Jane Street

Gilded Rage: Elon Musk and the Radicalization of Silicon Valley

by Jacob Silverman  · 9 Oct 2025  · 312pp  · 103,645 words

-CEO Safra Catz was part of Trump’s transition team. Other corporate leaders and financiers had given Trump huge sums, including, as the Times noted, hedge fund magnate Robert Mercer and his daughter Rebekah Mercer, who together gave $15.5 million while also investing in ideologically motivated tech and media projects, such

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co-founder of PayPal and the first venture capitalist to invest in Facebook. He’d had some notable failures as an investor, particularly as a hedge fund manager, but his portfolio brimmed with the riches yielded by making early commitments to future tech unicorns. Gay, philosophically libertarian, with politics that might generously

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represent a forgotten middle. A number of these self-designated moderates donated to various Republican presidential primary candidates before ultimately settling on Donald Trump. Billionaire hedge fund manager William Oberndorf—a conservative who gave to “moderate” groups supporting the recall of DA Chesa Boudin—was a major donor to establishment Republicans like

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associates) anointing the young financial professional as one of the “tycoons of tomorrow.” Asked to identify a role model, Sramek said, “Peter Thiel. Lateral thinker, hedge fund manager, entrepreneur, venture capitalist, intellectual, philanthropist. He seems to combine everything extremely well.”18 The Standard called him a teetotaling “party boy.”19 Another publication

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Deutsche Bank. In July 2009, Malde learned that he was being investigated by his employer. Someone pretending to be an employee of Brevan Howard, a hedge fund that was a Deutsche Bank client, had written “I’m hot, I’m hot” on a finance discussion forum.24 The relatively obscure incident spawned

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in WhatsApp, plunked down about $30 million for two homes, one of them a pricey tear-down. In interviews, Ken Griffin, the founder of hedge fund titan and market maker Citadel, telegraphed his intent to leave Chicago, where his $28 billion-plus fortune made him Illinois’ wealthiest resident. “If people aren’t safe here

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they learn about plutocracy. Within the country’s donor-driven political system, each election brings different billionaires into the public eye—chemical magnates, software executives, hedge fund tycoons, reclusive scions to old banking fortunes. For the 2024 election, whatever hesitation some of the country’s elites might have felt about supporting Trump

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sued the track owner in federal court. He lost. Yass eventually landed on Wall Street, where he was mentored by Izzy Englander, a highly regarded hedge fund trader. Yass started trading options on the Philadelphia Stock Exchange and soon invited some of his college poker buddies to join him. They founded Susquehanna

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of dollars. But he would have made far more if he had held onto his stake for even a year or two. One of his hedge funds folded during the 2008 financial crisis, but Founders Fund, his VC firm, became a Valley powerhouse. And Thiel’s mode of thinking—his ruthless imperiousness

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by leaking to the New York Times the personal writings of his ex-girlfriend Caroline Ellison, who was the CEO of Alameda Research, his crypto hedge fund that also served as a vehicle for embezzling stolen FTX customer funds. It wasn’t his first offense: the prosecution also contended that Bankman-Fried

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laureled, well-connected Stanford legal scholars. His whole life had been gilded by privilege and the cosseted imperviousness to consequence that comes with it. At Jane Street, the prestigious financial firm where Bankman-Fried worked after graduating from MIT, he lost $300 million in a poorly conceived bet pegged to the 2016

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splurge on a sushi dinner. If you were his friend—or perhaps a lover—he might have invested half a billion dollars in your crypto hedge fund. He might have created a new token and let you in on it before it debuted on public markets. SBF did what he wanted, operating

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, gave Bankman-Fried the treatment meted out to other defendants who were indicted around the same time: ex-Honduran president Juan Orlando Hernández (drug trafficking), hedge fund titan Bill Hwang (fraud, market manipulation), and the mercurial Chinese businessman and intelligence asset Miles Guo (fraud). Contrary to how he had been treated his

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politicking. But then it all fell apart. On November 2, 2022, CoinDesk reported on a leaked balance sheet from Alameda Research, Bankman-Fried’s crypto hedge fund that doubled as a venture capital firm, buyer of Bahamian luxury real estate, and a general clearing house for whatever the youthful mogul wanted to

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.13 A number of money managers and friends of Musk bought not for their investment firms or their clients but for themselves. Bill Ackman, the hedge fund billionaire who developed a sideline as a cranky social-media essayist, owned $10 million worth of X through his nonprofit foundation. There were some notable

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-sale/ 13 https://www.wsj.com/articles/ken-griffin-moving-citadel-from-chicago-to-miami-following-crime-complaints-11655994600 14 https://www.reuters.com/business/hedge-fund-citadel-move-headquarters-miami-chicago-2022-06-23/ 15 https://fortune.com/2024/02/13/florida-jeff-bezos-600-million-ultra-high-net-worth-individuals

On the Edge: The Art of Risking Everything

by Nate Silver  · 12 Aug 2024  · 848pp  · 227,015 words

buildings, as Manhattan does. This is where people apply the EV maximizer skill set to make lots of money, such as through venture capital and hedge fund investing. There’s more in this book on Silicon Valley than on Wall Street, though. The Silicon Valley guys are more of an open book

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see themselves as rivals and are ready to go to battle. By 2023, the cold war between these tribes had escalated into open conflict as hedge fund billionaires led the charge to oust Ivy League presidents and The New York Times sued OpenAI. Incursions into enemy territory are treated with alarm, like

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in lifetime tournament winnings—and first achieved that distinction when she was just twenty-eight years old. When she left poker to work for the hedge fund Bridgewater Associates in 2018—an unexpected move for someone who once called herself “anticapitalist at heart”—it was big enough news that it made The

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too aggressive, you’ll encounter ten who aren’t aggressive enough. It’s true in finance, according to Coates. “A lot of asset managers and hedge funds I’ve dealt with have a problem getting their good traders and PMs to use their full risk allocation,” he told me. “They’re not

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the Upper West Side in Manhattan, where he was shooting an episode of his Showtime series Billions. Although the world in Billions, centered on the hedge fund Axe Capital, is one of the most accurate fictional portrayals of the River, Koppelman is best known by poker players for cowriting the 1998 movie

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in the world, bet its Super Bowl props? It’s because sportsbooks fall into two major camps. Miller’s book calls them “retail” sportsbooks and “market makers.” The sportsbooks you see advertised on TV are retail books. They put a lot of money toward customer acquisition; DraftKings spent almost $1.2 billion

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your favorite cabernet shipped to your house? A friend of mine who’s a DraftKings VIP gets all of this and more. Characteristics of Market Makers and Retail Books Market Maker Retail Tolerates sharp action, up to a point, to improve price discovery Aggressively limits customers it thinks are winners Often transparent about how

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Sports betting is the core business Sometimes an “amenity” as part of a larger business Moves lines in response to sharp bettors Piggybacks off the market makers and moves lines in response to them I have no doubt that companies like DraftKings know what they’re doing; they and FanDuel are lapping

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. That’s a valuable customer, worth a few cases of cabernet. But the retail books aren’t particularly good at bookmaking. That’s where the market makers come in. Let me give you a real-life example of how this works. On February 20, 2023, I bet $1,100 on the Toronto

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fucking hedge fund in Dublin is going to bet the game. And if the bookmaking process is working properly, I have to beat those guys. “Basically, the smartest people in the world who are doing this for a living, trying to make real money from it, are betting into these market makers and moving

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evenly keeled. You know, to put it in a poker metaphor, I don’t have a tilt button,” said David Einhorn, the founder of the hedge fund Greenlight Capital (and a high-stakes poker player) when I asked him what trait was most important to his success. This was interesting because when

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to rebel against society, investment banking beckons for you. Silicon Valley prizes nonconformity, though, even if it’s a monoculture in its own ways. Even hedge funds are willing to make bets on unconventional people like Vanessa Selbst, since the conceit of the industry is that they can make excess profits by

