Today, you probably know who Sam Bankman-Fried and FTX are, and the details of why he and his company are front-page news are emerging at an amazing pace. Here’s the short version: Bankman-Fried—a boyish-looking cryptocurrency baron known commonly as SBF—announced that his lauded cryptocurrency exchange, FTX, had lost at least $1 billion in client funds, sending the crypto market into a tailspin (Fox Business, 11/16/22). The company, once the third-largest cryptocurrency exchange (AP, 11/16/22), has filed for bankruptcy. Lest one think this is a debacle that only affects crypto bros, Treasury Secretary Janet Yellen warns that “the sector’s links to the broader financial system could cause wider stability issues” (New York Times, 11/17/22).
How could this happen? How could no one have seen this coming? These are the questions many people are asking. One problem is that in the months leading up to Bankman-Fried’s transition from financial genius to possible financial criminal (Yahoo Finance, 11/14/22), he received little scrutiny in the media. On the contrary, he was celebrated.
‘Pragmatic style’
The New York Times (5/14/22) largely embraced Sam Bankman-Fried’s self-presentation as “a straight-talking brainiac willing to embrace regulation of his nascent industry and criticize its worst excesses.”
Among the silliest suck-ups came from the New York Times (5/14/22), in which David Yaffe-Bellany, the paper’s cryptocurrency correspondent, said that Bankman-Fried’s “pragmatic style” came from his parents, who “studied utilitarianism, an ethical framework that calls for decisions calculated to secure the greatest happiness for the greatest number of people.” Yaffe-Bellany added that “Bankman-Fried is also an admirer of Peter Singer, the Princeton University philosopher widely considered the intellectual father of ‘effective altruism.’” (Singer has been criticized for his eugenics-like approach to disability—FAIR.org, 1/20/21.)
Yaffe-Bellany was also widely lambasted for providing media cover for Bankman-Fried even after his empire collapsed (New York Times, 11/14/22). As Gizmodo (11/15/22) put it:
The new article in the New York Times by David Yaffe-Bellany lays out the facts in ways that are clearly beneficial to SBF’s version of the story and leaves many of his highly questionable assertions without proper context or even the most minimal amount of pushback. The result isn’t to illuminate the shadowy world of crypto. It reads like…the Times had conducted an interview with Bernie Madoff after his Ponzi scheme collapsed and ultimately suggested he just made some bad investments.
Bloomberg (4/3/22) called Bankman-Fried “a kind of crypto Robin Hood, beating the rich at their own game to win money for capitalism’s losers.”
The conservative New York Post (11/15/22) used Yaffe-Bellany’s reporting to tweak the establishment Times for its coziness with someone who may face criminal indictment. But the Post‘s sibling paper, the Wall Street Journal (10/30/22), had just weeks earlier given Bankman-Fried free, uncritical space to pump out optimism about cryptocurrencies, including the idea that value drops in crypto were just part of a general economic fluctuation: “It wasn’t just crypto…. By and large what we saw this year was a broad-based risk-asset selloff, as this monetary inflation reared its head, became noticeable enough to inspire policy change.”
Bloomberg (4/3/22) likewise had painted Bankman-Fried as an eccentric financial whiz kid, whimsically frugal with a “Robin Hood–like philosophy,” while Reuters (7/6/22) ran with his claims that not only did he have “a ‘few billion’ on hand,” but that he would graciously use it to “shore up struggling firms.” An accompanying photo of Bankman-Fried with a T-shirt and disheveled hair made him look like the reincarnation of Abbie Hoffman.
Barron’s reran an AFP story (2/12/22) that, again, highlighted Bankman-Fried’s “spartan lifestyle,” his vegan diet and his casual wardrobe. Matthew Yglesias (Slow Boring, 5/23/22), an economics commentator and a graduate of Slate and Vox, wrote, “I think [his] ideas, as I understand them, are pretty good.” None of these pieces really probed whether his business was sustainable.
Shadowy sector
How on Earth did this T-shirt-clad man charm American media into thinking that he could manage billions of dollars in wealth, based on an intangible commodity that has no intrinsic value? Analysts have long tried to get the media class to understand that crypto has many inherent problems (Jacobin, 12/26/17, 10/17/21), that the crypto market’s value has tanked (CNBC, 6/15/22), that Bitcoin wealth is highly concentrated (Time, 10/25/21) and that Bitcoin, despite being Internet-based, is highly environmentally destructive (Guardian, 9/29/22).
