This makes a critical point, one that needs to be taken to heart societally at large, but I feels like it undercuts itself by burying its main arguments. The problem isn't just crypto, or business, but rather something about modern society at large -- academics, politics, the workplace, and so forth and so on, celebrity or not. There's a sort of naive head in the sand acceptance or embracing of hype that pervades everything, without enough critical caution or skepticism. SBF/FTX is a good example but by framing the article so strongly around it the broader message is diminished somewhat.
> There's a sort of naive head in the sand acceptance or embracing of hype that pervades everything,
I don't think this is true. I think that people who are selling things generate hype for those things that they're selling, and our media not only depends on those sellers to pay for ads, but additionally is owned by people who are also invested in those things that are being sold.
I think this can easily be misinterpreted as everything being hyped up, rather than everything being designed to trick you into supporting things that benefit people who sell, whether they're politicians or toilet-brush sellers. This is happening because our politicians, toilet-brush sellers, and media are owned by the same people. They rely on you buying in, or at least not being able to organize or sustain an opposition. We've allowed the world to consolidate so much that separating sales and news is impossible. They're operating from the same address.
Main point: not everything is being hyped. Scams that benefit the people who own the media that hype spreads through are being hyped.
Journalists are human and as such also fall to the same pitfalls of most people. So they fawn over Apple, or Google or a new Show on Netflix --reflexively. There are some who do do in-depth analysis and some of those who do do analysis go overboard and go full-on post-modernist/intersectional on their subjects when all we want is a skeptical and more or less objective approach to reporting. We don't want "narrative" and storytelling --that's for longform writing.
> > There's a sort of naive head in the sand acceptance or embracing of hype that pervades everything,
Speak for yourself, I was saying this guy was going to end up in black site prison in the Summer of '22 as CONbase was looking like it was going to be insolvent, SBF's meddling in the US political system just underscores the MO of the well-heeled of SV, VC and political circles. In many ways this represents what that class does in any ecosystem: it does it in the stock market, the energy market, pharmaceutical drugs, Ag seed IP etc... it's all just a means to an end.
Why weren't we having this conversation with memestocks and it's blatant collusion between the hedge fund World and regulators and even the Stock Market itself when it pulled the plug as it suffered too many one day loses? It almost makes me think this was intentional, a sort of deliberate narrative to push to ignore the blatant level of grift that is wide-spread in this economic system. The only question is cui bono?
> Main point: not everything is being hyped. Scams that benefit the people who own the media that hype spreads through are being hyped.
Yield farming was hyped in every conceivable manner, and it was HEAVILY resisted in the Bitcoin community because we had seen some variation of this before; Celcius and 3 arrows were also pushing this scam and were equally vilified at that time for the scam that they were, in fact when someone explained to me what Caradano was I felt it was just another MLM playing out in token form. I initially tried to talk people out, but I've been around long enough to know that getting burned is what it often takes for people to learn why this tech was invented in the first place.
People won't listen when everyone is getting paid as it feeds off of some basic Human urges: greed. It isn't until it all comes crashing down that people who once hailed as genius by the media or VC World in SV, likely paid to do so, are seen for the scammers that they are.
> This is happening because our politicians, toilet-brush sellers, and media are owned by the same people. They rely on you buying in, or at least not being able to organize or sustain an opposition. We've allowed the world to consolidate so much that separating sales and news is impossible. They're operating from the same address.
Well said, I highly recommend this series on the Murdoch's [0], I wasn't aware of how far Rupert's reach was in some key events in History (Berlin Wall, early 2000s Hong Kong) in order to sell a specific narrative, and I only vaguely recall how sensationalist his programming like 'A Current Affair' was at creating Fake News for sensationalism that drove sales.
Hell, it even seems like what Elon is doing at Twitter is exactly a page out of Murdoch's book with a paper he bought in the UK.
Exactly. It also doesn't help that >90% of "journalists" have no clue what they're talking about. But it doesn't matter for revenue because 99% of their readers know even less.
Journalist's job isn't to master a field they cover (although this can help a lot), but to know what questions to ask to whom. Lack of skepticism and fact checking is, indeed, sins of the profession, but that's it.
This requires knowing what you're talking about because, as OP alluded to, everyone is hyping everything, including acedemics and CEOs. In that enviroment, how does a jouranlist know who to talk to and what questions to ask? The only way in today's climate is to learn the subject, something which returns lower (perhaps negative) ROI vs posting clickbait hype content. "New startup claims quantom tech could crack your bank account password in just 3 seconds" will do better and requires less knowlege and effort than an a real investigation.
> The only way in today's climate is to learn the subject,
Somewhat, sure, but they aren't going to become an expert.
They are reporters. Journalists. They report what people do and say. They present their findings. Hopefully they find people that are willing to cast doubt on a subject, which in the case of crypto, they did. You had many articles from journalists reporting back on problems with crypto.
We pretend like FTX was something that was well known and well established, yet I didn't hear much about it here prior to everything collapsing. And suddenly, all these armchair experts come out the woodwork, apparently well aware of all the problems with FTX but apparently never spoke up once and didn't think it was news worthy. The experts are out there, but apparently none how how to talk to reporters.
> "New startup claims quantom tech could crack your bank account password in just 3 seconds" will do better and requires less knowlege and effort than an a real investigation.
Let's ignore all the "real investigations" that happen.
They’re job is to ask the right people the right questions.
Logically I’d you’re covering some topic a reporter should seek out contrarian opinions. Not because they’re right, but because they provide another perspective.
They don’t even do that. Some article about crypto will just talk to crypto companies and fans.
But I suspect the real reason is article like “Some people like crypto and others don’t” doesn’t sell ad space.
> Journalist's job isn't to master a field they cover (although this can help a lot), but to know what questions to ask to whom.
The modern corporate journalist's job is to know who and what to ask so propaganda can be constructed according to the wishes of the corporate-political complex.
This person paid fealty to the regime, ergo the job of journalists was to pump the scam and silence questions and concerns until the ruling class is not left holding the bag. Whereas if a billionaire fails to do those things, then the job is to find negative things to print and minimize the positive.
> Lack of skepticism and fact checking is, indeed, sins of the profession, but that's it.
On the contrary it is the very core of the profession, and it's how it's always been. The idea of the professional journalist as an impartial and unbiased truth seeker and reporter of news is itself propaganda.
Some do a great job, like Matt Levine at Bloomberg or Felix Salmon. Just because of the Gell-Mann Amnesia Effect doesn't mean incompetent journalists should get a free pass, or manifestly corrupt pseudo-journalists like Paul Krugman as shown in the article when he was simultaneously taking money from Enron and lauding them.
> 1. What did I do? In early 1999 I was asked to serve on a panel that offered Enron executives briefings on economic and political issues. As far as I knew at the time, they genuinely wanted to learn something. I resigned from that board in the fall of 1999, when I accepted an offer to write for the New York Times.
It's funny to post such a clear falsehood when talking about Gell-Mann amnesia.
I think your comment is fantastic, and it made me think of a curiosity:
Matt Levine is an excellent journalist because he's not a journalist historically, writes about a topic he knows in depth, but Krugman supposedly also writes about what he knows, but is just plain (as you cited) corrupt to a disgusting extent.
You see the huge problem we from journalism have when even in a place like HN people can't discern between reporting and opinion on the news. Levine is terrific, but he isn't a reporter. His job as columnist is to give context and his opinion on subjects he's an expert on, not to report events.
Most people can't tell the differences between a reporter and an editor or a columnist. They are, like the parent commenter, ignorants on this matter. And yet they complain vigorously about something they don't even comprehend. It's fascinating if not terrifying.
On the one hand, Matt Levine writes interesting and insightful articles and I feel I learn from reading them. On the other hand, Levine also had multiple contacts with FTX and SBF including lengthy interviews and he seems to not have detected the FTX fraud early. It also seems like the fraud was, in retrospect, pretty obvious, SBF acknowledged to Levine that he ran a Ponzi scheme in an interview - and that was kind of it. Depositors were depositing their FTX money directly to Alameda's bank account and nobody noticed. In some sense it seems like nobody was actually doing investigative journalism.
Well, I think FTX and Alameda (specifically SBF) certainly realized where the money was coming from. How could anyone, much less a trading firm, be unaware of an extra 8 billion dollars in their accounts?