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one example; if you just follow the public money, you’ll lose the same 5 percent juice to the house that everyone else loses.[*14] Hedge funds are another example; they charge investors exorbitant fees on the premise of achieving excess returns above and beyond what any ol’ Ernie Index Fund could

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get in the S&P 500. “The thing about hedge funds, it’s the only industry in the world where not only do you have to be right, but everybody else also has to be wrong

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artificial meat and alternative energy. When I first proposed this book, venture capital was slated to play more of a supporting role, paired off with hedge funds in a chapter that was mostly about Wall Street. Instead, it turned out to be the protagonist. I followed the flow of the River where

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insufficiently denouncing anti-Semitism and being inconsistent in their application of free speech principles. Penn’s president, Liz Magill, soon resigned under pressure from the hedge fund manager Bill Ackman and the Penn board. Harvard’s Claudine Gay initially survived, but resigned in January 2024 after several credible accusations of plagiarism were

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is one further reason that VCs tend to be particularly thin-skinned about public criticism. In most parts of the River—say, sports betting or hedge funds—you make money essentially by being critical of your competitors’ opinions. In VC, you don’t—it’s not a culture that’s used to

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. Although Talking-Shop Sam saw me as an equal, Sneaky Sam was full of gotcha questions, quizzing me as though I was his intern at Jane Street Capital. I got the sense that Sneaky Sam was using me to audition his arguments—if he could outwit me, maybe he could eventually outwit the

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and options traders. Why GameStop in particular became popular is hard to say. It was partly because it was being shorted by a lot of hedge funds and the day traders wanted to fight back, and partly because it was perceived as an archaic, Blockbuster Video dinosaur of a company. Propping it

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. Whoever wins the drawing gets the market price ($150). The other one gets stuck with their worthless NateCoin ($0). ₦ is being heavily shorted by a hedge fund. If Satoshi and Pepe hold ₦ for another twenty-four hours, the short sellers are squeezed out of the market and the value of ₦ will increase

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it is that you never have to take a gamble that could leave you in ruins. I spoke with David Einhorn, the founder of the hedge fund Greenlight Capital. Einhorn and I run in a lot of overlapping New York poker/finance circles, so I know him well enough to know he

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. Who does more good for the world: an idealistic twentysomething who works for poverty wages for an NGO in some third-world country, or a hedge fund guy who makes $10 million a year and then donates half of his earnings, enough for the NGO to hire a hundred idealistic twentysomethings? Personally

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a sort of Robin Hood on blockchain steroids. Bankman-Fried had worked briefly at the Centre for Effective Altruism, but wound up starting a crypto hedge fund, Alameda Research, instead. In the early days of crypto, it was so easy to make money that it would almost be unethical not to do

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’t give a cent to the endowment of Harvard or another elite private college.) GiveWell—founded by Holden Karnofsky and Elie Hassenfeld, alumni of the hedge fund Bridgewater Associates who were inspired by Singer and shocked to discover how little information there was about how effective charities were at meeting their goals

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an opportunity is too good to be true versus when there really is the opportunity of a lifetime. Bill Perkins, who runs the energy-trading hedge fund Skylar Capital and is also a high-stakes poker player, is one of a couple of people I know who made a lot of money

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their competing assumptions about p(doom)—Yudkowsky’s p(doom) is high and Hanson’s is low—and had a debate on AI risk at Jane Street Capital in 2011, the firm that would later employ SBF. Some of the rationalist interest in prediction markets also stems from Hanson, who has expressed his

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, Maria Konnikova told me. “I met a number of con artists who ended up becoming big financial criminals, like some were in jail for their hedge funds becoming Ponzi schemes. And it usually starts with something tiny,” she said. “You think that you’re a savvy investor, and then you lose money

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, intended as a standard lefty critique of capitalism, or necessarily as a critique of capitalism at all. Look, I play poker with venture capitalists and hedge fund guys. I’m a capitalist. Rather, I’m saying to take the observation seriously that totalizing utopian ideologies have the potential to be dangerous. And

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a tilt-inspired moment, you might make a smaller bet on the Celtics to hedge your exposure. Hedge fund: A private firm that makes complex financial bets, often based on proprietary knowledge or statistical models; hedge funds do not necessarily hedge their risk. Hedgehog: Along with a fox, one of two decision-making personality

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. In sports betting, a market-maker is a bookmaker that uses bets from experienced bettors to help establish accurate pricing, adjusting odds swiftly. A market-maker’s prices are often copied by retail bookmakers that have large marketing budgets but limit bets

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.com/learn/cryptopunks-short-history. GO TO NOTE REFERENCE IN TEXT Einhorn and I: Paul Amin, “Hedge Fund Billionaire Einhorn Places Sixth in Major Poker Tournament,” CNBC, July 18, 2018, cnbc.com/2018/07/18/hedge-fund-billionaire-einhorn-places-sixth-in-major-poker-tournament.html. GO TO NOTE REFERENCE IN TEXT an infamous

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.com/p/introductionhtml. GO TO NOTE REFERENCE IN TEXT Hanson and Yudkowsky: Per interview with Robin Hanson. GO TO NOTE REFERENCE IN TEXT risk at Jane Street Capital: “The Hanson-Yudkowsky AI-Foom Debate,” LessWrong, accessed January 2, 2024, lesswrong.com/tag/the-hanson-yudkowsky-ai-foom-debate. GO TO NOTE REFERENCE IN

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paradox, 485 finance alpha, 241–42, 478 Bid-Ask spread, 444, 479 calmness and, 222 contrarianism and, 240–42 Global Economic Crisis (2007–2008), 30 hedge funds, 21, 27, 112, 239, 240–41, 249, 486 independence and, 239 inside information and, 197n Midriver and, 21, 489 moral hazard and, 261 optionality, 76

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, 355–56, 377, 378, 379, 380, 403, 495, 533n Haxton, Isaac, 111–12, 239 head fakes (sports betting), 176, 207, 486 heads up (poker), 486 hedge funds, 21, 27, 112, 239, 240–41, 249, 486 See also finance hedging, 486 hedonistic utilitarianism, 363n Hegel, G. W. H., 429 Hellman, Martin, 424 Hellmuth

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line value and, 206 defined, 172, 488, 516n extent of, 200, 210 lessons from sports betting and, 209, 520n line shopping and, 202, 203–4 market makers vs. retail bookmakers and, 187 prop bets and, 182 sports betting profitability and, 180 Lindley, Dennis, 482 line shopping (sports betting), 202–4, 488 liquidity

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, 50, 488, 489, 499 See also nuclear existential risk Manifest conference, 369, 370–71, 374, 377 marginal utility/marginal revolution, 489 margin of error, 489 market makers, 186–90, 489 Markus, Billy, 314, 315 Martínez, Antonio García, 258 martingale (betting strategy), 489 Mashinsky, Alex, 307–9, 312, 313 Masters, Blake, 274n McCloskey

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Kelly criterion and, 397, 399 key skills for, 191–97 lessons from, 209–14, 520n line shopping, 202–4, 488 manual trading, 175, 176–77 market makers vs. retail bookmakers, 186–90, 187, 489, 518n models and, 179–80, 182 Nash equilibrium in, 58–60, 508n networking and, 191, 197 obsession and

Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits

by Kevin Roose  · 18 Feb 2014  · 269pp  · 83,307 words

, who haven’t fully made the cutthroat, technocratic ethos of Wall Street their own yet. “There’s a generation gap in finance,” one middle-aged hedge fund manager told me at the outset of my investigation. “Young people have their own risk models. They look at their place in the world completely

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would be the next bank to fail. The firm’s stock price had tumbled, thousands of workers had gotten laid off, and one well-regarded hedge fund manager jolted Wall Street that summer by proclaiming that Lehman wasn’t properly accounting for its real estate investments. Still, Arjun assumed that Lehman would

