How Sam Bankman-Fried Sportswashed an $8 Billion Crypto Fraud, Starring Tom Brady and Steph Curry

The FTX founder was a "martian" to the sports world. Why did he spend so much on arena naming rights and superstar endorsements? And how the hell did SBF become friends with TB12? Authors Michael Lewis (Going Infinite) and Zeke Faux (Number Go Up) witnessed the rise and fall of a crypto king. Now we can do the postmortem: “Moneyball, on steroids, gone wrong.” This episode originally aired November 21, 2023. Hosted on Acast. See acast.com/privacy https://acast.com/privacy for more information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Pablo Torre?

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• 0:42Pablo Torre?

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• 1:27Pablo Torre?

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• 2:56Pablo Torre?

  Welcome to Pablo Torre Finds Out. I am Pablo Torre, and today we're going to find out what this sound is.

• 3:02Speaker 02

  He should have said, "Tom, I paid you for 20 hours. Get down here and like, give me a pep talk." Because like, I'm facing like, a really tough challenge right now.

• 3:12Pablo Torre?

  Right after this ad.

• 3:15Speaker 03

  You're listening to DraftKings Network.

• 3:36Pablo Torre?

  Okay, so I just got to dive right in here because I believe that today's story has been incredibly under-covered in the world of sports specifically, which is criminal, as it were. This is the story of Sam Bankman-Fried. Sam Bankman-Fried is the founder of a company, a crypto exchange, named FTX. And FTX made Sam the richest person under the age of 30 on the planet. It put him on the cover of Fortune as the next Warren Buffett, and Forbes as the next Mark Zuckerberg, and it put him all over sports itself. You may remember this, FTX had a Super Bowl commercial. Sam was famously endorsed by Tom Brady, Steph Curry, and Shohei Ohtani,

• 4:21Pablo Torre?

  and many of the best athletes in America. All of which turned out to be an enormous problem.

• 4:30Speaker 03

  One of the most powerful people in the cryptocurrency industry, Sam Bankman-Fried arrested overnight in the Bahamas. The federal charges just unsealed. They include eight counts, including wire fraud, securities fraud, and intent to defraud the United States government.

• 4:47Speaker 04

  The government also contends that Bankman-Fried was using these customer deposits to both cover bad bets that he made at his crypto hedge fund Alameda Research and to make $100 million in campaign contributions. All in, we're talking about more than $8 billion worth of FTX customer money that went missing. Bankman-Fried has pleaded not guilty to all charges.

• 5:09Speaker 05

  This is always sort of a gamble, right? The defendant taking the stand in their own trial. The defense putting him up there. How's he doing so far? Poorly to really poorly.

• 5:19Speaker 06

  A jury has found FTX founder Sam Bankman-Fried guilty. Guilty. Guilty on all seven counts against him.

• 5:30Pablo Torre?

  Yeah, fucking insane. That trial was this month, by the way, not so far from our office here in New York. And it did feel like one minute Sam Bankman-Fried was the good guy in charge of our entire technological future. And the next minute, he was in jail. And all of this was humiliating for sports for many reasons. Like this next video, which I just had to show to producer Ryan Cordes, which is from June 2021.

• 5:59Speaker 05

  It's official. The home of the Miami Heat is now FTX Arena. The name was formally converted at an event at the arena just a short time ago. The name will stick around for the next 19 years. Officials with FTX say today marks the start of a new era.

• 6:15Pablo Torre?

  A new era. What an era. Do you remember that era? It looked like the

• 6:19Speaker 07

  Celebration for the big three with the Heat. I don't know why there was so much confetti.

• 6:21Pablo Torre?

  Yeah, yeah, yeah. It was them saying not 17, not 18, 19, 19 years.

• 6:28Speaker 07

  That's right.

• 6:30Pablo Torre?

  It lasted 19 months, dude.

• 6:32Speaker 07

  Well, they got one number, right? You gotta give them that, bro.

• 6:34Pablo Torre?

  So FTX, that crypto exchange, is Sam Bankman-Fried's company, right? This was Mr. FTX, this was Mr. Miami Heat. And that deal was supposed to be worth $135 million over the 19-year span between Sam Bankman-Fried and FTX and Miami Dade County.

• 6:54Speaker 07

  Yeah, make that clarification. It was the county, not the Heat.

• 6:56Pablo Torre?

  Except the Heat also annually were gonna be making $2 million a year.

• 6:59Speaker 07

  Oh.

• 7:00Pablo Torre?

  And so all of the optimism of that confetti, it made me think about who we know who might have been there when all of this was going down. And of course, we found someone.

• 7:12Speaker 07

  Dude, of course. You know, I watch every single Heat game. And my boy, Will Manso, my boy, one of the best reporters in the country. I remember he interviewed Sam Bankman-Fried one time on a game.

• 7:20Pablo Torre?

  Yes. Will Manso, in arena reporter for the Miami Heat, was right there at courtside with the man in question.

• 7:31Speaker 05

  That morning, I get up as normal. My producer sends me an email for the Heat Show that night and says, "Hey, you're interviewing this guy, Sam Bankman-Fried. He's the founder, the owner, the CEO, whatever you wanna call it, of FTX. And the arena being FTX, tonight's a big opening night. It's gonna be all in Miami shirts everywhere. Everybody's gonna be excited. So you need to interview this guy." So I get there and I get to the seat and I see him standing there. But what I see is this man in like a dark t-shirt, sort of a black t-shirt, cargo shorts, his hair is much more disheveled than I saw in the pictures. Like, I knew he had big hair, but I mean, it's everywhere. And it just looks like it hasn't gotten combed in two weeks. I walk over and the handler comes, "Hey, Will, how are you?" And I'm like, okay, this is really him.