One might think—or hope—that, after Enron, WorldCom, Bernie Madoff, Jordan Belfort and the 2008 financial crisis, that the business press could harbor skepticism about financial and business leaders in general, but particularly those in a shadowy, emerging sector known for its instability (Forbes, 5/10/22) and its susceptibility to scams (Forbes, 9/23/22).
Bankman-Fried, unfortunately, was a dangerous combination of factors that could win over reporters. He was optimistic about a troubled financial sector. He was making billions while spouting altruistic ideas and remaining personally thrifty, a kind of mysterious being who could be presented as a poster child for a more ethical version of capitalism. His insistence on casual dress suggested that he was just so smart, his brain operated above the mundane details of regular business.
His image was simply fun to write about. And this all made for the kind of good copy—and photographs—that will make an editor happy at deadline time. But this allowed his image to be the main focus for the press, rather than the goings-on of his business.
Doug Henwood, host of KPFA’s Behind the News and the author of Wall Street: How It Works and for Whom, told FAIR:
The business press is rarely skeptical about the speculative heroes of the moment. There are exceptions; if you read carefully, you can get a good critique. But the general culture is boosterish. Just a few months ago, SBF was a genius. Elon Musk, too, though his antics at Twitter are making that cult harder to sustain. Before that it was Elizabeth Holmes and her magical blood-testing machine. Go back a couple of decades and it was Ken Lay and Enron (celebrated by none other than [New York Times columnist] Paul Krugman, who’d also been paid a consulting fee by the company).
There are a lot of reasons for this. Many business journalists identify with the titans they cover—some even aspire to join them, as did former New York Times reporter Steven Rattner, who became an investment banker. Then there’s the fear of alienating your sources—the dreaded loss of “access.” And then there’s the general reluctance to be the skunk at the picnic—when markets are frothing, it’s more fun to play along than play the critic.
NBC (11/16/22): Bankman-Fried “is hardly the first wealthy donor, and certainly won’t be the last, whose ideological agenda is difficult to disengage from business motives.”
As NBC (11/16/22) noted, Bankman-Fried’s wide spending bought him wide influence, as he
visited the White House, attended a congressional retreat, and held countless meetings with lawmakers and top regulators. He got chummy with Bill Clinton after paying the former president to speak at a conference. He spent $12 million getting a referendum on the ballot in California. And he earned praise during Senate testimony from Sen. Cory Booker, D-N.J., for a “much more glorious afro than I once had.”
In just two years since Bankman-Fried’s first political donation, his money hired dozens of top-flight lobbyists and political operatives, made major investments in newsrooms like ProPublica and Semafor, and made him the second-biggest Democratic donor of the 2022 midterms, behind only the 92-year-old financier George Soros. He said $1 billion would be a “soft ceiling” for his spending in 2024.
The whole mess is sparking a conversation about whether cryptocurrency markets demand tighter and more robust regulation (Fortune, 11/14/22; Washington Post, 11/17/22). But there needs to be a discussion about the media’s role in this as well. Reporters should be skeptical of crypto market actors, for all the reasons stated above, but they also should be skeptical of business leaders more generally.
Good public relations is as important to a business’s bottom line as the strength of its product. Reporters and editors need to fight the urge to be a part of that.
Doug, here’s my attempt at one of your one line zingers, let me know what you think, I promise I won’t cramp your style ever again….peace!
“A tongue and cheek that was blocked and chained.”
One more example in a list going back many centuries of financial so-called experts and investors (gamblers with a posh label) having their ignorance and stupidity exposed. Bernie Madoff should, perhaps, never have been prosecuted: offering returns that are too good to be true, greedy people nevertheless hand over their money in abundance then complain bitterly when they are scammed. That’s capitalism. Do you want a better system? It will require a socialist revolution.
Oh stop it and I couldn’t disagree more. Our great country was founded on principles of individual rights and individual opportunities based upon individual initiative and individual accountability, with emphasis on “opportunities”, not “guarantees”. Government guaranteed income or benefits with no individual initiative or individual accountability is socialism, plain and simple, nothing progressive about that.