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young financiers—a sort of West Point for Wall Street. More than half of Wharton’s six-hundred-person undergraduate class typically heads to banks, hedge funds, private equity firms, and other financial services companies after graduation. Among the celebrity financiers the school has churned out are SAC Capital billionaire Steven A

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which college seniors are hired for two-year stints as analysts. After their two years are up, analysts are expected to find work at a hedge fund or private equity firm, or, in a few cases, get an offer to stay on for a third year of banking. The ones who don

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incredibly risk averse,” the Goldman analyst told me. “Think about it: if you go to a bank, you make as much money as anything except hedge funds, private equity, or possibly a tech startup. Those things are wildly more risky and a lot harder to do. So if a bank comes to

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market data. There are research analysts, who churn out detailed reports on various topics and companies. There are prime brokers, who provide basic services for hedge funds and other investment firms, and structured finance divisions that devise and package complicated derivatives. There are media relations people, political lobbyists, HR managers, and private

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struggled to measure up. Jeremy had started the scramble with a rotation on Goldman’s prime brokerage desk, a group that provided basic services for hedge funds who held their money at the bank. It was a cold desk whose work amounted to little more than acting as bank tellers to

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hedge fund managers, and he’d quickly grown bored of it. His second rotation, in equity sales, was slightly better, but still something a trained chimp could

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, and they like spending their time around other moneyed elites. Banking is often a stepping-stone to more lucrative jobs at private equity firms or hedge funds, and the ultimate destination is often the Forbes 400 list. “I’m not self-loathing at all,” one young private equity worker with Habitual tendencies

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York for dozens of imaginary “dentist appointments” and mysterious “family emergencies.” What they’re actually doing is interviewing for jobs with private equity firms and hedge funds, which grab for Wall Street’s most promising first-year analysts in one of the most time-honored rituals of young finance life. Private equity

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firms and hedge funds (which are collectively referred to as the “buy side,” since they purchase the products and services that “sell side” investment banks offer them) represent the

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of work. “I don’t even mention what I do for work to girls,” a young hedge fund trader told me. “In 2008, with all the stuff happening, I felt bad. When you’re associated with a hedge fund, you’re seen as taking away people’s mothers’ retirement money.” “I tell people I

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then they end up in my bed.” A private equity associate using the acronym “P.J.” to refer to his firm’s private jet. A hedge fund trader giving dating advice to his down-and-out friend: “Girls come in many shapes and sizes. But just remember: when you hold them by

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true. In the past few months, Ricardo had begun getting calls from headhunters, who came bearing interview opportunities for jobs at private equity firms and hedge funds, where the workload would be slightly better. He didn’t think much of them at first. After all, every first-year got these calls, and

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presentations by himself. Ricardo had once insisted that he would leave J.P. Morgan after two years to go to business school, jump to a hedge fund, or quit the industry altogether. But now, with an assignment that was both more exciting and less strenuous than his old one, he could see

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train and headed up to Cambridge, Massachusetts, to meet the members of Black Diamond Capital Investors. Black Diamond is Harvard’s most exclusive student-run hedge fund. Its thirty members, who are all Harvard undergraduates, each kick in at least $1,000 (and as much as $25,000) for the privilege of

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impressed at his ambition, but told him to come back when he had a college degree.) There’s Arash, a senior who interned at a hedge fund the previous summer, and is slated to work at another large fund after he graduates. And there’s Christian, a freshman who managed a six

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money this strategy has made the group, but he did tell me that they haven’t lost money—which is more than many professionally run hedge funds can say. Despite some minor disagreements, there was no yelling or table pounding at the Black Diamond meeting. In fact, the whole thing felt more

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like an international relations seminar than a hedge fund meeting. “Why would we run to metals if the economy is improving?” Bryce said at one point, after Patrick suggested investing in platinum to take

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advantage of low prices. “Does anyone think the economy isn’t improving?” Later in the meeting, the group video-chatted with a hedge fund trader from San Francisco, a Harvard Business School graduate who serves as an informal advisor to the group. The trader dispensed a few nuggets of

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in it.” Nor do they concern themselves with the softer side of finance. Most of them want to work in private equity or at a hedge fund right away after graduation, and when I asked why they’d prefer skipping over the typical stepping-stone bank job at a place like Goldman

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. “Nobody goes into finance to do charity.” So, if you want to know what kind of overachiever goes to Harvard and joins a student-run hedge fund, there’s your answer: a person who is turned off by Goldman Sachs because it’s too charitable. It’s tempting to accuse Patrick and

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deeply insecure. Sure, Penelope was a great self-promoter, and she’d assembled an all-star book of clients that included some of the biggest hedge funds and pension funds in the world. Some high-ranking people at Goldman thought she was indispensable. But Jeremy saw something poking through her resilient exterior

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such heavyweights as Steve Schwarzman, the billionaire cofounder of the Blackstone Group. All the major banks, as well as many large private equity firms and hedge funds, recruit on campus, with a flurry of information sessions, résumé drops, and group interviews. To Marina, the fact that 20 percent of her classmates might

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more students for socially productive careers in public service, entrepreneurship, and scientific research,” rather than “serving as the vocational training center for reckless banks and hedge funds.” And at Duke, another finance feeder school, a majority opinion of the student editorial board added its voice to the growing chorus: If more smart

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were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those

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were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. All told, enough wealth and power was concentrated

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the existence of Kappa Beta Phi, whose members included both incredibly successful financiers (New York City mayor Michael Bloomberg, former Goldman Sachs chairman John Whitehead, hedge fund billionaire Paul Tudor Jones) and incredibly unsuccessful ones (Lehman Brothers CEO Dick Fuld, Bear Stearns CEO Jimmy Cayne, former New Jersey governor and MF Global

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subjects aspired to be like. What did being the CEO of a big bank do to your psychological outlook? How did running a $30 billion hedge fund change the way you viewed the world? Unfortunately, whenever I asked these kinds of questions of the CEOs and industry barons I interviewed, I never

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a Fenway Frank?” A: “Barney Frank comes in different size buns”). David Moore, Marc Lasry, and Keith Meister—respectively, a holding company CEO, a billionaire hedge fund manager, and an activist investor—sang a few seconds of a finance-themed parody of “YMCA” before getting the hook. Bill Mulrow, a top executive

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at the Blackstone Group, and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of

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dried up, and about telling his colleagues at the firm that he was quitting—not to go to a prestigious private equity firm or a hedge fund, but to live a volatile existence as an entrepreneur. “They’re going to think you’re fucking up,” an ex-Goldmanite friend told him. “I

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colleague. The notes were invariably addressed to the entire division, and invariably contained platitudinous expressions of gratitude, along with contact details at a new bank, hedge fund, or private equity firm. But Terrance’s note had no new contact details, only a brief expression of thanks along with his personal e-mail

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resolution authority that would give government the power to wind down a failing financial institution in an orderly way, and gave private equity firms and hedge funds tougher disclosure standards. Many of the rules in Dodd-Frank had yet to be written and implemented (and would subsequently be watered down by lobbyists

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dedication, the path itself had always been fairly straightforward. You put in two years of backbreaking work at a bank, then moved over to a hedge fund or a private equity firm for two more years of nonstop number crunching, went to business school, then came back with an MBA and began

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(the same firm that conducted my Excel spreadsheet-making seminar), and his specialty is helping young people prepare for their interviews at private equity firms, hedge funds, and investment banks. He’s a former Lehman Brothers banker who looks a bit like a young Christian Bale, with gray-flecked scruff on his

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the best banks. For a long time, they’ve been searching for the highest level of attainment. And for a long time, private equity and hedge funds were the next step in that track. Now, it’s different.” The way Trevor described it, young people who several years earlier might have happily

