Inside the crypto hype machine

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Rob Armstrong (0:36)

Thank Let's go to Pushkin.

Sam Bankman-Fried is back in the news. Sentencing in his fraud trial takes place next week in Manhattan. Today on the show, we are wondering how long he will spend in prison, and if anyone has learned anything at all.

This is Unhedged, the markets and finance podcast from the FT and Pushkin. I'm Rob Armstrong in New York, and I'm joined today by Josh Oliver in London. Josh has written an entire book, Hype Machine, about SBF, the so-called crypto ecosystem, and how it all went terribly wrong. Josh, how's it going?

Josh Oliver (1:19)

It's going well. Thank you for having me, because the world needed one more book about crypto.

Rob Armstrong (1:24)

It does, well, it needs your book in particular, Josh, and I want to talk about your book in a second.

But first, I want to talk a little bit about the sentencing, which is going to be the big news next week. I was really struck by the letter from John Ray to the judge in the case. Ray is the caretaker of FTX as it works its way into bankruptcy, and he wrote a scathing and spicy letter to the judge. You want to tell us a little bit about that and what it means?

Josh Oliver (1:57)

Yeah, absolutely. So, I mean, to catch folks up, sentencing hearings next week and the process that we're in now is there's like a back and forth of filings where the government and the defense lawyers are arguing about how long the sentence should be. And just to give people the polls on that, the theoretical maximum they may have heard, more than a hundred years, the government has asked for 40 to 50, the defense has asked for six and a half. So that's the fight they're having.

Rob Armstrong (2:23)

And the point of the fight, you know a lot better than I, is SBF's team says, look, you know, some things went wrong here, but nobody really got hurt. And Ray's letter said, oh yes they did.

Josh Oliver (2:37)

Yeah, absolutely. I think Ray was jumping in in some ways because they're trying to respond to this notion that no one really lost money, which is an argument that the defense team had kind of picked up and run with, based on some technicalities of the bankruptcy process and this kind of line that went around that, you know, certain of the creditors are gonna get paid back 100% in quotes, but it's not actually 100% and it's not all the creditors. So, you know, it's more complicated than that. But I do feel like that idea that there was no loss clearly just really annoyed John Ray, who obviously already has no love lost for Sam because Sam Bankman-Fried has been attacking the bankruptcy since the beginning. This has been a huge feud.

And this is just sort of John Ray taking his last chance to kick Sam on his way down, frankly. And the letter was, you know, just full of these incendiary little sound bites. And they know how to write these things to have the headline phrase. I think this one, it was life of delusion that Sam was sort of narcissistic evil genius who was always lying and misleading everybody around him. And it kind of captures like the two visions of who this person is.

That's the question of the sentencing.

Rob Armstrong (3:50)

That's just the point I wanted to get to. There are these two ideas of who this guy is. And one of them is that he was a sort of semi genius kid who had big ideas, was sort of disorganized and in over his head and things went sideways. And that's the defenses picture. And then at the other end of the spectrum, here is a deeply wicked fraudster who had no intention of making a real business and systematically took everyone for a ride.

You've met this guy. Where on that spectrum does the truth lie?

Josh Oliver (4:33)

I have to admit, you know, it's probably not a good thing to say out loud, but I always found like talking to Sam to be interesting and even sometimes enjoyable. I mean, by times it was frustrating because there were certain questions he would never answer, but he was a captivating person and that was key to his success.