• 8:14Speaker 05

  And he's standing there and he's kind of in assuming quiet. And he goes, "Hey, how are you?" And I shake his hand. He's Sam Bankman-Fried. I said, "Hey, Will Manso." And I'll kid you not, the first thing I notice is right here on his shirt, along the shirt, is what appears to be the world's largest toothpaste stain. Like, he was brushing his teeth in the morning, a big chunk of toothpaste fell. He didn't know what to do, so he blabbed it on and scrubbed. And that's the way he kept the shirt on. His shorts look like they're never been washed or ironed fixed. I mean, he looked like he just got out of bed.

• 8:49Speaker 07

  That's insane to leave the house like that, bro.

• 8:52Pablo Torre?

  Well, this is where Will Manso ends up being not just a good reporter, but a good guy because he has a solution to this completely incomprehensible problem.

• 9:04Speaker 05

  So by luck, that day, or by luck, or by chance, by whatever, that day, every seat in the arena had a "You in Miami", the FTX slogan, t-shirt on the seat. So we go back to him and not to tell him that, hey, you look like a vagabond and you look terrible with this on your shirt. We say like, hey, these shirts are so cool. They're everywhere. Everybody's wearing them. Why don't you wear it? You're the CEO of the company. And he was like, oh, awesome. That's a great idea.

• 9:36Speaker 05

  So they come to me, hey, Will Manso's standing by with the CEO of FTX, who's so excited to be here courtside for his first Heat game. And we're here courtside with the CEO of FTX, Sam Bankman-Freeman, who's been kind enough to join us here on this opening night. Sam, I guess... You will notice that he has the shirt and you can see the outline of another shirt under. That's the original toothpaste shirt. You're here watching the Heat in a big game opening night with an arena with your company name on it. What's that like?

• 10:03Speaker 06

  It's really cool. I mean, just seeing everything from the courtside logo and the logos ever, the flames coming out, being right next to the players. It's really exciting.

• 10:13Speaker 05

  In the moment, he seemed like the sweet, unassuming, like you almost liked him because he was just so like, not like Joe Cool or like trying to be like, whatever, I do this all the time.

• 10:24Speaker 06

  I mean, it's unbelievably cool and exciting. Just the enthusiasm and support that we've gotten from the team, from the club, from the fans and from the city here has been, has just been great and we're really excited to work with them.

• 10:38Pablo Torre?

  That shirt is immense.

• 10:39Speaker 07

  I can't believe how big the shirt is.

• 10:42Pablo Torre?

  And the shame is immense. Will Bantso is a good reporter. This is not the clip I would submit to the Pulitzer Committee, because I have been texting this photo of Will and Sam Bankman-Fried in giant ass shirts.

• 10:56Speaker 07

  Do you know how bad-

• 10:57Pablo Torre?

  To laugh at him.

• 10:58Speaker 07

  The stain has to be for him to agree to wear a 4X shirt.

• 11:01Pablo Torre?

  Absolutely.

• 11:02Speaker 07

  Like, it has to be a huge [bleep] stain, bro.

• 11:03Pablo Torre?

  It's a stain that is only rivaled by the stain upon the entire institution of Miami and the Heat.

• 11:12Speaker 07

  How dare you?

• 11:13Pablo Torre?

  The only defense I can offer you here, as the Minister of Heat Propaganda, is that you guys, it turned out, were not alone in this shame. Because, Cortez, I've spent weeks now, you've seen me walk around this office with two books. I've spent weeks studying this story, and my theory, after all of this, is that this whole thing is actually a sports story.

• 11:37Speaker 07

  Hmm.

• 11:38Pablo Torre?

  As much as we talk about the Saudi Arabian government using soccer and golf and FIFA, all of these sports to hide its morally reprehensible behavior, right? Sports washing. To me, the ultimate example of a foreign entity using sports to hide and to normalize its behavior is actually Sam Bankman-Fried and FTX. I believe that this is a sports washing story. And so what I did, I've been reading these two books by Zeke Fox and Michael Lewis, respectively, "Number Go Up" and "Going Infinite", all about Sam Bankman-Fried and FTX and their people, authors, who got access to him, who were around while all of this was happening.

• 12:19Pablo Torre?

  And what I wanted to do on today's show is actually pressure test my theory that this story is a sports washing story. This is a sports story to the core. And I needed both Zeke Fox and Michael Lewis to tell me whether they approve of my logic here. And also, who else, beyond just you, should be absolutely humiliated by this entire thing?

• 12:43Speaker 07

  I was shaking my head that entire time-

• 12:45Pablo Torre?

  Yeah, you were.

• 12:46Speaker 07

  Because, like, it hit me again about the recent episode you did-

• 12:48Pablo Torre?

  Because of the guilt that you have, clearly.

• 12:50Speaker 07

  No, I have zero guilt about the dark triad, about how you're a narcissist because you turned this entire fascinating episode into about Pablo Torre and Pablo Torre's theory.

• 12:58Pablo Torre?

  Well, it is my show. And also, I want to find out if I'm the one person who might be right about a scandal that pretty much everybody else missed.

• 13:07Speaker 07

  Okay, great.

• 13:26Pablo Torre?

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• 14:55Pablo Torre?

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• 16:27Pablo Torre?

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• 17:14Pablo Torre?

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• 17:32Pablo Torre?

  Hey. Hello, hello. Are you in Miami? I'm in New York. I'm in New York, a satellite of the Dan Lebatard empire. But I want to say, Michael, first off, I have some specific questions that may feel disjointed in a sense, but I promise that they are targeted to things in your book that that I I just found really fascinating as regards sports. So thank you for doing this. This is just one big trust fall. I'm in your hands. Let's do what you want to do.

• 18:05Pablo Torre?

