[link removed]

FAIR
View article on FAIR's website ([link removed])
Why Are Michael Lewis—and 60 Minutes—Hyping SBF? Ari Paul ([link removed])
Sam Bankman-Fried

Detail from a New York Times photograph (10/2/23 ([link removed]) ) of Sam Bankman-Fried leaving a courthouse earlier this year. (photo: Hiroko Masuike)

Sam Bankman-Fried, once a celebrity of the cryptocurrency market, is now on trial for fraud and money-laundering charges related to the collapse of his billion-dollar crypto exchange, FTX, and its associated firm, Alameda.

The accusations, according to the New York Times (10/2/23 ([link removed]) ), have made Bankman-Fried (aka SBF) emerge “as a symbol of the unrestrained hubris and shady deal-making” that have defined the cryptocurrency business. The trial will “offer a window into the Wild West–style financial engineering that fueled crypto’s growth,” which “lured millions of inexperienced investors, many of whom lost their savings when the market crashed.”

A year ago (FAIR.org, 11/19/22 ([link removed]) ), I wrote that the business media, leading up to Bankman-Fried’s arrest, failed in their duty to scrutinize FTX and question what was going on behind its public relations. Far too often, he was lionized as a quirky visionary, a big-hearted man willing to funnel his profits into philanthropy and political progress. Bankman-Fried’s boy genius image collapsed with his arrest, but the business media’s credibility took a hit, too.


** SBF's chief defender
------------------------------------------------------------
60 Minutes: The Rise and Fall of Sam Bankman-Fried

60 Minutes (10/1/22 ([link removed]) ): "Michael Lewis has never before written something that dovetails so dramatically with a sensationalized news event."

Today, acclaimed business writer Michael Lewis has stepped into the role of SBF’s chief defender. He interviewed Bankman-Fried over more than a year for his upcoming book on him, Going Infinite: The Rise and Fall of a New Tycoon (Wall Street Journal, 10/4/23 ([link removed]) ), and he took to CBS’s 60 Minutes (10/1/22 ([link removed]) ) to tell the world that the accused was simply misunderstood.

“This is not a Ponzi scheme,” he said of FTX, adding:

In this case, they had a great real business. If no one had ever cast aspersions on the business, if there hadn’t been a run on customer deposits, they’d still be making tons of money.

Lewis reiterated this point on MSNBC’s All In With Chris Hayes (10/3/23 ([link removed]) ), saying the “alleged crime makes no sense.”
CoinDesk: Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet

This is the reporting (CoinDesk, 11/2/22 ([link removed]) ) that Michael Lewis dismissed as "aspersions."

It is true that CoinDesk (11/2/22 ([link removed]) ) obtained documents showing that

Bankman-Fried’s trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.

And as the New Yorker (9/25/23 ([link removed]) ) later put it, "The disclosure raised questions about the true value of Alameda’s holdings and about the conflict of interest between the two supposedly independent companies." This revelation led to doubts about and then a run on the exchange (CoinDesk, 11/10/22 ([link removed]) ; New York Times, 11/14/22 ([link removed]) ).

In essence, Lewis is upset that some parts of the business press and the cryptocurrency investing community were too probing of FTX and Alameda, despite the fact that no one disputes CoinDesk’s findings. As CoinDesk even noted, the exchange’s quick demise spoke to the risks involved in new markets with scant regulation:

The immense scope of this black swan-style event serves as a key reminder of just how rapidly confidence can erode in the parallel financial universe of digital assets—where there are no central banks to bail out the key players—as happened in 2008 when nearly all of Wall Street ran short of liquidity and had to turn to the Federal Reserve for emergency funding.


** 'Misappropriating billions'
------------------------------------------------------------
CoinDesk: The FTX Collapse Looks an Awful Lot Like Enron

CoinDesk (11/16/23 ([link removed]) ) compared the FTX/Alameda collusion to the corporate fraud behind Enron.

And even if Lewis genuinely believes the CoinDesk exposure or other players’ doubts about FTX unfairly caused an asset run, that still doesn’t negate the serious criminal activity being alleged. For starters, a Department of Justice press release (12/13/22 ([link removed]) ) states that SBF

perpetrated a scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds. As alleged, the defendant used billions of dollars of FTX customer funds for his personal use, to make investments and millions of dollars of political contributions to federal political candidates and committees, and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency hedge fund also founded by the defendant.