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more enjoyable ways to make money. So they jumped ship. “Seven years ago,” Trevor said, “the only way to succeed was in private equity or hedge funds. The folks I was in i-banking with weren’t asking about personal fulfillment. But now with the financial crisis and a tech boom, people

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you don’t like corporate finance, you can move to prime brokerage. If you hate your job in equity research, you can move to a hedge fund whose specialty suits you better. The analysts’ obsession over “hot desks” and stratification within investment banks obscures the fact that these are all high-paying

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J.P. Morgan handing out key chains and Frisbees. The biggest names from Wall Street were Credit Suisse, Barclays Capital, the hedge fund Bridgewater Associates, and a number of midsized hedge funds and private equity firms. Trumping them all was the Anheuser-Busch booth near the back of the gym, where Princeton alumni in

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at Wharton. One bank advertised its “global transaction advisory for the new economy.” Another offered students a chance to “bring your career into focus.” Jane Street Capital, a medium-sized hedge fund, had a banner promising its recruits a “dynamic, challenging environment. Rapid advancement. Idea-driven meritocracy. Informal fun and open atmosphere.” (Oh, and last

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that the Wall Street recruiting process will never again attract the same assortment of college students it once did. The hardcore finance majors, Black Diamond hedge fund members, and Wharton graduates of the world will still beat a path to Wall Street’s doors, but there will be many fewer dilettantes—political

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order to preserve their labor advantage. (It does them no good, after all, to lose their best second-year analysts to private equity firms and hedge funds every year.) But they will also recognize that in an era of tighter budgets and greater competition, they can’t afford to fill their ranks

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crash their classes; the members of Kappa Beta Phi for not killing me on the spot; Patrick Colangelo and the rest of the Black Diamond hedge fund members for their hospitality; and Rachel Gogel, who designed this book’s gorgeous cover (literally) overnight. I’m also grateful to all those who aided

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the upper echelons of the finance industry.”) “The firm’s stock price had tumbled, thousands of workers had gotten laid off, and one well-regarded hedge fund manager jolted Wall Street that summer by proclaiming that Lehman wasn’t properly accounting for its real estate investments”: The

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hedge fund manager, David Einhorn, was profiled by Hugo Lindgren in “The Confidence Man,” New York, June 15, 2008. “In September 2008, while Arjun was starting his

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Soros on their walls”: I don’t know if such posters actually exist, but they should. “Black Diamond is Harvard’s most exclusive student-run hedge fund”: Mercer R. Cook, “Exclusive Investment Club Asks Student Members for $1,000,” Harvard Crimson, September 14, 2012 (note: Black Diamond has changed its membership and

Number Go Up: Inside Crypto's Wild Rise and Staggering Fall

by Zeke Faux  · 11 Sep 2023  · 385pp  · 106,848 words

on Twitter and Reddit, where they shocked Wall Street by sending shares of left-for-dead retailer GameStop up more than tenfold, nearly bankrupting hedge funds that bet against it. Then they took this nihilistic, buy-it-for-the-LOLs mentality to crypto. Dogecoin replaced politics and dad jokes in

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Celsius, it turned out, had $18 billion in assets. I couldn’t believe it. Somehow Celsius had accumulated as much money as a large hedge fund with a business plan that wouldn’t even work for a kid’s lemonade stand. “That’s what I was imagining,” I murmured, trying

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wiping away tears. * * * — NOT EVERYONE I spoke to in Miami was a Bitcoin cultist. The biggest users of Tether were professional traders at hedge funds and other large firms, and I interviewed several of them too. What they explained to me was that for all the talk of peer-to

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floor of the living room, a woman I recognized from a Netflix documentary on social media manipulation played with her baby. I overheard a hedge fund manager bragging on the phone about the “MILF” he’d had sex with the night before. I decided to mingle and ask the guests

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almost inexplicable memeification process, had come to stand for “Fuck Joe Biden” among Trump supporters. The man, who I later figured out was a hedge fund manager named James Koutoulas, announced to the table that his plan for the coin was “dumb but it’s working.” A month earlier, a

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then I read what Devasini wrote about regulators: And the controllers of the Security Exchange Commission, what were they doing, instead of controlling a Hedge Fund so huge? Were they playing Tetris? Were they sleeping with their feet on the table like Homer Simpson as the reactor was catching fire?

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a bank—it was an “international finance entity,” organized under looser Puerto Rican laws. His plan was to open accounts for all the major cryptocurrency hedge funds and companies. That way, they could easily transfer money between themselves without ever sending it out of Noble. * * * — BETTS TOLD ME that

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than keeping the money in cash. Tether could be investing in anything at all. “It’s not a stablecoin, it’s a high-risk offshore hedge fund,” Betts said. “Even their own banking partners don’t know the extent of their holdings, or if they exist.” * * * — I KNEW BETTS

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to buy them back. Among the buyers were EOS, the ICO promoted by Tether co-founder Brock Pierce; and Sam Bankman-Fried’s hedge fund Alameda Research. Devasini had essentially printed his own money to replace what was lost by Crypto Capital and sold it to the biggest players

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document listed hundreds of investments made by Tether. Most were pretty standard: short-term bonds. But there were also strange things, like investments in hedge funds and small bets on the prices of copper, corn, and wheat. The part of the holdings that seemed riskiest to me was billions of

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corporate loans. Rather than a smoking gun, the records felt like another inconclusive clue. * * * — ON WALL STREET, my report caught the attention of hedge funds. In particular, short sellers. These are funds that make money by betting against shaky companies, then waiting for them to fail. Some of them try

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But none of the analysts seemed much better informed than “Andrew,” the conspiracy theorist I’d met who posted as “Bitfinex’ed.” One hedge fund trader told me he’d hired ex-CIA analysts to decode the body language of Tether executives during a TV interview, a technique whose value

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met, he was working as a low-level analyst at a research firm. At a coffee shop, he gave me a dossier on a hedge fund called Platinum Partners. I wrote an exposé, he filed a report to the SEC, and the fund later collapsed. Since then, Anderson had

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Anderson, I’d seen a No Parking flyer put up ahead of a shoot for the show Billions. On the show, Bobby Axelrod, an unethical hedge fund manager, declares, “What’s the point of having fuck-you money if you never say, ‘Fuck you’?” I agreed with the sentiment. But

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’d become the most prominent crypto booster of all. And on November 10, I read in the crypto publication Protos that Bankman-Fried’s hedge fund, Alameda Research, had received 31.7 billion Tethers in 2021. That meant that Bankman-Fried had supposedly sent $31.7 billion in real U

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Bankman-Fried’s matter-of-fact response: “He basically said, ‘Yep, that makes sense.’ ” Another young MacAskill acolyte had gone to work for Jane Street Capital, a stock trading firm. It was one of a handful of companies that had used mathematical models and computer programs to take over the business

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making markets on Wall Street. Anytime someone bought or sold a share of a stock or exchange-traded fund, there was a decent chance Jane Street was on the other side. Entry-level jobs there paid around $200,000 annually. Bankman-Fried secured an internship at the trading firm.