  Okay, so I do want to explain what I want to do here because that is Michael Lewis, maybe the most successful nonfiction author of our time, the author of Moneyball and The Big Short, and now going infinite, The Rise and Fall of a New Tycoon. No writer spent more time over about two years getting to know Sam Bankman Fried than Michael. And this generated some amount of controversy because, you know, Sam Bankman Fried is in jail. So I got lots of 101 questions for Michael about all of that. But what I also wanted to do here was consult the other writer who was all over this story, a really smart investigative reporter named Zeke Fox.

• 18:48Speaker 02

  This is the most legit podcast that I've been on.

• 18:54Pablo Torre?

  Not quite a Bahamas conference with [bleep] Tony Blair.

• 18:59Pablo Torre?

  Zeke's book about Sam Bankman Fried, which is called Number Go Up: Inside Crypto's Wild Rise and Staggering Fall, which mentions that conference with Tony Blair, by the way, is also really good, in my opinion. It's different from Michael's book. It's competitor to Michael's book, but it's quite good. And Zeke first became fascinated by Sam because Sam had principles, meaning that he believed in the greatest good for the greatest number of people. And so what Sam first told Zeke in the pages of Bloomberg Businessweek was that he was going to give all of his billions away.

• 19:36Speaker 02

  We had this conversation, me and Sam, really early on when he was explaining utilitarianism to me. And my specialty is scammers.

• 19:44Pablo Torre?

  Yes.

• 19:45Speaker 02

  And I've actually always had this idea that there should be a scammer who steals the money and gives it away. And Sam explained utilitarianism to me and I was like, oh, you could be my guy.

• 20:00Pablo Torre?

  Of course, Sam never gave all of his money away. In fact, allegedly, he stole his customers' money at FTX and he spent it strategically to enrich himself and his business, his crypto exchange, which like a stock exchange, you could go to and bet money on various cryptocurrencies rising or falling in price, these coins. And so much of what Sam spent with those allegedly stolen funds, well into the nine figures easily, went directly to sports. And so I wanted to ask both Zeke and Michael a pretty simple question. Why?

• 20:40Speaker 05

  Sam was, you gotta remember, he's a Martian. He like, he's trying to figure out people the way an AI would figure out people. Had no kind of social interaction as a kid. Never thought of himself as a sort of person who could run a business with customers. So he's sort of groping, figuring out how do you get attention for this crypto exchange?

• 20:58Speaker 02

  Sam, when are you gonna go to sleep tonight?

• 21:01Speaker 06

  Oh geez, I mean, I've got, I've got some time from like 8:30 or 9:00 AM. Think, I've got, I've got back to back meetings until then.

• 21:17Speaker 02

  This was a kid who, when he was like 19, when, by the way, he's a, he's at MIT. He has a Nate Silver-ish blog where he writes about baseball stats, genuinely does like sports.

• 21:29Pablo Torre?

  Oh, I didn't know that.

• 21:30Speaker 02

  Yeah, you might've thought he was just like a nerd who doesn't like sports and does it cynically, but he actually, he was a fan.

• 21:37Speaker 05

  And he starts to just kind of, from first principles, look at what people care about. And he saw that, like, in

• 21:45Speaker 04

  Europe, when you put the names of companies on the jerseys of players, everybody noticed that the name of the company. And no one cared about the names of the that were on the stadiums. But in the United States, all the announcers, every time they talk about a stadium, they mention the Mercedes Benz Superdome. And again, welcome back to the Mercedes Benz Superdome and. He just picked it up, you know, it was, uh, it was like what people cared about. He would never like try to make an argument about why people were this way because he had no idea. It was just, I'm looking at these strange creatures called human beings, and this is what they do here in America.

• 22:21Speaker 06

  Look, where are the places that have huge amounts of following, that have, you know, lots of people care about? Um, that are sort of universal, um, and that are excited to partner with us. And, and I think that, you know, we're open to a lot of areas, but in practice, sports has been a lot of that.

• 22:38Speaker 02

  He said, it had been my impression that the names of stadiums of professional sports teams in America, particularly baseball, football and basketball teams, were very widely known. I, as a somewhat average level sports fan, could name dozens of stadium names, almost all of which I had never been to.

• 22:55Speaker 04

  Once Sam has decided that what they need to do is stick FTX's name on a stadium, they go looking for a stadium to stick its name on. And he, he got rejected by the New Orleans Saints and the Kansas City Chiefs. And I think it was because crypto just generally made some people uncomfortable, um, rightly. The Kansas City Royals offered him their, their stadium. And he said he didn't want to be the Kansas City Royals of crypto.

• 23:21Speaker 02

  No offense to the Kansas City Royals.

• 23:25Speaker 04

  Finally, this thing where the heat breaks and, uh, he doesn't want to be the Miami Heat of crypto. And, and the twist to the heat deal that was so appealing to him in the small circle of people trying to figure out how you get inside of the minds of ordinary people.

• 23:39Speaker 02

  Yeah.

• 23:39Speaker 04

  Was that it required government approval. The Miami Dade County.

• 23:44Speaker 03

  Had to approve the deal. It wasn't just, oh, you go right to the Miami Heat. And the fact that a government was going to sign off on it and rubber stamp them and say the government approves of FTX. They thought that gave them, that was really valuable because it would just create trust. That's what they're doing. They're trying to create trust.

• 24:02Speaker 02

  It may have been an easy pitch because the mayor was all about crypto back then. He actually, he had promoted something called Miami Coin, which fell 99%.

• 24:13Pablo Torre?

  Francis Suarez, the most Miami man that's ever Miami.

• 24:17Speaker 02

  He was at this crypto conference where I first met Sam and gave a speech about, yeah, how we should all get in on crypto.

• 24:27Speaker 05

  It's just wonderful to be here in the Bahamas, which is like the Hamptons of Miami. So, and only Sam and FTX can do something like this and convene this kind of incredible collection of talented people in the crypto space. And I had to be here.

• 24:42Pablo Torre?

  In no way will any of us regret this. It was basically, I think, the tenor of that speech. But just speaking to the oddness of him, it's the idea of, on the one hand, this guy is an alien who does not understand anything about our customs, but on the other hand, he's savvy.

