How a scoop by a crypto news minnow led to FTX's decline

How a scoop by a crypto news minnow led to FTX’s decline

by Oliver Darcy | CNN

astonishing level obvious disappointment staged by ex-crypto king Sam Bankman-Fried not revealed by government investigators or a big financial news organization like The Wall Street Journal.

Instead, the public’s first look alleged crime By Bankman-Fried – known to insiders as SBF – came earlier this month from a small news site that has spent years chronicling the turbulent events, unknown to the majority of the public. dark world of crypto: CoinDesk.

The reporter and editor duo working to detonate this news, which led to a dizzying sequence of events that caused billions of dollars to evaporate, were actually unaware of the scoop in their hands with the first document they obtained. It casts enormous doubt on the stability of SBF’s crypto empire.

According to a copy of the message I was given, reporter Ian Allison emailed editor Nick Baker about the initial story plan, “Hi Nick,” saying, “I’m looking for some things to do with Alameda if you want to chat this week, no. crazy rush.”

Allison had achieved financial document This showed that the 30-year-old SBF engaged in shady behavior to use crypto firm FTX to support its separate investment firm Alameda. But that wasn’t clear at first, and Baker recalled in a phone call this week that “it took a few days to understand the story.”

Baker said both he and Allison “know it’s an important document to have,” but stressed that the two of them didn’t understand the huge story embedded in the numbers spreadsheet at first.

“Did I know I was going to be talking to you today? Hell no,” Baker said sincerely. “I had no expectation that it would be this huge.”

Over the next few days, from a home office in New York, Baker teamed up with Scotland-based Allison to “cut” the financial document into a story. On November 2, they released the explosive report that quickly grabbed the attention of the crypto world and shook the foundation of powerful exchange FTX. The prolific tweeter, the SBF was noticeably quiet.

“It was something that touched us all internally,” Baker recalled. “Sam doesn’t hesitate to tweet it whenever there’s big news about him. And his silence was deafening. That’s one of the things we were surprised about in the days that followed. That he didn’t say anything.

This silence was probably due to the fact that SBF knew CoinDesk had uncovered something big. And he had good reason to believe it. The article cast enormous doubt on the health of FTX and prompted an effective influx of investors to suddenly withdraw funds from the company, which jeopardized its solvency.

After the scoop, SBF’s chief competitor, Binance, suggested it would bail out the company through an acquisition. But in the second big news that led to the collapse of FTX, Allison learned that the critical deal would not happen. Baker said he published this story, which he knew would “unleash chaos and destruction” in the crypto world, which worried him.

“I was nervous,” Baker said. “It was definitely a cold hand [moment] – not because I think [the scoop] It was wrong, but because I knew it was right. I knew the pain ahead. Telling a true story has consequences.”

Shortly after, with the crypto market and company in chaos, SBF resigned in embarrassment and FTX moved to declare bankruptcy, marking one of the most dramatic collapses in financial history.

“There’s very little parallelism for a story this fast and impactful,” Baker said, noting that FTX’s comeback is happening much faster than companies like Enron. “We left the story and they went bankrupt in a week and two days and this leading figure in crypto went bankrupt. Stunning. It’s really fascinating. I’ve never seen anything like it.”

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