 1: It's pretty peanuts that but they are rules about clawbacks 1343 01:06:45,120 --> 01:06:47,360 Speaker 1: and bankruptcy, right, you have to demonstrate that when the 1344 01:06:47,400 --> 01:06:49,600 Speaker 1: money was given, that the. 1345 01:06:49,880 --> 01:06:52,160 Speaker 2: There was a proceeds of a crime, also that it 1346 01:06:52,200 --> 01:06:52,840 Speaker 2: was insolvent. 1347 01:06:53,320 --> 01:06:56,800 Speaker 1: And it's unclear when FTX becomes insolvent. Is it November 1348 01:06:56,840 --> 01:06:59,400 Speaker 1: of last year? Is it June? It certainly wasn't January 1349 01:06:59,440 --> 01:07:01,680 Speaker 1: of last year. The fine, So anything that went out 1350 01:07:01,680 --> 01:07:03,880 Speaker 1: the door before then, you're not gonna be able to clock. 1351 01:07:03,640 --> 01:07:05,640 Speaker 2: With made off. It was pretty easy. That was never 1352 01:07:06,200 --> 01:07:08,360 Speaker 2: you know, the last twenty years, there was no business there. 1353 01:07:08,680 --> 01:07:11,520 Speaker 2: Whatever you got you were getting somebody else's money. 1354 01:07:11,560 --> 01:07:12,360 Speaker 1: So that was easy. 1355 01:07:12,760 --> 01:07:13,640 Speaker 2: This is a little more. 1356 01:07:14,400 --> 01:07:17,000 Speaker 1: And they have not made the argument yet. And tellingly, 1357 01:07:17,400 --> 01:07:20,800 Speaker 1: if it turns out that the money is there, it 1358 01:07:20,840 --> 01:07:23,680 Speaker 1: will be because those the assets add up to the 1359 01:07:24,160 --> 01:07:28,640 Speaker 1: liabilities that nobody's really gone systematically through this pile of stuff, 1360 01:07:28,680 --> 01:07:31,160 Speaker 1: an incredible bile of stuff. It's sam bank and free 1361 01:07:31,160 --> 01:07:33,520 Speaker 1: to cumulate. It's one hundred and something in private investments. 1362 01:07:33,640 --> 01:07:36,480 Speaker 2: You call it the dragon's lair. He threw five billion 1363 01:07:36,560 --> 01:07:40,360 Speaker 2: dollars into three hundred separate entities. And many of these 1364 01:07:40,600 --> 01:07:42,120 Speaker 2: are giant winners. 1365 01:07:41,920 --> 01:07:44,760 Speaker 1: You know, some of a zero it's a VC portfolio. Yeah, 1366 01:07:44,760 --> 01:07:46,560 Speaker 1: And the question is what's it worth? And I don't 1367 01:07:46,560 --> 01:07:49,800 Speaker 1: know what it's worth. Is it enough to close the 1368 01:07:49,840 --> 01:07:52,040 Speaker 1: gap between eight point six and seven point three? It 1369 01:07:52,080 --> 01:07:54,840 Speaker 1: seems so there's some other they owe some other stuff, 1370 01:07:54,840 --> 01:07:57,240 Speaker 1: but the customer. It'll be interesting to see what the 1371 01:07:57,240 --> 01:07:58,160 Speaker 1: customers get back. 1372 01:07:58,440 --> 01:08:00,640 Speaker 2: So one other thing I have to add ask about 1373 01:08:00,800 --> 01:08:03,000 Speaker 2: is you throw some shade at some of the big 1374 01:08:03,040 --> 01:08:07,160 Speaker 2: law firms, Sullivan and Cromwell and others. First, Sullivan and 1375 01:08:07,200 --> 01:08:11,720 Speaker 2: Cromwell was for a while ftx's outside council for certain. 1376 01:08:11,440 --> 01:08:14,360 Speaker 1: Things, including their dealings with the regulators. 1377 01:08:14,000 --> 01:08:17,360 Speaker 2: Which kind of raises questions, how could they be bankruptcy counsel. 1378 01:08:17,479 --> 01:08:19,360 Speaker 1: I don't understand it because they're sitting. 1379 01:08:19,120 --> 01:08:20,880 Speaker 2: On Isn't that an inherent conflict of interest? 