As for journalists - I'm not sure how exactly they would have known to discover this point. It seems obvious after the fact, but who would think to check "Let me make sure deposits actually go to the business I think they do"? Instead, what I mean here is that there were incredibly obvious signs of wrongdoing and I would expect that a critical and competent investigator would discover at least one such sign, write about it and be motivated to find more. That seems not to have happened which makes me think nobody was actually investigating a new startup with billions of dollars in an area rife with fraud - which seems like a pretty big condemnation for the class of people whose job is to investigate and analyze companies in that industry.
90% of "tech journalists" wouldn't be worthy of the title.
When I look at the writing and output from any particular text media journalist, particularly on the subject of many things related to global geopolitical issues, I ask myself, "is this something that would be seen as neutral and impartial, ethical journalism by Steve Coll?" [1]. Often the answer is no.
Same vibe in medicine. Doctors and medical researchers carry a great weight of authority. Some medical treatments can be mainstream for years, before research finally self-corrects. Lobotomy, opioids, and more.
Regarding opioids, I recall that in the mid `90's when I listened to about 4 hours of NPR during work every day the host (Dianne Ream?) had reps from Purdue Pharma (or one of the other opioid purveyors) in which the pharma reps were basically saying that doctors weren't prescribing enough pain medication for their patients. I recall the host really challenging them on each of the points they were trying to make, which was out of character for her and stuck in my mind.
Point being, I expect that at least some of the guests are arranged without much input from the hosts. There must be heavy politicking involved to get bandwidth in mass media, and the people actually doing the work (running interviews or writing articles) can only push back to the degree that they have some degree of control over the network or channel.
If you want a striking example of this, look at the interview Ben Shapiro gave to the BBC a few years back. Whatever you think of Shapiro, he has a masterful understanding of how American media works (I believe his Daily Wire is among the top shared sites on Facebook for instance), but he is clearly off-balance in a British interview. The interviewer repeatedly asks questions and doesn't allow Shapiro to dodge them which eventually results in Shapiro becoming too agitated to finish. It was really illuminating on a few levels.
Shapiro was recently interviewed by Lex Fridman, and Fridman asked him about this interview specifically. He said he hadn't prepared properly as he was not aware of how "combative" the interview style would be vs. the kind of interviews he was used to thus his showing was poorer than usual.
I remember the interviewer as being firm but polite about it. But I think it's a bit ironic considering that Shapiro posted videos to his own youtube channel with titles like "Ben Shapiro destroys liberal college student" or something to that effect. I believe it was one of the questions in the interview. I thought combative was his forte.
I’ve worked with the folks in public affairs at a Forbes 500 company before.
Plenty of what you read as “reporting”, which to the reader appears as actual news, is carefully planned corporate stories that are shopped around to various contacts in the media until someone bites. This is described as “organic media” (only because it’s not paid for), but it’s mostly directed by the companies themselves.
In most cases with avian flu the thing they are scared about is not you getting sick but birds around you catching it.
So while birds don't care about borders potential sick bird carcass does.
Avian flu is not great for farms, if there is a breakout you pretty much cannot have your birds outside. And if your flock is infected they will be gassed and destroyed which no one wants to happen. Hence why they are careful.
This core issue is one that surrounds a lot of investments/companies: A lot of "smart people" like (or hate) this, so if I question it, they will think I'm dumb or not with the "in crowd." Basically, every financial scandal you can think of in the past 30 years had the press absolutely excited about it and pumping it. Enron, Maddoff, FTX, Theranos, WorldCom, Tyco, etc. One problem I've encountered is that a lot of people in the press are not trained in the field they are reporting on. So, they actually have no idea if you're blowing smoke.
I worked with a newspaper and major publisher earlier in life and was shocked at how ignorant people that we read every day are on the very topics they are reporting on. Not to mention the abuse of alcohol and drugs that happens in the newsroom, which was baffling. The media does a lot better when it is looking at events and reporting on that rather than trying to derive some narrative or to get a scoop, especially when it involves business or government fluff. It doesn't help that a lot of journalists have what feels like a need for validation, but at the same time have big egos. All of these big scam artists know that and feed them.
Hype wasn't called that, but there was plenty of "hysterias" and "manias" previously in history. Look at the Dutch Tulip Bubble or the reporting that led to the Spanish American War. Not saying it's not a problem, but it is not about modern society, it's about human nature.
Our country sucks up to elites, because their vast wealth makes them gods.
The fourth estate is totally owned by the elites, and there is no real dissent with the views of the wealthy. That's why global warming is only now recognized at all (three decades late), because it is actually on some of their radars now.
I think social media is directly responsible for that.
I was just listening to some Christopher Hitchens videos yesterday and was reminded of just how articulate and elegant his arguments were.
Compare that to modern "intellectuals" like Jordan Peterson. Complete rabble rousers.
Social media has allowed cowardly arguments to be made mainstream and that has weakened our total global human B.S. detector by a ton.
Imagine crypto had to be popular without social media. It would have been ripped apart just like Marc Andreessen was ripped apart on that podcast for his intellectually vapid ideas.
It is really a shame how much harm social media has done to our species.
The crypto crowd has been able to promote a culture in which there is no supporting data for financial hype, and that's considered OK. Crypto is different, you see.
If crypto exchanges had to file an S-1 and quarterly reports with the SEC, people would be looking at the financials and saying "WTF?". With no audited numbers, there's not much for serious reporters to look at. But they have to write something. Hence the softball articles.
Now, there are the old-line balance sheet types who say publicly that crypto is bullshit across the board. Warren Buffett, Charlie Munger, that crowd. People who read Graham and Dodd, and Extraordinary Popular Delusions and the Madness of Crowds.
The crypto community argues that's outdated thinking. Go watch "Don't be like Larry" [1] again. That was an FTX commercial run at the Super Bowl. The reason the hype worked is the run-up of Bitcoin from sub-penny values to $60,000. World's best performing asset for a few years. It is hard to argue against success. Everything else rides on the coattails of Bitcoin.
FTX has nothing to do with cryptocurrencies, really. It's a bucket shop out of the 1920s, a fake broker that pretends to do trades but is just updating their own fake database and issuing fake stocks for fake companies. The same stunts could have been, and have been, pulled with gold mining stocks. FTX benefited from the "we don't need regulation because this is innovation" mindset. That's how they did it.
Big questions for journalists today:
- Where is Binance, the company, anyway, what assets do they really have, and who controls them?
There was an interesting discussion about this clip when the ad landed.
The persona that Larry David presents in his show is someone who is selfish and doesn't care about fads and what others think. More often than not, this let's him see past the bullshit, although his selfishness and stubbornness end up being his downfall.
In the ad, he is presented as a dumb dumb who is missing out on the cool crypto stuff - with a kind of uncanny valley persona who shares some traits but misses other. Well, in good irony, it turns out that FTX was good thing to miss, so I guess the original Larry's persona wins!
I always hear this, after one of these Jurassic-scale meltdowns.
The hard truth is, is that lots of people saw it coming, but everyone was making money, and they were all hoping that they'd "get theirs," before things went pear-shaped.
Greed does strange things to the human mind...
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."
-Upton Sinclair
"There’s no free lunch in this world unless you’re willing to run around to different dumpsters to get it."
I've been one saying this to the coin people for years....
"You think crypto is a new design that somehow overcomes scammers while completely ignoring that every market that has ever existed has had scammers and has had to develop either impromptu or formal regulations to prevent said scammers from destroying the market. Your leaders are frauds. Your day of reckoning is coming."
Yep, this has been my observation too with friends investing in crypto (fortunately they at least understand the golden rule of not investing more than they can afford to lose).
They ask me about some new coin that offers some absurd gains and after looking through it, it becomes obvious that it's super sketchy and potentially a Ponzi scheme, I explain that to them and they proceed to go for it anyway because they think they'll be able to pull out before it goes bust.
It was the same about SBF. I'm generally a fan of crypto (specifically with projects that have genuine utility though), but it was always obvious to me that he was probably doing something like this simply from all the hero worship surrounding him. Part of it is probably that successful CEOs of billion dollar companies don't tend to have such a goody-two-shoes type of reputation. Every big tech leader has had a pretty bad reputation while they've been in that position.
I have never bought any crypto but admittedly I bought into a lot of the mythology. I had assumed he was making money by being a large exchange and front running trades.
