Speaker 1: Pushkin. Hey there, it's Michael Lewis. Before we get to
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Speaker 1: Welcome to the first episode of Judging Sam, The Trial
Speaker 1: of Sam Bankman Freed. I'm Michael Lewis. Sam was worth
Speaker 1: tens of billions of dollars before FTX his cryptocurrency exchange
Speaker 1: came a part at the seams, and now he's being
Speaker 1: tried for financial crimes. They could send him to prison
Speaker 1: for the rest of his life. In this special series,
Speaker 1: we're following the trial that will decide Sam's fate. We'll
Speaker 1: have a reporter in the courtroom each day. We'll have
Speaker 1: expert interviews and I'll be analyzing it all as someone
Speaker 1: who knows this story as well as anyone knows the story.
Speaker 1: I spent a year and a half following Sam while
Speaker 1: I was reporting and writing a book about him. I
Speaker 1: was there for the good days, which were astronomically good,
Speaker 1: and I was there for the catastrophic collapse. While Sam
Speaker 1: was on house arrest, I visited him often. That's all
Speaker 1: in my new book about Sam, going Infinite, The Rise
Speaker 1: and Fall of a New Tycoon. On today's episode, while
Speaker 1: we wait for the trial to begin, I'm talking with
Speaker 1: Pushkins Jacob Weisberg about the book and trying to approach
Speaker 1: some of the questions you might be asking, like who
Speaker 1: was this rumpled guy in cargo shorts and limp white
Speaker 1: socks whose eyes twitch to cross zoom meetings as he
Speaker 1: played video games on the side. When did I start
Speaker 1: sensing that there might be trouble in the penthouse? And
Speaker 1: how and why did he end up where he is
Speaker 1: now as the defendant and what could well be the
Speaker 1: crypto trial of the century. Thanks for joining us.
Speaker 2: Hey, Michael, Welcome to your new show.
Speaker 1: Pleasure to be here, Jacob.
Speaker 2: I've got a lot that I want to ask you
Speaker 2: about this book. It was so fun to read Michael.
Speaker 2: For people who haven't read the book yet, this trial
Speaker 2: is about to start. Tell them who is Sam Bankman Freed.
Speaker 1: Born to Stanford professors, law professors, grew up completely isolated,
Speaker 1: essentially no one could serve as a character reference. Before
Speaker 1: the age of eighteen, finds his calling on Wall Street
Speaker 1: as a high frequency trader, discovers he has these gifts
Speaker 1: that he didn't know he had. At the same time,
Speaker 1: discovers this movement effective altruism, devoted to like earning as
Speaker 1: much money as possible to save as many lives on
Speaker 1: the planet as you can say, and then goes off
Speaker 1: on a jag into crypto to make as much money
Speaker 1: as he can to fulfill this ambition. After he goes
Speaker 1: into crypto, starts first a hedge fund called Alimeter Research,
Speaker 1: and then so he has a place to trade that's
Speaker 1: worthy of his hedge fund, a crypto exchange called FTX.
Speaker 1: In very short order, it goes from being nothing to
Speaker 1: worth forty billion dollars in the eyes of America's venture capitalist,
Speaker 1: and then it explodes.
Speaker 2: I want to ask you a little bit about how
Speaker 2: you found this story. How did you end up writing
Speaker 2: a book about Sam Bang and Free.
Speaker 1: So it was purely accidental. Two years ago, a friend
Speaker 1: of mine calls me and says, I have a problem.
Speaker 1: I'm about to swap three hundred million dollars in shares
Speaker 1: in my company for shares in this company called FTX.
Speaker 1: And he says, I've kind of looked into the company.
Speaker 1: It's fastest growing financial firm I've ever seen. And my
Speaker 1: problem is, I don't know who this guy is who
Speaker 1: created FTX. I don't I don't have a read on him,
Speaker 1: and I've called all Wall Street and no one else
Speaker 1: has a read on him. Forbes has listed his net
Speaker 1: worth of twenty two and a half billion dollars, but
Speaker 1: he didn't exist a year ago. He kind of came
Speaker 1: out of nowhere. He said, could you sit down with
Speaker 1: him and just tell me who he is? You know,
Speaker 1: you do this for a living. And so a couple
Speaker 1: of weeks later, Sam Beckmanfried showed up at my office
Speaker 1: in Berkeley and we went for a long walk. And
Speaker 1: at the end of the long walk I did two things.
Speaker 1: I called my friend and I said, sure, swap the shares.
