Ari Paul Crypto Media Criticism

While Crypto Bro Scammed Clients, Reporters Scammed Readers

Before Bankman-Fried’s transition from financial genius to possible financial criminal, he received little scrutiny in the media.

By Ari Paul / Fairness and Accuracy in Reporting (FAIR)

Today, you probably know who Sam Bankman-Fried and FTX are, and the details of why he and his company are front-page news are emerging at an amazing pace. Here’s the short version: Bankman-Fried—a boyish-looking cryptocurrency baron known commonly as SBF—announced that his lauded cryptocurrency exchange, FTX, had lost at least $1 billion in client funds, sending the crypto market into a tailspin (Fox Business11/16/22). The company, once the third-largest cryptocurrency exchange (AP11/16/22), has filed for bankruptcy. Lest one think this is a debacle that only affects crypto bros, Treasury Secretary Janet Yellen warns that “the sector’s links to the broader financial system could cause wider stability issues” (New York Times11/17/22).

How could this happen? How could no one have seen this coming? These are the questions many people are asking. One problem is that in the months leading up to Bankman-Fried’s transition from financial genius to possible financial criminal (Yahoo Finance11/14/22), he received little scrutiny in the media. On the contrary, he was celebrated.

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‘Pragmatic style’

Among the silliest suck-ups came from the New York Times (5/14/22), in which David Yaffe-Bellany, the paper’s cryptocurrency correspondent, said that Bankman-Fried’s “pragmatic style” came from his parents, who “studied utilitarianism, an ethical framework that calls for decisions calculated to secure the greatest happiness for the greatest number of people.” Yaffe-Bellany added that “Bankman-Fried is also an admirer of Peter Singer, the Princeton University philosopher widely considered the intellectual father of ‘effective altruism.’” (Singer has been criticized for his eugenics-like approach to disability—FAIR.org1/20/21.)

The New York Times (5/14/22) largely embraced Sam Bankman-Fried’s self-presentation as “a straight-talking brainiac willing to embrace regulation of his nascent industry and criticize its worst excesses.”

Yaffe-Bellany was also widely lambasted for providing media cover for Bankman-Fried even after his empire collapsed (New York Times11/14/22). As Gizmodo (11/15/22) put it:

The new article in the New York Times by David Yaffe-Bellany lays out the facts in ways that are clearly beneficial to SBF’s version of the story and leaves many of his highly questionable assertions without proper context or even the most minimal amount of pushback. The result isn’t to illuminate the shadowy world of crypto. It reads like…the Times had conducted an interview with Bernie Madoff after his Ponzi scheme collapsed and ultimately suggested he just made some bad investments.

The conservative New York Post (11/15/22) used Yaffe-Bellany’s reporting to tweak the establishment Times for its coziness with someone who may face criminal indictment. But the Post‘s sibling paper, the Wall Street Journal (10/30/22), had just weeks earlier given Bankman-Fried free, uncritical space to pump out optimism about cryptocurrencies, including the idea that value drops in crypto were just part of a general economic fluctuation: “It wasn’t just crypto…. By and large what we saw this year was a broad-based risk-asset selloff, as this monetary inflation reared its head, became noticeable enough to inspire policy change.”

Bloomberg (4/3/22) likewise had painted Bankman-Fried as an eccentric financial whiz kid, whimsically frugal with a “Robin Hood–like philosophy,” while Reuters (7/6/22) ran with his claims that not only did he have “a ‘few billion’ on hand,” but that he would graciously use it to “shore up struggling firms.” An accompanying photo of Bankman-Fried with a T-shirt and disheveled hair made him look like the reincarnation of Abbie Hoffman.

Bloomberg (4/3/22) called Bankman-Fried “a kind of crypto Robin Hood, beating the rich at their own game to win money for capitalism’s losers.”

Barron’s reran an AFP story (2/12/22) that, again, highlighted Bankman-Fried’s “spartan lifestyle,” his vegan diet and his casual wardrobe. Matthew Yglesias (Slow Boring5/23/22), an economics commentator and a graduate of Slate and Vox, wrote, “I think [his] ideas, as I understand them, are pretty good.” None of these pieces really probed whether his business was sustainable.

Shadowy sector

How on Earth did this T-shirt-clad man charm American media into thinking that he could manage billions of dollars in wealth, based on an intangible commodity that has no intrinsic value? Analysts have long tried to get the media class to understand that crypto has many inherent problems (Jacobin12/26/1710/17/21), that the crypto market’s value has tanked (CNBC6/15/22), that Bitcoin wealth is highly concentrated (Time10/25/21) and that Bitcoin, despite being Internet-based, is highly environmentally destructive (Guardian9/29/22).