> by being a large exchange and front running trades.
That's what many of madoff's victims believed about madoff!
One way that conmen pull off their stunts is by convincing the marks that they're doing something shady.
A con always has to answer the questions: Where is the windfall coming from? Why isn't someone else taking it first, and Why would the conman share it?
"The money really comes from front-running trades, other people can't take the windfall because I run the trade routing, to make the profit I need to have a huge fund to hide the activity in."
All the better if the explanation is spread among the marks via rumor-- then the con never has to answer an tough questions.
Similar patterns exist in other scams. E.g. early bitcoin ponzi operator pirate40 had some people thinking that he was laundering money for dark web drug markets.
I'd be interested in knowing if there were similar explanatory rumors about FTX/SBF.
Based on this https://youtu.be/C6nAxiym9oc it wasn't even anywhere near that well thought out with SBF. He behaves like a child when asked simple questions about crypto, trying to use double speak to weasel his way out but not even the way a typical CEO or politician might do it.
I think SBF's trick was to just demonize regular finance and to treat all criticism as simply FUD. IIRC they also paid influencers a pretty penny to promote them. It's an extremely common tactic in crypto, basically every crypto scam covered on that channel involves a similar cult of personality being setup as a cover for the scam.
> I have never bought any crypto but admittedly I bought into a lot of the mythology.
Why? As a person who is been this space for over a decade, I don't think you need to have bought any token in your Life to realize this guy was a nobody with media hype, money, and political connections and little else. His MIT degree and his career in finance aren't exactly exemplary or even unique in this space either.
> I had assumed he was making money by being a large exchange and front running trades.
They did, as in all of his business associates at FTX and Alameda had built the core business around that, but that is neither novel nor is it hype worthy, considering the myriad of amazing things that are happening in this ecosystem. His downfall was getting caught running a Ponzi scheme in an economic downmarket after having taken all of his customer's deposits. We've had countless exchanges exit scam over the years and some just fall due to blatant mediocrity and incompetence that this also nothing new.
Do you realize how absurd it is to sit hear and see countless SBF threads on a prominent tech based forum in the back drop of the all the calamity caused by fossil fuels, that spans from Russia's war on Ukraine funded by EU's dependence on it's energy, to all the refugees flooding into the UK and treaty (with tons of money behind it) signed by France and the UK to help with this, and with much Europe being on fire and seeing record temp this summer and ultimately with COP27 ending with everyone feeling left defeated as little to nothing was actually achieved?
While at the same time not realizing that Bitcoin is mainly operating on renewable energy, and that a prototype mining farm to recapture the Methane (the most damaging of GHGs) is being built [0] and tested as we speak? If there was any real utility in people's attention you'd think it would be to focus on those aspects, not another useless click-bait headline about SBF's absurd lifestyle and love life with all of his co-workers or what ever.
Moreover, it should be noted that when this raised funds for it's prototype in a frothy bull market that is to be built in CA (that is constantly on fire due to climate change) it only got $4 million as opposed to the $200+ million SBF got from Sequoia alone, and people still think this crook is worth tanking the entire ecosystem due to bad press.
I'm taking a previous commenters suggestion and reading 'Trust me I'm lying' after having read Hate Inc twice last year and the Rupert Murdoch documentary series as it underscores the mechanics of what it was back then to how it is still used now.
You should too, because gullibility is at the core of all of this just as much as greed is; no one promising something for nothing should be taken serious, and yet we see it item and again ending with an ultimate rug-pull.
This is a bit of a tangent (and a response to only the title, which I admit is bad form) but what’s with the prevalence of adding “bro” at the end of random words? Can a woman be a crypto bro or a tech bro?
It reminds me of when everyone was talking about “brogrammers” a while ago, and it had a pretty clear connotation of “programmer who loves keg stands, hitting the gym, and making misogynistic comments”. I think “crypto bro” and “tech bro” don’t have that connotation at all, or at least that’s never how I perceived SBF.
> It reminds me of when everyone was talking about “brogrammers” a while ago, and it had a pretty clear connotation of “programmer who loves keg stands, hitting the gym, and making misogynistic comments”. I think “crypto bro” and “tech bro” don’t have that connotation at all, or at least that’s never how I perceived SBF.
I’d say they have related connotations. Less about explicit invocations of masculinity like beer and the gym, more about being egotistical or solipsistic or “highly confident in oneself while actually being wrong”. Not quite the same thing as the traits you mentioned, but associated with them, for better or worse.
While the bro meme emerged to describe the kegs and kettlebells thing, i think it's shifted to mean something like "someone massively overconfident who gets ahead through bullshit, backscratching, and reality distortion, rather than through actual talent".
Under this definition, women absolutely can be bros. And neither men nor women, nor anyone else, are usually bros, it's a rare thing.
The "crypto bro" stereotype came from real people who combined a love of crypto with bro behaviors like aggressive rhetoric, shameless self-promotion, and flaunting their wealth (e.g. talking about lambos all the time).
Women do that stuff too. I have seen women promote crypto scams as well. It is subtly misandrist to use these terms I think. But no one will stop using it because that is part of the society wide perception of men being viewed as less moral than women.
So maybe women can be bros too? Just like men can be karens and huns. But just as complaining in an of itself doesn’t make you a Karen, shilling a scam coin in and of itself doesn’t make you a crypto bro.
Unfortunately, because cryptocurrency is so male dominated the conspicuous presence of women is arguably a red flag (and somewhat ironically wrt your less moral comment). :-/ E.g. there were fewer women in the pipeline at the front and any women in the space take on a number of additional costs (e.g. harassment and misogyny) that a greater portion of what remain are only there because the are being paid handsomely to promote scams.
and this sterotype can easily be self-perpetuating...
You don't see the press calling Caroline Ellison a "crypto chick" or some other gendered epithet. You would never see that because it would be unacceptable whereas "crypto bro" is acceptable.
Spend some time on dating apps. I would estimate in a call center environment there is a high number of female employees running the those scams off a script. All sorts touting their investment opportunities to anybody desperate enough to listen.
It's easy to look back and say "it should have been obvious," but besides those who had general disdain for crypto like Buffett aside, were there any MSM outlets that actually saw through SBF for what he was at the onset and wrote an actual article about it before this all occurred? Because I can't seem to find any, and this just makes me want to avoid reading the news altogether at this point.
It's not clear to me that there was anything to 'see though'. This makes him seem like a Machiavellian genius putting up a front. It seems entirely possible that he is exactly what he seems. Sincere but lacking the skill and wisdom to run a large financial organization.
While ignorance of the law cannot be used as a defense for breaking it, an organization such as FTX comprises a complex interaction of financial, technological and legal issues. You can easily imagine naive hands breaking multiple laws in their ignorance.
It is also possible that they did things knowingly illegal only after their lack of experience had put them into a situation where they were trying to stabilize a teetering house of cards.
Some things are hard, very hard. In some domains, being clever without being an expert doesn't work.
It is also worth mentioning that the media sources that said how great things were going are also the same ones that are telling us how badly it ended up. I say 'possible' and 'imagine' above because we can't really get a good picture of what happened from reading a few articles. There will be a few good well researched summaries in a few years time. Hardly anyone will be interested by then; besides, the truth will be boringly complicated and nuanced.
> This makes him seem like a Machiavellian genius putting up a front.
It is not so much that he was a "Machiavellian genius," it was that he was basically the main character in Idiocracy; the smartest one in the room, but the room was a circus made for his own entertainment than anything else.
> an organization such as FTX comprises a complex interaction of financial, technological and legal issues.
It is unclear if this complexity was designed specifically to hide blatant acts of fraud or just cover up incompetence. Either way, the lack of transparency does not look good for him.
>It is also worth mentioning that the media sources that said how great things were going are also the same ones that are telling us how badly it ended up.
I am sure the individual investors who got scammed out of their investment(s) due to getting suckered into it by the MSM will be more than forgiving as well.
>There will be a few good well researched summaries in a few years time. Hardly anyone will be interested by then; besides, the truth will be boringly complicated and nuanced.
Until the next fraudster gets propped up and we can all look back to this and hope for the revival of independent, constructive journalism that the internet was supposed to bring over this current iteration of the MSM circus.
>> an organization such as FTX comprises a complex interaction of financial, technological and legal issues.