Speaker 1: What could go wrong? Weo, yeah, pullips. But I turned
Speaker 1: to Sam and I said, I've never heard a story
Speaker 1: like this. I mean, what has happened to you is
Speaker 1: just extraordinary. I want to watch. Can I be a
Speaker 1: fly on the wall? And he said yes, And I
Speaker 1: just moved into his life starting September October of twenty
Speaker 1: twenty one and watched the ride up and watched the
Speaker 1: ride down. But the first year of it really was
Speaker 1: it was Although the material was fantastic, there was no
Speaker 1: question there was like the kind of material one would
Speaker 1: use for a narrative work of narrative nonfiction. I felt
Speaker 1: very uncomfor starting it unless I knew where it ended,
Speaker 1: and it was so volatile, I had no idea like
Speaker 1: where it was going, and so it wasn't until it
Speaker 1: actually collapsed that I realized that I had the shape
Speaker 1: of a book, and didn't start writing it until January
Speaker 1: this year.
Speaker 2: The Michael Lewis I know doesn't like to write about
Speaker 2: people who were that famous, and doesn't like to write
Speaker 2: about the stories that everyone else is writing about. When
Speaker 2: you started on n FTX, it was a lot less
Speaker 2: of a story than it became, but it was still
Speaker 2: he was on the radar screen of everybody in the
Speaker 2: financial world. He was quickly becoming mister crypto. Did you
Speaker 2: just decide what the hell this is too good to miss?
Speaker 1: Yeah? And I also I instantly had such privileged access,
Speaker 1: and I was seeing so much stuff that wasn't out
Speaker 1: there that that didn't worry me that much. And the
Speaker 1: nature of the coverage he was getting was so superficial
Speaker 1: that whatever book I would write was suffering only flesh wounds.
Speaker 1: And I was animated by like the original question my
Speaker 1: friend had asked, like who is this guy? And I
Speaker 1: didn't feel like anybody was kind of getting him on
Speaker 1: the page or on the screen, or that there was
Speaker 1: a thing to do that nobody was doing. But I
Speaker 1: was frustrated because because I did have this sense that
Speaker 1: this is going somewhere, and I don't know where it's going.
Speaker 1: I mean as late as like in early November of
Speaker 1: last year, moments before it all implodes, I sat down
Speaker 1: with a friend who I used as sort of a
Speaker 1: sounding board for story problems, and I laid it out.
Speaker 1: I said, Look, this is the character, this is the
Speaker 1: kind of material that's been incoming. It's an incredible story.
Speaker 1: But I'm frustrated. He said, I can see why you're frustrated.
Speaker 1: You don't have a third act. He said, in a book,
Speaker 1: you can dance your way out of this, that you
Speaker 1: can kind of fool the reader into thinking you have
Speaker 1: an ending. But it's no movie, you know, like you
Speaker 1: would never be a movie. And he said, you ought
Speaker 1: to think about that. And two days later FTX collapsed
Speaker 1: and I said, this is the best movie ever.
Speaker 2: But you didn't know what the story was going to be.
Speaker 2: I mean, with hindsight, I'm sure there's a lot of
Speaker 2: temptation to think I saw the signs. I saw this coming.
Speaker 2: You knew something would happen. But at one point, if
Speaker 2: at any point before the collapse, did you think there's
Speaker 2: a problem here, something bad's going to happen.
Speaker 1: I didn't, you know. Before the collapse, what I could
Speaker 1: see was chaos, like all the order to the organization
Speaker 1: was inside Sam's head. There was no organization chart, there
Speaker 1: was no list of employees. It was just like there
Speaker 1: had been a history in the place of minor crises,
Speaker 1: and they'd been in particular an episode that had occurred
Speaker 1: that I had sort of reported out, and I knew
Speaker 1: it was an important part of the story. When he
Speaker 1: started his hedge fund, it was called Alometer research in
Speaker 1: Berkeley in twenty eighteen, there was nothing but a group
Speaker 1: of effective altruists, you know, its people he had recruited
Speaker 1: who were not money people. Three months in, they've they've
Speaker 1: raised one hundred and seventy five million dollars from effective
Speaker 1: altruists and are wheeling and dealing in the crypto markets.
Speaker 1: And half the people in the firm realize that they've
Speaker 1: lost track of all the money, that it's like missing
Speaker 1: and they don't know where it is is and like
Speaker 1: literally just gone and and so and so and Sam
Speaker 1: all he wants to do is trade all day, and
Speaker 1: he says, and he's saying, let's not let's not waste
Speaker 1: our time trying to track down the money. It's out
Speaker 1: there somewhere. Uh, let's let's keep trading. And this results
Speaker 1: in a collapse basically that they call it the schism.