• 24:59Speaker 04

  FTX is making history again, this time becoming the first company to work out a new partnership with the MLB.

• 25:06Speaker 02

  Major League Baseball, they put a patch on every umpire.

• 25:09Pablo Torre?

  That was my favorite one.

• 25:10Speaker 02

  A great idea. They, and I don't think they had patches before.

• 25:15Pablo Torre?

  You sort of see the logic in all of these choices, right? Like with Major League Baseball, Sam Bankman Fried is right that like, do people really give a about the sponsor on anyone's jersey? No, it's forgettable. But beyond naming rights of stadiums, we are just gonna be seeing on a baseball broadcast, the umpire all of the time.

• 25:35Speaker 06

  They're one of the, you know, the organizations with absolutely massive reach. And, you know, it's a sort of cool patch on, on every umpire, which I think is, is pretty creative. But I think beyond that, you know, we were excited about how excited they were about this. And I think that's really important for us.

• 25:53Speaker 03

  It was perfect because what is an umpire? Umpire is someone who's there judging everything and making sure it's fair. And you, you're watching the television and you see the batter and you see the catcher and you see the pitcher and you see this logo on the umpire.

• 26:07Speaker 07

  I couldn't, I mean, it took my breath away. How quickly, how easily, how cheaply they were able to get that, that real estate. And almost every shot, you know, basically constantly on TV on this human being is this thing that says FTX.

• 26:23Speaker 07

  So what they figured out, I mean, I figured this out in my own way, right? And that would, that I've written sports books to get at things other than sports. Because this whole society is so sports obsessed that you can take them to, if you start with sports, you can get them to places they wouldn't think they would want to go. They're not going to want to read, read a book about data and analytics. They might want to read a book about, wow, data and analytics in baseball. And, and business people are constantly looking for sports metaphors for what they're doing. If you give them a sports metaphor, combined with a lesson, the lesson is more likely to be absorbed. This is a version of what Sam Bankman-Fried was doing.

• 27:04Pablo Torre?

  There was a line that you had in your book, uh, from, I believe, FTX's lawyer, Dan Friedberg, about the difference in vetting between the NBA and Major League Baseball. Do you recall what he said?

• 27:15Speaker 07

  You're picking up on all this stuff that nobody has picked up on. But yes, um, they were worried, of course. Crypto, you know, crypto has got a kind of sketchy reputation in most people's minds. Lots of bad things that happen in crypto. Getting people to take your money, uh, they thought was going to be a big problem. And it was a problem, obviously in football, um, with the institutions, with the stadiums. Uh, the basketball, uh, the, the deal with, he did, they had to jump through hoops. They, they did go give presentations to the Miami Dade Board of Supervisors or whatever that government body is. Baseball just took the money. Uh, they, they, baseball, they couldn't believe how easy it was. And, and this probably tells you something about the hand that baseball feels is playing.

• 28:00Speaker 07

  It's like the lesser venture capitalist. It's wor, it's worried about being left out. So it will allow others to just do their vetting for them. And if it's okay for basketball, it's gotta be okay for us. Just please give us some too.

• 28:12Pablo Torre?

  Which, which is hilarious, which is hilarious and speaks to the ego inside, and the ecosystem of ego inside. Of sports as well, but but as for that ecosystem in sports, I found it fascinating in your reporting, which establishes Sam Bankman Fried, yes, a Martian, but also is discerning about who matters and who does not. I mean, he has opinions. You you quote, if you could remind us of of the stuff that he wrote to employees about the difference between Baker Mayfield or Dak Prescott and Tom Brady. Again, it's the Martian view, sort of like this is, he notices this sort of indiscriminate use of quarterbacks especially, but but athletes to pitch stuff.

• 28:53Pablo Torre?

  And he says, you know, I've seen Dak Prescott in this mattress commercial 7,000 times, and I don't believe a single person has bought a mattress because Dak Prescott was in the mattress commercial. That I think in his mind, that had zero effect.

• 29:07Speaker 02

  He said, on the other hand, Tom Brady has changed our life. That that that Brady matters more than everything combined. The best ever, right? But he's not thinking about being the best. He wants to be better. So you know, he's going to invest better, too. FTX, that's the crypto app, right? Now it's for all kinds of investing. It's better. So I've got some some numbers. Can we go over the numbers?

• 29:35Pablo Torre?

  Please.

• 29:35Speaker 02

  OK, so because a lot of this has come out now that FTX is bankrupt.

• 29:40Pablo Torre?

  Spoiler alert.

• 29:41Speaker 02

  Yes. The story ends badly. So his biggest name celebrity was Tom Brady. And Tom got $55 million. Credit to rival crypto book author Michael Lewis on this. He had the detail, which was that Brady committed to do 20 hours a year of work for FTX for three years to get the 55 million.

• 30:07Pablo Torre?

  Doing the math on that, that's

• 30:10Speaker 02

  Yeah, it's $916,000 an hour. What do you think? Are you in? You know what? I'm in. I mean, I do think everybody FTX hired to endorse it was being paid more money per minute than they'd ever been paid. I mean, it wasn't just Brady, but but that, if you ask.

• 30:27Speaker 04

  Sam, Brady was cheap at that price. This is gonna sound strange. You hear that number and you think, oh, Brady just let himself be bought. I, I don't actually think that's what happened. I think Brady actually was interested. And this was, and FTX was the most interesting crypto place. Brady had is a genuine curiosity fascination with crypto. And, and a genuine curiosity fascination with Sam that was gonna, the money in a way clouds the reality of the situation. It wasn't just the money, uh, as much money as, as it was. What's up, guys? I'm here with my boy Sam from FTX. We're at Crypto Bahamas Conference. We're gonna start the day. We're gonna do some TikToks for you guys. And, uh, it's gonna be amazing day. We'll get started.