>It is unclear if this complexity was designed specifically to hide blatant acts of fraud or just cover up incompetence. Either way, the lack of transparency does not look good for him.
I would strongly suggest neither. I did not intend to imply that this complexity was specific to FTX but rather all organizations in that field. The complexity is a unavoidable result of combining the demands of financial, technological and most significantly legal aspects.
Pretty much everybody deeply involved in the crypto space, especially old timers, suspected something was off and stayed away. There are lots of examples of people deep in crypto sounding an alarm before it all went belly up. When the most crazy shenanigans started in June (fraudulently modifying customer orders to cover FTX’s own losses), there were calls for people to pull their money out.
The thing is though, mainstream media kept publishing fluff pieces.
People have been steadily losing trust in the media for years. All it had to take was a few responsible people to do some probing and realize that it's all a scam. The issue is that there's money to be made in promoting crypto, and therein lies the problem.
There's no way anyone can say they didn't see it coming. There's a whole subreddit dedicated to making fun of crypto and a website has existed for years now that archives every grift https://web3isgoinggreat.com/. So, yeah, I think the media is just fundamentally flawed and I'm not sure what the answer is.
I read this article and I think this is the entire point. You can't trust corporate media's coverage of would-be wunderkind "entrepreneurs."
Between access journalism, hero worship, a narrative formula that's known to sell, and laziness, journalists are all too glad to not only look the other way, but actively curate a reality distortion field on behalf of bad actors.
It's not just that they didn't see through SBF, it's that it never would occur to them to even look. That's simply not what they are optimised to do when they cover this class of person.
The book "Trust me I'm lying" goes into detail about this phenomenon. It is the interest of the media to be tricked, the authors get big stories and clicks and can then turn around and play dumb if things blow up. No one remembers the individual journalist who wrote the puff pieces, so the negative effects of eroding trust fall to a tragedy of the commons situation.
Yeah, the best any of them can say at this point is "we ignored publishing anything on him," and that was more likely due to sheer luck than responsible journalism.
Not reading any news at all is like not voting. The need to be informed in order to effectively participate in civic life does not magically go away just because you recognize that there are systemic problems.
Likewise, referring to all journalism as "the news" is making the same fallacy as referring to "the government" as a singular being. Neither are completely monolithic entities with anthropomorphic agency.
Same thing with early stories on Epstein. He is just presented as a successful investor. And then decades later, they start (even then in a very tepid fashion) asking questions like "where did he get his money?", "why did Wexner give him a mansion and power of attorney?", etc.
Now we hear this (in 2021) but it happened ~3 decades ago:
"On one of Levin’s trips to New York in 1989, Wexner asked him to meet a brilliant young financier who wanted to pitch an investment opportunity.
"Levin had never heard of the man, Jeffrey Epstein, which was odd. After working for Wexner for seven years, Levin knew virtually every player on Wall Street (a few months earlier, Levin says, he met with arbitrageur Ivan Boesky). Levin’s skepticism was confirmed as soon as he arrived at Epstein’s Madison Avenue office. There were no visible signs of a trading operation; just Epstein sitting behind a desk that didn’t even have a computer. “Epstein was trying to explain a currency trade he wanted to do. I have an MBA from Ohio State, and I didn’t understand a word the man said,” Levin recalled. Levin went back to Columbus and reported that Epstein was a fraud. “I told Les, ‘Stay away from him,’ ” Levin remembered. Wexner agreed not to do the trade."
"Levin was shocked when Epstein showed up in Columbus a few months later and announced Wexner had put him in charge of his finances. Levin tried to protest but says Wexner wouldn’t take his calls. Levin couldn’t stand having Epstein as a boss. “He was an asshole. The most arrogant person I ever met,” Levin recalled. A few months later, Levin quit.
"Levin said Epstein taunted him on his way out. “On my last day, Epstein walked into my office and held up a piece of paper. He bragged that Les had given him power of attorney over his money. I worked for Les for seven years and I never had general power of attorney,” Levin said. Epstein, Levin continued, even ordered him to surrender equity in Wexner’s town project, likely costing Levin millions. “Epstein basically said, ‘If you want, you can fight it out, but I have a lot of lawyers and I’ll make sure it’ll cost you a fortune.’ ”
This is NYTimes mentioning Epstein and Wexner (with a heads-up on surveillance to visitors /g):
"Mr. Wexner bought the house in 1989 for $13.2 million and lavished tens of millions on renovations, art and furnishings. Those curious to see the princely accommodations Mr. Wexner abandoned need look no further than the cover of last month's Architectural Digest. When asked how long Mr. Wexner had occupied the property, Jeffrey Epstein, his protege and one of his financial advisers, replied, "Les never spent more than two months there." Thus the prorated cost of Mr. Wexner's sejours would appear to have been in excess of a million dollars a day.
"Visitors described a bathroom reminiscent of James Bond movies: hidden beneath a stairway, lined with lead to provide shelter from attack and supplied with closed-circuit television screens and a telephone, both concealed in a cabinet beneath the sink."
New York Times is _still_ providing SBF cover by allowing him to speak at DealBook Summit later this month [1]. He's joined by such luminaries as Zuckerberg, Affleck, Fink, Zelensky etc. They invited him to speak long before the FTX imploded and now call SBF "Founder, FTX" instead of "CEO, FTX". The conference is by invite-only and costs $2,499 per person.
> New York Times is _still_ providing SBF cover by allowing him to speak at DealBook Summit later this month [1]
NYT is providing the US government with an oportunity to arrest SBF. If the guy is dumb enough to turn up, he wont get more than a few feet from his gulfstream before he is in irons.
New York Times / David Yaffe-Bellany are looking pretty bad in this. Bordering on straight-up propagandists. Yaffe-Bellany should have his kick-back accounts looked over a bit.
Everytime I read about the antics here I'm just reminded of Mark Twain's Roughin It. His adventures as a 'journalist' in Virginia City, NV during the silver rush are just too similar to everything going on right now that it beggars belief. He's not an unknown or unpopular author, though the work is a bit dusty.
If you're interested in the relevant parts, read from about here:
These are all critiques of reporting on a quirky celebrity CEO. Serious question - was there a lot of coverage that said something like “FTX is safe” or “FTX is a good place to park your money”?
I agree that there is a long tradition of uncritical puff pieces in CEOs. But this seems like a different position from “<insert your hated publication here> misled sheep to the crypto slaughter.”
> Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.
Sure, but Sequoia's hilarious hagiography wasn't mainstream journalism, it was a PR piece posted by a company that didnt exactly hide how deeply invested in his success they were. (Also probably too long and too weird to tempt many people into using his exchange. My favourite paragraph was the one that speculated at length whether SBF was incapable of feeling pleasure. You don't get that in Forbes puff pieces!)
That was indeed a blast. Of the wondrous sums reported being transferred into EA, how much was actual cash, as opposed to promissory notes, FTX-backed coins, etc?
An article that omits any whiff of risk while heaping on the praise is implying that it's safe, or at least implying that there weren't any obvious red flags.
Worse he gave "grants" through one of his foundations to news outlets like Vox, Intercept, ProPublica, and others. Vox did not even put a disclaimer about them having taken money from him in the fluff pieces they put out. They have only started doing so after the implosion of FTX, probably to ward off potential controversy.
Sure, including ones that should have been apparent without any sophisticated analysis:
For example, FTX was giving people 8%/yr 'yield' just for funds deposited there in spite claiming to not invest customer funds.
The claim that his fund earned >$10/billion over two years on a trivial arb with Korean exchange was also an obvious red flag (and asking people with relevant experience would have got an answer that this not a credible claim).
The heavy involvement with and promotion of extremely illiquid and self-made tokens was also pretty suspect, but not unique to FTX. Looking at my messages, I see that I specifically highlighted 'the ftx website lists something called a "3x leveraged shitcoin index token"'
... or the fact that they offered 100x leverage.
Who knows what more would have been found if any investigation or critical questions were applied.
These specific red flags were clear enough for me-- and other people I know, to yank most of their funds from LedgerX when SBF acquired it.
Any journalist writing about SBF/FTX would have had access to much more information that I did. E.g. I didn't see the videos of him obviously tweaking in interviews, nor the easily visible tweets by Ellison about how boring life is when off amphetamines. But someone spending a half hour googling the involved parties would easily have found these additional red-flags.