The federal government also accuses Bankman-Fried of "conspiring with others to defraud FTX’s lenders ‘by providing false and misleading information to those lenders regarding Alameda Research’s financial condition,’” and alleges that “he conspired with others to make illegal donations to political candidates, using the names of other persons to mask and augment political giving” (CNBC, 12/13/22 ([link removed]) ). The prosecution claims that his wealth and power—highly lauded and accepted at face value in the establishment press until the moment of his collapse—was “built on lies” (Reuters, 10/4/23 ([link removed]) ).

Like anyone, Bankman-Fried is innocent until proven guilty, and has the right to defend himself in court. And it is, of course, an open question if what SBF is accused of engaging in was a Ponzi scheme or mere fraud (Guardian, 12/17/22 ([link removed]) ). In fact, CoinDesk (11/16/23 ([link removed]) ) likens the FTX downfall not necessarily to a Ponzi schemer like Bernie Madoff, but to the shady energy company Enron ([link removed]) : “One core similarity is the role of publicly traded, equity-like assets ultimately linked to the performance of the firms themselves,” it wrote; in “both cases, these internal assets flowed between entities that were nominally or even legally separate, but that in fact served the same masters.”

But it's remarkable for an esteemed business journalist to use one of the country’s most important news programs to declare that everyone except SBF was to blame for a business collapse that had enormous consequences for everyone involved. It’s even weirder to hear a business writer insinuate that critical reporting and asking key questions about the health of a business constituted casting “aspersions.”


** 'Effective altruism'
------------------------------------------------------------
Vox: How effective altruism let Sam Bankman-Fried happen

Dylan Matthews (Vox, 12/12/22 ([link removed]) ): "SBF was an inexperienced 25-year-old hedge fund founder who wound up, unsurprisingly, hurting millions of people due to his profound failures of judgment."

More bizarrely, Lewis went on to say that the world is poorer without SBF at the helm of a cryptocurrency exchange. “A lot of people wanted there to be a Sam,” he said. “There is still a Sam Bankman-Fried–shaped hole in the world that now needs filling. That character would be very useful.... What he wanted to do with the resources.”

One can only imagine that Lewis means SBF’s commitment to "effective altruism" (Vox, 12/12/22 ([link removed]) ), a philosophy that often advocates amassing as much money as possible ([link removed]) in order to have more to give away. But Lewis’ declaration here displays the narrow vision the business press has for the world: Society doesn’t need a massive market for internet-based currency, and surely no one needs to profit off such exchanges. Nor can social problems only be addressed by bleeding-heart rich people.

There is a hole in society. But it isn’t another crypto capitalist we need, but a system that taxes the wealthy ([link removed]) to fund social programs and to curb the influence of money in our political system. Lewis’ desire for a new SBF is as much a political statement as it is commentary on SBF’s case.

And Lewis’ political naivete came on full display when he told 60 Minutes that SBF came up with an idea to pay Donald Trump not to run for president, an idea that would no doubt delight many liberals. However, putting aside the question of how much Trump ever entertained such a buy-off, the sleazy scheme would likely have no meaningful impact on our politics today. Whether Trump gets the nomination this year or not doesn’t change the fact that his ideas have become firmly rooted in the Republican Party, and living on in the policies of Republican governors around the country.

One has to wonder if SBF’s openness with Lewis inspired Lewis to cross the line into a guest of his source, compromising his vision. Andy Kessler wrote at the Wall Street Journal (10/1/23 ([link removed]) ) that “Lewis spent more than 70 days in the Bahamas" with SBF, where FTX was based, "on a dozen different trips.” “That’s commitment,” Kessler wrote, noting that “Lewis had all access.”

Lewis told the Journal that in his many discussions with SBF, under house confinement at his parents’ home in Palo Alto, California (Lewis lives nearby in the East Bay), “nothing he said was untrue.” He added, “If you asked him the right question, you got the answer.”

Judging from both this and the 60 Minutes appearance, Lewis is looking at the FTX and Alameda collapse not with a cold outside eye, but the view of an insider, by SBF’s side.


** 'Too much in love with his subjects'
------------------------------------------------------------
Michael Lewis on 60 Minutes

Michael Lewis (60 Minutes, 10/1/22 ([link removed]) ): "The story of Sam's life is people not understanding him."

Lewis, a prolific author and a contributor ([link removed]) at Vanity Fair, is far from just another business journalist. He is a rare kind of successful writer who can turn business reporting into drama, which has made him rich both via book sales (starting with Liar's Poker in 1989) and movie deals (The Blind Side, Moneyball, The Big Short).