• 31:11Speaker 04

  We'll do a, uh, get ready with me. Sam, where you going, bro? For Sam's point of view, it might've been just the effect Brady had.

• 31:22Speaker 04

  Although I think it probably tickled him that he was, you know, on the sidelines when Brady was playing football.

• 31:28Pablo Torre?

  There is, there is undeniably, now that you phrase it in these terms, there's this cinematic archetype, this odd couple of two archetypes, as you would see in a movie, options of the spectrum, getting together to, I mean, Brady was putting, you know, the red laser eyes in his like avatars on social media.

• 31:46Speaker 04

  Most people who met Sam felt oddly admiring and protective of him. He was nothing but this roly poly, super bright nerd. He wasn't pretending to be a former athlete. He wasn't, a lot of times you see people who are cozying up to athletes and athletes smell it, right? They're kind of jock sniffers. Sam, Sam, you know, he, he, he didn't pretend to know which way the football was supposed to go when you had it. He was just his own person. And so different that he interested people like Brady. It was like a weird friendship struck up on the playground by the kid who's all alone in the corner, who nobody wanted to play with and the most popular kid in the school. That's what it felt like.

• 32:30Speaker 04

  Sam could not believe the effect of the role that Brady played in the culture. And the drop off from Brady to Baker Mayfield or Dak Prescott is just huge. But he was also saying this, like, there's a relationship between the product that's being pitched and the person who's doing the pitching. So for example, Steph Curry's operation at first said no, he didn't want to endorse FTX. But then after Brady in the stadium, he came on board.

• 32:58Speaker 02

  Steph Curry got 35 million, the same 20 hours a year deal.

• 33:03Pablo Torre?

  Yeah.

• 33:03Speaker 02

  Um, and it didn't seemingly didn't do as much. Maybe like the, he hadn't put in his hours yet, although he did appear in one embarrassing FTX ad where he is carving an ice, ice sculpture of a bored ape NFT. This is Steph Curry, the world's leading expert on cryptocurrency.

• 33:25Speaker 04

  Definitely not. I'm not an expert and I don't need to be. With FTX, I have everything I need to buy, sell and trade crypto safely.

• 33:33Pablo Torre?

  Sam Bankman Fried, again, to your point, I don't want to be the Royals of, of, of sports podcast hosts either. He's picking like some of the greats who also are known to be credible and safe.

• 33:45Speaker 02

  Yes. So he also, um, David Ortiz.

• 33:50Pablo Torre?

  Yeah.

• 33:50Speaker 02

  Did an ad.

• 33:50Pablo Torre?

  Super, super well-liked, of course. You getting into crypto? We FTX, Stephen Thomas in? Oh, I'm in, bro.

• 33:59Speaker 02

  Naomi Osaka.

• 34:01Pablo Torre?

  Yep.

• 34:01Speaker 02

  I'm Naomi Osaka and I'm proud to partner with FTX. Otani from the Angels. What about the great CryptoTani? Maybe. That's the way he trades on FTX, the platform that does it all. There's no due diligence. And in this case, there was no due diligence done even by the venture capitalists who invested in the company. So it was a little hard to blame the athletes for not doing it too. It's sort of like, oh, everybody's all in on this. What could be wrong with it? But it, what it says is what you're getting when you buy an athlete is you're a kind of blind faith. The deal the athletes thought they were doing was, well, I'm famous and, and they're buying a little bit of my fame. And there's no cost to me and nobody's really going to do anything because I said, you know, I said, do it.

• 34:46Speaker 02

  What Sam Bankman Fried showed is yes, people will actually do things because you said to do it. And, and so there's some responsibility there.

• 35:02Pablo Torre?

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• 35:56Speaker 01

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• 36:14Pablo Torre?

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• 36:59Pablo Torre?

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• 37:40Pablo Torre?

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• 38:22Pablo Torre?

  Zeke, I want to get to who the audience was for these ads. So just to me, I'm thinking about like bros, dudes who love sports, right? And I imagine that that would be an audience, of course, that would overlap with the crypto customer demo.

• 38:40Speaker 02

  I mean, yes, but it is pretty inefficient because you're advertising to a lot of people who may not already have any desire to trade crypto. So you sort of have to convince them it's like a two-step thing. Like you want to trade crypto and then you should do it with us. So like your conversion rate on that is going to be pretty low. And in fact, it was, Sam told me, like they weren't signing up a lot of customers from these ads. And because that's like, if you remember the, the Super Bowl ad with Larry David. Like I was saying, it's FTX. It's a safe and easy way to get into crypto.

• 39:13Pablo Torre?

  I don't think so.

• 39:15Speaker 02

  Or the series of Tom Brady ads, the message was like all regular people. Basically, if you don't go trade crypto right now, you're missing out and you're a loser. And like the successful people like Tom Brady are doing it.

• 39:30Pablo Torre?

  Yes, the winningest, the champions that he signed up, they're all doing it. And by the way, it also seems like the undercurrent also in those ads is, and we're the good guys.

• 39:40Speaker 02

  Yes, and this is where even in the moment, I had developed like my own theory of why he was doing this. I mean, he's in the Bahamas, right? Like this whole thing is like questionably legal at best. Like he's not, the reason he's in the Bahamas is because he would definitely get sued by the Securities and Exchange Commission if he was in the US. And his, the biggest risk to his business would be that the government would basically say, you know what, we've thought about this a little more, even though you're on that island, this is actually all super illegal and we're gonna arrest you. Like setting aside any potential fraud, they might just be like, you're running this crazy exchange.

• 40:23Speaker 02

  The people in the US are getting on to it somehow and like this has got to stop. And if that happened, that could be like the end for him. So anything that would lower the odds of that happening would be valuable. And so he was doing a lot of, he gave away almost a hundred million dollars to people in Congress.