> The red flags were clear enough for me-- and other people I know...
This seems glaringly obvious to me as well. A basic scrutiny of how the money is made reveals deep flaws. It should be clear to anyone who has money to invest that there is a reason why one investment vehicle pays 8% versus another which pays 2% (CD's).
I don't believe they should lose their money without recourse, but people shouldn't have zero responsibility for their financial decisions. Some risk and educational foundation must be assumed by the individual. It would be nice if regulators and journalists gave a clear picture, but everyone should remember, they likely have no financial stake on their findings.
It's a hard situation: the relative safety of standard investments contributes to bad judgement when people end up in a red in tooth and claw unregulated market. Similar people used to theme parks going to a national park and falling to their death in a waterfall or being gored by buffalo.
Not that I think the safety rails are bad... if you had to be maximally cynical you'd never even bother taking an investment with only 2% yield, it just wouldn't be worth the meta-risk (the risk you misunderstood the risk!).
Probably one of the worst things about the FTX press puffery is the implication that FTX was more regulated or pro-regulation, ... probably causing people to think it was a part of the relatively safe major markets where the risks are usually reasonable and the asset returns tends to be fair relative to the risk.
I filed complaints with the government over the Gemini earn program because they were heavily marketing to retail users with comparisons to savings accounts while, AFAICT, actually consisting of effectively unsecured investments in ponzi schemes ('yield programs') whos risks weren't meaningfully disclosed. Never heard back, now that it's imploded perhaps I should try FOIA-ing any communication resulting from my complaints.
>The claim that his fund earned >$10/billion over two years on a trivial arb with Korean exchange was also an obvious red flag (and asking people with relevant experience would have got an answer that this not a credible claim).
Source? The numbers seems suspiciously high when you consider that the net worth of SBF (who owned most of SBF and FTX) was only $10.5 billion prior to the collapse. Maybe you got this confused with this?
Wikipedia: "In January 2018, Bankman-Fried organized an arbitrage trade, moving up to $25 million per day, to take advantage of the higher price of bitcoin in Japan compared to the price in America.[9][10][2] The company earned about $20 million from the arbitrage opportunity.[11]"
>The heavy involvement with and promotion of extremely illiquid and self-made tokens was also pretty suspect, but not unique to FTX. Looking at my messages, I see that I specifically highlighted 'the ftx website lists something called a "3x leveraged shitcoin index token"'
>... or the fact that they offered 100x leverage.
Are you making these claims from a "it's impossible to offer this product without being a scam" point of view, or "this product is gambling and shouldn't be allowed"?
>I didn't see the videos of him obviously tweaking in interviews
This seems like the prototypical example of stuff that you only notice after the fact because hindsight is 20/20. Can you imagine writing an article that's like "SBF is pretty sus, look at how much he's tweaking in this video"? Or telling your editor you want to investigate SBF/FTX because he looks like he's tweaking?
>nor the easily visible tweets by Ellison about how boring life is when off amphetamines.
If you read the whole tweet in its entirety, you'd realize that
1. she was talking about prescription amphetamines aka Adderall. it's not like she was smoking meth.
2. she was emphatically not talking about being bored, she was talking about how hard it was to get energy/motivation to do any sort of activity, all of which were symptoms of ADHD (see point 1)
Sure, it's fun to dunk on her and the rest of the FTX/Alameda staff now that the whole thing crashed and burned, but if you wrote a piece on this pre-crash you'd end up getting canceled for doubting/making fun of people's mental disorders.
He changed the explanation that they were given-- originally he was telling people Korean exchanges, later the claim changed to Japan. The replacement wasn't particularly credible either (at least not the scale). You can easily find examples of the earlier story on google using the word kimchi: https://www.google.com/search?q=SBF+kimchi
Of course, newly available disclosures show that they hadn't earned anything from the korean trade at all.
If you look at WP history, you'll see that entire article was recently written ( https://en.wikipedia.org/w/index.php?title=Alameda_Research&...) and the WP article for SBF himself only goes back to April 2021. The red flag examples I gave were actually quoted from my contemporary correspondence (warning other people off), so I know none of it is tainted by hindsight. Tainted by cynicism, perhaps, but I think cynicism is well justified in this space.
In later correspondence I see did cite the SBF wikipedia article on Dec 9 2021 ( https://en.wikipedia.org/w/index.php?title=Sam_Bankman-Fried... ) in a message to someone, "can't say that finding his wikipedia page has made me feel any safer about having funds in ledgerx" and noted that participation in forbes 30 under 30 is a "minor red flag (it's almost excursively paid promotion)", and I noted the text '"sleeps four hours per night" at the age of 29 is almost certainly something LARPing as a superman' and I compared it to other cryptocurrency fantasists like Craig Wright claiming to read 2500 books a year.
> Are you making these claims from a "it's impossible to offer this product without being a scam" point of view
Impossible to offer without having an extraordinary implosion risk, at least, if not being an outright scam. There was no disclosure around the risks or how it would be contained. Scamcoin casino competitors have had high profile "insurance funds" with somewhat transparent management as an explicit mechanism to address the extreme risk of these levered products. (I think they are also obviously too risky to do business with, and these are risks that should have been covered in any article discussing FTX!).
There are ways to create leverage without any implosion risk-- e.g. physically delivered options. But that's a different set of products, and one that sells less well to unsophisticated users in part because the investment risk isn't hidden, because the trades need counterparties instead of being against the house, etc.
> This seems like the prototypical example of stuff that you only notice after the fact because hindsight is 20/20.
I specifically set apart the elements that I didn't know about at the time.
My records show that prior to 2022 on at least a dozen occasions I told people that I communicated with that I thought FTX was fraudulent and that I thought SBF was likely a scammer. Quite explicitly, in fact, in 2021 I wrote: "I don't believe SBF money exists. I think he's a scammer. I'd take a non-trivial bet on it. His claimed origins of his money are more obviously false than madoffs'. maybe he's just a front for iran or something, but whatever the case is he didn't make his money the way he said he did." and "I mean SBF is super redflaggy to begin with. I think he's a scammer, not sure exactly the nature of the scam, but his story of where his sudden wealth came from just doesn't compute."
(I would have been more outspoken in public under my name about these concerns, but dealing with one multi-billion dollar lawsuit from a scammer at a time is enough for me! (and, in fact, said as much to friends in private))
So you don't get to chalk my perspective to hindsight, though it's certainly emboldened now by hindsight. :)
Now-- could I have gone to press with an expose on that? No. But it's enough that someone could refrain from gushing on support, or could have investigated more carefully. (Or as I did, pulling funds away from potentially exposed entities!)
> she was talking about prescription amphetamines aka Adderall.
If you've been around people on Adderall and don't recognize that it can easily compromise judgement and result in mania, then I dunno what to say other than congrats on your good fortune. Cryptocurrency is rife with stimulant abusers, however, many of which are on prescriptions yet engage in obviously unwise, reckless, or at least irritating behavior as a result.
That kind of message from executive staff is a serious red flag, if not directly showing abuse, and least demonstrating a significant lapse in judgement in choosing to make public such an obviously concerning message. Could you imagine how the public would respond to an equivalent tweet being put out by the CEO of Fidelity?
There aren't just two options "write a critical piece on thin indications" or "write a gushing promotion piece". The obvious thing to do when there are weak indications of concern is to just say nothing, or to do serious critical research-- had any been done they would most likely have turned up even more reportable information, or at least more negative indication that supported keeping distance. ... or to at least find some random naysayer to quote saying it's suspicious and they're uncomfortable with it.
That sounds more along the lines of "all crypto is a scam" than something that you can write a news story about. I'm not going to deny it isn't shady (I don't use them for that reason), but at best the only thing you can write for this is something like
"the exchange has drawn criticism for being domiciled in the Bahamas and not being audited"
but that might be tough. To my knowledge there wasn't significant criticism around before the crash (unlike with Tether, for instance). People seemed to be largely okay with the state of affairs, or the people who weren't okay and went to Coinbase/Gemini/Kraken.
Between that tweet (completely bereft of detail) from SBF (who is now a confirmed fraud...), and the FTX bankruptcy filing, I think there's a simple explanation for it.
1. Only some of the silos/firms in the silos have been audited. The auditor, thus, has no idea if there are unrecorded liabilities (SBF didn't exactly keep notes about where the money was supposed to be) between different firms in the silo.