While his narratives about business and other spheres of life are popular around the world, some wonder if he’s on the other side of career peak. As long ago as 2015, Columbia Journalism Review (1/15 ([link removed]) ) was noting he had been lambasted by critics for “journalistic laziness" and "falling much too in love with his subjects.” The Washington Post (5/5/21 ([link removed]) ) called his pandemic account The Premonition “disappointing” and “murky and unconvincing.”

Then his book The Blind Side, about the adoption of future African-American football star Michael Oher by a wealthy white family, became the subject of a scandal all its own (People, 8/17/23 ([link removed]) ), when Oher revealed that he was never actually adopted, and charged that the idea that he had been was “a lie concocted by the family to enrich itself at his expense” (ESPN, 8/14/23 ([link removed]) ).

Personal tragedy also struck: Lewis told 60 Minutes (10/1/23 ([link removed]) ) that he almost stopped writing after his daughter, along with her boyfriend, was killed in a car accident (AP, 5/29/21 ([link removed]) ).

Lewis’ appearance on 60 Minutes is an extension of the press enthusiasm ([link removed]) for SBF that FAIR documented before the fall of FTX. Lewis is entranced at SBF’s friendships with celebrities, his charismatic shabbiness, his lofty ambitions, and his obsession with news and information. All that creates an image of an adorable whiz kid rocking the stodgy world of Wall Street. But it really is the media’s job to look behind that and see him for who he really is: a competent adult who ran a business accused of serious wrongdoing.

But worst of all, Lewis’ praise for Bankman-Fried is the kind of business advocacy that not only takes the boss’ defense at face value, but doesn’t have any kind of empathy or interest in the victims of FTX’s collapse (Atlantic, 1/30/23 ([link removed]) ; Fortune, 10/1/23 ([link removed]) ). Skeptics of cryptocurrency often disregard cryptocurrency investors as dupes or small-time scammers. On 60 Minutes, Lewis dismissed the ethical implications of Bankman-Fried's machinations: "What you're doing is possibly losing some money that belonged to crypto speculators in the Bahamas."

However, many people are attracted to cryptocurrency investing for the same reason people invest in other risky ventures that promise great reward: Wages are not keeping up with the cost of living, and thus people are desperate to find other ways to attain financial security (Business Insider, 1/12/20 ([link removed]) ). Though some people come to crypto exchanges because they want a Lamborghini, others just want to create a nest egg for retirement, start a college fund or pay off their mortgage.

Whether it’s the subprime crisis of 2008 or the savings and loan crisis ([link removed]) of the 1980s, all financial collapses create victims, very real people whose lives are upended by greedy financial barons. We should be hearing more about the victims of financial collapse on venues like 60 Minutes.
Read more ([link removed])

Share this post: <a rel="nofollow" target="_blank" href="[link removed]" title="Twitter"><img border="0" height="15" width="15" src="[link removed]" title="Twitter" alt="Twitter" class="mc-share"></a>
<a rel="nofollow" target="_blank" href="[link removed]" title="Facebook"><img border="0" height="15" width="15" src="[link removed]" title="Facebook" alt="Facebook" class="mc-share"></a>
<a rel="nofollow" target="_blank" href="[link removed]" title="Pinterest"><img border="0" height="15" width="15" src="[link removed]" title="Pinterest" alt="Pinterest" class="mc-share"></a>
<a rel="nofollow" target="_blank" href="[link removed]" title="LinkedIn"><img border="0" height="15" width="15" src="[link removed]" title="LinkedIn" alt="LinkedIn" class="mc-share"></a>
<a rel="nofollow" target="_blank" href="[link removed]" title="Google Plus"><img border="0" height="15" width="15" src="[link removed]" title="Google Plus" alt="Google Plus" class="mc-share"></a>
<a rel="nofollow" target="_blank" href="[link removed]" title="Instapaper"><img border="0" height="15" width="15" src="[link removed]" title="Instapaper" alt="Instapaper" class="mc-share"></a>
​

© 2021 Fairness & Accuracy in Reporting. All rights reserved.
You are receiving this email because you signed up for email alerts from
Fairness & Accuracy in Reporting

Our mailing address is:
FAIRNESS & ACCURACY IN REPORTING
124 W. 30th Street, Suite 201
New York, NY 10001

FAIR's Website ([link removed])

FAIR counts on your support to do this work — please donate today ([link removed]) .

Follow us on Twitter ([link removed]) | Friend us on Facebook ([link removed])

change your preferences ([link removed])
Email Marketing Powered by Mailchimp
[link removed]
unsubscribe ([link removed]) .