How a scoop by a crypto news minnow led to the fall of FTX

13 days ago Silicon Valley

By Oliver Darcy | CNN

The staggering level of apparent deception staged by former crypto king Sam Bankman-Fried wasn’t uncovered by government investigators or a major powerhouse financial news organization, such as The Wall Street Journal.

Instead, the public’s first glimpse of the alleged wrongdoing by Bankman-Fried — known to insiders as SBF — came earlier this month from a small news site unknown to much of the public that has spent years chronicling the turbulent and murky world of crypto: CoinDesk.

In fact, the reporter and editor duo who worked to break the story, which prompted a stunning cascade of events that led to the evaporation of billions of dollars, didn’t realize the scoop they had on their hands when they first obtained a document that cast tremendous doubt on the stability of SBF’s crypto empire.

“Hi Nick,” reporter 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 some stuff to do with Alameda if you want to chat this week, no mad rush.”

Allison had obtained a financial document that showed 30-year-old SBF had engaged in shady behavior to use his crypto company, FTX, to prop up his separate investment firm, Alameda. But that wasn’t clear at first glance and it took “a couple days to figure out the story,” Baker recalled to me in a phone call this week.

Baker said that both he and Allison “knew that it was an important document to have,” but emphasized that the two had no understanding at first of the massive story that was buried in the spreadsheet of numbers.

“Did I know that I’d be speaking to you today? Hell no,” Baker candidly told me. “I had no expectation that it was going to be that gigantic.”

Over the next couple of days, Baker, from a home office in New York, worked with Allison, who lives in Scotland, to “chisel down” the financial document into a story. On November 2, they hit publish on the explosive report, quickly capturing the attention of the crypto world and shaking the foundation of the mighty exchange FTX. SBF, the prolific tweeter, was noticeably silent.

“It was something that struck us all internally,” Baker recalled to me. “Sam, whenever there is a big story about him, he is not shy about tweeting it. And his silence was deafening. That was one of the things we were surprised about in the days after. That he didn’t say a thing.”

That silence was likely because SBF knew CoinDesk had uncovered something big. And he had good reason to believe that. The article generated enormous doubt about the health of FTX, spurring an effective rush of investors to suddenly pull funds from the company which put its solvency in danger.

After the scoop, SBF’s chief competitor, Binance, suggested it would rescue the company through an acquisition. But in a second major scoop that led to FTX’s implosion, Allison learned that the crucial deal would not happen. Baker said it was publishing that story, which he knew would “unleash chaos and destruction” on the crypto world, that made him anxious.

“I was nervous,” Baker said. “It was definitely a cold hands [moment] — not because I thought [the scoop] was wrong, but because I knew it was right. I knew the pain ahead. Telling a truthful story has consequences.”

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

“There are few parallels for a story with that much impact — and so quick,” Baker said, noting FTX’s undoing occurred at a much greater speed than that of companies such as Enron. “We dropped the story and in a week and two days they are bankrupt and this leading figure in crypto has fallen. It’s stunning. Truly stunning. I’ve never seen anything like it.”

Continue reading...