2. The WRS silo (FTX US, FTX US Derivatives, etc) has been audited by a real accounting firm. The auditor for the Dotcom Silo (FTX.com, other exchanges, etc) was Prager Metis[1], the "First-ever CPA firm to officialy open its Metaverse headquarters in the metaverse platform Decentraland." I have doubts that this one was a through GAAP audit.
3. There were no audits at all for the Alameda/Ventures silos.
4. Crypto crashed earlier this year, which probably wiped out most of the stupid investments FTX made. It's possible that they may been only half-a-billion-in-the-hole in 2021, as opposed to ten-billion-in-the-hole.
[2] “I don’t know anything about FTX,” said Jerry Eitel, the partner emeritus and chief metaverse officer at Prager Metis. “I’m retired,” Eitel added, before disconnecting on the phone. (Eitel is a one-time CoinDesk contributor.) The head of Prager Metis’ audit practice could not be reached for comment.
I completely agree that the audit, to the extent that there was one, must have been pretty crummy. But that they technically had one meant there wasn't a clear "this is an unaudited financial company" red flag.
AFAIK that was limited to the first $10k in deposits, so it seemed plausible as a some sort of customer acquisition cost. Also, 8% was around the going rate for decentralized lending protocols, so it only seemed high in comparison to FDIC protected savings accounts.
> AFAIK that was limited to the first $10k in deposits, so it seemed plausible as a some sort of customer acquisition cost
$800 per year per customer? Ehh. Also, above $10k and up to $10m it was 5%/yr... which I think breaks that explanation as no one is going to argue that a half million dollars a year is a reasonable customer acquisition cost! :)
> going rate for decentralized lending protocols,
Don't use euphemisms here, the term is ponzi schemes. These yield programs were across the board ponzi schemes with no substantial source of income other than the deposits of other users.
(and don't let the fact that Bitcoin critics have called it a ponzi scheme in the past confuse you: Bitcoin has never promised a yield, it doesn't need a source of income. The fact that bogus criticism uses a word doesn't make it less legitimate where it applies.)
Yes, 8% only seems high in comparison to companies that are ran by adults that don't evaporate with your money every few years.
No financial company in the world that isn't a fraud is going to pay me a $800/year for parking $10,000 in their bank account, once all risks are taken into account.
The first six months of this year it was possible! All that would be needed would be a parent company that creates child LLC’s, one per customer, and then purchases $10,000 of I Series bonds using the child LLC tax ids.
The rate was 9.6% so you would have been pocketing a 1.6% spread on the customer deposits.
he had some twitter thread two years ago where he was talking about betting five times [what the gambler’s formulation of the kelly criterion would suggest], which is bug fuck insane and would’ve had me shorting him immediately if i’d been aware of it and could’ve figured out how to short him. he was 100% going to zero and it wasn’t even going to take long.
might’ve even happened at that point and he was just stealing customer money to cover it up.
not that i’d expect journalists to have been able to work it out; anybody who can understand kelly’s paper is making more money some place else.
Only after the collapse a friend pointed out that thread, where he’s arguing 10x Kelly makes sense because when you win such a crazy long shot bet you’ll have enough money to change the world and money doesn’t actually have a diminishing utility ever.
Regardless of his other arguments, it never makes sense to bet more than Kelly, because you move into _diminishing_ expected value… while also taking on more risk! You can do less than Kelly if you want to diminish your expected value, but at least that also comes with less risk.
> he’s arguing 10x Kelly makes sense because when you win such a crazy long shot bet you’ll have enough money to change the world and money doesn’t actually have a diminishing utility ever.
right he also had a thing in there where i think he was conflating the log utility in kelly with human’s tendency to have a logarithmic view of the utility of money.
they’re not actually connected, they’re just both the words “log utility”.
I think that thread is being widely misinterpreted. Kelly betting applies to repeated bets. At the start of the thread he makes it clear he's talking about a one-off. In that situation, EV really does scale linearly with bet size, so if you have any edge you should just go big.
You can argue that there is no such thing as a one-off bet, because there will always be more bets on other things for someone who isn't ruined, but that's the explicit assumption for that thread.
and i'm fine with that. i don't believe it exists, especially for a business/fund like his, where even making that claim is its own sort of hilarity, but i'm fine with that for the purposes of the thread and this response:
> Kelly betting applies to repeated bets. ... In that situation, EV really does scale linearly with bet size, so if you have any edge you should just go big.
in which case you don't spend any time talking about how you're going to bet "X times kelly". you don't deny that kelly applies, and then compute some >1 multiple of kelly and defend that number by saying kelly doesn't apply. there's no fixed multiple of what you get out of the gambler's formulation that makes any kind of sense if you've abandoned the initial premise.
i suspect the only good, coherent defense of what he was saying on twitter is something like "he had articulate arguments but didn't present them because of twitter limitations"
It is a classic example of everyone being wrong, everyone wants to feel superior a see a particular thing with that exchange, and thus take away that which makes them feel smart.
Anyway - anyone who has ever run any money knows you use a fraction of kelly, which if you have a brain makes you wonder why it is optimal to use a fraction of the optimal amount - which should make you realise that kelly is loaded with stupid assumptions and is basically useless beyond a philosophical construct.
yeah, pretty much every one of the [not particularly large number of] positive pieces I read on him screamed "compulsive gambler", including the VC hagiography that talked in depth about his interpretations of utilitarianism and devoted a paragraph to wondering if there was anything in life he actually enjoyed.
not to mention the Matt Levine interview where Matt tells him he's basically describing yield farming as a Ponzi scheme and he concedes that's valid and doesn't even try to construct a counterargument for where the value comes from...
He did have a counter argument - 'the market values the box' - pure capitalism.
The scary thing is he understood that the box inherently is nothing of any value, except that the market has placed a value on it - yet still bought into lots of boxes that the market said had value till they didnt have and value. The gambler once again.
Go find some long article from a major newspaper on a current CEO. It's likely to be positive, glowingly positive. The industry doesn't matter.
The CEOs won't provide an interview unless they feel the coverage will be positive, and people tend to want to read about rising successes, so negative articles face an uphill battle.
This, but there are more factors at play. Successful CEOs are often well spoken, have had plenty of press training, and usually have all the power in the conversation. Getting answers questioned is a privilege, not a right, unless you work in certain areas of law enforcement.
When bad things are on the horizon, CEOs have a little story ready to go, together with the surprise questions that may come up during the interview, or they don't come to interviews at all.
At a certain point, people collect enough money that press coverage is no longer much of a concern for them. Jobs, Musk, and other super rich don't need the validation and even manage to build a cult centered around their personality. As long as they say the right things to their key shareholders and don't start spouting unacceptable language that their core fan base disagrees with, it doesn't really matter if they come to interviews or not.
Private interviews are not a level playing field. Press conferences come closer, because more reporters means having to deal with more and less obvious questions.
It's not hard to be impressed by a young crypto billionaire if you have little to no knowledge about the platform and if their company keeps all the business details behind closed doors; for years, these people were actually running a moderately stable cryptocurrency business. Reporters couldn't know about how deep the company had sunk when the debts started to come in and a bunch of young people in bean bags managing billions of dollars for millions of people are doing something right; all they need to do is make the reporters comfortable and lie about or avoid the upcoming collapse and journalists are bound to write something positive about you.
I am just surprised no one questioned the partnership between Alameda and FTX. The equivalent would be something like if a large HFT firm like Citadel, Virtu, or one of the others had the same ownership with a brokerage like Robinhood or Charles Schwab or even formed a partnership. I think the financial media would be questioning the incentives.
I read in the WSJ today that Alameda had indeed done price arbitrage trades on the FTX exchange. The closeness of these two firms should have raised questions I think. I really don't know a lot about it because I was never involved in either FTX or Binance. But I think most financial journalists are trained to spot disincentives and corruption that come with marrying trading firms and exchanges. So I am surprised that did not happen leaving aside other questionable items.
>> The equivalent would be something like if a large HFT firm like Citadel, Virtu, or one of the others had the same ownership with a brokerage like Robinhood...