One might think—or hope—that, after Enron, WorldCom, Bernie Madoff, Jordan Belfort and the 2008 financial crisis, that the business press could harbor skepticism about financial and business leaders in general, but particularly those in a shadowy, emerging sector known for its instability (Forbes5/10/22) and its susceptibility to scams (Forbes9/23/22).

Bankman-Fried, unfortunately, was a dangerous combination of factors that could win over reporters. He was optimistic about a troubled financial sector. He was making billions while spouting altruistic ideas and remaining personally thrifty, a kind of mysterious being who could be presented as a poster child for a more ethical version of capitalism. His insistence on casual dress suggested that he was just so smart, his brain operated above the mundane details of regular business.

His image was simply fun to write about. And this all made for the kind of good copy—and photographs—that will make an editor happy at deadline time. But this allowed his image to be the main focus for the press, rather than the goings-on of his business.

Doug Henwood, host of KPFA’s Behind the News and the author of Wall Street: How It Works and for Whom, told FAIR:

The business press is rarely skeptical about the speculative heroes of the moment. There are exceptions; if you read carefully, you can get a good critique. But the general culture is boosterish. Just a few months ago, SBF was a genius. Elon Musk, too, though his antics at Twitter are making that cult harder to sustain. Before that it was Elizabeth Holmes and her magical blood-testing machine. Go back a couple of decades and it was Ken Lay and Enron (celebrated by none other than [New York Times columnist] Paul Krugman, who’d also been paid a consulting fee by the company).

There are a lot of reasons for this. Many business journalists identify with the titans they cover—some even aspire to join them, as did former New York Times reporter Steven Rattner, who became an investment banker. Then there’s the fear of alienating your sources—the dreaded loss of “access.” And then there’s the general reluctance to be the skunk at the picnic—when markets are frothing, it’s more fun to play along than play the critic.

As NBC (11/16/22) noted, Bankman-Fried’s wide spending bought him wide influence, as he

visited the White House, attended a congressional retreat, and held countless meetings with lawmakers and top regulators. He got chummy with Bill Clinton after paying the former president to speak at a conference. He spent $12 million getting a referendum on the ballot in California. And he earned praise during Senate testimony from Sen. Cory Booker, D-N.J., for a “much more glorious afro than I once had.”

In just two years since Bankman-Fried’s first political donation, his money hired dozens of top-flight lobbyists and political operatives, made major investments in newsrooms like ProPublica and Semafor, and made him the second-biggest Democratic donor of the 2022 midterms, behind only the 92-year-old financier George Soros. He said $1 billion would be a “soft ceiling” for his spending in 2024.

NBC (11/16/22): Bankman-Fried “is hardly the first wealthy donor, and certainly won’t be the last, whose ideological agenda is difficult to disengage from business motives.”

The whole mess is sparking a conversation about whether cryptocurrency markets demand tighter and more robust regulation (Fortune11/14/22Washington Post11/17/22). But there needs to be a discussion about the media’s role in this as well. Reporters should be skeptical of crypto market actors, for all the reasons stated above, but they also should be skeptical of business leaders more generally.

Good public relations is as important to a business’s bottom line as the strength of its product. Reporters and editors need to fight the urge to be a part of that.


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Ari Paul
Ari Paul

Ari Paul has reported for the Nation, the Guardian, the Forward, the Brooklyn RailVice NewsIn These TimesJacobin and many other outlets.

7 comments

  1. This is a portent: like cryptocurrency, the US dollar is based on froo-froo. It’s worth what we say it is because we say it is. Other nations are weary of being jerked around by this actually worthless reserve currency.

  2. “His image was simply fun to write about.”

    Bullsh*t. And this article about why SBF got the start treatment by the press is as glib and superficial as the press coverage of SBF that it is critiquing.

    Mainstream media is owned by billionaires and the elites. It’s main purpose is as a propaganda mouthpiece for the agendas of those owners. If they were fawning over some crypto currency bro, if they were (on balance) deliberately oblivious to the serious structural, legal, and regulatory issues of crypto, then there is some reason why they want crypto to succeed.

    Maybe a little intelligent, honest inquiry on that topic would result in an article worth reading.

  3. I don’t think this shows you need more regulation of crypto, necessarily, that we need more strict control and regulation of these speculators and CON-MEN . They go crazy(while stealing a lot off money) and nobody questions them until they’ve stolen everybody’s money, and say OOPS, I lost all of your money. BUT, it’s not really my fault!!!!!!!!!!!!!!!!!