1380 01:08:21,000 --> 01:08:24,160 Speaker 1: They're sitting on the evidence for the trial. So you 1381 01:08:24,200 --> 01:08:26,840 Speaker 1: would have thought I would have thought that at least 1382 01:08:26,840 --> 01:08:31,080 Speaker 1: people would raise questions about the lawyers for FTX being 1383 01:08:31,160 --> 01:08:34,000 Speaker 1: also the lawyers for the bankruptcy and also especially since 1384 01:08:34,040 --> 01:08:36,120 Speaker 1: they're the ones who really twisted Sam's arm to sign 1385 01:08:36,160 --> 01:08:37,400 Speaker 1: that the bankruptcy documents. 1386 01:08:37,520 --> 01:08:40,080 Speaker 2: Right, And there was a typo I found in the book. 1387 01:08:40,120 --> 01:08:43,519 Speaker 2: You wrote that the bankruptcy lawyers are going to generate 1388 01:08:43,560 --> 01:08:46,680 Speaker 2: fees of a billion dollars. That's a typo. What's that 1389 01:08:46,760 --> 01:08:47,640 Speaker 2: number supposed to be? 1390 01:08:48,200 --> 01:08:49,160 Speaker 1: It's not a typo. 1391 01:08:49,600 --> 01:08:51,559 Speaker 2: It's a billion dollars lawyer. 1392 01:08:51,640 --> 01:08:55,920 Speaker 1: There are hundred advisor, lawyer and other fees. Real lawyer 1393 01:08:55,960 --> 01:08:58,040 Speaker 1: and other fees. So this is where we are. We're 1394 01:08:58,040 --> 01:09:01,920 Speaker 1: at several hundred million. Now. One of the creditors, Big creditor, 1395 01:09:02,000 --> 01:09:04,639 Speaker 1: did an analysis of what they were going to charge 1396 01:09:04,720 --> 01:09:06,760 Speaker 1: by the time the dust settles, and they figured out 1397 01:09:06,760 --> 01:09:08,080 Speaker 1: it's going to be about a billion dollars. 1398 01:09:08,280 --> 01:09:09,640 Speaker 2: That's unconscionable. 1399 01:09:10,160 --> 01:09:15,840 Speaker 1: The thing that's striking to me is just how insider 1400 01:09:16,080 --> 01:09:17,920 Speaker 1: a game the bankruptcy process is. 1401 01:09:18,040 --> 01:09:20,280 Speaker 2: For a long time though took but it used to. 1402 01:09:20,200 --> 01:09:23,439 Speaker 1: Be regulated by the SEC. And in the eighties they 1403 01:09:23,479 --> 01:09:25,840 Speaker 1: got they took it out of the SEC and they 1404 01:09:25,880 --> 01:09:29,200 Speaker 1: created this thing called a bankruptcy trustee who's in the 1405 01:09:29,240 --> 01:09:32,400 Speaker 1: who's in the Department of Justice, but has no real 1406 01:09:32,560 --> 01:09:34,960 Speaker 1: power except the power to bitch and moan to the bankruptcy. 1407 01:09:35,360 --> 01:09:37,639 Speaker 2: He could petition, but he's gotten on so he did. 1408 01:09:37,520 --> 01:09:39,799 Speaker 1: In this case. He said, this is outrageous. They shouldn't 1409 01:09:39,840 --> 01:09:42,840 Speaker 1: be the Department of Justice. Guy wrote long letter saying 1410 01:09:42,880 --> 01:09:46,599 Speaker 1: you should not allow Solomon Cromwell to be the bankruptcy lawyers, 1411 01:09:46,600 --> 01:09:47,480 Speaker 1: and when they should. 