SBF’s Bets Used to Work Out
Bet sizing, plea deals, Binance’s rescue fund, tax refunds and Ozempic.
We talked a couple of times last week about Sam Bankman-Fried’s formative time as an intern at Jane Street Capital, where he learned to think in bets but maybe went a bit overboard. Michael Lewis’s book about Bankman-Fried, Going Infinite, describes the internship program, in which interns are encouraged to bet with each other but not allowed to lose more than $100 per day.
I expressed some surprise that the interns felt compelled to gamble their entire $100 daily stake on a coin flip with 1% edge. “A Jane Street intern had what amounted to a professional obligation to take any bet with a positive expected value,” writes Lewis, and that seemed odd to me; surely you don’t want to risk your entire bankroll on a barely weighted coin flip. I connected this story to Bankman-Fried’s own repeated claims about his linear utility function and wild risk appetite, and of course to what eventually happened to FTX.