Read On "Silicon Valley"
More News On "Silicon Valley"
2 minutes ago - NBA roundup: Jazz top Warriors on last-second dunk 3 minutes ago - Behind two different Congress fates: Listless, invisible campaign in Gujarat; spirited, focused fight in Himachal 3 minutes ago - Rangers use 4-goal 3rd period to beat Golden Knights 5-1 3 minutes ago - Warriors left stunned after blowing lead in final seconds in Utah 7 minutes ago - Who Is Dating Lil Nas X? Does Lil Nas X have a boyfriend right now? 8 minutes ago - Why did Megan Fox Breakup with MGK after their Engagement? - 12 minutes ago - Wednesday’s Sports In Brief 12 minutes ago - Top Famous Celebrities and their “Fake News” Story 14 minutes ago - Terra Founder Accuses SBF Of Attacking UST Peg With $1B UST From Genesis 17 minutes ago - WJC’s Ron Lauder Joins Campaign to Have Kanye West’s Music Removed from Streaming Services 24 minutes ago - JURANOVIC JOKE 26 minutes ago - Third-Period Meltdown Leads to Another Home Loss For Golden Knights 26 minutes ago - Comic Con India Heads to Delhi: Here are All Details About the Event 31 minutes ago - MLB world reacts to Padres’ stunning blockbuster signing 36 minutes ago - Gael baseball team will play Clarion-Goldfield/Dows at Field of Dreams 37 minutes ago - Padres, Xander Bogaerts Agree To 11-Year Deal 38 minutes ago - New York Times journalists and staff go on first 24-hour strike in 41 years 39 minutes ago - Ukraine war is going to ‘take a while,’ Putin says as he warns nuclear risk is increasing 43 minutes ago - Eetu Makiniemi, San Jose Sharks lose to Vancouver Canucks 43 minutes ago - NY Rangers’ Four Third Period Goals Bury Golden Knights, 5-1, As Gallant Enjoys Homecoming Against Former Club Before 17,939 Wednesday 46 minutes ago - The Lord of The Rings: The Rings of Power Season 2 Adds Eight New Actors to Cast 46 minutes ago - Simone Fontecchio lifts Jazz past Warriors in short-handed matchup 51 minutes ago - MLB Free Agency Tracker: Xander Bogaerts, San Diego Padres Agree on Deal 55 minutes ago - NASA Missions Probe Game-changing Cosmic Explosion 56 minutes ago - Albatross or not, Judge’s $360M deal was earned 1 hour ago - San Diego stunner: Padres steal Xander Bogaerts from Red Sox with 11-year, $280 million contract 1 hour ago - ‘Their Satanic Majesties Request’: When The Rolling Stones Went Psych 1 hour ago - Google’s Top Trending Searches of 2022 Revealed: See Which Pop Culture Moments Made the List 1 hour ago - New York Times employees strike for 24 hours in labor dispute 1 hour ago - "They Never Flinch" | Fontecchio Hits Game-Winner As Utah Stuns Golden State 1 hour ago - Musicians, bands release sleigh full of new holiday music 1 hour ago - Thompson’s 5-goal game sends Sabres past Blue Jackets 9-4 1 hour ago - NBA-leading Celtics embarrass sloppy Suns in blowout 1 hour ago - NHL Thursday parlay at mega (+1111) odds, today 12/8 1 hour ago - Here's What Stood Out in the Celtics' Win vs. Suns: Dominant Defensive Performance Paves Way to Blowout Victory 1 hour ago - 3 reactions from short-handed Warriors’ horrible yet encouraging last-second loss to Jazz 1 hour ago - Gujarat Election Results 2022 LIVE Updates: Trends show that BJP set to get over 50% of votes 1 hour ago - Gujarat poll results: AAP looks to breach BJP's bastion, emerge as principal challenger of the saffron party 1 hour ago - A list of all NBA teams in alphabetical order and their logos 1 hour ago - Watch: Tempers Flare Down the Stretch as Jazz Steal the Win vs Warriors in the Absence of Stephen Curry 1 hour ago - Kobe Bryant's advice to Kevin Durant: 'Really just don't be a crybaby' 1 hour ago - World Cup winner White warns ‘naive’ S.Africans ahead of Champions Cup debut 1 hour ago - Virginia stays perfect with 83-54 victory at William & Mary 1 hour ago - Courteney Cox Jokes About How ‘Real New Yorkers Eat Pizza’ In Hilarious Video 2 hours ago - NHL world reacts to historic five-goal performance 2 hours ago - Recap: Avs blanked by Bruins 2 hours ago - Elon Musk turns Twitter office rooms into bedrooms for 'tired' employees 2 hours ago - Extreme Natural Events and Climate Change 2 hours ago - Golden State Warriors suffer heartbreaking loss in unbelievabably crazy finish 2 hours ago - 1,100 New York Times Employees to Go on 24-Hour Strike 2 hours ago - After Teaching Him for Free, Michael Jordan’s Hall of Fame Coach Reveals the ‘Hardest Thing He Had To Overcome’ in Golf 2 hours ago - What Makes a Great Gift? 2 hours ago - [latest] Black Clover Movie Latest Spoilers, Leaked Summaries, Plot & More News 2 hours ago - TV and Streaming Viewing Picks for December 8, 2022: how to watch Thursday Night Football 2 hours ago - Rangers’ Kaapo Kakko showing potential, but goals hard to come by 2 hours ago - OMEGA X legal battle against SPIRE begins, CEO Kang Seong Hee defiant to New York Times – Asian Junkie 2 hours ago - Thompson nets 4 in 1st, 5 overall, as Buffalo tops Columbus 2 hours ago - Judge goes back to Yankees as Giants, Padres examine options 2 hours ago - How Streaming Has Rewritten the Script for Movies 2 hours ago - Capitals finish season-long road trip 3-2-1 to stay afloat in East
free geoip