From the NY Times to WaPo, media fawn over Bankman-Fried



It’s been nearly three weeks since FTX founder Sam “SBF” Bankman-Fried announced that his exchange was facing a deep liquidity crisis, was unable to find a last-minute bailout, and was forced to file for Chapter 11 bankruptcy. The insolvency affected millions of investors, leaving many portfolios completely wiped out.

Bankman-Fried openly admitted that FTX lent client deposits to Alameda Research, FTX’s sister hedge fund, though he characterized it as a mistake caused by “confusing internal labeling.” FTX’s terms of service explicitly state that client funds will never be lent to other financial institutions or used by FTX for its own operations. Sam publicly stated in a now-deleted tweet: “We do not invest client assets (not even Treasuries).”

The broader crypto markets have bled dry in response, and other industry stalwarts now face the risk of insolvency with the contagion spreading to Genesis, Grayscale and many other companies that had assets in FTX or were owed money by Alameda Research.

Related: The fall of FTX and Sam Bankman-Fried could be good for cryptocurrencies

FTX’s new CEO, John Ray III, stated in court documents: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred here.” In the same court documents, FTX admitted that it may have more than 1 million creditors, most of whom were users who lost money when SBF took it and lent it to Alameda Research for its commercial property business.

In the wake of Bankman-Fried’s actions, it is deeply frightening that mainstream media outlets such as The Wall Street Journal, The New York Times, The Washington Post, Forbes, and many others have covered the FTX scandal and subsequent collapse with gloves. of children, refusing to call out Bankman-Fried and his inner circle for using and abusing client funds.

Instead, these posts largely framed the FTX disaster as a series of honest mistakes by overly ambitious and flamboyant entrepreneurs sticking to the effective altruism movement. Bankman-Fried and insiders like Caroline Ellison, the former CEO of Alameda Research, were simply trying to do good for the world and will no longer be able to carry out their benevolent aspirations.

The Wall Street Journal, for example, published an article focused primarily on Bankman-Fried’s charitable aspirations, while glossing over the fact that it misused client funds:

Bankman-Fried has said that her parents, both law professors, instilled in her an interest in utilitarianism, the philosophy of trying to do the greatest good for the greatest number of people. She said that she began putting those ideals into practice while majoring in physics at MIT. Concerned about the suffering of animals on factory farms, he said, he stopped eating meat.

The WSJ also delved into the FTX Foundation and its Future Fund (a nonprofit arm of FTX), discussing how many good causes are no longer able to collect promised grants:

Related: Will SBF face consequences for FTX’s mismanagement? don’t count on it

“The collapse of Mr. Bankman-Fried’s empire has reverberated far beyond his base in the Bahamas, through the halls of academia and pioneering laboratories around the world. various fellows […] funds were still owed to them when FTX failed, according to people familiar with the matter.”

Not once has the WSJ condemned Bankman-Fried for his actions. While he discussed the multi-million dollar losses charitable causes have suffered, he did not mention the billions that were stolen from FTX customers who were promised their deposits were safe.

Similarly, The Washington Post reported that Sam Bankman-Fried and his brother Gabe wanted to make a difference after the global pandemic rocked the world in 2020:

A Washington Post review of lobbying disclosures, federal records and other sources found that the brothers and their network have spent at least $70 million since October 2021 on research projects, campaign donations and other initiatives aimed at improving biosecurity and preventing the next pandemic.

The post omitted the fact that the charitable donations were, in fact, funded with money SBF obtained from customers. The article further lamented that the brothers will no longer be able to fund their pandemic-related philanthropic efforts:

But the sudden collapse of FTX, which filed for bankruptcy last Friday following reports that client funds were being used to prop up a sister trading company, has sparked a financial contagion that is expected to end the agenda of brothers pandemic prevention.

Unfortunately, the impact of the FTX collapse goes well beyond the negative impact on funding for pandemic prevention. Millions of people lost their money trusting FTX to keep their cryptocurrency safe. Companies using FTX to hold their corporate treasuries are now going under. Hedge funds, venture capital, and centralized financial platforms have been severely crippledwith some investors who have otherwise outperformed the market now facing 50% losses due to the misappropriation of their funds.