• 40:41Pablo Torre?

  Right.

• 40:41Speaker 02

  So that, I mean, that helps maybe.

• 40:44Pablo Torre?

  Sure, yeah, you're lobbying the lawmakers, paying them.

• 40:47Speaker 02

  But I think it also helps to have Tom Brady on your side.

• 40:51Pablo Torre?

  Sam would go said, when I, when I go to Capitol Hill and I go meet the senators, the first thing they want to talk about is Tom Brady. So, so, so the senators were feeling that warm glow towards Sam because of this perceived relationship with Brady. And Zeke, now that I hear it, there is this theory that this entire time Sam Bankman Fried was hiring influencers, but with a specific target as to who he wanted to influence, the people who might existentially threaten him the most.

• 41:24Speaker 02

  Yes, and.

• 41:27Speaker 02

  I mean, he had just raised venture capital at like a $32 billion valuation. And they were hoping that maybe next time they go back to the venture capitalists, they could get $100 billion. And like, could it potentially help if one of these venture capitalists went out to dinner with Sam and Tom Brady? Like, yes, that might help. And so like, if that gives you like, he loved odds. He thought of everything in terms of odds. Yeah. So like, maybe he said in his mind, having Tom Brady available for dinner improves my chances of getting $100 billion by like 1%. You know, I actually, I'm actually would pay Tom Brady $500 billion. Like, it's a bargain at 55 million.

• 42:08Speaker 04

  It was actually brilliant. It actually worked. It was exactly the way to go about it. And whatever dollars he forked over, he got much more in return in terms of just social credibility. If he had actually run this place the way it should have been run, he might have become the world's first trillion dollar company. It was, it was growing unbelievably fast. The name recognition went from zero to like, everybody's heard of this place in about two seconds. And it felt okay, because all these people who you admire and these institutions you admire said, it's okay. Very big names in the world of sports and entertainment. Is that expensive?

• 42:50Speaker 04

  Or are they really sort of playing for the dollars that are going to come as a part of the business down the road?

• 42:56Speaker 06

  You know, it's expensive on some scales, but we're in a really fortunate position as a company to be able to afford it. You know, we're spending a pretty small fraction of our revenue this year on that. We're still going to be net profitable after that. And so, you know, it's something which, which, you know, we are fortunately able to afford and which, which while expensive, we think really helps tell our story and grab people's attention in a way that few other things do.

• 43:22Speaker 04

  We love checking in with you too, Sam. Such a good spokesperson for the industry and we look forward to seeing what you've got.

• 43:27Pablo Torre?

  Well, it kind of, it kind of points to the very reason why he spent all of this money on the trappings of sports, on the ads, on the famous friends, on the patches on an umpire's [bleep] jersey is because without it, it was an emperor without maybe any clothes.

• 43:43Speaker 04

  Tonight, the cryptocurrency world is reeling after the meltdown of one of its most popular trading platforms. The exchange FTX filed for bankruptcy protection today as fallen crypto king Sam Bankman-Fried stepped down as CEO.

• 43:58Speaker 02

  After FTX failed, I was like, oh, should I go down there and try and meet him again? I'm thinking to myself, definitely a fraud, he's gonna get arrested soon. This could be my last chance to talk with him and he might be willing to reveal secrets that he wasn't willing to reveal before because he knows like the end is here.

• 44:16Pablo Torre?

  Smash cut two, you're in the Bahamas again.

• 44:20Speaker 02

  Sam, he didn't like to show off his apartment because it was like a $30 million penthouse at the nicest resort in the Bahamas.

• 44:28Pablo Torre?

  Rumpled cargo shorts, toothpaste stained shirt, frizzy, out of control hair, $30 million penthouse.

• 44:34Speaker 02

  Yes, and it's at Albany, which Tiger Woods often parks his mega yacht there.

• 44:43Pablo Torre?

  Naturally.

• 44:45Speaker 02

  And I don't know what to expect because I'm thinking like Sam might be all alone here, so he might be despondent. Could he even be like suicidal? I don't know, like his life is ruined. He answers the door, he shuffles out of the elevator in his crew socks, khaki shorts and t-shirt, just like always. And he's just like, hmm, like weird week, huh? And I'm like, I'm like, yeah. And what I was most struck by was when the elevator doors opened, we're in this like landing room and there are just like tons of shoes, like dozens and dozens of shoes. It was a big apartment with five bedrooms and what I realized was that, oh, all the people who worked at FTX, they all ran away and like they left their shoes. They were like, let me get off this island.

• 45:30Pablo Torre?

  That is haunting, dude.

• 45:30Speaker 02

  Like.

• 45:31Pablo Torre?

  That is haunting. Yeah, it's like Jurassic Park after the dinosaurs have, after the T-Rex has screamed into the giant banner.

• 45:42Speaker 02

  So he led me to down the marble hallway to like the most modest room, I'm sure, in this apartment. And we spent just like hours and hours talking about what had happened. He really tried to make this case that he had screwed up because the money's gone, right? Like, the exchange failed. The customers all went to go like cashing their chips at the casino. And the FTX casino was like, sorry, we don't have any money.

• 46:08Pablo Torre?

  Right. So because word had gotten out that actually, he was taking the money that people had put with FTX, the exchange, and he'd been using it to trade, to gamble on himself secretly with his research fund, his hedge fund.

• 46:20Speaker 02

  Right. Which is like not legit at all. Yeah. The great thing about Sam is that even though like his answers were lies, he would listen to your questions and he would answer them. Like, a lot of like, you know, I'm sure you've interviewed people who just give you like the talking points.

• 46:35Pablo Torre?

  Oh, athletes, athletes all of the time are just giving you the cliches to keep them moving.

• 46:41Speaker 02

  Yeah. He would give you like a custom lie, just that directly addressed your question.

• 46:47Pablo Torre?

  A little origami crane of a lie for you.