1412 01:09:47,240 --> 01:09:51,240 Speaker 2: So this isn't Michael Lewis whining, And this is basically 1413 01:09:51,400 --> 01:09:54,280 Speaker 2: DJ saying these are the wrong attorneys, but they. 1414 01:09:54,200 --> 01:09:56,760 Speaker 1: Don't have the power to do anything about it. And 1415 01:09:56,840 --> 01:10:00,160 Speaker 1: did the SEC back in the day. Yeah, yeah, So 1416 01:10:00,760 --> 01:10:05,720 Speaker 1: it's just it's changed so that the power resides with 1417 01:10:05,760 --> 01:10:08,760 Speaker 1: the bankruptcy judge, and the bankruptcy judge is usually a 1418 01:10:08,760 --> 01:10:12,040 Speaker 1: former bankruptcy lawyer. And it just starts to smell like 1419 01:10:12,080 --> 01:10:17,559 Speaker 1: a club. And what with all the trustee was asking 1420 01:10:17,600 --> 01:10:20,080 Speaker 1: for is there needs to be like an outside examiner 1421 01:10:20,160 --> 01:10:24,519 Speaker 1: to watch this stuff, and the judge wouldn't even allow that. 1422 01:10:24,760 --> 01:10:27,280 Speaker 1: So this thing is happening essentially inside of a black box. 1423 01:10:27,680 --> 01:10:31,680 Speaker 1: And I just find that curious. It just seems like, 1424 01:10:31,880 --> 01:10:32,559 Speaker 1: how could that be? 1425 01:10:33,760 --> 01:10:37,000 Speaker 2: How could it be? So I have hundreds of questions 1426 01:10:37,000 --> 01:10:38,840 Speaker 2: more for you, but I'm going to just stick to 1427 01:10:38,960 --> 01:10:45,560 Speaker 2: the two most potent ones now. Effective altruism seemed like 1428 01:10:45,600 --> 01:10:49,440 Speaker 2: a big part of Sam's persona and his self identification. 1429 01:10:50,439 --> 01:10:52,920 Speaker 2: I came away from the book thinking this is a 1430 01:10:52,960 --> 01:10:58,479 Speaker 2: bunch of nonsense. I mean, seriously, they talk about, well, 1431 01:10:58,520 --> 01:11:00,840 Speaker 2: the risk from a super and ova one in a billion, 1432 01:11:00,880 --> 01:11:03,200 Speaker 2: and an asteroid is one in a million, and a 1433 01:11:03,320 --> 01:11:06,360 Speaker 2: pandemic is one in one hundred. And AI is one 1434 01:11:06,400 --> 01:11:10,040 Speaker 2: and thirty and these are just bs made up numbers, 1435 01:11:10,479 --> 01:11:13,919 Speaker 2: which you know, to a math guy, even a middling 1436 01:11:14,240 --> 01:11:18,000 Speaker 2: MIIT math guy, should have been like obvious red flags 1437 01:11:18,040 --> 01:11:21,160 Speaker 2: that this is crap. How did they get away fooling 1438 01:11:21,280 --> 01:11:24,519 Speaker 2: so many smart people? Or am I overstating this? 1439 01:11:25,960 --> 01:11:26,920 Speaker 1: I said the same thing. 1440 01:11:27,320 --> 01:11:30,640 Speaker 2: I mean I immediately so. But by the way, if 1441 01:11:30,680 --> 01:11:33,080 Speaker 2: you just sit down for two minutes with a pen 1442 01:11:33,160 --> 01:11:36,000 Speaker 2: and paper, the one in a billion on the supernova 1443 01:11:36,400 --> 01:11:40,040 Speaker 2: you could shows something like one in four trillion very 1444 01:11:40,160 --> 01:11:43,920 Speaker 2: very easily. And I'm sure, but it doesn't matter. They're 1445 01:11:44,000 --> 01:11:45,960 Speaker 2: just round made up numbers. 1446 01:11:46,000 --> 01:11:48,320 Speaker 1: So in their heads, you've got to understand this is 1447 01:11:48,320 --> 01:11:52,040 Speaker 1: a psychological as much of an as an intellectual movement, right. 1448 01:11:52,160 --> 01:11:56,080 Speaker 1: It's tribal. They're finding solos in each other's company. They're 1449 01:11:56,120 --> 01:11:58,960 Speaker 1: loving having these arguments about this thing. And what would 1450 01:11:58,960 --> 01:12:00,720 Speaker 1: they say? Let me see if I can for just 1451 01:12:00,720 --> 01:12:05,320 Speaker 1: a moment, there's some number that's true, whatever it is. 1452 01:12:05,640 --> 01:12:07,720 Speaker 1: We don't may not know the number, but there's some 1453 01:12:07,880 --> 01:12:11,000 Speaker 1: number that's true. And if any number is true and 1454 01:12:11,040 --> 01:12:14,240 Speaker 1: you multiply it by an infinite future, you get a 1455 01:12:14,240 --> 01:12:14,759 Speaker 1: big number. 