Going Infinite: The Rise and Fall of a New Tycoon

Bitcoin, the first decentralized cryptocurrency, was proposed by a mysterious entity known as Satoshi Nakamoto in 2008 as a response to the global financial crisis. According to Satoshi (who has not been identified—it is not even clear whether this is a single person or a group), one upside of Bitcoin was that it did not require trust in institutions; it was not backed by any government or controlled by a central bank.

In crypto’s early days, people interested in cryptocurrency shared this distrust for institutions. For example, Zane Tacket, an early Bitcoin investor, was drawn to cryptocurrency because he was skeptical about the traditional world of finance. By 2016, Zane had become wealthy and was well-known in the world of cryptocurrency. By 2017, crypto people evolved; newer speculators were motivated by wealth accumulation rather than distrust in institutions, and Zane was bothered by this shift.

Lewis points out that while Bitcoin was initially conceived as a critique of the financial system and a way to move and own money without having to trust institutions, crypto investors essentially constructed a “parallel financial system” (108) that demanded more trust than traditional finance. Banks and stock exchanges had regulators, but crypto was unregulated.

By the end of 2018, Zane noticed that a new trader—Sam—was disrupting the cryptocurrency market, taking advantage of inefficiencies in the market and causing spreads to shrink. Around this time, Sam decided to make himself more public. After operating largely in the shadows, he started attending conferences and meeting other major players in the cryptocurrency world. At first, the other heads of cryptocurrency exchanges didn’t believe him when he revealed his identity; he had to convince them by pulling out his phone and showing them his accounts.

Sam reflected on what had happened during The Schism, and how trust was broken within the EA community. He eventually decided that he only needed to alter one aspect of his behavior moving forward; he needed to make himself appear more approachable. He decided not to express criticism outwardly and to instead appear agreeable by replying, “Yup!” to whatever people said.

As crypto markets became more efficient, Sam decided that the team needed to find a way to make more money, so he explored the idea of creating a crypto exchange, which would allow users to trade various cryptocurrencies directly on a single platform. Sam and the rest of the team tried to pitch an idea to the heads of other crypto exchanges: They would provide the code, and the other leaders would help attract customers and bolster trust in the new exchange. Sam wanted to make the new exchange a futures exchange, which would allow users to trade cryptocurrency contracts that speculated on the future price of digital assets, only putting up relatively small collateral. Normally, when traders suffered losses on this type of exchange, the exchange would cover the losses by socializing them, or sharing them among all users. Sam and Gary planned to create a new type of exchange that would not need to socialize losses. It would monitor trades every second, and would liquidate trades as soon as they went into the red.

They proposed this idea to Changpeng Zhao, or CZ, the CEO of Binance, the world’s largest crypto exchange. He was skeptical about the idea of a futures exchange and turned Sam down. Sam then decided to create the exchange himself; he called it FTX, and its token was FTT. In other words, FTT was the name of FTX shares. FTX operated in Hong Kong and was incorporated in Antigua. It did not allow Americans to trade on its platform because of regulatory restrictions in the United States. Sam minted 350 million FTT tokens. He first offered them to employees and important players in the crypto world at a reduced price, then made them available to outside investors. 

Sam hired Ryan Salame, a tax accountant turned crypto trader, to help him with the new exchange, though he didn’t specify what Ryan’s role would be. He also hired Ramnik Arora, an unsatisfied Facebook employee looking for greater happiness in life. Ramnik took a significant pay cut to work for FTX. Sam hired him without knowing what Ramnik's role would be; eventually, Ramnik functioned as Sam’s personal helper, someone who fixed whatever problems arose. Ramnik also helped Sam raise money from venture capitalists (VCs). At first, VCs were skeptical about investing in FTX due to the volatility and regulatory uncertainties of the cryptocurrency market. But eventually, between 2020 and 2021, FTX raised several rounds of funding.

Lewis closes the chapter by noting the unusually intertwined nature of Alameda Research and FTX. The boundaries between the two companies were unclear. Moreover, Caroline, now the co-CEO of Alameda Research, was still sexually involved with Sam. The two continued to correspond via business memos that debated the pros and cons of continuing their relationship while working together.

