During a fireside chat, BitMEX founder and influential crypto investor Arthur Hayes sat down with Michael Lewis, the bestselling author of “Moneyball,” “The Big Short” (which covered the 2008 banking crisis) and “The Blind Side.”
Lewis drew controversy and excitement last year from crypto-supporting pundits after it was revealed that he spent several months with Sam Bankman-Fried prior to the FTX collapse as research for his next book. Hopes are high that he’ll provide a tell-all account of what really happened in a similar fashion to his books.
Bitcoin maximalists hold the cult classic movie The Big Short in particularly high regard for how it portrayed the excesses of the banking industry that led to the 2008 banking collapse with near-surgical accuracy. As is well-documented, the last financial crisis provided the impetus for Satoshi Nakamoto to write the Bitcoin whitepaper in 2008. Nakamoto inscribed a message within Bitcoin’s Genesis Block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Lewis on SBF and Crypto’s “Financial Kanye”
Lewis detailed the reasons for his SBF collaboration, which he said came about after a friend asked him to screen the now disgraced exchange founder for financial investment. Lewis became so intrigued with SBF and the crypto space (which he joked was the equivalent of “Financial Kanye”) that he decided to stick around, inadvertently “lucking out” for a front seat to the calamitous meltdown that eventually followed. With the movie rights already sold, Hayes quipped that Jonah Hill could play the lead.
On How Intermediaries Rigged the Financial System
Lewis got exposed to Bitcoin as early as 2012 but admits he’s a conservative investor who doesn’t like the volatility of crypto markets. He is perplexed by how entrenched financial intermediaries still are in the banking system.
“It’s one of the curious questions of this economic age: how untouched by the internet financial intermediaries have been. Every other intermediary has been completely screwed by the internet, you know? Big time. It’ll get there, but the amount of time it’s taken is kind of incredible. Instead of the intermediaries being knocked out of the system, they found ways to rig the system so there was still a place for them. I mean, I wrote a book called Flash Boys about this, and it’s still true.”
He feels that there are so many unnecessary hands touching the money in financial transactions, “taking little slices out as rents that are completely unnecessary.” These middlemen “have just been hard-baked into the financial system, like the people in the middle of things successfully stopped the change from having the effects it should have had.”
Lewis admires the principles behind the DeFi movement and the financial revolution that could come out of crypto.
“Maybe it will happen, I hope it will happen. But there’s a war before it happens, you know? And I’ve seen glimpses of that war… I’ve never had anybody so angry at me as a Wall Street billionaire from whom I’m trying to take money if I write something that’s even remotely threatening to their profits.”
Lewis also speculated that US regulators were “irritated” by Silvergate and Silicon Valley Bank’s connections to crypto, and were thereby a tad slow to step up and bail them out during the recent liquidity crisis.
Hayes and Lewis exchanged notes on their love for Hong Kong and SBF and Lewis’ research on FTX’s operations in the city-state for his book, which conveniently comes out the day when Bankman-Fried’s trial starts.
On the quasi-religious and emotional nature of Bitcoin’s support, Lewis, who was raised as an atheist, drew parallels between the evangelical Christian community behind his “The Blind Side” book and the crypto community but stated that what he thinks doesn’t really matter.
Lewis also explained that while FTX and Alameda Research came in as outsiders to crypto, they, specifically SBF and Caroline Ellison, eventually also became swept up in the decentralized money movement.
The author wrapped up the fireside chat with a self-effacing joke that he’s lazy and requires a gun to his head to get started on a new book.
He predicted that something else in crypto could likely provide the inspiration for his next book, which will probably be due in about 5 years from now. Possibly even Arthur Hayes, but that he would have to mess up again — and this time really big — alluding to Hayes’ well-documented troubles with US regulators and authorities in the past.