Not just Robinhood selling order flow. Robinhood was just the first to say "we can make enough money with order flow, so let's cancel trading commissions".
yes. It was widely reported on and criticized though and I believe the SEC decided not to ban it. This article[1] has some details but it seems like the SEC may not be able to. However, none other than Gary Gensler criticized the practice. That's my point is how different the reporting was on RH versus FTX over a similar practice.
edit: FWIW this is not even the biggest issue. Alameda making bets with FTX customer money seems to be the biggest problem. I am bringing this up because closeness between a trading firm and an exchange might have been an early clue to financial journalists that the relationship should be scrutinized.
Remember that the SEC exists because a bankrupt banking sector begged the government to give them a fig leaf. If you aren't sure who they serve, go looking for a punitive fine that's been levied and distributed to any victims of financial crime. Gensler appears to have skin in this FTX game personally, natch.
Brokers like Robinhood would love to not have to rely on a third-party market-maker, because it can vertically integrate. Citadel had the years of its life during the bull run in great part to RH.
Market making can be neutral, it's not a big conflict of interest. What is a conflict of interest is placing bets in the market with what can be information of traders on the FTX platform - i.e. people buying solana and Alameda leveraging that direction on the information - or people leveraging on FTX and Alameda making liquidating plays.
After Glass- Steagal was repealed, structural conflicts of interest putting the totality of supposedly safe deposits at the service of gambling has been standard operating procedure for the street and hence the country.
The question is, who is going to pay for critical business reporting? The readers - wannabe CEOs - won't, and the businesses in question won't buy advertising either.
The WSJ wrote one of the listed puff pieces. In fact, it was written by their global tech editor (a Q&A without much pushback on the optimistic claims SBF was making). Perhaps the most egregious examples was from NYT, which also charges for its content and is highly profitable.
They promoted him because they're as unscrupulous and devoid of ethics as he is, by and large. He didn't win them over with some con man charm, he won them over with money, or the allure of money, or even probably some politicking.
This is just a stupid and absurd article. Yes, if you want to you can go around and cherry pick articles and opinion pieces that are flattering to crypto and point out they turned out to be wrong in retrospect, but that's what a free press is.
You are going to have people with different opinions saying different things, and sooner of later some of them will be wrong, and some will be right and we'll all be better off for having heard the arguments. But to try and pretend there hasn't been media critical of crypto is just deliberately ignoring the facts. How could we have seen this coming? Maybe listen to the Bloomberg podcast where SBF genuinely just outright states they're creating ponzi schemes back in April. But what did you want? Bloomberg to storm the offices of FTX and drag SBF off in cuffs?
The core of what happened at FTX was that SBF ran an unregulated exchange- that's a matter for the government and regulators. Not the press. Ocassionally talented investigative reporters uncover a fraud- and often it'll be the most impressive story of their lifetimes. But it's not a reasonable standard to blame them for every one that blows up before they catch it.
It touches on a general phenomena in asset booms though, whether housing, crypto, stocks or whatever. The general pattern is:
Asset goes up in a normal manner
Agents, exchanges etc make money
They then buy ads in media and journalists write "Asset is hot now" articles
Public reads them piles in, everything shoots up
And then eventually once they've run out of new buyers it all crashes
It's worth bearing in mind as an investor. After the crash you'll get "It's all over for <asset>" articles followed by no articles when everyone is fed up which is probably the time to buy.
> You are going to have people with different opinions saying different things, and sooner of later some of them will be wrong
That’s a rather dismissive attitude towards the craft of journalism. Imagine the same applies to medicine. Someone pays a doctor to let your mother die and you’d be saying “well sometimes patients die, we can’t go cherry-picking those cases and pretend it matters”
The major problem around crypto reporting wasn’t that some reporters got it wrong. It’s that some reporters got major funding from crypto bros and then happened to write extremely naive and flattering articles about crypto bringing in gullible masses who now lost their money when the FTX Ponzi went bust.
It’s not an attack on the free press to point out that writing sugarcoated lies about financial investments because you stand to earn is a scam.
The job of journalism isn't only to report provable facts, it's to also report on what people are doing and why. It's not the NYT's job to do a deep economic analysis of crypto and come up with an editorial position on it. They interview the people involved in order to give you insight into what's going on in the industry. Is it going to be balanced? No because they're literally trying to show you what the advocates for the industry are saying, and they trust you to be literate enough to understand that when they publish an interview with SBF they are presenting what SBF wants to represent to the world and you should take it with the knowledge of what source it comes from.
I'm less surprised by the media coverage of the entire fiasco because when on earth have they ever not written sympathetically about your average millenial do-gooder cause driven entrepreneur, what I ask myself is, how have the investors not seen this coming, who are after all the people who open their own wallets for this and are professionals.
And not just this case but any of the recent crypto-company explosions that lost customer funds to the tunes of hundreds of millions. There are experienced funders behind this who tout themselves on being able to differentiate BS from reality.
People love to drag the NYT but I don't really expect them to have really deep insight into these firms, on the other hand people are way too uncritical of the whole Sequoia/al6z/etc alternate media machinery around this.
And let's be honest, the media are mainly writing the articles because the top tier investment professionals have spent millions of dollars giving the Bahamas crypto guy their seal of approval.
They're not giving the same amount of positive spin to any old crypto guy who says he wants to save the world.
> he received little scrutiny in the media. On the contrary, he was celebrated.
It's not just this issue that the media plays follow the narrative. Not only that, they're all in on the ruse. That is, none are willing to call out the others for constantly half-assing it.
It might not be a corporate monopoly, but it's a monopoly of the mind.
Aren't reporters scamming us most of the time? "Reporting" for anything that involves a monetary transaction has turned into an advertorial, or at best a superficial enumeration of promised features. Why are we adding "site:reddit.com" to our search queries?
And when FTX folded, the same press was still writing puff pieces about SBF trying to make excuses for his behavior, painting that "genius" as just an incompetent but well intentioned man when he was always a crook running a Ponzi scheme and selling securities illegally, because that press could not admit their own responsibility in building a false profile of SBF thus their own utter corruption and lack of critical thinking or just doing their job, investigate and search for the truth...
Reporters helped SBF build a credible profile in order for him to steal money, everything to do with reporters writing glowing reviews of SBF and his fraudulent business in exchange for kickbacks of all sorts, including direct grands to several news outlets, which makes reporters corrupt.
I would say because of the dozens of articles with "journalists" waxing poetically about his reputation as a big-thinking successfully-entrepreneurial self-made financial-wizard philanthropist. A regular Jeffrey Epstein.
So the "real problem" here is that the WSJ wrote "FTX is was today valued at 32bn after raising money from Sequoia Capital, NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter ..."
I'm sick of people trying to twist words to mean things they don't.
Scamming someone requires obtaining something like money in the process (fraudulently). SBF ran a scam because he took people's money and used it fraudulently.
Reporters just ran puff pieces. But they didn't defraud anybody. The reporters weren't investors in Alameda. They didn't obtain anything except the normal salary they get for any story.
So no, reporters did NOT "scam" readers. They just engaged in run-of-the-mill journalism. You can critique that all you want, but it still falls under the category of "journalism", NOT the category of "scam".
> scamming someone requires obtaining something like money
I would say "something of value". It doesn't have to be money. Attention is valuable - personally I consider it my most scarce and valuable resource.
I don't think it's unreasonable to create a comparison between stealing people's attention and stealing people's money. We focus a lot on the latter, but we are starting to focus on the former too, usually in the form of criticizing social media.
Take Facebook. They grabbed people by creating a system to connect with friends, family etc. and created an inescapable network effect for an entire generation. Then they morphed slowly into an outrage generation private data stealing machine to the huge detriment of millions of people - entire countries in fact, like Myanmar. The money they make is one step removed from the people being scammed, which makes it a little harder to directly characterize this as a scam. But it is a scam, just as much as this crypto stuff is, only far worse.
Reporters running puff pieces to generate outrage - or rather, their publications - are doing the same. Stealing your attention to get money from advertisers. They are just less successful. Same sea, tiny biting fish where Facebook is a shark.
> Reporters just ran puff pieces. But they didn't defraud anybody.
And they running puff pieces after the scam was uncovered. And they're trying, after having presented SBF as a genius, to now make believe people that it's only leveraged trades (to the tune of tens of billions of dollars) with customers fraud gone wrong.
Why is anyone still reading the garbage coming out of these papers that aren't even suitable as toilet paper is beyond me.
