👁️ Michael Lewis is Still in Denial
The fallen titan has yet more mealy-mouthed apologies for Sam Bankman-Fried. Also Tally shutdown, Ohio's FirstEnergy scandal, and more.
Welcome to your weekly Dark Markets news roundup - it’s a particularly bountiful week for freaks and grifters!
One update for those who don’t follow me on Twitter: I have officially signed the contract for my Sam Bankman-Fried book, so if you’re not yet a premium supporter, now’s the time to get on board for a full behind-the-scenes look at the book writing and publication process. More details coming soon!
In this Edition:
Good Reads: The Wingspan of Severed Hands; Michael Lewis is Debasing Himself Again; SBF “hated flying private”; Mysterious deaths in Autonomy tech fraud case; Kim Dotcom fights extradition from Thailand; Aluminium pressure cookers are poisoning Afghani children; a16z’s Tally shuts down; Legalized betting has horrible social impacts; The Ballad of Ohio’s own Trumpy fraudster Bobby George.
Good Reads: The Wingspan of Severed Hands, by Joe Koch
After a couple of years of working concertedly to recover from Pandemic Brain, I’m thankfully back to reading quite a bit, so I’m going to be sharing more (very short) recommendations. “Wingspan” is one of the best new “cosmic horror” books I’ve read in a while, both in grotesque content and dream-like delivery. At the center of the novel is a butterfly-like “weapon” grown from the memories of a research scientist, and over its brisk 110 pages Koch plays with the twisting of identity with incredible subtlety. Though it’s from the obscure imprint Weirdpunk Books, thankfully Wingspan is easily available.
Michael Lewis is Debasing Himself Again
Apparently as part of the release of a paperback edition of his catastrophically bad SBF book Going Infinite, Michael Lewis has written a new chapter about Sam’s conviction, published at the Washington Post as an op-ed. The piece is a fascinating artifact of delusion that I’ll dig into later in more length.
Lewis seems to have barely changed his default belief that no real crime was committed. He regurgitates well-worn falsehoods about how “FTX was a good business” and Alameda having all the cash wasn’t actually a big deal. He even gets in another complaint that jurors weren’t told about all the great things Sam did with the stolen money, reiterating his conclusion in the book that “the money is still there”
The money was not still there, Michael. Victims got back roughly 1/3rd of the value of their deposits.
It’s truly sad to watch. When you make a mistake of this magnitude, the right thing to do is admit it, engage in some real introspection, and move on. But Michael Lewis seems to have as much difficulty reckoning with his own failures as Sam Bankman-Fried himself. There’s an undeniable, pathetic poetry to that.
Bankman-Fried “hated flying private”
Ryan Salame, an FTX co-conspirator who’s heading to jail soon on campaign finance charges, tweeted that “Sbf hated flying private, I was one of the main people that pushed him to do it and in court they used it against him like he was a greedy villain cause of it”.
Salame is a convicted liar, so take that with a grain of salt. It’s a strange admission even if true. The criminal trial highlighted the performative nature of Sam’s supposed “Effective Altruism,” such as his PR-motivated choice to trade in luxury cars for cheap Toyotas. But he was at least committed to the bit, so Salame seems to be admitting here that he gave his boss very bad advice that wound up hurting him?
Bizarre Deaths in the Autonomy fraud case
Sometimes extremely weird shit just happens. For example, the UK billionaire Mike Lynch disappeared with his sinking yacht last week. Then, his codefendant in a fraud case was killed in a car accident just days later.
That sure sounds shady, but there’s little reason for anyone to kill these guys - they’re the ones in trouble, after all, for an alleged accounting fraud that stretches back to 2011, when Lynch sold Autonomy to HP. HP later took an $8B write-down on the $11B purchase, claiming Autonomy’s accounting was fraudulent. But the trial has been ongoing for years. Sometimes a weird coincidence is just that.
Kim Dotcom Nears Extradition from New Zealand
Megaupload founder (and seemingly pretty shitty human being) Kim Dotcom is on the verge of being extradited from New Zealand, where he now resides, to face trial in the U.S. You may be shocked to learn that he’s charged with copyright infringement on a massive scale via Megaupload - though if you’re over about 35, you’re probably not surprised by that at all.
Dotcom’s legal troubles began in 2012 with a raid on his Auckland mansion. He has been fighting extradition for the entire 12 years since.
The Terrifying Poison of Afghani Pressure Cookers
This staggering thread summarizes a terrifying public health crisis created by fraud. An Afghan manufacturer of pressure cookers, Rashko Baba, has been caught melting down engine blocks and other post-industrial waste to manufacture aluminum pressure cookers. This single manufacturer appears to be responsible for long-term, catastrophic levels of lead among Afghan children. Lead poisoning is known to lead to permanent intellectual disabilities.
Tally Shutdown Shows Interest Rate Impacts
Tally, a debt management fintech backed by Andreessen Horowitz and once valued at $855 million on $172 million raised, has shut down. Tally’s business model involved using cheap loans to refinance users’ credit card debt, and that old gray mare just ain’t what it used to be when dollars cost 5.5% to borrow from the Fed. While this is a particularly exposed business model, it’s an illustration of the broader pressures (possibly health pressures) brought to bear by the end of the free money era.
Legalized Sports Gambling Makes Everything Worse
A new study shows that U.S. states that legalized sports gambling saw a big increase in bankruptcies, car loan defaults, and lower credit scores across the state. The study established causal links, seeing effects only after gambling was legalized. Online gambling saw much larger (3x) impacts than offline. Most intriguing, this didn’t just apply to active gamblers - the declines in financial health hit states as a whole.
This should be intuitively obvious to anyone who can acknowledge the addictive nature of gambling. And the impacts will be compounding over time as they ramify through defaults and instability across an entire economy - and inevitably, even across state lines. In pursuit of the perverse incentive of increased government revenues, U.S. state governments are selling out their future.
The Ballad of Bobby George
I wanted to direct my readers to this wild writeup at The Rooster, a publication focused largely on political corruption in Ohio. Bobby George is a weird right-wing bloviator who has been charged with extremely disturbing sexual assault, but that’s barely the beginning. Bobby’s father Tony George was a go-between in the FirstEnergy bribery scandal, which saw Ohio’s legislature suborned by $60 million in bribes that motivated speaker Larry Householder to pass a $1.3 billion bailout for the company’s failing electrical plants.
These people are, naturally, passionate fans of Donald Trump.
the 'money is still there' narrative is so frustrating; even if people had gotten back 100% of their deposits (which, as you said, they did not), there is such an obvious harm to having money frozen for years ... the people getting that return are often wealthy investors who bought claims for a fraction of their value because they can afford to invest with uncertainty and a long time line, rather than retail investors who absolutely did not sign up to have their money tied up in an AI startup or whatever else.