1456 01:12:15,760 --> 01:12:20,080 Speaker 2: Yes and no who specializes in trobabilities. 1457 01:12:20,240 --> 01:12:22,479 Speaker 1: I try, I try, I try. 1458 01:12:22,560 --> 01:12:25,320 Speaker 2: Hey listen, Eventually the universe suffers from heat death, and 1459 01:12:25,720 --> 01:12:30,160 Speaker 2: entropy means that everything dies. So so why bother doing 1460 01:12:30,160 --> 01:12:30,679 Speaker 2: your homework? 1461 01:12:30,720 --> 01:12:33,960 Speaker 1: I try, I just try. I'll stop now. I didn't 1462 01:12:34,000 --> 01:12:36,840 Speaker 1: try to do much in the way of defending. 1463 01:12:36,360 --> 01:12:38,680 Speaker 2: This, No. I was completely sympatical with you as you 1464 01:12:38,720 --> 01:12:41,240 Speaker 2: as I'm reading and I'm putting my nose up, and 1465 01:12:41,280 --> 01:12:42,960 Speaker 2: then you throw the numbers. 1466 01:12:42,600 --> 01:12:47,360 Speaker 1: Out and me offer another weird defense of them, and 1467 01:12:47,360 --> 01:12:53,000 Speaker 1: that it's pretty cool how quickly they got to threats 1468 01:12:53,000 --> 01:12:56,880 Speaker 1: from artificial intelligence, and when that's fair, when nobody cared 1469 01:12:56,880 --> 01:12:57,960 Speaker 1: about it, right, and now. 1470 01:12:57,840 --> 01:13:00,000 Speaker 2: Everybody and a pandemic before COVID. 1471 01:13:00,120 --> 01:13:02,400 Speaker 1: Yeah, that's right. So I'll give them credit, given the 1472 01:13:02,479 --> 01:13:05,400 Speaker 1: credit for paying attention to things. These things are not unimportant. 1473 01:13:05,800 --> 01:13:08,280 Speaker 1: Once you start to kind of turn Matthew about them, 1474 01:13:08,280 --> 01:13:11,000 Speaker 1: it starts to feel a little silly. Yeah, And especially 1475 01:13:11,080 --> 01:13:14,080 Speaker 1: when you devote your life to these equations, then it 1476 01:13:14,120 --> 01:13:18,200 Speaker 1: seems to sit like a little just off. But it 1477 01:13:18,280 --> 01:13:22,040 Speaker 1: wasn't just stupid. It was four point zero stupid. It 1478 01:13:22,080 --> 01:13:24,120 Speaker 1: was it was it was you know, with that, it's 1479 01:13:24,120 --> 01:13:25,920 Speaker 1: sort of like sort of like the kid on the. 1480 01:13:25,920 --> 01:13:27,400 Speaker 2: Softball weapons grade stupid. 1481 01:13:27,600 --> 01:13:29,080 Speaker 1: It's like the kid on the softball team who's the 1482 01:13:29,080 --> 01:13:30,960 Speaker 1: best student but doesn't know when to steal a base. 1483 01:13:31,160 --> 01:13:33,320 Speaker 1: And it is a little of that. It's a different 1484 01:13:33,360 --> 01:13:36,160 Speaker 1: It's like blind spots to the intelligence is what it 1485 01:13:36,200 --> 01:13:38,960 Speaker 1: felt like, like really smart people with this big blind spot. 1486 01:13:39,439 --> 01:13:43,759 Speaker 2: Last question, So, I've read your whole body of work, 1487 01:13:43,920 --> 01:13:48,200 Speaker 2: some books multiple times, and we talked a little bit 1488 01:13:48,240 --> 01:13:52,160 Speaker 2: about Flash Boys, But the thing that kind of stood 1489 01:13:52,200 --> 01:13:57,360 Speaker 2: out to me is wondering, regarding the characters in this book, 1490 01:13:57,600 --> 01:14:01,400 Speaker 2: do you find any similarities between the world of crypto 1491 01:14:02,040 --> 01:14:06,719 Speaker 2: and the world of subprime mortgage securitization, any parallels there? 