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always did, Bankman-Fried evaluated the decision by expected value. Expected value is a weighted average of potential outcomes. Let’s posit that his Jane Street career was 100 percent sure to generate $10 million in lifetime earnings. That would be its expected value. Another option he considered was founding

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a journalist, where a well-written story could influence the world’s thinking on the most important issues. Then, in late 2017, he quit Jane Street, moved back to California, and took a job as director of business development for MacAskill’s Centre for Effective Altruism. He said that his

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way more on some exchanges than others. This was the kind of buy-low, sell-high arbitrage opportunity he’d learned to exploit at Jane Street. At the firm, he’d built complex mathematical models for trades that aimed to make money off tiny price differences. On crypto exchanges,

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house in Berkeley, and started recruiting more friends to help. They needed a coder to create the kind of trading systems they had at Jane Street. Bankman-Fried wasn’t much of a programmer himself, but he knew a prodigy named Gary Wang. The two had met at a sleepaway

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a natural fit to manage the other programmers. A few months later, Bankman-Fried recruited another young mathlete whom he’d worked with at Jane Street. Her name was Caroline Ellison, and she was a soft-spoken redhead and a Harry Potter superfan. The daughter of MIT professors, she’

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was generating about a million dollars a day in profit, Bankman-Fried told me. And Alameda hadn’t stopped trading. He said that his crypto hedge fund made an additional $1 billion in profit in 2021. Owning an exchange (FTX) and a firm that trades on it (Alameda) was an

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liked to arrive at work in the evening and work through the night. And Caroline Ellison was in Hong Kong, like usual, running the hedge fund Alameda. The only one I spotted was Nishad Singh, who’d taken the title of FTX’s head of engineering. He sat at

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one of the other big players in DeFi was Sam Bankman-Fried. Stone could tell from watching Bankman-Fried’s crypto wallet addresses that his hedge fund, Alameda Research, was farming giant sums on tokens like SushiSwap. Stone estimated that Alameda earned billions of dollars this way. And Stone became

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Vietnamese programmer, a Norwegian competitive gamer, and a twenty-seven-year-old former Yale fraternity president who’d been working as a recruiter for hedge funds. Few players downloaded Axie until the end of 2019, when the company started paying them in its Smooth Love Potion cryptocurrency. Even then,

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ex-presidents. If this was how the Bahamas treated me, I thought, imagine what they did for Bankman-Fried. Anthony Scaramucci, the bombastic hedge fund manager who’d done an eleven-day stint as Trump’s communications director, was co-hosting the event. Never one to miss the chance for

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a $5 billion valuation. Wu was fifty-one and his résumé included Cornell University, Harvard Business School, and a stint at the giant hedge fund Tiger Global. But when we sat down, he and a colleague bragged to me about a Zelda-like play-to-earn game on their

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the poor quality of the business plans too. I had hoped to finally meet Gary Wang, FTX’s star coder, or Caroline Ellison, the former Jane Street colleague who was by then the head of Alameda. But I didn’t see them anywhere either. * * * — A DAY BEFORE Crypto Bahamas,

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limitless. Celsius executives approached him about possibly buying their company. He met with them on June 12. Caroline Ellison, the head of his hedge fund Alameda, joined the call. The two of them had a lot of questions about Celsius’s balance sheet and decided to pass on the

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Fried turned the company down. It would prove permanent, and Celsius would later file for bankruptcy. * * * — THE NEXT COMPANY to collapse was a hedge fund called Three Arrows Capital, long regarded as one of the best investors in crypto. Co-founder Su Zhu had promoted an influential theory that he

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money Three Arrows used for its supercycle bets was borrowed from Celsius and several other crypto companies that also offered high-yield accounts. The hedge fund was willing to pay a high interest rate, which was convenient, because the lenders needed to find some way to earn money to meet

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. People needed to get dollars out the door.” And Three Arrows had funneled much of that money into Terra-Luna. When it collapsed, the hedge fund lost $600 million. (The founders later said they were swayed by their friendship with Kwon, who lived near them in Singapore.) On May 11

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, one of the lenders to Three Arrows messaged an executive at the hedge fund asking for repayment, saying he would accept payment in Tether or other stablecoins. “Yo,” the Three Arrows executive wrote back. “Uhh, hmm.” The

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its lenders. Celsius had advanced them $40 million. Celsius competitors BlockFi and Voyager Digital revealed that they’d made even bigger loans to the hedge fund. Even companies that hadn’t lent to Three Arrows themselves took a hit. Gemini, a well-regarded exchange, turned out to have lent users

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prove to be ill-timed. On November 2, an article on crypto news site CoinDesk raised questions about Bankman-Fried’s finances, revealing that his hedge fund, Alameda Research, held nearly $6 billion of a cryptocurrency he’d created, called FTT, and owed billions of dollars to lenders. Though the

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advice of his lawyers, even as investigators from the U.S. Department of Justice scrutinized whether he’d used customers’ funds to prop up his hedge fund Alameda Research, a crime that could send him to prison for years. (To me, it sure looked like he had.) “What I’m

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combination of comically poor bookkeeping, wildly misjudged risks, and complete ignorance of what his own hedge fund was doing. In other words, an alumnus of both MIT and the elite Wall Street trading firm Jane Street was arguing that he was just dumb with the numbers—not pulling a conscious fraud. Talking

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FTX’s offices in February, I flew past the bright red flags at his company—its lack of corporate governance, the ties to his hedge fund, its profligate spending on marketing, the fact that it operated largely outside U.S. jurisdiction. I wrote a story focused on whether Bankman-

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in 2018 with Caroline Ellison, Nishad Singh, Gary Wang, and a small group of other friends from the effective-altruism community to run their hedge fund, Alameda Research. (The name itself was an early example of his casual attitude toward rules—it was chosen to avoid scrutiny from banks, which

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of “Fifty-one percent you double the earth out somewhere else, forty-nine percent it all disappears.” Starting an exchange while already running a hedge fund was a huge conflict of interest. And it wasn’t as if Bankman-Fried kept FTX and Alameda separated. On the exchange, Alameda was

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bets. Publicly, Bankman-Fried presented himself as an ethical operator and called for regulation to rein in crypto’s worst excesses. But through his hedge fund, he’d actually become the market’s most degenerate gambler. I asked him why, if he really thought he could sell the tokens, he

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said, customers would wire money to Alameda Research instead of sending it directly to FTX. (Some banks were more willing to work with the hedge fund than the exchange, for some reason.) He claimed that somehow, FTX’s internal accounting system double-counted this money, essentially crediting it to both

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life saved. GO TO NOTE REFERENCE IN TEXT He was a trader on the international ETF desk: Joe Weisenthal and Tracy Alloway, “The Ex-Jane Street Trader Who’s Building a Multi-Billion Crypto Empire,” Bloomberg, April 1, 2021. GO TO NOTE REFERENCE IN TEXT in Oregon when they were

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NOTE REFERENCE IN TEXT The founders later said: Joanna Ossinger, Muyao Shen, and Yueqi Yang, “Three Arrows Founders Break Silence Over Collapse of Crypto Hedge Fund,” Bloomberg, July 22, 2022. GO TO NOTE REFERENCE IN TEXT filed for bankruptcy: “Eastern Caribbean Supreme Court in the High Court of Justice Virgin

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The Bizarre and Brutal Final Hours of FTX,” Financial Times, February 9, 2023. GO TO NOTE REFERENCE IN TEXT Galois Capital: Laurence Fletcher, “Hedge Fund Galois Closes After Half of Assets Trapped on Crypto Exchange FTX,” Financial Times, February 20, 2023. GO TO NOTE REFERENCE IN TEXT an NFT cockfighting

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178 “gold farmers,” 34 Goldman Sachs and IGE, 34 “Gordon Goner,” 144, 156 Green, Seth, 146 Greenberg, Andy, 98 Grillo, Beppe, 44 H hedge funds. See also Alameda Research betting against Tether, 70 Platinum Partners, 72 as short sellers, 70, 72 as Tether users, 26–27 Held, Dan, 21 Herbert

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-dump” schemes and, 49–50 Internet Gaming Entertainment (IGE), 34 J James, Letitia, 64 Jan, Richard, 193, 195 Janczewski, Chris, 104–105, 106 Jane Street Capital, 83, 84 Jeter, Derek, 129 K Keeton-Olsen, Danielle as scam compounds guide, 192–195, 196, 198, 199 basic facts about, 191 story about Chinatown

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and, 66, 67 effect of rise in interest rates on, 239 El Salvador and, 199, 203 first bubble and, 52 FTX and, 23, 95 hedge funds and, 26–27, 70 Hindenburg Research and, 72–73 as holder of commercial paper, 23 as holder of debt of Chinese companies, 68, 69