  4. Ari, I already like you as a journalist because you are asking these questions. I personally question the culpability of the parents of “sam” and “caroline” since they not only failed to ask where the 10 billion start-up money came from (which I would have asked my adult children (who have integrity) but their conservative professional positions vouched/acted as a front/cover/info-bearer to these criminals. The wood nymph gang think they will lay low, get pardoned by donation-recipient biden, write a book, make a movie and be richer than before but I hope someone in government does not think they are cute.

  5. Crypto growing pains or the very as common modus operandi

    Issues raised already in 2017

    Unclear origin and identity of creators defies a notion of transparency claimed.
    While mathematically Bitcoin supply is limited already most nominal bitcoins have been mined and reportedly 50% nominal value in hands of two entities only and 70% in hands of 1000 entities only defies a notion of equitable distribution of wealth in bitcoin units, resembles structure of market manipulation (similar for FED fiat market) or Ponzi scheme of early entries scamming later entries.
    Current Bitcoin software implementation/network implementation defies the stated principle of transparency and autonomy of the transactions while in fact all Bitcoin servers as well as Bitcoin exchange servers implementations so far require some kind of third party authentication or authority established, mostly for reason of security, efficiency or expediency of Bitcoin transfer in order to avoid increasing network latency.
    Bitcoin deposit accounts are fee based and hence defy stated notion of nearly cost-free Bitcoin currency system and transfers and practically became purely notional and fractional. While Bitcoin deposit accounts supposedly designed to prevent theft or loss of Bitcoins residing on user devices due to their hacking or physical destruction and unrecoverability, in fact they became a “paper” bitcoins and like notional “paper” gold certificates where there is not enough gold for redemption of entire notional value in physical gold at one time, there is not enough bitcoins (capital) within given institution/Bitcoin Exchange for redemption their of entire notional value of bitcoin deposits and the fractionality of those bitcoin financial services only grows and often has led to collapse of the financial institutions that provided them in the past due to insider fraud, hacking etc.,. as they are based on nothing but a confidence scheme. So in fact you are not holding Bitcoins but a deposit certificate for bitcoins, an old banking arrangement backed by fiat money, not 21st century innovation.
    The corruptibility of the Bitcoin network itself is of big concern. Taking over 50%+ of all active at given time, Bitcoin transactions processing nodes (“Proof of Work” Processing Nodes), and hence enabling those who control 50%+ nodes to legally steal Bitcoins, has already been documented. Although it is at this point still technically costly it may likely provide avenue for disruption or hijacking Bitcoin exchanges and prevent transfers.
    Worrying machinations of Bitcoin foundation and conflict of interests of its members defies stated notion of wider Bitcoin democratic community setting the rules and instead special interest seem to control Bitcoin standard specifications.
    Severe problems with Bitcoin network latency and reaching adequate SLA levels and transaction speed dramatically dependent of the volume, which is slowly increasing while practical usability of the system collapses. A proposed remedy to it such as increasing of the size of the block in the blockchain prefers concentrated processing power and reduction of number of Bitcoin processing nodes, a possibility of differing transaction speeds, higher for capital rich players and slower for grunts and by that defies Bitcoin stated egalitarian principle and dangerously concentrates the power of few over BTC infrastructure.
    A sleuth of new competing digital currencies some openly backed or run by competing global financial institutions and banks with huge capital and political connections to government, all in the background of unsettled legal framework and hence a potential huge tax or even criminal liability. All that defying spirit of Bitcoin as defined by its creator(s).
    Huge volatility of bitcoin markets and repeated lack of adequate liquidity of bitcoin as an asset due to hoarding Bitcoins by investors [a form of Bitcoin Mercantilism] treating it as a hedge for currencies like Dollar, Yen, Yuan or Euro and not interested in building BTC infrastructure and transacting with Bitcoins as a currency, paying bills, invoices etc., but only as temporary speculative store of value waiting for fiat currency collapse. Again all that defies the bitcoin notion of near zero-cost, interest free peoples’ circulating currency alternative holding value against government-run insane fiat money printing, free of financialization schemes such a attempts for Bitcoin BTC ETF.
    Massive, shadowy, agressive Bitcoin Astroturf supported by misinformation, obfuscation and propaganda hype [ a financial apocalypse is coming, buy BTC, loud claims] recently peddled not only by an alternative business media outlets that usually peddle Silver/Gold commodity investments [ Gold is real Money incessant theme] but also from business MSM which more and more give time and credence to the Bitcoin after more and more Bitcoin egalitarian principles, practices and ideas are gutted in latest implementation of BTC infrastructure and/or more Wall Street speculators take BTC portfolio positions. It is always suspicious when a clear target of Bitcoin revolution seems to join in BTC praising choir.

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