The staggering level of apparent deception staged by former crypto king Sam Bankman-Fried has not been uncovered by government investigators or a major financial news agency, such as the Wall Street Journal.
Instead, the first public insight into alleged wrongdoing by Bankman-Fried — known to insiders as SBF — came earlier this month from a small news site unknown to much of the world. audience that has spent years chronicling the turbulent and murky world of crypto: CoinDesk.
In fact, the journalist and editor duo who worked to break the story, which set off an astounding cascade of events that led to the evaporation of billions of dollars, didn’t realize the scoop they had in their hands when they first obtained a document that cast huge doubt on the stability of SBF’s crypto empire.
“Hi Nick,” journalist Ian Allison emailed editor Nick Baker about his initial story plan, according to a copy of the message provided to me, “I’m looking at things to do with Alameda if you want to chat this week, no crazy rush.
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Allison had obtained a financial document that showed SBF, 30, had engaged in shady behavior to use his crypto company, FTX, to support his separate investment company, Alameda. But it wasn’t clear at first glance, and it took “a few days to figure out the story,” Baker reminded me in a phone call this week.
Baker said he and Allison “knew it was an important document to have,” but pointed out the two had no early understanding of the massive story that was buried in the spreadsheet of numbers.
“Did I know I would be talking to you today?” Hell no,” Baker told me bluntly. “I didn’t expect it to be so gigantic.”
Over the next two days, Baker, from a home office in New York, worked with Allison, who lives in Scotland, to “chisel” the financial document into a story. On November 2, they released the explosive report, quickly capturing the attention of the crypto world and shaking the foundations of the mighty FTX exchange. SBF, the prolific tweeter, was remarkably quiet.
“It was something that hit us all inside,” Baker reminded me. “Sam, whenever there’s a big story about him, he doesn’t hesitate to tweet it. And his silence was deafening. That’s one of the things that surprised us the next few days. he said nothing.
This silence was probably because SBF knew that CoinDesk had discovered something important. And he had good reason to believe so. The article generated huge doubt about the health of FTX, causing an effective rush of investors to suddenly withdraw funds from the company, which put its solvency at risk.
After the scoop, SBF’s main competitor, Binance, suggested saving the company through an acquisition. But in a second major scoop that led to FTX’s implosion, Allison learned the crucial deal wouldn’t happen. Baker said he was posting this story, which he knew would “unleash chaos and destruction” in the crypto world, which made him anxious.
“I was nervous,” Baker said. “It was definitely a cold hand [moment] – not because I thought [the scoop] was wrong, but because I knew it was true. I knew the pain to come. Telling a true story has consequences.
Shortly after, with the crypto market and his company in chaos, SBF resigned in disgrace and FTX decided to file for bankruptcy, marking one of the most astonishing collapses in financial history.
“There are few parallels for a story with so much impact – and so fast,” Baker said, noting that the loss of FTX happened at a much greater speed than companies such as Enron. . “We dropped the story and in a week and two days they are out of business and this crypto figurehead is down. That’s wonderful. Truly magnificent. I’ve never seen anything like it.”