Which “great country” is that? If you are referring to the hyper-individualist, community-shunning USA, it has markedly poor social mobility, meaning that the “opportunities” you write about are considerably less available than in many other countries. Socialism is the essence of progression, while capitalism keeps the working class poor (American wages have been stagnating behind inflation since the 1970s). The World Economic Forum (the one that meets in Davos) put the USA at 21st most socially mobile countries. Hardly a progressive nation. By 2020, the USA had fallen to 27th.
https://www.visualcapitalist.com/ranked-the-social-mobility-of-82-countries/
Interesting and here we still have a pure and honest true believer. You must have had many sleepless nights and cried like a baby back when Deng back in 1976 started the post‐Mao reform and subsequently China basically became a market driven and capitalist economy. No worries though, you have hope. Back here in our Western society we have an energy policy dictated by an autistic high school dropout from Sweden and a former bartender named AOC. What could go wrong?
FAIR needs to do a better job of moderating.
The above reply was NOT written by me, rather by one of the trolls – likely State Department or Ukrainian – who have been rampant at sites like Moon of Alabama or Grayzone (i.e.; sites that run afoul of the Empire’s narrative managers).
Again – the above reply to Rebecca was NOT from me.
You could also add that capitalism didn’t exist at the nation’s founding. The industrialized version was grafted on late in the 19th century, and we’ve been paying the horrid price ever since, ruled by capitalist oligarchs who’ve seized every lever of power.
Of course the other side of the coin on this story is not new for other reasons: Greece, Venezuela–and even earlier in history, Cuba, North Korea, the Soviet Union–all followed the same road to financial ruin–the road of Socialism.
Yeah, the kind of ruin in Cuba that, despite a vicious US embargo since 1959, has a world-class healthcare system far superior to the one in the USA.
Tell me, which ‘flavor’ Kool Aid do you drink ? Take a peak at how many Cubans migrate to the United States EVERY month. Always watch what they do – not what is said.
No sh*t Sherlock. People tend to flee places that are sanctioned, sabotaged, embargoed, regime changed and punished by the regional hegemon. See: Venezuela. In any case, those are the precise goals of the sanctions – to cause immense pain and suffering in the population so that they’ll either flee or attempt to get rid of the government that Uncle Scam doesn’t like.
https://www.mintpressnews.com/real-reaso-us-embargo-against-cuba/282742/
Even a comedian like Lee Camp apparently knows more than you. And you miss another point – many of those fleeing are coming only to work and send money back home.
“This begs the question, what is the point of the embargo on Cuba? What are we hoping to achieve? To punish a dead Fidel Castro for his sins? Maybe to punish a dead Che Guevara for his sins? Perhaps punish Cuban cigar makers for being so damned good? (I had an American cigar last week – tasted like sucking the tailpipe of a burned-out Chevy Impala filled with dead squirrels.)
Actually, the U.S. government once admitted what our real goals are. As covered in Multipolarista, an internal memo from the State Department in 1960 said the Cuba embargo was meant “…to bring about hunger, desperation, and overthrow the government.” So our stated goal was to bring about hunger and desperation in the innocent Cuban people. And in fact, that is still the U.S. government’s intended goal with economic sanctions around the world. Just a few years ago, then Secretary of State Rex Tillerson admitted it onstage at an event when talking about our sanctions on North Korea. He said, “They have had over 100 North Korean fishing boats that have drifted into Japanese waters. Two-thirds of the people on those boats have died. …They’re being sent out in the winter time to fish because there’s food shortages. And they’re being sent out to fish with inadequate fuel to get back. So we’re getting a lot of evidence that these sanctions are really starting to hurt.”
He proudly said we’re winning against North Korea because the U.S. is starving poor fishermen to death. What kind of a psychopath would say such a – you know what, don’t answer that.
So who does our economic war on Cuba impact the most? The International Labor Organization told the U.N., “The direct and indirect effects of the embargo on the Cuban economy and people affect not only the enterprises, but even more their workers and the population in general. The International Labor Organization is particularly concerned about the impacts on children, workers and the elderly.”
Children and the elderly – you know, the people I view as the real enemies. Those damn Cuban three year-olds. (If I had a nickel for every time one of them attacked me in a car park, or hurled dirty, filthy lies at my grandma, I’d be a rich man.)
So while the U.S. is busy shipping death, disease, and starvation around the world – some in Afghanistan, some in Venezuela, some in North Korea – Cuba has been busy exporting their OWN horrible products around the world, like… doctors.”
Oh how precious LOL. Now base on the above comments exactly which Tom Q Collins is this ? The real one (if there is such a thing), the so called impostor or the total charlatan that accurately covers all three of the above ?? You are quite a piece of work whoever you are !!