Speaker 1: Half the firm gets up and leaves because they're afraid
Speaker 1: he's essentially stealing the money and that it's all it's
Speaker 1: And well, it emerges in the back end of it
Speaker 1: that he hadn't stolen money, that was in fact just
Speaker 1: missing and they were able to go find it on
Speaker 1: a kind of easter egg hunt. Uh, but uh so
Speaker 1: there were these sort of things that had happened before
Speaker 1: that you could see that the seeds were there for
Speaker 1: some problem. But did I know that there was like
Speaker 1: this was going to blow up the way it blew up. No,
Speaker 1: and no one else did either.
Speaker 2: And pause for a second, just because it's so important
Speaker 2: to the story, explain what effective at altruism is.
Speaker 1: Because this is a this is a.
Speaker 2: Strange it's a motive for making money. You gonna make
Speaker 2: money to give it away.
Speaker 1: It was a movement. It's a movement that grew out
Speaker 1: of the work of the philosopher Peter Singer, and it
Speaker 1: was started by several young Oxford philosophers and right after
Speaker 1: the financial crisis. Oddly. The premise is that you look
Speaker 1: at philanthropy rather than just willy nilly do good in
Speaker 1: the world. You analyze it. You try to measure the
Speaker 1: effects of what you're doing and quantify it and look
Speaker 1: at it as a mathematical problem. And the mathematical problem
Speaker 1: you're trying to solve is, in the end, how do
Speaker 1: you maximize with your altruism the number of quality life
Speaker 1: years of human beings? Is that's where they end up.
Speaker 1: And so that once it becomes a math problem. It
Speaker 1: attracts lots of Mathew people, but it pretty quickly collides
Speaker 1: with the observation that humanity faces various existential risks and
Speaker 1: artificial intelligence running amock pandemics or climate change or nuclear war,
Speaker 1: and that these risks risk actually wiping out all future
Speaker 1: human beings, and that the trillions of people and if
Speaker 1: there's even a slight probability of that happening, anything you
Speaker 1: do to reduce that risk ends up saving far more
Speaker 1: lives than you could ever save by addressing the problems
Speaker 1: of people living on the planet today. And so by
Speaker 1: the time Sam gets to it, it's already moving in
Speaker 1: that direction, and the effective altruists who gather in Berkeley
Speaker 1: to create a crypto hedge fund are all in their
Speaker 1: minds generating money in order to mitigate existential risk to humanity. Sam,
Speaker 1: who himself has a two or three year background on
Speaker 1: Wall Street and trading, has proposed this to a whole
Speaker 1: bunch of people who have no background in trading, that
Speaker 1: we're going to gather together, we're going to exploit the
Speaker 1: inefficiencies in crypto to make billions of dollars to give
Speaker 1: it away to prevent I don't know the next pandemic
Speaker 1: or a pandemic that would wipe out all people, and
Speaker 1: they're all in on this.
Speaker 2: Yeah, So your character Sam Bankman Freed tells you I
Speaker 2: have a motivation. My motivation is effective altruism. It's to
Speaker 2: make as much money as possible and use it as
Speaker 2: efficiently as possible to better humanity.
Speaker 1: Not to save humanity, to save.
Speaker 2: Humanity even more. Did you buy that? Did you think, Okay,
Speaker 2: that's that's pretty interesting, it's pretty unusual and that's what
Speaker 2: he's trying to do, or did you think there might
Speaker 2: be a different or more complicated motivation.
Speaker 1: Well, in the first place, when he collides with the
Speaker 1: effect of altrue as a movement, when he is a
Speaker 1: junior in college and is swept up in it, it's
Speaker 1: all sincere and he becomes he becomes a proselytizer for
Speaker 1: this movement. His identity is all wrapped up in being
Speaker 1: the most important person in this movement, and he had
Speaker 1: a sense of himself being special because of this movement.
Speaker 1: So when he says I'm doing it for this reason,
Speaker 1: he thinks that's true. He's not. He's not just saying that,
Speaker 1: but to try to trick you. So I bought it
Speaker 1: to that extent, and it was really interesting. I mean,
Speaker 1: I had had in the past collided with some of
Speaker 1: the early people who had who had heard the siren song,
Speaker 1: people who might have ended up being I don't know,
Speaker 1: math teachers in high school are doctors. Had instead thought, well,
Speaker 1: I need to earn to give because I buy this argument,
Speaker 1: and I'm going to go to Wall Street to give
Speaker 1: the money away. So I had met the kind of
Speaker 1: people before, and it was kind of refreshing. Right, There
Speaker 1: is a certain sense to it. If someone's going to
Speaker 1: be earning this money, might as well be someone who's
Speaker 1: going to do something good with it, rather than someone
Speaker 1: who's going to build themselves a bigger swimming pool. And
Speaker 1: I was charmed by his single mindedness. I thought that
Speaker 1: was interesting. But mixed up in it all, of course,
Speaker 1: is a sense of ambition that he wanted to think
Speaker 1: of himself as an important person, and this was a
Speaker 1: mechanism for thinking of himself as an important person. He
Speaker 1: liked sort of like living his life by argument. You
Speaker 1: could change Sam bankman Fried's mind. It didn't happen very often,
Speaker 1: but when it happened to happen by argument, and he
Speaker 1: would just buy. He would do things that were very
Speaker 1: uncomfortable for him simply because he heard an argument that
Speaker 1: persuaded him when he was in college a year the
Speaker 1: argument about animal suffering and veganism. And this guy really
Speaker 1: liked his chicken, you know, and he stopped eating meat
Speaker 1: on a dime because he bought the argument. And it
Speaker 1: was miserable, but he did it, so he was capable
Speaker 1: of that kind of action.
