December 2, 2022

How a CoinDesk scoop led to the fall of Sam Bankman-Fried and implosion of FTX

3 min read

New York
CNN Business

A surprising level of Apparent deception Organized by Former crypto king Sam Bankman Fried was not exposed by Government investigators Or a large powerhouse financial news organization, such as the Wall Street Journal.

Instead, the public’s first glimpse Accused of wrongdoing by Bankman-Fried — known internally as SBF — came earlier this month from a small news site largely unknown to the public that chronicled the tumultuous and tumultuous events. Many years have passed. The messy world of crypto: Coin Desk.

In fact, the reporter-editor duo who worked to break the story, which set off an amazing chain of events that led to the evaporation of billions of dollars, were not the first to get hold of a document. They did not realize what was in their hands. Casting serious doubts on the stability of SBF’s crypto empire.

“Hi Nick,” reporter Ian Ellison emailed editor Nick Baker about his initial story plan, according to a copy of the message provided to me, “I’m looking at some stuff with Alameda if you’d like to chat this week. Want, not mad rush.”

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Alison had gotten one. Financial document The 30-year-old SBF showed suspicious behavior in using its crypto company, FTX, to prop up its separate investment firm Alameda. But it wasn’t obvious at first glance and “it took a few days to figure out the story,” Baker recalled to me in a phone call this week.

Baker said both he and Allison “knew it was an important document,” but emphasized that neither of them had any understanding of the larger story buried in the spreadsheet of earlier numbers.

“Did I know I’d be talking to you today? Hell no,” Baker told me bluntly. “I had no idea it was going to be this big.”

Over the next few days, Baker, from a home office in New York, worked with Alison, who lived in Scotland, to “chisel” the financial document into the story. On November 2nd, they published the explosive report, which immediately caught the attention of the crypto world and shook the foundation of the mighty exchange FTX. SBF, the perfect tweeter, was remarkably quiet.

“It was something that struck all of us internally,” Baker recalled to me. “Sam, every time there’s a big story about him, he’s not shy about tweeting it. And his silence was apathy. That was one of the things we wondered about in later days. That he didn’t say anything.”

This silence was likely because SBF knew that CoinDesk had revealed something big. And he had good reason to believe so. The article raised many doubts about the health of FTX, leading to an effective rush by investors to suddenly withdraw funds from the company, which threatened its solvency.

After the scoop, SBF’s chief competitor, Binance, suggested it would rescue the company through an acquisition. But in another major scoop that led to the implementation of FTX, Allison learned that the key deal wouldn’t happen. Baker said he was publishing the story, which he knew would cause “chaos and mayhem” in the crypto world, which upset him.

“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 right. I knew the pain ahead. True storytelling has consequences.”

Soon after, with the crypto market and his company in chaos, SBF resigned in disgrace and FTX declared bankruptcy, marking one of the most stunning collapses in the history of finance.

“There are very few parallels for a story that has had so much impact — and so quickly,” Baker said, adding that FTX’s demise happened much more quickly than companies like Enron. “We dropped the story and in a week and two days they went bankrupt and this leading figure in crypto collapsed. It’s spectacular. Really spectacular. I’ve never seen anything like it.”

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