Bradley Grower,
how many Ukrainians flee their country every month? Do try to consider the logical implications of your arguments, will you?
Are you saying they all went down of their own accord? What about Anglo-American Alliance attempts to sabotage efforts at redistribution and nationalization of wealth at every turn, everywhere on the planet? Read some non-revisionist, history, Bradley! Read how many financiers and industrialists outside of Germany endorsed and invested in the Third Reich. They have immense power and intend to keep it by any means. National Socialism is a monopolist’s wet dream. Nothing has changed. You’re a patsy if you believe we have free enterprise.
Lets be clear Sam Bankman-Fried was the largest contributor (more than $70 million) to Democratic politicians and liberal-leaning political-action committees ahead of the 2022 midterm elections. (Source: the Center for Responsive Politics, a nonpartisan group that tracks campaign donations). There is some very serious mislabeling, critical missing facts, and cherry picking contained with this article. Once again I am very disappointed in ‘FAIR’.
Barry, it is so predictable that it is almost tautological to find out that a corrupt businessman gave a chunk of his stolen money to the political party in power, no?Could it be that Bankman-Fried was trying to curry favor and influence with lawmakers and regulators – using the stolen cash? I don’t see how pointing that out detracts from the broader point Ari made here, not at all.
An excellent analysis, and especially good at relating the current crypto mania to recent history of like events. I can only suggest one additional point, namely that this is almost exactly what occurred leading up to the Great Crash of 1929. Thus the history goes back much further. Are we doomed to repeat this over and over?
Read John K. Galbraith’s excellent analysis of that period (“The Great Crash”), and see nearly identical observations. For example, the phenomenon of the worthless South Sea Bubble (which did absolutely nothing, but garnered a fortune due to speculation).
Again, an excellent article. Thank you.
Hey Mr Obvious you missed the most important point While lightly touched on, in two sentences, at the very end of the article. The politicians were all paid off. Simply put corruption – play for play – and that’s the real story regarding SBF.
To Barry,
Are the two – political corruption and a lazy incompetent lying-ass corporate press – mutually exclusive? Nope. Therefore your continued insistence that it is ALL about an either or proposition, is nonsense. We can not get rid of political corruption without being informed about it to begin with. Being informed of political corruption entails a rigorous investigative press, one that is not in bed with politicians. Ari was just pointing out the ways in which the two intercept, how one imposes a continuance of the other. Nuff said about it, I’m not an idiot Barry….and aware of the real reason you’re here to browbeat Ari – keyword “Israel.”
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… because the only thing that matters to Vinz Arthur is money. More than family, friends, love, joy…
Must be nice 2B a trust fund person and not having to worry about money or paying the rent.
You sound like someone who’d know. Trust fund supplemented by taxpayer funding for social media troll armies is the new gig economy. How do they pay you? By the hour, by the word or by the post?
FAIR really needs to set up a registration system. Too many trolls stealing too many identities and/or making up BS handles and leaving drive by comments with no accountability.
I’m certainly reconsidering any further donations until they at least address it.
Wow, after reading this thread, the level of nuttiness coming across with many of these comments is truly staggering. I am struck on one particular male, apparently named “Tom” going all of the map, ranting in several comments as an apparent know it all, calling people names in the process and suggesting FAIR cancel out anyone who disagrees with his thoughts. Does he really assume or think everyone reading FAIR agrees with his every thought? Regardless of that answer is it proper to censure all of them? Pretty narrow minded from my perspective as I enjoy reading different viewpoints within the boundaries of reasonableness. Broadly I believe the anti-free speech culture we see in society today permeates on both sides of the political spectrum. The problem is far to many believe tolerating — or even being exposed to — opposing viewpoints is an injustice to be stopped.
Crypto, being 100% farcical, is not a market. Regulation won’t do. Destruction is in order.
Is it possible for scam victims to receive their money back? Yes, if you have been a victim of a fraud from an unregulated investing platform or any other scam, you may be able to reclaim what was stolen from you, but only if you report it to the appropriate authorities. You may reclaim what you’ve lost with the appropriate strategy and evidence. Those in charge of these unregulated platforms would most likely try to persuade you that what happened to your money was an unfortunate occurrence when, in reality, it was a sophisticated theft. If you or someone you know has been a victim of these situations, you should know that there are resources available to assist you. Simply do a search (r e v e r s a l p r o c o m) . It is never too late if you have the right information, your sanity can be restored.
This was a very useful and interesting article. Thanks much Ari.
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