Perhaps the most egregious reports come from The New York Times. in one widely criticized Puff Piece, the author painted a picture of an ambitious but overextended businessman who made mistakes but did so legally. With a little more oversight or perhaps a larger team, they advised, these costly mistakes could have been avoided. They even described SBF as a philanthropist who let his charitable ambitions get too big:

Even as he continued to hire, Mr. Bankman-Fried built an ambitious philanthropic venture, invested in dozens of other cryptocurrency companies, bought shares in trading company Robinhood, donated to political campaigns, gave media interviews and offered Elon Musk thousands of millions of dollars to help finance the acquisition of the mogul’s Twitter. Mr Bankman-Fried said he wished “he had bitten a lot less”.

Frankly offensive reporting portrayed the embattled ex-CEO as simply too busy and overworked to properly monitor what was happening at his companies.

FTX and Alameda Research describe themselves as closely linked. However, they are not described as related parties that must have clear restrictions on doing business with each other. In no world was it appropriate to mix funds between the two parties when FTX’s assets were primarily client funds. Instead, the article explained Bankman-Fried’s defense of the muddled relationship by noting that Alameda is a crucial market maker and liquidity provider for FTX.

Related: My Story of Telling the SEC ‘I Told You So’ on FTX

in a follow up mailThe NYT explored SBF’s political and charitable contributions in depth, describing the now-embarrassed businessman as the second-biggest donor to the Democratic Party behind George Soros, and describing his wide-ranging influence on policy and regulation:

A network of political action committees, nonprofit organizations, and consulting firms funded by FTX or its executives worked to court politicians, regulators, and others in the policy arena, with the goal of turning Mr. Bankman-Fried into the authoritative voice of cryptocurrencies, while also shaping regulation. for industry and other causes, according to interviews, email exchanges and an encrypted group chat seen by The New York Times.

Amid the discussion of his numerous donations, the article never raised where Bankman-Fried’s generous funding came from. There is no mention that FTX and Alameda are now bankrupt and many lives are ruined. Funds that were stolen from users to prop up the FTX share value or FTT price that are then used for political and charitable donations must be recovered. Simply put, the money was not for Bankman-Fried to give away.

Forbes wrote a Similary swaggering article about the other antagonist in the fall of FTX and former CEO of Alameda Research, Caroline Ellison. He began with effusive praise for the now-fired executive:

Alameda Research CEO Caroline Ellison is a math whiz with a love of Harry Potter, fringe political philosophy, and high stakes. She is also one of the supporting cast in Sam Bankman-Fried’s FTX Catastrophe.

The article went on to describe his rise from star student at Stanford to Alameda Research, where he eventually took the reins of the proprietary trading firm. He discussed his penchant for math, polyamory, and, of course, effective altruism. He also suggested that she could be the scapegoat for Alameda’s downfall:

Many of the people who flocked to Ellison’s defense gather at Urbit, a peer-to-peer platform. […], one of his online followers told Forbes. They think Ellison was set up to be the culprit and claim that former co-CEO Sam Trabucco, who they derisively call ‘Sam Tabasco’, is behind the Alameda implosion.

Forbes hinted that Ellison might flee Hong Kong for Dubai, but did little to hold the former chief executive accountable. She blatantly omitted the fact that she was in charge of risk management and disastrous operations at Alameda, including her involvement in transferring client funds from FTX to Alameda to support her trading losses.

The mainstream media should be held accountable for higher standards of journalism than what we have seen in this coverage. Too many outlets have compromised the veracity of their reporting, perhaps because their reporters share Bankman-Fried’s leftist politics.

It is clear that Bankman-Fried’s influence extends well beyond the cryptocurrency industry and extends to the mainstream media. We need stronger citizen journalism to get the whole truth out, and we must collectively ensure that the former billionaire is held accountable for his actions.

matthew liu He is a co-founder of Origin Protocol, a blockchain platform that brings NFT and DeFi to the masses through its two flagship products, Origin Story (story.xyz) and Origin Dollar (ousd.com). A serial entrepreneur, he previously co-founded PriceSlash (acquired by BillShark) and Unicycle Labs. He was an early project manager at YouTube before it was acquired by Google, and also served as vice president of products at Qwiki (acquired by Yahoo!). and Bonobos (acquired by Walmart). He bought the first BTC from him in 2012 and participated in the Ethereum crowdsale in 2014.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.



Add Comment