While I agree with the idea that journalists in general were not nearly critical enough, it’s a bit much to say that no one ever asked questions and/or was critical. I vividly remember the interview in which Matt Levine participated, and he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF).
To make this all about “telling it like it is like we do on the trading floor” is trying to force an angle that is simply not there. The better point hidden in the article is that journalists don’t really grasp the material they’re covering, and as such are incapable of asking critical questions.
> he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF).
That's not how I recall it. Levine asked SBF to describe yield farming and SBF went on his (in)famous thing about boxes, practically calling them out as pyramid schemes (but without mentioning any specific names). At no point was FTX referred to as a ponzi scheme.
Agreed. Levine even said after the interview that he came away more confident in SBF because it sounded to him that SBF's business model was selling people shovels to dig for gold. Even if the gold was fake and worthless.
What actually happened was FTX was reliant on these "assets" to get loans even though they were just an exchange that should have just been passing them off to counterparties.
> I think of myself as like a fairly cynical person, and that was so much more cynical than how I would have described farming. Like, you're just like "well, I'm in the Ponzi business, and it's pretty good!"
Levine himself says that SBF wasn't calling FTX or Alameda ponzi schemes, but rather was saying that some of the coins traded on FTX were ponzis, and that he left that interview feeling impressed with SBF's savvy.
Specifically, Levine's words:
People on Twitter now are like “he admitted that FTX is a Ponzi!” but of course that’s not true. He conceded a certain validity to my claim that some crypto businesses — not his — are Ponzis. He is just in the business of trading their tokens.
In fact, I came away from that conversation bullish on FTX and Bankman-Fried.
This all seems very counterfactual and vibes based.
To be clear about this conversation, someone claims that Levine "called SBF out on running a Ponzi scheme." I provide a clear quote from Levine disavowing that. You come in and say that well, maybe FTX was unsound in a way that is actually different from what actually went wrong with FTX/Alameda.
Is there any content to your contribution here? Or is it all just vibes?
I'm not disputing that Mr Levine's take was that SBF and co were "in the Ponzi (trading) business" rather than running a Ponzi themselves.
I am just just pointing out that while this is not as rapidly or completely unstable as running one of the traded Ponzis, it is also not fundamentally stable and sustainable. IDK what "vibes" have to do with that, if anything. These are fundamentals that eventually bring down temporarily bubbles. If that's what you mean by "vibes", it's the opposite.
> Matt: (27:13)
> I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good.
> Joe Weisenthal: (27:27)
> At no point did any of this require any sort of like economic case, it’s just like other people put money in the box. And so I'm going to too, and then it's more valuable. So they're gonna put more money in, and at no point in the cycle, did it seem to like, describe any sort of like economic purpose?
Matt works for an extremely reputable institution, not to mention he's a former Goldman Sachs lawyer. He would be the last person to call anyone or anything a fraud.
Short sellers and people that bitch about things are either heroes or completely marginalized entities (without any reputation to uphold).
Also, IDK why you expect "the system" to warn you about fraudsters. The entire premise of crypto is that it's unlimited, ungoverned finance - which also means unlimited fraud opportunity. So many reputable people warned about this general problem. Like - this should be even more common than it is, because it's ridiculously profitable and kind of legal!
> The entire premise of crypto is that it's unlimited, ungoverned finance - which also means unlimited fraud opportunity.
True, but a lot of modern cryptocurrency businesses have been spending a lot of marketing $$$$ on buying a veneer of legitimacy.
Smart investors know that just because they've got reputable investors, famous board members, favourable press coverage, celebrity endorsements and a sports arena named after them, doesn't mean that This Time It's Different.
But I can understand why a naive investor might fall for the marketing.
See I don't understand this. Just because it is said that crypto is some decentralised no government economy surely does not mean it isn't governed by existing laws and regulations for their processes and actions? Especially the fact that for the most part, it gets redeemed into fiat currency.
Matt Levine's newsletter is kind of a comedy version of comp.risks; financial industry failures, presented entertainingly. But he did manage to get SBF to openly admit on his podcast that he was running a Ponzi:
I think of myself as like a fairly cynical person. And that was so much more cynical than how I would’ve described farming. You’re just like, well, I’m in the Ponzi business and it’s pretty good."
If we’re thinking of the same clip with Matt Levine, I think your characterization is a bit misleading. IIRC Matt Levine was definetly not calling FTX a Ponzi scheme, but yield farming. SBF and FTX (or maybe Alameda?) participated in yield farming, but that has little to do with the aspect of FTX that actually ended up falling apart.
For those interested I think the clip is in an episode of the Odd Lots podcast with both SBF and Matt Levine.
>Matt Levine participated, and he basically called SBF out on running a Ponzi scheme and being OK with it (
That's not quite how it went. Matt Levine wasn't especially negative of him, just found it wild. And they were talking talking more about him being in the Ponzi (in a sense) business more so than him running a Ponzi scam specifically.
To make this all about “telling it like it is like we do on the trading floor” is trying to force an angle that is simply not there. The better point hidden in the article is that journalists don’t really grasp the material they’re covering, and as such are incapable of asking critical questions.