Speaker 2: He still world's most unhealthy looking vegan.
Speaker 1: Right, Oh my god, you think vegan means healthy vegans
Speaker 1: means a truckload of crappy snacks. If you leave him
Speaker 1: in a prison with only a vending machine d from
Speaker 1: he's fine because that's kind of what he eats anyway.
Speaker 2: So how did your view of him evolve during the
Speaker 2: period you were working on the book? And you spent
Speaker 2: all this time with him, You spend all the time
Speaker 2: with his family, You spend time with all these people
Speaker 2: of the company. I mean, this is the cast of
Speaker 2: characters we're going to meet at the trial, and a
Speaker 2: number of these people are now testifying against him on
Speaker 2: behalf of the government. Did your understanding of him change
Speaker 2: while you were working on it?
Speaker 1: What accreed it. Over time was just a sense of
Speaker 1: how peculiar he was. The longer I was there, the
Speaker 1: depth of his oddness just increased. I give you an example.
Speaker 1: In the first trip we took together, I went to
Speaker 1: the Super Bowl with him. I went to Los Angeles
Speaker 1: for a bunch of parties and meetings in the super Bowl,
Speaker 1: and we were in a hotel together, and he went
Speaker 1: into his room and I went in my room, and
Speaker 1: I thought, well, he's just like normal people living in
Speaker 1: his hotel room. It was two trips later when I
Speaker 1: realized that what he would do is check into the
Speaker 1: hotel room and never stay there because he was uncomfortable
Speaker 1: sleeping alone. And he would find someone's sofa that he
Speaker 1: knew to sleep on, or sometimes crawl into some some
Speaker 1: colleagues hotel room to sleep on their sofa rather than
Speaker 1: in his own room. That kind of thing happened over
Speaker 1: and over where like he just Oh my god, I thought,
Speaker 1: I knew how unusual, odd peculiar he was, and he
Speaker 1: just gets there's just there's something. There's another door I
Speaker 1: need to open here. I tell you another thing. This
Speaker 1: is going to sound very peculiar. I became kind of
Speaker 1: awed by how almost incapable he was of lying to me,
Speaker 1: of just that that everything he said would check out. Now,
Speaker 1: what he would do is not answer things I asked
Speaker 1: in very crafty way. Sometimes I would ask something and
Speaker 1: he'd give me answer to a slightly different question. But
Speaker 1: I over time I came to be able to rely
Speaker 1: on him more than I did in the beginning. First,
Speaker 1: with the things he were telling me, I thought were preposterous,
Speaker 1: that this can't be true, that can't be true, And
Speaker 1: it all checked out, and it kept checking out. You know,
Speaker 1: there were things that weren't immediately apparent. That the more
Speaker 1: I was there struck me as just kind of I mean,
Speaker 1: just peculiar and shocking the fact that the way he
Speaker 1: had almost systematically removed anybody over about the age of
Speaker 1: thirty two from his life, that the way he had
Speaker 1: come to kind of disdain any kind of grown up
Speaker 1: supervision and grown up methods that he disdains the wrong word.
Speaker 1: He would start, So, you think you start a company,
Speaker 1: and you've never run a company, you never run anything. Basically,
Speaker 1: you would think you, I don't know, take a management class,
Speaker 1: read a book. And he kind of flipped through a
Speaker 1: few things and decided this is all bullshit, and you're
Speaker 1: just gonna have to make it up as I go along.
Speaker 1: And to get yourself in a position where you have
Speaker 1: an almost five hundred person company and nobody knows where
Speaker 1: they are in the company because there's no org chart
Speaker 1: and he doesn't like titles and there's not even a
Speaker 1: list of employees. That kind of stuff just that you
Speaker 1: stumble upon. That the lack of order, because he didn't
Speaker 1: have much respect for the way people had conventionally ordered
Speaker 1: things that you know, I would run into versions of that.