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud

by Ben McKenzie and Jacob Silverman  · 17 Jul 2023  · 329pp  · 99,504 words

destroyed, and for what? So we could all gamble on fake money? So criminals and fraudsters and Silicon Valley venture capital firms and Wall Street hedge funds could make out at the expense of regular folks? What are we even doing anymore? It’s getting to the point that we, as a

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more, sometimes much more. And with your crypto, they made their own bets and loans and investments, acting at once like a bank and a hedge fund. The problem was that crypto was extraordinarily volatile, with no inherent value, and that these banks (or bank-ish entities) might have been engaging in

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would reveal huge losses—hundreds of millions for some of Do Kwon’s investors and financial partners, which ranged from venture capitalists to important crypto hedge funds. These big players weren’t the only losers. Many ordinary retail investors, especially in South Korea, where Do Kwon was based before moving to Singapore

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’t much time to focus on Do because other dominoes began to fall. Based in Singapore, Three Arrows Capital (3AC) had started as a small hedge fund run by former boarding school classmates Kyle Davies and Su Zhu, both thirty-five years old. As the crypto markets mushroomed in size during the

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put it: “Earn to give.” In order to advance Sam’s EA aspirations, MacAskill offered him a piece of advice: Apply for an internship at Jane Street Capital. The prestigious Wall Street trading firm is known for hiring the most brilliant grads from elite universities. Sam got the internship, excelled in it, and

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was offered a full-time position following graduation. At Jane Street, Sam could apply his considerable quant skills to figuring out ways to arbitrage minor differences in price to produce massive profits. He was tasked with

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providing market-making services trading global exchange-traded funds (ETFs). The specifics of that field are not important for us here, just the obvious: At Jane Street, Sam Bankman-Fried was still playing games. These games involved real money, and Sam was very good at making money. But playing the same game

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. Sam recruited a few close friends from MIT, including roommate Gary Wang, whom he had known since meeting him in high school math camp, and Jane Street colleagues like Caroline Ellison, with whom he had become close. They began operating out of a small space in Berkeley, not far from where Sam

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Wang, FTX’s cofounder, had known Bankman-Fried since math camp in high school. Caroline Ellison, the CEO of Alameda Research, worked with him at Jane Street. Caroline and Sam occasionally dated. All nine of the roommates were thirty years old or less. Another troubling aspect of Sam’s operations was the

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I wouldn’t say not at all concerned. . . . It is important to have a nontrivial amount to be an active market-maker in crypto.” Sam launched into a long-winded explanation of how market makers like Alameda and Cumberland work in crypto. He moved on to stablecoins, and how he thought two of them

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to have been driven by the fact that you have made so much money. You were a trader before, and you were making money [at] Jane Street, and now you’re in crypto. Isn’t it still driven by the same thing? I mean, you are making a lot of money.” “So

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a magic societal cure-all. But the previous decade of Sam’s life had also been instructive. From his time at MIT and then at Jane Street, he had learned how to speak the language of complex financial engineering—the lingua franca of Wall Street. His ability to execute quantitative, bloodless arbitrage

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. Ignore any inconsistencies and just move on to the next thing. Somehow, Celsius had done no wrong. It was a victim of unseen forces—shadowy hedge funds, pseudonymous online investigators, Sam Bankman-Fried himself—or was, weirdly, just misunderstood. While extolling Celsius’s innocence, Krissy Mashinsky simultaneously marketed a line of T

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James Block, who eventually revealed his name after journalists began peppering him with requests for tips and commentary, he was offered a job by a hedge fund shorting crypto. He decided to stick to medicine. He became a key source for crypto observers, and was a hero to some Celsius victims. He

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myth of Alameda’s trading prowess and Sam’s financial genius evaporated in an instant. It turned out Alameda was more of a sloppily run hedge fund than what it was often marketed as: a risk-neutral firm primarily providing market making services. Alameda had been making wild bets, and apparently it

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to be true. He owned 90 percent of Alameda and lived with its CEO, whom he had known—and occasionally dated—since their days at Jane Street. The once-billionaire shrugged his way through Andrew Ross Sorkin’s questions. Sam said he “had a bad month,” and the audience, composed of corporate

Going Infinite: The Rise and Fall of a New Tycoon

by Michael Lewis  · 2 Oct 2023  · 263pp  · 92,618 words

. Most went to work for Google, or for high-­frequency trading firms. Jump Trading, Tower Research Capital, Hudson River Trading, Susquehanna International Group, Wolverine Trading, Jane Street Capital: all these Wall Street companies Sam had never heard of came to the job fair that year inside the MIT gym. And he became just

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not.” He was surprised when three different high-­frequency trading firms emailed him to invite him to interview for their summer internships: Susquehanna, Wolverine, and Jane Street Capital. “It turned out that this was a real thing,” he said. Exactly what it was remained a mystery, even after the firms had reached out

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to him. You couldn’t just google “Jane Street Capital” and learn anything useful about the place. There was hardly anything about Jane Street Capital on the internet.¶ “I had no idea what to expect,” said Sam. “I didn’t even know what types

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of interviews these were going to be.” He had three phone interviews with Jane Street traders, and they were like no interviews he’d

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when he sought it, how he sought it, how he updated his beliefs in response to it. Jane Street poker wasn’t normal poker, and Jane Street coin flipping wasn’t normal coin flipping. None of the Jane Street games were even games, exactly, so much as games within games, or games about games. The most

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and a ticking sound, had trouble seeing quickly what mattered and what did not, especially if the problem had no perfect solution. Few of the Jane Street traders’ questions had perfectly correct answers. They were testing him for an ability to make messy judgments and act quickly on them—­and not to

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intuitive decisions you make in Magic, condensed down but even more complicated,” said Sam. “Even Magic does not get you there.” The puzzles that the Jane Street traders gave Sam to solve were designed, like the betting games, to expose blind spots in his mind. The one about baseball was the simplest

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every other human being, in some sense. And lots of people who are not in the major leagues are paid to play baseball. “Relative,” the Jane Street trader said, was any second cousin or closer, and “pro baseball player” included both major and minor leagues but nothing else. Sam guessed there were

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sort of person who scored an 800 on their math SAT, and understood that the test was too crude to capture their full aptitude. Like Jane Street Capital, the effective altruism movement had come to Cambridge, Massachusetts, for a reason. Roughly three in four of the people who approached MacAskill after one of

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job on Wall Street for the express purpose of making money to give away. His name was Matt Wage, and he’d been hired by Jane Street Capital. In the presence of strange new games, the relevant thought processes just seemed to come to Sam. In the presence of strange new people, not

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so much—­though it took Jane Street Capital a bit longer to figure that out. That’s something they hadn’t tested for in the interviews. But at the end of the summer

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be analyzed. It compelled them to think quantitatively about qualitative things. To think rigorously about everything—­even a jelly-­bean-­eating contest. After all, what Jane Street was looking for were traders who could think faster and better than everyone else in global financial markets. On the day in question, Sam hadn

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learn how to read other people. Sam believed the opposite was true. “I read people pretty well,” he said. “They just didn’t read me.” * * * ¶ Jane Street Capital, like the other high-­frequency trading firms, felt very strongly that it was better off if the public did not know what it did. “The

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an arcade. In busier moments the din reached the point that one job candidate, being interviewed by phone, complained that her Jane Street interviewer was playing video games. After that, Jane Street instructed its traders to explain before all phone interviews that they weren’t playing video games. “The sound drives some people crazy

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action had moved into a new class of private trading firms shrouded in secrecy. By 2014, when Sam started as a full-­time trader at Jane Street Capital, the financial institutions at the center of markets—­those setting the prices of global assets—­were not the old investment banks but opaque high-­frequency

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a billion dollars for the Florida Panthers hockey team. The guy who created Citadel Securities, Ken Griffin, was worth $5.2 billion, according to Forbes. Jane Street didn’t disclose profits, even to employees, but Sam could see the full record of its trades and guessed that in each of the previous