Meanwhile there are people out there who exposed the Alameda Research ponzi before FTX was even created. It was the same ponzi as the Bitconnect ponzi: say you notice crazy arbitrage [1] and promise insane returns "guaranteed zero risks".
Insane returns promises have a name: scam. Giving the insane returns to the early investors while keeping the scam going as another name: ponzi.
And this was all explained years before the ponzi was exposed.
And in addition to that US congressmen and senators are accusing SBF and ex-officials and officials to be working hand in hand to allow FTX regulatory capture of the crypto exchange market...
And you dare tell us that the journalists trying to sell the "leverage trades with customers money gone wrong" are still... Journalists engaged in run-of-the-mil journalism?
Despite all the donation SBF made to these publication?
Please.
I mean: the only other explanation is that these journalists are so incompetent they shouldn't be allowed anywhere near a keyboard. They should be flipping burgers and even then I wouldn't want to eat the poison they'd be serving.
The thing to remember about journalists is that they have a degree in journalism. Not math. Not science. Not engineering. Not politics. Not economics. Not medicine. Not agriculture. Not history. And certainly not statistics.
But they pontificate as if they are in possession of revealed truth.
What they wrote about the 737MAX is a stellar example of such ignorance. The only correct sources of information about it came from Aviation Week or official NTSB reports. The rest was all garbage.
Everything you said about journalists, you can say about product designers or software developers. Yet products continue to be designed and software continues to be written. It's almost as if learning doesn't end at the terminal endpoint of a college education.
> Everything you said about journalists, you can say about product designers or software developers.
True enough when they pontificate about other fields, but I expect product designers to develop good products, and software developers to develop good software.
Virtually nobody with a career in product design goes to school for a degree in it, and most software developers are computer science grads, which has almost nothing to do with actual software development.
I don't know about the outlets mentioned in this article, but there are a few different ways that PR firms can grease the media gears in order to get you good PR coverage. Ranging from, literally paying for a piece to be run, to more subtle things like handing them timely content on a silver platter. Maybe no money is exchanged hands, but they get some of their work done for them instead. It is still value exchanged without money being exchanged.
We know for a fact that SBF gave donations to ProPublica, the intercept, vox, and others. What we don't know and is probably unknowable is to what degree those payments influenced the reporting.
It's true that it's not an actual scam, but I do agree with the use of the strong language in calling it a "scam". Journalists are supposed to report things objectively.
Instead of giving a balanced perspective, the fall into the trap of portraying individuals as heroic geniuses or villainous morons (presumably because it sells better). If they're not going to be objective then they kinda deserve to be called out.
Remember the Fyre festival scam? The PR agencies knew it was a scam and went along with pushing and then said something philosophical about whether they should be responsible or not for "just doing their job". Their entire job is to make gold out of dog poop, so yes, they share some responsibility.
The definition of the word journalism is as follows:
"journalism, the collection, preparation, and distribution of news and related commentary and feature materials"
These people do not actually do journalism. They are in effect PR shills. The very first part of the definition is not done. They don't actually collect information, they just publish what they're handed in the most enthusiastic manner.
Professionals like marketing firms and lawyers are virtually never held to account when their clients are eventually caught. So they're just responding to the incentives we've set up for them.
Journalists will sometimes at least suffer a bit of a reputational blow.
Yep, Wirecard is another such example where a huge accounting firm E&Y didn't even have any reputation damage worth mentioning. As you say it's a failure in our incentives.
Sounds about right, sunshine must be bright if you're just now coming out from under that rock. The Crypto Industry is nothing but scams on top of scam on top of scams in order to show legitimacy. Hell try to get an _actual_ trusted audit. I'll hold my breath.
Personally I agree with you on that. I just don’t think it’s reasonable to say that fluff pieces in the media makes the “reporters” accomplices to the scam.
I put reporters in quotes because any halfway decent reporter would have known to dig around a bit but that’s just unfortunately not how the largest newspapers operate, with a few exceptions.
Correct. Those of us that actually remember this 'technology' remember that it existed back in the late 1970s as a permissionless distributed database. It was an unworkable mess then, and look at what we currently have right now.
"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."
Another example from the so-called "dot-com boom" who went to work at Prudential and later Merrill Lynch.1
The polycule/testosterone stuff is just speculation. It’s known a number of stimulants were used by him and his top people, unknown if they were abusing them.
I think this take is a misunderstanding of the conversation. What they were discussing was the “Phillip Morris” question that he was asked earlier this year. Like if it’s so cheap to save peoples lives in poor areas with endemic malaria (which has some issues but I think most likely is close to true, donating to the AMF is probably one of the least weird and most likely to hold up EA ideas, better than all x-risk stuff) then why not kill 100 westerners (with tobacco, or whatever) to save 10,000 people elsewhere? And in interviews he was like, well you can’t do that heh heh heh, but uh, if he was raised a utilitarian, uh, well, why not? You’ve got some additional framework? And later interview was him saying, no, not actually, kill the westerners.
Which is a take you could hear from utilitarians, an-prims, and the tiny but not non-existent eco-fascists. It’s definitely one of those I am enlightened/logically superior takes that often reveals more about the person saying it than they think.
EA is a mishmash of ideas and philosophy that's been changing over the past decade through endless pontificating debate, book sales, and billionaire largesse. Sam and his core team were all EAs since the beginning, I don't think it's all that important to ascertain which rationalizations they were using.
Ultimately Sam was admitting that his personal ethics, whatever they may ultimately be, are not what he was espousing. The others involved in the fraud have shown the same.
I don't doubt the sincerity of many in the EA movement, but ultimately it's dependent on and co-opted by a few extremely wealthy individuals. FTX has shown the public that a significant portion of those with power are neither trustworthy nor sincere, and the philosopher-kings of the movement itself are not able or willing to see through the charade.
> I don't doubt the sincerity of many in the EA movement
Insincerity isn't the thing to be worried about. Concentrated utilitarian thinking is itself, to use their terms, an existential risk at least if its combined with significant funding.
My favorite example is that there is a small EA faction that believes-- presumably on the basis of their golden rational analysis, totally unsullied by empirical inputs such as first hand experience-- that wild animals are suffering tremendously and the most efficient way to the reduce total suffering on earth would be to engage in bio-engineering to genocide all the wild animals.
Some greedy capitalist might pollute the earth for gains through indifference, if they speak of charity they might be insincere but mankind is capable of much much worse. Say what you want about non-utilitarian philosophies, but they aren't going to @#$@ rationalize themselves into killing all animal life on earth and sincerely think they're committing the most efficient kindness possible while doing it!
We should regard utilitarianism as an intellectual tool we can use to aid our decisions balanced against other perspectives and considerations and not a uniquely correct philosophy.
EA has become quite a broad church. At one end, it's still just nerds doing spreadsheets to find which is the best charity, but at the other end, it's the state religion of the capital-R Rationalist cult. I don't know to what extent SBF really cared about helping people, and to what extent he just needed to demonstrate his righteousness to people in his social sphere.
You may be confusing bros with jocks. SBF was the quintessential cryto bro, checking all the boxes of the startup / tech bro stereotype: young white man with a elite education, or a dropout of such, liberal values wants to change the world, quirky but a genius, filthy rich as a result of his own, totally self made business.
Well, that's the whole meta-joke, that he wasn't a nerd (what he was trying to project to fit in the startup/venture culture), he was in fact a bro with bellow average intelligence.
When people talk about crypto bros and tech bros that's the whole shtick, they are saying their targets are not defined by technical ability (which is stereotypically attributable to geeks). So pointing out he wasn't really masculine is failing to see the metaphor behind "crypto bro" used as an insult.
Part of the SBF schtick was the "anti-bro" vibes. The intentionally awkward, low social skills presentation is used by some major altcoin promoters too-- but I don't think many people would identify it as "crypto bro" and that's a big part of why its effective.
He wasn’t. He knew what people like you perceived a crypto bro to be and filled it while simultaneously filling the Wall Street trader wunderkind like Christian Bale played in the Big Short. He’s as crypto bro as the “pimple faced white kid in his mothers basement” that people like you call all hackers.
Edit: upon reflection, maybe he is indeed a crypto bro - nothing in your definition is untrue. Using my analogy above, Crypto Bros are the Script Kiddies of crypto. Apologies.