Speaker 1: One last thing that his attitude towards risk. He had
Speaker 1: an appetite for risk that at first I thought was
Speaker 1: kind of funny. And then you know, he's like you're
Speaker 1: in a game of chicken, and then you realize you
Speaker 1: don't want to be playing chicken against this person because
Speaker 1: he actually will do the things that most people won't do.
Speaker 1: Watch out, because he will actually do it. Like, you know,
Speaker 1: he says he's going to go spend a billion dollars
Speaker 1: to buy that, and you think, no, he's just saying that, No,
Speaker 1: we actually will go do it. But it was just
Speaker 1: this took a while for me to appreciate who he was.
Speaker 2: Yeah, I mean, reading the book Weird doesn't begin to
Speaker 2: do justice to it. This is someone who is a
Speaker 2: very hard time relating to people, said very few friends,
Speaker 2: is much more at home in the world of numbers
Speaker 2: and data. I mean, nothing about him is like anyone
Speaker 2: else we would see in a position running a company
Speaker 2: and dealing with other human beings. Right, So, if he's
Speaker 2: a kind of genius but he's not good at running
Speaker 2: a company because he can't deal with people, why doesn't
Speaker 2: he get someone else to run the company and he
Speaker 2: can do what he's good at.
Speaker 1: So I don't think he knew he wasn't good at
Speaker 1: running a company. I think he thought basically, people shouldn't
Speaker 1: need to be managed, and so it was their problem
Speaker 1: as a practical matter. What ends up happening is the
Speaker 1: messy business of managing people gets subcontracted to people who've
Speaker 1: got a little bit of emotional intelligence, including his own
Speaker 1: psychiatrist who he brings in to be the corporate psychiatrist,
Speaker 1: who ends up dealing with a lot of the messy problems.
Speaker 1: So what happens is his organization. After Sam's insistence that
Speaker 1: he really should be the one in charge, the organization
Speaker 1: adaptsed to it in various bizarre ways.
Speaker 2: They had like a chief mental health officer.
Speaker 1: No titles in the company, but yes, effectively they did.
Speaker 1: You know, I think that in almost any other era
Speaker 1: it would have occurred to no one to put Sam
Speaker 1: bankmanfreed in the financial markets, but would happened in the
Speaker 1: financial markets over the last fifteen years where they become
Speaker 1: automated and run by people who were really good with
Speaker 1: math and computers and who were not being filtered for
Speaker 1: their social skills or lack thereof. And his aptitude with
Speaker 1: a certain aspect of markets led him to be in
Speaker 1: this very odd position of running a company when he's
Speaker 1: almost singularly incapable of running a company, and he could
Speaker 1: at some things, but the whole human thing and quite
Speaker 1: light in my relationship, I dug into his childhood and
Speaker 1: I could not believe how isolated it was, like just know,
Speaker 1: it was beyond I mean, it isn't just he didn't
Speaker 1: have close friends, like he had nobody, and that he
Speaker 1: really just kind of lived on his own and was
Speaker 1: sorting out the world all by himself. How many people
Speaker 1: do you know when you say to them, could you
Speaker 1: give me the names of two or three people who
Speaker 1: could describe for me how you were up to the
Speaker 1: age of eighteen, looks at you and says, there's nobody
Speaker 1: you know. You know, this is had to be somebody, right,
Speaker 1: there are people who had written in college recommendations. He'd
Speaker 1: gone to school with a bunch of people. He'd you know,
Speaker 1: had parents and a brother. There had to be somebody
Speaker 1: who would actually be able to it's some character reference, right,
Speaker 1: There was none. He said that he had all kinds
Speaker 1: of problems and relating to other people and in particularly
Speaker 1: communicating his inner state to other people, like any kind
Speaker 1: of interaction he had had with other people was a
Speaker 1: calculated exercise. It was something he had to had to
Speaker 1: calibrate in order for it to work. The idea that
Speaker 1: such a person was running a four hundred and fifty
Speaker 1: person company, I mean, that was odd.
Speaker 2: After I finished reading, you asked me how I felt
Speaker 2: about him, and I think my reaction was, I feel
Speaker 2: really sorry for this guy because he had such an
Speaker 2: isolated and seemed like fundamentally unhappy childhood, had so much
Speaker 2: trouble dealing with people. And then he constructed this world,
Speaker 2: which is sort of an abstract world that worked for him,
Speaker 2: but it catastrophically and quickly fell apart.
Speaker 1: There is a feeling to him that there was this
Speaker 1: brief moment where he was able to impose on the
Speaker 1: real world an abstract notion of the way the world
Speaker 1: might work or should work, and the real world sort
Speaker 1: of mimicked his mental model for a brief period, and
Speaker 1: it all worked, but the mental model was missing all
Speaker 1: kinds of stuff that actually is in the real world,
Speaker 1: and the real world finally kind of took.