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in 2021 someone created an ETF that invested in companies whose products were beloved by upper-­middle-­class American women. Without ever tapping outside capital, Jane Street had gone from a few traders with a few million dollars, in 1999, to roughly two hundred traders working with several billion dollars, in 2014

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of his job, the sandwich game was not without its moments. The companies that created ETFs essentially exported the problem of pricing their creations to Jane Street and other high-­frequency trading firms. If some investor showed up and said they wanted to buy, say, $100 million worth of some ETF

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some unusual aptitude for identifying weighted coins. Collectively they flipped coins millions of times a day. The law of averages would eventually enforce itself. But Jane Street still had losing trading days, and losing trading weeks and even, rarely, losing trading months.‡ “The biggest risk was that we wouldn’t find enough

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were engaged “in a constant process of finding and extending the efficient frontier of where computers can replace humans in finance.” The job of the Jane Street trader was not simply to optimize financial markets but to optimize himself, by keeping his attention focused on the most valuable decision he might make

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been automated but could be automated,” said Sam. “It was better than people, because the people had to do it so fast.” Jane Street made money in the sandwich business. Jane Street also made money by finding statistical patterns missed by others in the markets. Of course, traders have sought patterns missed by markets

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for as long as anyone has traded anything. The difference between what happened at Jane Street and what happened on, say, a Wall Street trading floor in the 1980s was one of degree rather than of kind. Data had fully replaced

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tomorrow? Perhaps others had not thought of this? There was no way to answer those questions without running a study of the historical price movements. Jane Street’s traders spent a lot of their time engaged in these financial research projects. It wasn’t enough for the trader to make money. You

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that moment, the upcoming election seemed as if it might be the most consequential election for global financial markets in modern times. The traders on Jane Street’s international ETF desk kicked around ideas about how to trade it. And someone pointed out just how slowly, by high-­frequency trading standards, election

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the states were somehow maximally efficient in their data collection, it seemed likely there was a lag before the results reached the financial markets. “At Jane Street almost everyone had the same intuition,” said Sam. “That it would be surprising if you couldn’t do this.” That is, it would be

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faster than anyone else. Sam recruited young traders from other desks to make themselves expert on local voting data. To each state, he assigned a Jane Street trader to locate the fastest source of election data. One trader took Michigan; another, Florida. And so on. Getting the voting data more quickly

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than everyone else, Sam and his fellow Jane Street traders assumed, was the hard part. The smart trading strategy seemed so obvious that they didn’t give it nearly as much thought. In the

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were indeed able to get a jump on CNN, sometimes by seconds, usually by minutes, and occasionally by hours. “Trump up!” one Jane Street trader would shout, and some other Jane Street trader would sell stocks. Five minutes later John King would confirm the fact, and the market would move. As the evening wore

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outcome, in and of itself, did not suggest anyone had done anything wrong, any more than a good outcome suggested anyone had done anything right. “Jane Street really didn’t like blaming people,” said Sam. “They sort of asked, ‘Did anyone do anything contrary to what they were being told?’ When the

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Street and kept them sufficiently interested and engaged and well paid that they couldn’t imagine doing anything else with their lives except trade for Jane Street. They turned math people into money people without any obvious loss in human happiness. Even the employees who weren’t all that good at

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him a bonus of $1 million. In his reviews, Sam pressed his bosses to paint a picture of his financial future at Jane Street. It would depend, of course, on Jane Street’s overall performance, they said, but ten years in, if he kept on doing as well as he had been doing, he

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to him that he couldn’t refute. Days after his arrival at MIT, for example, he’d met another freshman, Adam Yedidia—­the friend whom Jane Street eventually hired. They’d fallen into a conversation about utilitarianism. Sam argued that it was life’s only sensible philosophy, and that the main reason

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days when US markets were closed—­the action in foreign markets was especially great when US traders weren’t paying attention—­and so on the Jane Street books he had taken negative vacation days. On the trading floor, he’d found himself asking himself a question: What is the likelihood that

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could make a billion dollars.’ And I said, ‘You’re not going to make a billion dollars.’ ” * * * ‡ Which told you something about Jane Street. In 2104, the year Sam joined Jane Street, Virtu Financial applied to the US Securities and Exchange Commission to sell shares to the public. Its prospectus revealed that in 1

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why, when they went looking for young talent, they wanted computer programmers who could speed their machines more than traders who could make risk decisions. Jane Street had never gotten seriously into the US stock market speed games, and perhaps regretted it. Its relative strength had always been in arguably fairer markets

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doing that much good.” At the same time, she’d formed an unsettling attachment, at once full of promise and absent of hope, to another Jane Street trader, Eric Mannes. “Looking back on my relationship with Eric Mannes really makes me cringe,” she wrote later, in an attempt to explain her emotional

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quit—­especially not to go work for a fly-­by-­night crypto trading start-­up. Caroline sensed, rightly, that her departure alerted Jane Street to an alarming new threat. Jane Street and the other high-­frequency trading firms had been fishing for traders in the same ponds as Will MacAskill and the other Oxford

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financial gambles were the same people drawn to the belief that they could calculate the expected value of their entire lives. By Wall Street standards, Jane Street was not a greedy place. Its principals did not flaunt their wealth in the way that the guys who had founded other high-­frequency trading

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sports teams or hurl money at Ivy League schools to get buildings named for themselves. They were not opposed to saving a few lives. But Jane Street was still on Wall Street. To survive, it needed its employees to grow attached to their annual bonuses, and accustomed to their five-­bedroom Manhattan

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effective altruists into the firm was worrisome. These people arrived with their own value system. They had their own deep loyalties to something other than Jane Street. They didn’t have the usual Wall Street person’s relationship to money; they didn’t care about their bonuses in the ways Wall Street

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and watching it rise. She was exploiting the same sorts of inefficiencies in the market for cryptocurrencies that, to exploit in other financial markets, required Jane Street–­level talent and speed and expertise. Sam wrote her a check for $50,000 and sent it to her, no strings attached, so she might

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values of different crypto coins. Her success led Sam to his secret belief that he might make a billion dollars by creating a hedge fund to trade crypto the way Jane Street traded everything. But he couldn’t do it by himself. Crypto trading never closed. Just to have two people awake twenty-­four

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however, by not speaking. Following graduation from MIT, he’d stayed in Boston, working as a programmer for Google Flights. During his final weeks at Jane Street, Sam traveled to Boston just to tell Gary about his plan to make a billion dollars trading crypto for effective altruistic causes. (Sam had converted

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in South Korea and traded in his name,” recalled Nishad, who now saw why maybe it would take Jane Street a while to export radical efficiency to crypto markets. Jane Street would smell legal trouble; Jane Street would at the very least be embarrassed if it wound up as news in the New York Times that

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crypto markets were becoming more efficient every day. The big Wall Street high-­frequency trading firms like Tower Research Capital and Jump Trading and even Jane Street were entering the markets and engaging in the same deforestation they practiced in other financial markets. Even if Sam somehow found more capital, there’d

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or to the other gamblers, and it was exactly what the crypto world wanted. His timing, though accidental, was perfect, as big professional traders like Jane Street were entering the crypto markets and in need of a professional-­grade futures exchange. Sam’s choice of location, also accidental, was perfect too: Hong

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no more than prurient interest.¶ Everyone noticed that one of its contributors was the current girlfriend of Eric Mannes, Caroline Ellison’s former boyfriend at Jane Street. The previous month, the couple had visited the Bahamas and stayed with employees of Alameda Research at Albany: Had the leak somehow originated inside the

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school math competitions. A copy of Forbes magazine, with Sam’s face on the cover. And a box of business cards, from his time at Jane Street Capital. It was Manfred that caught Constance’s eye. Manfred was Sam’s stuffed animal. He’d had it since birth and refused any substitutes, and