• 46:50Speaker 02

  So I'm like, Sam, like, you, are you saying, and you couldn't offend him. I was like, Sam, are you saying, like, this sounds ridiculous. You're saying that you lost $8 billion, you misplaced it, and he's like, misaccounted. And like, like, he thinks that he's played like this trump card. And I'm gonna be like, oh, yeah, he's kind of delusional. He was still hoping that someone would give him $10 billion and he could just run it all back again and give it another try.

• 47:19Pablo Torre?

  A comeback, a Tom Brady fucking comeback in the fourth quarter, two minutes left is what he was planning on.

• 47:24Speaker 02

  He should have said, Tom, I paid you for 20 hours. Get down here and like, give me a pep talk. Because like, I'm facing like a really tough challenge right now.

• 47:33Speaker 03

  Sam Bankman-Fried, guilty. Prosecutors laid out a case showing how Bankman-Fried stole billions in customer funds from FTX to make up for bad bets at Alameda, buy luxury real estate in the Bahamas, and secure celebrity endorsements. A jury found him guilty of seven

• 47:50Speaker 04

  ...counts of fraud and conspiracy for his role in the collapse of the cryptocurrency exchange he created, FTX. SBF, as he has become known, could be looking at spending more than 100 years in prison.

• 48:03Speaker 02

  What we learned at the trial is that it was a lot closer to like a fraud from the beginning and that as soon as customers started sending in money to FTX to buy their Dogecoin or whatever, Sam treated that as like his piggy bank and was gambling with it. I think no matter how much he thought that he didn't care about risk and that he would do anything in the pursuit of trillions, that it must feel horrible that he like the game is over and that he's coming to terms with the idea that he won't get another try. But I think that like purely guessing on my part, I think he's doing the math and

• 48:45Speaker 02

  he's thinking, all right, good behavior, I could be out in 10 years and like, maybe I could start a new crypto thing. Like, like not, you know, probably not the same people would invest, but like, listen, if Sam Bankman-Fried came to you in 10 years, it was like, listen, last one was a fraud, but like, I'm starting something new. And like, you want to get in on the ground floor.

• 49:05Pablo Torre?

  Right. I got me, I got Tyler Hero, I got Bam Adebayo, we're all hanging out again. What do you think?

• 49:28Pablo Torre?

  So Zeke Fox just gave us a nice capper on how leagues and teams and athletes all carry significant responsibility for the sports washing of Sam Bankman-Fried's multi-billion dollar fraud. But I also needed to acknowledge the elephant in the studio here. Our other author, Michael Lewis, if you didn't know, has also been accused of being a celebrity who got used by Sam. And nobody had better access to Sam than Michael, yes. And Michael, of course, is the author of Moneyball, most famously, the bestselling story of how Billy Bean's Oakland Athletics ushered in a statistical revolution in baseball.

• 50:08Pablo Torre?

  But when I actually read Going Infinite, Michael's book on Sam, I realized that Michael did not take it easy on him at all. It is full of damning stories like the ones you just heard in this episode.

• 50:24Pablo Torre?

  What it does not spotlight, however, is a certain detail that Zeke mentioned to me earlier in the show about what Sam was doing as a teen.

• 50:34Speaker 02

  He's at MIT. He has a Nate Silver-ish blog where he writes about baseball stats.

• 50:40Pablo Torre?

  And that detail got me wondering about a different way, maybe, that Michael Lewis might actually carry responsibility for the rise of Sam Bankman-Fried and this whole story. And I just needed to ask Michael about it at the end here, one-on-one.

• 50:59Speaker 04

  My connection to Sam,

• 51:02Speaker 04

  I think in the beginning, why he was even interested in sitting down with me, was he'd read Moneyball when he was 13 years old.

• 51:08Pablo Torre?

  I was gonna ask.

• 51:09Speaker 04

  And it completely confirms his approach to life, which is, you know, he's this kid who's unendowed with a normal range of human feeling. And he substitutes emotion and feeling for emotion and feeling, sort of mathematical calculation to make every decision in his life, every decision. I mean, when he gets older, like whether to get married and have kids, it's an expected value calculation. He's sort of taking the idea of the hard Moneyball, that, I mean, that experience doesn't matter, that a nerd with a computer can actually make better decisions about baseball players than some guy who played for 20 years. He's sort of taking that to an extreme and taking it out into the world and applying it to everything.

• 51:54Speaker 04

  And it becomes preposterous. I mean, he takes it to, he just like this Moneyball on steroids gone wrong. That phenomenon, the Moneyball phenomenon, was in a way, I think, a bridge for him to see, a bridge for him, his mind into the world, into real-world problems that you might otherwise think his. Nothing, no ability to solve or even think about.

• 52:17Pablo Torre?

  Yeah, I think that's, I think that's fascinating, Michael. And it's funny because the conversation around your book by people I think who largely did not read the book, it was wrong. Not least because there are many indicting stories and bits of reporting in your book about Sam. But I feel like what you just explained is a far more interesting way that you are connected to the story. And I ask you this now in terms of the pendulum of our willingness to trust quants and nerds versus the old scouts who felt, who felt evicted from this conversation by you, by Moneyball.

• 52:59Pablo Torre?

  How do you grade how we have swung in that direction?

• 53:05Speaker 04

  You put it well. The nerds evict the scouts.

• 53:10Speaker 04

  The scouts are still around, but they're just, their status is lower than it was. And then there's all of a sudden have a place at the head of the table. And Sam was very oddly doing the same thing in other sectors of the economy. He didn't let anybody over the age of 35 into his company. So he was, the nerd was evicting the old experienced people in finance, basically. Or political analysis, that meaning he was meddling in American politics. It was him and three 28-year-olds thinking about how you manipulate a Republican primary using analytics as sort of their touchstone.