Speaker 2: Over, And both the EA and the crypto contribute to that.
Speaker 2: I mean, crypto is utopianism about money and finance.
Speaker 1: You know, it's Another important part of his story is
Speaker 1: his indifference to sort of crypto religion. That he saw
Speaker 1: crypto purely as a mechanism for making money for effective altruism.
Speaker 1: He wasn't particularly interested in crypto.
Speaker 2: The biggest person in crypto was not a crypto true believer,
Speaker 2: just the opposite.
Speaker 1: He was very wary of the crypto religionists, and he
Speaker 1: knew he couldn't say what he thought because it would
Speaker 1: get him in trouble with his market. But he was
Speaker 1: he was there to use it. He wasn't there because
Speaker 1: he thought it was going to change the world as
Speaker 1: we knew it. He knew that had some capacity to
Speaker 1: do some things, but it wasn't that big a deal.
Speaker 1: There was an inefficient market. That's what drew him into
Speaker 1: it in the first place. Yeah, I asked you what
Speaker 1: you thought of him, because you know, you write a
Speaker 1: book and you never know this is it. I think
Speaker 1: this is a This is maybe the most powerful case
Speaker 1: of this in my literary career. I've always known since
Speaker 1: my first book that you never know what a reader
Speaker 1: is going to read that You write what you write,
Speaker 1: You tell a story. The story inevitably has holes the
Speaker 1: reader walks into and sort of makes it its own
Speaker 1: or interprets it them. It's the way they want to
Speaker 1: interpret it, but you never know what that's going to
Speaker 1: be until the book comes out. I feel more about
Speaker 1: this book that way than I've felt with any book
Speaker 1: that I don't know how people are going to react
Speaker 1: to Sam Bankman Freed when they see who he really is,
Speaker 1: whether they're going to feel sorry for him, whether they're
Speaker 1: going to be rooting for him, whether they're going to
Speaker 1: hate him. I don't have a great sense. Everybody's trying
Speaker 1: to figure out who he is, and they are all
Speaker 1: these kind of snap judgments being rendered on the way
Speaker 1: up and on the way down, and I just felt
Speaker 1: like I did feel that this is a problem just generally,
Speaker 1: that the radical thing to do here was do with
Speaker 1: whole judgment, to not impose whatever judgment I might have
Speaker 1: on the reader. Let the reader make his or her
Speaker 1: own judgment. We'll be right back, Welcome back to judging Sam.
Speaker 1: The trial of Sam bankman Freed.
Speaker 2: As with any financial catastrophe, they're real victims here. How
Speaker 2: bad should we feel for them? Are crypto speculators or
Speaker 2: they're kind of real people who lost their life savings
Speaker 2: who have a really really good reason to be super
Speaker 2: angry at Sam bankmintrude.
Speaker 1: Well, let me give you just my sense of who
Speaker 1: they are. In the first place, most of them are
Speaker 1: not Americans. I mean most of the Americans weren't allowed
Speaker 1: to trade on FTX International, and the vast majority of
Speaker 1: the millions of accounts that they opened were outside of
Speaker 1: the United States. Next, when you look at the list
Speaker 1: I got ahold of the list of the fifty biggest creditors,
Speaker 1: it was a lot of institutional money. So you had
Speaker 1: the top thirty creditors, or most of them are like
Speaker 1: high frequency traders. But no doubt there are lots of
Speaker 1: little people who thought this is the most trustworthy crypto exchange,
Speaker 1: and they put their savings on them. And interestingly, and
Speaker 1: I think this is like a really relevant point, among
Speaker 1: those people were the employees of FTX, the people who
Speaker 1: were most all in. If you want to find the
Speaker 1: person who lost everything, just go down the list employees
Speaker 1: at FTX.
Speaker 2: There's at the trial we're going to see in part
Speaker 2: a classic drama of loyalty and betrayal. The people at
Speaker 2: the company who are closest to him are now betraying
Speaker 2: each other, trying to cop please make deals with the government.
Speaker 2: Caroline Ellison, who ran Alameda, who was romantically involved with him,
Speaker 2: Ryan Salem, and Gary Wang, these people who are the
Speaker 2: closest people to him at FTX are now presumably judging
Speaker 2: him very negatively. What happened to that web of personal relationships.
Speaker 2: Why is everyone who was with him now against him?