Breaking Twitter: Elon Musk and the Most Controversial Corporate Takeover in History

by Ben Mezrich  · 6 Nov 2023  · 279pp  · 85,453 words

money and the importance of freedom of speech. Jack was once again no longer the company’s CEO—likely forced out by Elliott Management, a hedge fund with a major financial interest in Twitter. He had handed the reins off to the company’s chief technology officer, a previously obscure engineer named

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knowledge that he had been feuding with Twitter’s board for some time; primarily, he had been in a battle with Elliott Management, the activist hedge fund managing over $50 billion, who owned around 4 percent of Twitter’s shares. It was no secret that Elliott had been searching for a replacement

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in the tech press, was considered one of the most brilliant young entrepreneurs of the past decade. After first making a name for himself at Jane Street Capital, then starting his own quantitative trading firm, called Alameda Research, at thirty, SBF had founded FTX, one of the fastest-growing crypto exchanges in the

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company’s board of directors. He was taking aim at Facebook—and Zuckerberg wasn’t known for playing nice with competitors—and there were always hedge fund activists, competing car companies, even the Tesla faithful, who were upset at Elon’s diverging interests, some even calling for his ouster as the head

DeFi and the Future of Finance

by Campbell R. Harvey, Ashwin Ramachandran, Joey Santoro, Vitalik Buterin and Fred Ehrsam  · 23 Aug 2021  · 179pp  · 42,081 words

curve Figure 4.3 Logistic/sigmoid bonding curve Figure 4.4 Different bonding curves for purchases and sales Figure 4.5 The mechanics of automated market makers Chapter 6 Figure 6.1 The Mechanics of MakerDAO's DAI Figure 6.2 Collateralization Ratios in Compound Figure 6.3 Savings and Lending Rates

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over the traditional financial system. The authors also explain the in-depth workings of many of the most important DeFi protocols today, including stablecoins, automated market makers, and more. I recommend this book to anyone interested in learning more about Ethereum and DeFi protocols. Vitalik Buterin Co-founder of Ethereum I INTRODUCTION

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many smart contract applications in which demand for exchange liquidity cannot be dependent on a counterparty's availability. An innovative alternative is an AMM. Automated Market Makers An AMM is a smart contract that holds assets on both sides of a trading pair and continuously quotes a price for buying and for

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holds 200 of asset A worth 400 ETH. In this case, the contract's return is 100 percent. Figure 4.5 The mechanics of automated market makers If, however, the contract does not sell asset B, the contract's value would be 600 ETH. The contract has an impermanent loss equal to

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orders and a maximum slippage parameter for market orders in an effort to mitigate the slippage associated with price moves or front-running. dYdX provides market makers and traders the open-source software and a user interface required to interact with the DEX. Having dYdX do the order matching introduces a certain

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to certain assets with reallocations controlled by a single trader. Because these portfolios are actively managed, they function much more like active mutual funds or hedge funds. The benefits are similar in that the portfolio manager has a predefined set of assets to choose from, and the users benefit from this contract

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solve the same problem: how to create the best decentralized venue to exchange assets. The DEX landscape on Ethereum consists of two dominant types: Automated Market Makers (AMMs) and order-book exchanges. Both types of DEXs vary in architecture and have differing risk profiles. AMMs, however, are the most popular DEX to

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also often have large spreads due to the presence of low-sophistication market makers. Whereas traditional finance is able to rely on sophisticated market makers including Jump, Virtu, DRW, and Jane Street,21 order-book DEXs are often forced to rely on a single market maker for each asset pair because of the nascency of the DeFi market

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complex compute infrastructure required to provide them with on-chain liquidity. As the market evolves, we expect these barriers to break down and more traditional market makers to enter the ecosystem; for now, however, these obstacles create a significant barrier to entry. Regardless, both AMM and order-book DEXs are able to

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. Jump, Jump Trading, LLC, 2021, https://www.jumptrading.com/; Virtu, VIRTU Financial, 2021, https://www.virtu.com/; DRW, DRW Holdings, LLC, 2021, https://drw.com/; Jane Street, https://www.janestreet.com/. 22. Nathaniel Popper, “Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes,” New York Times, January 12, 2021, https://www.nytimes

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parallelization. Also known as sharding. Ethereum 2.0 takes this approach in combination with a proof-of-stake consensus algorithm. Impermanent loss. Applies to automated market makers (AMM), where a contract holds assets on both sides of a trading pair. Suppose the AMM imposes a fixed exchange ratio between the two assets

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. Parties must agree on the source of the information. Order book matching. A process in which all parties must agree on the swap exchange rate. Market makers can post bids and asks to a decentralized exchange (DEX) and allow takers to fill the quotes at the pre-agreed price. Until the offer

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and t refer to figures and tables, respectively. A Aave, 89–94, 94t–95t Address, 157 Airdrop, 157 Algorand, 139 Amazon, 3 AMMs, see Automated market makers Ampleforth (AMPL), 27 Anti-money laundering (AML), 157 API oracle, 137–138 Apple, 10 Apple Pay, 10 Arbitrage, 112–113, 113f Asymmetric key cryptography, 20

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–21, 157–158 ATMs (automated teller machines), 10 Atomic, 30, 158 Augur, 137 Automata, 136 Automated market makers (AMMs), 51–54, 53f defined, 158 and DEX risk, 142 Uniswap as, 95, 97f, 99 Automated teller machines (ATMs), 10 B BalanceOf(address) method, 37

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, 133 C Cap, 143 Censorship resistance, 27 Central Bank of Iraq, 14 Centralized control, 3, 64–65 Centralized financial systems, 2–5 CFMMs (constant-function market makers), 103, 142–143 CFTC (Commodity Futures Trading Commission), 147, 148 Chainlink, 24, 120, 137 Checksums, 177n5 Chip-and-pin credit cards, 10 Coinbase, 35, 77

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, 67–68 Compound Governance, 80, 86–87 COMP tokens, 86–87, 102 Consensus protocols: and blockchains, 19 defined, 160 proof of work, 12 Constant-function market makers (CFMMs), 103, 142–143 Contract accounts, 30, 160 Correlated prices, 54 Cost of corruption, 137 Counterparties, 93 Counterparty risk, 130 Credit cards: chip-and-pin

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, 109 Internal Revenue Service, 149 Internet banking, 10 Invariants, 95–98, 165–166 Iraq, 14–15 Iraqi Swiss dinars, 14–15, 14f iTokens, 120 J Jane Street, 144 Jump, 144 K Keepers, 49, 59, 79, 166 Kinks, 81 Know your customer (KYC), 166 L Lack of interoperability: in centralized financial systems, 5

More Everything Forever: AI Overlords, Space Empires, and Silicon Valley's Crusade to Control the Fate of Humanity

by Adam Becker  · 14 Jun 2025  · 381pp  · 119,533 words

.” He took Will’s advice—and his philosophy—and ran with it. He adopted effective altruism wholeheartedly, taking it with him to a job at Jane Street, a Wall Street firm specializing in high-frequency trading. After a few years working there as a trader (he claimed that he donated about half

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money: within two years of starting his new cryptocurrency trading firm, Sam had turned his millions into billions. He recruited friends from his time at Jane Street, and from the EA community, to join him in the upper echelons of his company. He tapped MacAskill to help run the charitable foundation he

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customers’ private account funds to cover trades made by Alameda Research, which Bankman-Fried (aka SBF) and his EA gang were still running as a hedge fund alongside the trading firm. When Alameda’s funds crashed with the crypto market in fall 2022, FTX’s customers were left holding the bag, with

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his circle, things that didn’t quite make sense on the face of it. For example, Caroline Ellison, SBF’s ex-girlfriend, former colleague at Jane Street, and former CEO of Alameda Research, seemingly ran a strange Tumblr account. Media reports on the account, titled “worldoptimization,” collected extremely compelling evidence that Ellison