The New York Times has a Softball Story on FTX’s Sam Bankman-Fried

Sam Bankman-Fried, CEO and founder of FTX, walks near the US Capitol on September 15, 2022 in Washington, DC.

Sam Bankman-Fried, CEO and founder of FTX, walks near the US Capitol on September 15, 2022 in Washington, DC.
Image: Graham Sloan/Sipa USA (AP)

FTX filed for bankruptcy on Friday, leaving reasonable people wondering how a cryptocurrency platform founded in 2019 and valued at $32 billion in 2021 could go down to zero in such a short period of time. There is a new piece New York Times FTX got exclusive access to founder Sam Bankman-Fried, but if you’re looking for answers, you won’t find them there. In fact, the interview with SBF, as he often calls it, is presented through such a sloppy lens that you have to start wondering what’s going on in cryptocurrency reporting. Time.

In a new article New York Times David Yaffe-Bellany lays out the facts in ways that are clearly helpful to SBF’s version of the story, leaving his highly questionable claims without proper context or even the slightest back-up. The result is not to shine a light on the shadowy world of cryptocurrency. It reads as if Time interviewed Bernie Madoff after the ponzi scheme collapsed and ultimately suggested that he had simply made some bad investments.

As an example, take a paragraph near the beginning of the article that quotes the work of the SBF hedge fund FTX’s sister organization, Alameda Research, Directed by SBF’s one-time romantic partner, Caroline Ellison. The paragraph, one of several about Alameda, omits the most important Reuters, Bloomberg News, and Financial Times.

Trust me The New York Times:

Mr. Bankman-Fried said Alameda had amassed a large “margin position” in FTX, meaning it borrowed from the exchange. “He was a lot bigger than I thought,” he said. “And actually the risk of miscarriage was very significant.” He said the size of the task was in the billions of dollars, but declined to provide further details.

SBF’s quote about “borrowing” billions between FTX and Alameda appears to be a wild mischaracterization, if credible reports from many other outlets are to be believed, and the corporate three-card Monte is painted as some kind of innocent investment move. At least $4 billion in FTX funds, including customer deposits, were moved to support Alameda. Reutersand that’s something you can’t legally do.

Ken Griffin, the billionaire CEO of Citadel, explained today at a conference in Singapore why traditional finance is not allowed to move money this way.

“There is no doubt that client assets were used to make investment decisions for the benefit of FTX shareholders at the clients’ expense, but it did not work at the clients’ expense. American broker dealers do not allow this. You can’t just use your client assets to do proprietary trading,” Griffin explained in an interview. Bloomberg news.

“That’s a big no-no. And that’s a good no-no, to be clear,” Griffin continued.

As another example, take a paragraph Time FTX discusses its relationship with Binance CEO Changpeng Zhao:

Mr. Zhao, a former FTX investor, still owned a large amount of FTT, a cryptocurrency that FTX invented to facilitate trading on its platform. On November 6, Mr. Zhao announced He announced on Twitter that he was selling FTT, leaving FTX customers scrambling to withdraw their deposits.

There’s a lot to cover in this paragraph, but let’s start with the claim that FTT is a cryptocurrency “invented to facilitate trading”. It’s a very crypto-industry friendly way of talking about what’s going on. In fact, FTT was created by SBF for the same reason as any other cryptocurrency: as a speculative asset that allows early investors to extract wealth from people who put money into the asset after the price rises.

The Time the piece also mentions Zhao’s announced FTT token sale last week, without explaining why the sale itself is a problem. Zhao had acquired FTT coins in a strange way and wanted to empty it. It started when Zhao bought a 20% stake in FTX in 2019. In mid-2021, after Zhao’s relationship with SBF soured, SBF bought Zhao’s stake in FTX for $2 billion. But a large part of this $2 billion was in FTT, a token invented by SBF. When Zhao announced that he was selling all of FTT at a cost of $580 million Reutersthe whole house of cards collapsed.

Earlier in the passage, the Time He calls what is happening with FTX “working on deposits”, a character that hides what is really happening. It’s not clear that FTX even has enough liquid $580 million to cash in Zhao’s stake in the cryptocurrency token invented three years ago. If you can’t explain what the FTT actually is, you can’t understand why it’s the biggest fraud of the last decade.