Speaker 1: It's a great question. It's unclear to me exactly what
Speaker 1: everybody's going to say. I'm in an odd position, and
Speaker 1: in a position that neither the defense attorneys nor the
Speaker 1: prosecutors are in, and then I've interviewed everybody. Yeah, you know,
Speaker 1: the prosecutors haven't talked to Sam Magunfried, and the defense
Speaker 1: people aren't able to talk to the shot or Gary
Speaker 1: or Caroline or other witnesses. And even after the collapse,
Speaker 1: I've had access to both sides, not everybody on the
Speaker 1: prosecutor side, but people who I know were the prosecutors
Speaker 1: intend to bring and who the prosecutors think are going
Speaker 1: to get up and say X or why. I know.
Speaker 1: I know that even some of those people, if you
Speaker 1: put a gun to their head and said like, did
Speaker 1: he do it? Might say no. However, on the inside
Speaker 1: the Four Principles, Sam and the first three people to
Speaker 1: turn against him, Gary Wang, Mishad Singing, Caroline Ellison. The
Speaker 1: minute it all collapsed, there was a several beat sort
Speaker 1: of drama that unfolded. First was, willis get someone to
Speaker 1: buy us? This is not that big a problem. Second, Oh,
Speaker 1: we got to quickly find all this money that is,
Speaker 1: we don't know where it is, which is reminiscent of
Speaker 1: what had happened three four years earlier at Alameda. And
Speaker 1: third was we can't get the money in time. Flee
Speaker 1: and they all and everybody you know, they're all basically
Speaker 1: twenty nine years old. They all ran to their parents.
Speaker 2: I remember you calling me from the Bahamas and saying,
Speaker 2: it's like there's a hurricane coming. Everyone's left. Sam's still here,
Speaker 2: his parents are here. I'm still here. And it's like
Speaker 2: people like ran out of their hotel rooms and didn't
Speaker 2: close the door.
Speaker 1: They grabbed. There were seventy company cars. They drove them
Speaker 1: to the airport and left him in the parking lot
Speaker 1: with the keys, oh you know, the engine still running
Speaker 1: kind of thing. And everybody's afraid they were going to
Speaker 1: get arrested wherever they were. And I mean, I can't
Speaker 1: remember the last Has there ever been a financial crisis
Speaker 1: where all the perpetrators ran to their Paris home. I
Speaker 1: don't think that's what they do. Did Michael Milkin run
Speaker 1: to his parents home? I don't think so. Right, So
Speaker 1: they all ran to their parents home, and all of
Speaker 1: a sudden, for the first time, the grown ups are involved,
Speaker 1: the parents. They're going turning to their parents. What do
Speaker 1: we do now?
Speaker 2: In this pre trial period, I've wanted to say to
Speaker 2: Sam Bankman, free too. I've never met. Stop digging, keeps
Speaker 2: talking to the press, kept going on social media, kept
Speaker 2: talking to you, which I don't know how much of
Speaker 2: the problem that was, but he somehow couldn't take what
Speaker 2: would seem like the obvious lawyer's advice when you're going
Speaker 2: to go on trial. Why is that? Is he naive? Hubristic?
Speaker 2: Is there a strategy there, like it is going to
Speaker 2: be fought partly in the court of public opinion and
Speaker 2: he has to get his side out. Why did he
Speaker 2: get himself in additional trouble.
Speaker 1: When the Bahamas police came to arrest him. He was
Speaker 1: in Gary Wang's bathroom trying to send in his testimony
Speaker 1: to Congress. He was trying to speak to the American
Speaker 1: people even as they hauled him away in chains. So
Speaker 1: I think there's several things going on at once. I think,
Speaker 1: for a start, if you or I were in this situation,
Speaker 1: we'd be terrified, and we'd be looking for an expert
Speaker 1: to help us. We'd be looking to the lawyer to
Speaker 1: tell us what to do. I think that's what most
Speaker 1: people in this situation would do. Sam's whole life has
Speaker 1: been looking at the experts, finding the morning and trying
Speaker 1: to figure out the expertise for himself, sometimes with great success,
Speaker 1: to not actually trust what some experts saying instead, rethink
Speaker 1: it for yourself. It was really smart to not less
Speaker 1: to his superiors at Jane Street who were telling him
Speaker 1: you're not gonna make as much money and crypto as
Speaker 1: you wouldn't Jane Street. The markets are thinner, whatever they
Speaker 1: were saying, and just ignore that and did it anyway.
Speaker 1: So he starts with like, I don't listen to lawyers,
Speaker 1: which is funny because his parents are both lawyers.
Speaker 2: Right right, Well, they may have something you do it.