1492 01:14:07,760 --> 01:14:09,880 Speaker 1: You know there probably are. That's not what popped into 1493 01:14:09,920 --> 01:14:11,519 Speaker 1: my mind. What popped into my mind when I was 1494 01:14:11,560 --> 01:14:14,160 Speaker 1: working on the book, the nature of the characters and 1495 01:14:14,200 --> 01:14:16,120 Speaker 1: kind of how outrageous it all was and how there 1496 01:14:16,120 --> 01:14:19,040 Speaker 1: were no guardrails was Liar's Poker. I just felt like, 1497 01:14:19,240 --> 01:14:21,160 Speaker 1: I'm back at a time, I'm back in a space 1498 01:14:21,560 --> 01:14:23,920 Speaker 1: where your jaw is on the floor because of what's 1499 01:14:23,960 --> 01:14:26,479 Speaker 1: going on and you can't believe this happens in a business. 1500 01:14:26,880 --> 01:14:28,720 Speaker 1: And that was the feeling about Liar's Poker. Wait, this 1501 01:14:29,200 --> 01:14:31,680 Speaker 1: is an actual business and people are strippers are on 1502 01:14:31,720 --> 01:14:34,639 Speaker 1: the floor and all that stuff. And then it quickly 1503 01:14:34,640 --> 01:14:38,000 Speaker 1: got very straight laced on the surface. This is before 1504 01:14:38,160 --> 01:14:40,519 Speaker 1: This is the moment in crypto before it gets straight laced. 1505 01:14:40,920 --> 01:14:44,360 Speaker 1: And it reminded me of that different people. You know, 1506 01:14:44,640 --> 01:14:49,559 Speaker 1: they're more nerds than jocks, but still wacky, like just 1507 01:14:49,680 --> 01:14:53,519 Speaker 1: wacky behavior. And the wackiness was kind of joyous. It's 1508 01:14:53,720 --> 01:14:57,960 Speaker 1: like a range of behavior is being tolerated here. This 1509 01:14:58,200 --> 01:15:01,360 Speaker 1: not ordinarily tolerated and Marshall in financial life. 1510 01:15:01,320 --> 01:15:03,760 Speaker 2: Right, this was more frat house than trading. 1511 01:15:03,400 --> 01:15:07,080 Speaker 1: Floor there, or yes, a nerd frat house. 1512 01:15:06,880 --> 01:15:10,200 Speaker 2: But yes, Michael, thank you for being so generous with 1513 01:15:10,280 --> 01:15:12,800 Speaker 2: your time. We have been speaking with the one and 1514 01:15:12,840 --> 01:15:16,639 Speaker 2: only Michael Lewis discussing his brand new book Going Infinite, 1515 01:15:16,760 --> 01:15:20,280 Speaker 2: The Rise and Fall of a New Tycoon. If you 1516 01:15:20,479 --> 01:15:22,920 Speaker 2: enjoy this podcast, we'll be sure and check out any 1517 01:15:22,960 --> 01:15:25,800 Speaker 2: of the previous five hundred we've done over the past 1518 01:15:25,880 --> 01:15:30,360 Speaker 2: nine years. You can find those at Apple Podcasts, Spotify 1519 01:15:30,720 --> 01:15:34,759 Speaker 2: or YouTube, or Bloomberg dot com. Follow me on Twitter 1520 01:15:35,240 --> 01:15:38,680 Speaker 2: at rid Holt's follow all the Bloomberg family of podcasts 1521 01:15:39,080 --> 01:15:42,840 Speaker 2: at podcast Check out my daily reads at rid Halts 1522 01:15:42,880 --> 01:15:46,040 Speaker 2: dot com. I would be remiss if I did not 1523 01:15:46,120 --> 01:15:48,519 Speaker 2: thank the correct team who helps put these podcasts together 1524 01:15:48,560 --> 01:15:52,200 Speaker 2: each week. My audio engineer is Meredith Frank A. Tika 1525 01:15:52,240 --> 01:15:55,760 Speaker 2: of Albron is my project manager. Anna Luke is my producer. 1526 01:15:56,200 --> 01:16:00,479 Speaker 2: Sean Russo is my researcher. I'm Barry Ridholts. You've been 1527 01:16:00,479 --> 01:16:03,920 Speaker 2: listening to Masters in Business on Bloomberg Radio