• 53:52Speaker 04

  So the moneyballing of everything, I mean, it's a phenomenon of the last 20 years, right?

• 53:57Pablo Torre?

  No doubt.

• 53:58Speaker 04

  Sam is just like taking it to an extreme. I think, what do I think about this? It bothers me a little. This is the truth. And it may bother me for unintelligent reasons.

• 54:12Speaker 04

  What bothered me at the time when I wrote Moneyball was that there were a club of people who were insensible to new ideas and new approaches. And so they just shut out this other way of thinking about the problem and were smug in their ability to make their own judgments. I thought that was bad, this kind of clubby approach to thinking about the world or thinking about problems or dealing with uncertainty. We've replaced one smug club with another smug club. It's just the smug club are, you know, these nerves.

• 54:45Pablo Torre?

  Yes.

• 54:46Speaker 04

  And they are undeniably better at putting debt together a baseball team than the old smug club. It is a better way of thinking about the problem. And, but it is not a perfect way of thinking about the problem. And I think when you, whenever you create the smug club, what you do is you shut out other ways of thinking about the problem, things that threaten your alien to you.

• 55:09Pablo Torre?

  Yeah, yeah. It pains me to say this as somebody who, and again, full disclosure here, my favorite sports book of all time is Moneyball. I am somebody who did reporting on the Philadelphia 76ers and Sam Hinkie and quoted "trust the process" at ESPN in a way that then became a meme. And what I'm hearing you say now, Michael, is the problem of being too trusting of your process.

• 55:32Speaker 04

  Intellectual monoculture.

• 55:34Pablo Torre?

  Yes.

• 55:35Speaker 04

  Intellectual group think, we are, we know that there isn't a different way to think about this problem. I think the smartest of the people who are, you know, at the vanguard of Moneyball are aware of this.

• 55:47Pablo Torre?

  I agree. I agree.

• 55:48Speaker 04

  But there is, there is, we're talking about the pendulum swinging, and I just have felt it's, I sensed it swinging too far in the other direction. And Sam Bankman-Fried is oddly an example of that.

• 56:00Pablo Torre?

  Yeah. Yeah, well, and also just the other dimension of this, just to, to put the final sort of cherry on top of this introspective Sunday, is the question of how the audience, how, by the way, journalists, authors, the public, how, how we trust the quant now too.

• 56:19Pablo Torre?

  And there is the wisdom of not just the people inside the room where it happens trusting their process in a monoculturally blinkered way, but also now the outsiders assuming that that is where the credibility is, is with the people who are the most fluent in numbers to the exclusion of the experience, the old scouts, the old farts that we evicted.

• 56:41Speaker 04

  Here's the problem, where you allow your mind to come to rest, that someone once said, "An explanation is where the mind comes to rest." And the mind used to come to rest with, "Oh, Bill Parcells knows what he's doing on defense. You know, we're doing this because Parcells knows defense." Or, "We know the player's good because this scout says he's good," without examining the mechanisms by which this judgment is rendered. And my point, and the point on Moneyball is, don't allow your mind to come to rest.

• 57:14Pablo Torre?

  Exactly, exactly. No, this is the grand irony of this story, Michael.

• 57:19Speaker 04

  Yes.

• 57:20Pablo Torre?

  I just think about this, and I totally understand the multiplicity of interpretations here. My point is about the underrated aspect to which Sam Bankman-Fried and FTX not only embodied the sequel to Moneyball, however unconsciously this was happening.

• 57:40Speaker 04

  I was very aware of this. I was very aware of this.

• 57:42Pablo Torre?

  The sequel to Moneyball while also being a case study in how domestically sports washing also exists. The use of sports to launder the moral reprehensibility of the people behind the doors that are now locked to the outsiders.

• 58:01Speaker 04

  That's an interesting way of putting it. Yes, if you can connect it up to sports, people are blind to everything else. This is absolutely true.

• 58:13Speaker 04

  It legitimizes. It legit, you know, sports is used to legitimize great fortunes in this country, that you will, you buy a sports team and you become a different kind of, your money becomes a different kind of money.

• 58:25Pablo Torre?

  Yes.

• 58:26Speaker 04

  It's one of the reasons people buy sports teams, whether they, whether they're conscious of it or not, they want to, they want, however, they made this pile of money, they might have made it by raping middle-class investors in the stock market, but now they're the owner of some franchise and people see them differently and like them more.

• 58:43Pablo Torre?

  Sure. Not merely a mortgage lender, now the owner of your favorite childhood obsession.

• 58:48Speaker 04

  That's right. And what I love, what I, what I loved about Sam Bankman-Fried as a character was that he was figuring all this out as if no one had ever thought any of these thoughts before. He was figuring out, he was figuring out all by himself, the role of sports in the American imagination. And when you, when you approach life this way, when you approach life, you're, you're working assumption is nobody knows what they're talking about, especially older people have no idea. You only trust your friends with their computers and their analytics. You end up first making some wild errors, but second, a second sort of stumbling upon cliches that everybody who's been in this world and paid attention

• 59:30Speaker 04

  to it, understand. But third, sometimes you get these blazing insights, like you, you actually do get this fresh look at a thing.

• 59:37Pablo Torre?

  Totally.

• 59:38Speaker 04

  And the way he parsed sports generated, I've never heard anybody say, oh, the stadium matters, the player doesn't matter. I never heard anybody say, Tom Brady is not just a different by degree than Dak Prescott. It's like a different species. They figured this stuff out. It was interesting. Interesting to hear it.

• 59:55Pablo Torre?

  Absolutely. Michael Lewis, thank you for at least temporarily allowing my mind finally to, to, to come to something resembling rest.

• 1:00:06Speaker 04

  Totally fun. Great talking to you.

• 1:00:12Pablo Torre?

  This has been Pablo Torre Finds Out, a Meadowlark Media production, and I'll talk to you next time.

• 1:00:47Speaker 03

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