Speaker 1: It may have something to do with it. So the
Speaker 1: second thing is add to this total conviction that he
Speaker 1: is innocent. Now you have to imagine he really thinks
Speaker 1: he's innocent. Yeah, all right, you got it. You've got
Speaker 1: to believe that whether you believe he's innocent or not,
Speaker 1: you've got to believe he believes he's innocent. Okay. Third
Speaker 1: is he's aware that what's going on out there is
Speaker 1: a narrative war, and there is one narrative being told,
Speaker 1: and the narratives is relentlessly negative towards him, and then
Speaker 1: that maybe he can change the narrative if he's out
Speaker 1: there and actually speaking. It's a story war. There are
Speaker 1: two stories. Get cold. The defense is going to tell
Speaker 1: one story. The prosecutor is going to tell another story.
Speaker 1: Each side is going to manipulate the facts in certain ways.
Speaker 1: Each side is going to leave stuff out that they
Speaker 1: shouldn't leave out, that you can't leave out if you
Speaker 1: can tell this story honestly. So each side is going
Speaker 1: to be telling essentially a slightly false story, and then
Speaker 1: the jury's going to decide whose story is better judging.
Speaker 1: Sam will be right back. Welcome back. So we're back
Speaker 1: with one last thing. And so, Jacob, you we have
Speaker 1: had this conversation. Is there anything else you'd like to
Speaker 1: ask me? Well?
Speaker 2: Sure, give us the insider's guide to the trial. What's
Speaker 2: the thing people should be looking for that you're looking
Speaker 2: for that they might not know about otherwise.
Speaker 1: One of the three key witnesses, Gary Wang, does not speak.
Speaker 1: He actually, when you actually try to talk to her
Speaker 1: and interview him, he just stares at you. I've never
Speaker 1: had this experience with a potential source. People sat next
Speaker 1: to him for months and gotten out a word out
Speaker 1: of him. I want to see what happens when he's
Speaker 1: put on a witness stand.
Speaker 2: So not a great interview, not a great witness.
Speaker 1: It may be the most unusual moment in a court
Speaker 1: room in American history?
Speaker 2: Can he win a trial? I mean, the baseline is
Speaker 2: the government wins most of the cases it brings. The
Speaker 2: odds are stacked against him, but he's not taking a plea.
Speaker 2: He's taking his chances. But even if there were a
Speaker 2: hung jury in the first trial, they could try them again,
Speaker 2: and they're holding back other charges and it could be
Speaker 2: tried other places. I mean, is there any outcome for
Speaker 2: Sam Bankman freed other than basically spending years and years,
Speaker 2: if not the rest of his life in prison.
Speaker 1: Last year I saw these stats not long ago. Last
Speaker 1: year there were like seventy thousand criminal cases brought by
Speaker 1: the federal government and the rate of acquittal was less
Speaker 1: than half of one percent.
Speaker 2: So there are worse than I thought, worse.
Speaker 1: Than you thought. No, it is the odds are so
Speaker 1: stacked against you if the Feds bring an actual criminal
Speaker 1: case against you. If you're asking what my intuitive judgment
Speaker 1: is about Sam's the likely Sam is acquitted, I think
Speaker 1: the if you went on too the betting markets, you
Speaker 1: probably get if you wanted to bet he's gonna get off.
Speaker 1: I think you get like ninety to one odds. I
Speaker 1: think that's about what the betting markets were the last
Speaker 1: time I looked. I'd certainly take those odds. I might
Speaker 1: even take like thirty to one, but I don't think
Speaker 1: i'd take better than that or worse than that. The
Speaker 1: odds are really stacked against him. I think his chances
Speaker 1: are better than the markets think.
Speaker 2: Huh, I do?
Speaker 1: I do. I think that better than the markets think,
Speaker 1: but I don't think they're great.
Speaker 2: It's a very Sam Bankman freed way to addalyze make
Speaker 2: the bet and ether or bitcoin.
Speaker 1: Yeah.
Speaker 2: Yeah, Michael, it's really fun talking to you, and I'm
Speaker 2: really glad to be able to tee up this podcast
Speaker 2: with you. Can't wait to see what happens next.
Speaker 1: Tomorrow I'll sit down with producer and reporter Lydia Jean Kott,
Speaker 1: and former prosecutor Rebecca Mermelstein, now a defense attorney to
Speaker 1: talk about the charges against Sam and how his lawyers
Speaker 1: might defend him. Then, Lydia, Gene and I will give
Speaker 1: you a first hand report of what happened on trial
Speaker 1: day one. Join us. This episode of Judging Sam was
Speaker 1: hosted by me, Michael Lewis. Lydia Gencott is our court
Speaker 1: reporter Katherine Girardeau and Nisha Venken produced this show. Sophie
Speaker 1: Crane is our editor. Our music was composed by Matthias
Speaker 1: Bossi and John Evans of stell Wagons. Symphonet Judging Sam
Speaker 1: is a production of Pushkin Industries. Got a question or
Speaker 1: comment for me, There's a website for that atr podcast
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