FTX had only $900 million in liquid assets. and its largest single asset was a cryptocurrency called Serum Financial Times. FTX held $2.2 billion worth of Serum, but the market value of all Serums anywhere was only $88 million. And you’ll never guess who created the Serum. Like FTT, Serum was created by FTX and Alameda Bloomberg news. The people behind FTX created their own fake money and were treated as if it happened real dollars and cents.

But every explanation is new Time the piece makes extensive use of quotes from the ex-billionaire, giving both SBF and cryptocurrency more broadly the benefit of the doubt, and even tries to make his attitude more self-reflective than a merciless calculation to make himself sound better.

Another piece from Time:

However, Mr Bankman-Fried agreed with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry. He said his other commitments caused him to miss signs that FTX was in trouble.

“If I had concentrated a little more on what I was doing, I could have been more thorough,” he said. “That would allow me to capture what’s happening on the risk side.”

SBF somehow “expanded its business interests too quickly”? Did the SBF simply “fail to catch up” with the risks it took? Or was the whole enterprise rotten to the core?

after the paragraph in clause Time It casts soft light on the FTX’s extraordinary implosion, explaining that the SBF’s “ambitions exceeded its understanding,” or perhaps suggesting that it was “too dependent” on a small group of advisers.

And, according to TimeSBF’s lean staff numbers were further proof that it wasn’t all smoke and mirrors, but something to be proud of alongside its charitable contributions:

Mr. Bankman-Fried’s circle of colleagues was committed to effective altruism, a philanthropic movement that encourages supporters to give away their wealth in efficient and logical ways. For colleagues outside the clique, it was sometimes difficult to find time to speak with Mr. Bankman Fried, said a person familiar with the matter. And Mr. Bankman-Fried made it a point of pride that FTX only has a staff of about 300, much smaller than its biggest rivals Binance and Coinbase.

Even as he continued to recruit, Mr. Bankman-Fried built an ambitious philanthropic operation, invested in dozens of other cryptocurrency companies, bought shares in the trading firm Robinhood, donated to political campaigns, gave media interviews and offered billions of dollars to Elon Musk. helping finance the mogul’s takeover of Twitter.

Mr Bankman-Fried said he wished “we would bite less”.

Again, this characterization of SBF makes it sound like it overextended itself in an otherwise prestigious enterprise. In effect, SBF had built a house of cards where “each individual card is a house of cards unto itself.” Rusty Foster put yesterday.

Even the apparent conflict of interest during the collapse of FTX is noted as something only “critics” of SBF would mention:

FTX and Alameda were closely connected. Alameda traded heavily on the FTX platform, which meant that he sometimes benefited when other FTX clients lost money. a dynamic that critics call a conflict of interest. In the past, Mr. Bankman-Fried has defended the deal, saying Alameda provided important liquidity — an injection of capital that allowed other clients to complete transactions on the exchange.

And at the end of the day, SBF just wants to cooperate with investigators and do what’s right for the people who put their money into FTX. TimeHe quotes SBF critically:

As FTX collapsed, Mr. Bankman-Fried said he was “working constructively with regulators, bankruptcy officials and the company to try to do what’s best for consumers.”

First of all, the Times article never addresses the claim that FTX was nearly “hacked” over the weekend. 600 million dollars. Not a single mention of this very strange thing, which will undoubtedly have a major impact on bankruptcy proceedings going forward.

The Time The piece ends with SBF’s love of video games and his social media antics over the past two days:

“People can say whatever they want about me online,” she said. “In the end, what matters to me is what I do and what I can do.”

He also said that he has been finding other ways to occupy his time lately, playing the video game Storybook Brawl, although less than he usually does. “It helps me relax a bit,” she said. “It clears my mind.”

Shortly before the interview, Mr. Bankman-Fried sent a cryptic tweet: The word “What.” Then he tweeted the letter H. Asked to explain, Mr Bankman-Fried said he planned to place the A and then the P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”

So he was planning a series of cryptic tweets? “Something like that.”

But why? “I don’t know,” he said. “I improvise. I think it’s time.”

The Time The piece was met with a backlash on social media as people tried to understand how someone who lost literally billions of dollars from FTX users could act like an innocent businessman whose worst crime could be some bad trading. But the SEC and DOJ are both investigating FTX The Wall Street Journaleven so Time He decided to go easy on the SBF, at least there is hope that justice will be served at some point in the future.

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