The staggering level of sheer deception perpetrated by former cryptocurrency tycoon Sam Bankman-Freed has not been exposed by government investigators or major financial news organizations such as The Wall Street Journal.
Instead, the public first saw alleged wrongdoing by Bankman-Fried, known to insiders as SBF, earlier this month from a small news site unknown to most of the public that has been chronicling the turbulent and dark world of cryptocurrencies for years: CoinDesk. .
In fact, the reporter-editor duo who were working to uncover the story that set off the mind-boggling cascade of events that led to the evaporation of billions of dollars didn’t realize the sensation they had in their hands when they first received the document, which they put under huge doubts about the stability of the SBF crypto empire.
“Hi Nick,” reporter Ian Ellison emailed editor Nick Baker about his original story outline, according to a copy of the message provided to me, “I’m looking for something to do with the Alameda if you’d like to chat this week.” no. crazy impulse.”
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Ellison received a financial document that showed the 30-year-old SBF engaged in questionable behavior by using his cryptocurrency company FTX to support his separate investment firm, Alameda. But it wasn’t clear at first glance, and it took “a couple of days to get the story straight,” Baker reminded me in a phone call this week.
Baker said that both he and Ellison “knew it was an important document to have” but stressed that at first they both didn’t understand the huge story hidden in the spreadsheet of numbers.
“Did I know that I would be talking to you today? Hell no, Baker told me candidly. “I didn’t expect it to be so gigantic.”
Over the next few days, Baker, from his home office in New York, worked with Allison, who lives in Scotland, to “turn” the financial document into an article. On November 2, they released an explosive report that quickly grabbed the attention of the crypto world and shook the foundations of the mighty FTX exchange. The SBF, a prolific tweeter, was noticeably quiet.
“It was something that struck us all internally,” Baker recalled to me. “Sam, whenever there’s a big story about him, he doesn’t hesitate to tweet about it. And his silence was deafening. This was one of the things that surprised us in the following days. That he didn’t say anything.
This silence was likely due to the fact that SBF knew that CoinDesk had revealed something important. And he had good reason to believe it. The article raised huge doubts about FTX’s health, provoking an effective rush by investors to suddenly withdraw funds from the company, jeopardizing its solvency.
After the sensation, SBF’s main competitor, Binance, suggested that it would save the company through an acquisition. But during the second big scoop that brought down FTX, Allison learned that the deal was not going to happen. Baker said that the publication of this story, which he knew would “cause chaos and destruction” in the crypto world, caused him dismay.
“I was nervous,” Baker said. “It was definitely cold hands [moment] – not because I thought [the scoop] was wrong, but because I knew it was right. I knew the pain ahead. A true story has consequences.”
Soon after, with the crypto market and his company in turmoil, SBF resigned in disgrace and FTX filed for bankruptcy in one of the most stunning crashes in financial history.
“There are several parallels to a story with such a strong impact – and so fast,” Baker said, noting that FTX collapsed much faster than companies like Enron. “We dropped the story and after a week and two days they went bankrupt and this leading figure in crypto went down. This is amazing. Really amazing. I’ve never seen anything like it.”