Then, in August 2021, Sam took a trip to the Bahamas and notified the rest of the team that, yet again, he had spontaneously decided to stay and would not be returning to Hong Kong.

Sam hired George Lerner, his personal therapist, to be the corporate psychiatrist for FTX. George, who was also Caroline’s therapist, witnessed firsthand her struggles with Sam. Sam refused to go public with their relationship, but Caroline longed for a deeper romantic commitment and acknowledgment from Sam. She continued to date him, despite the emotional toll it took on her.

Sam decided to establish FTX as the most legitimate and law-abiding crypto exchange. He wanted to acquire regulatory licenses, establish a worldwide presence, and court trust from institutional investors. As part of this strategy, he also wanted the US government to regulate the crypto industry, enforcing new laws to punish exchanges that weren't as compliant as FTX, “leaving FTX alone as a kind of teacher's pet of crypto” (147).

To enact this plan, Sam needed to get rid of CZ’s stake in FTX; CZ had bought $80 million worth of FTT tokens when FTX opened in 2019. Since then, the relationship between FTX and CZ's powerful crypto exchange, Binance, had soured, partly because FTX took advantage of Binance’s predictable attempts at market manipulation. Binance used bots to trade and create artificial volume, giving the illusion of liquidity and attracting more traders. FTX noticed the trading pattern and used this knowledge to make money off of the bots’ trades. By 2021, after other tense incidents, Sam decided that it was time to sever ties with Binance and CZ. Sam bought out CZ’s shares of FTX.

In a marketing push to make FTX appear more trustworthy and legitimate, FTX bought the naming rights for the home stadium of the Miami Heat, which required local government approval. This boosted the company’s credibility. After this deal, celebrities and organizations started to happily accept endorsements and partnerships with FTX.

Once Sam moved FTX headquarters to the Bahamas, Ryan purchased five acres of jungle and hired two young and inexperienced architects, Alfia Rosenfield and Ian White, to build the new office space. The project was large and complex—Alfia and Ian were tasked with building a sprawling, city-like compound—but no one at the company was willing to give them any guidelines or directions. So, the two architects essentially became “FTX's anthropologists” (157): They observed the company's culture and dynamics, studying how employees interacted and what values were important to them. They noticed that many employees emulated Sam’s poor work-life balance; they deprived themselves of sleep and spent long hours at the office, which meant that the architects would have to build spaces to sleep and shower. They also observed that the employees continually oriented themselves towards Sam’s whereabouts and clamored for views of him, so they incorporated glass walls and floors into their designs to make Sam more visible. At some point, Alfia and Ian received a note with requests from Sam: Sam wanted the new office complex to be shaped like a giant F, he wanted one of the walls to mimic his hair, and he wanted a space to prominently display a tungsten cube that he had purchased—tungsten, an expensive and dense metal, was trendy amongst the crypto crowd.

The architects took these notes, along with their observations, into consideration as they designed the office buildings. They were given a deadline of April 25, 2022. Even though they didn’t have permits, they cleared the jungle and presented their designs to Sam, several FTXers, and the prime minister of the Bahamas. After the presentation, they finally got a chance to ask Sam directly what he wanted the office design to include. He said he wanted badminton courts. The architects learned that the note that they had received—the one with the three requests that were supposedly from Sam—had, in fact, been written by someone else.

FTX was so messy that there was no internal organization chart—typically, in a company, an organization chart shows clear delineation of roles and responsibilities. George, the company psychiatrist, set out to create one. After mapping FTX’s approximately 300 employees, George noted that nobody reported to Gary Wang, the CTO. Instead, programmers reported to Nishad. Ryan, the CEO of FTX’s international business, was barely involved with the company. Caroline was left alone in charge of Alameda Research.

By this point, a few fellow EAs had learned of Caroline and Sam’s relationship. Caroline decided to stop sleeping with Sam, but asked him to secretly move out of their shared luxury condo and to not let anyone else know that they had broken up.