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**NOVEMBER 28, 2022**

Kuttner on TAP

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**** The New York Times Is in the Tank for
Crypto

There is far too much cheerleading and not nearly enough skeptical
reporting.

In a recent post
<[link removed]>,
I noted in passing the oddly soft coverage of the collapse of Sam
Bankman-Fried in

**The New York Times**. The

**Times** managed to compare the woes of FTX to a bank run, to blame
Bankman-Fried's competitors for undermining his credibility, and to
take his professed charitable intent at face value.

Since I wrote, the

**Times** coverage has only gotten worse.

A piece on the interconnections
<[link removed]>
between Bankman-Fried's exchange (FTX) and the investment company he
controlled (Alameda) soft-pedaled the outright illegality of his making
trades with customer funds. To hear the

**Times** tell it, "Alameda's need for funds to run its trading
business was a big reason Mr. Bankman-Fried created FTX in 2019. But the
way the two entities were set up meant that trouble in one unit shook up
the other as crypto prices began to drop in the spring."

But that's not what happened. When customers demanded their money,
Fried didn't have it, because he had been using it and losing it,
illegally, for his own trades.

And this: "Alameda's methods borrowed many aspects from traditional
high finance. It was a quantitative trading firm, similar to Wall Street
hedge funds that use mathematical models and data to inform decisions.
It used 'leverage'-or borrowed money-to fuel its trades and make
bigger returns."

Note the alibis, and the passive voice. The subhead tells the reader
"things got out of control," as in Nixon's infamous "mistakes were
made." The comparable

**Wall Street Journal** piece
<[link removed]>
ran rings around the

**Times** version, explaining the interlocks and the sheer illegality.

But the most appalling recent

**Times** piece was their take on SEC Chair Gary Gensler
<[link removed]>,
the one real hero of this whole mess. Gensler was onto the frauds and
risks of crypto early, and wise to Bankman-Fried. He was repeatedly
lobbied by Bankman-Fried and his allies to lighten up, but to no avail.
As our colleague David Dayen wrote on Wednesday
<[link removed]>,
a bipartisan group of members of the House tried to interfere with
Gensler's ongoing investigation.

But to hear the

**Times** tell it, the problem is Gensler. According to the piece, which
collects and repeats a medley of inconsistent complaints, Gensler has
been both too aggressive and too soft. ("But the collapse of FTX has
raised questions
<[link removed]>
about Mr. Gensler's effectiveness.") The piece also mischaracterizes
Gensler as a onetime enthusiast of crypto, when in fact he was an early
skeptic.

The piece even credulously quotes one of the congressmen who sought to
interfere with Gensler's investigations: "'Reports to my office
allege he was helping SBF and FTX work on legal loopholes,'
Representative Tom Emmer, a Minnesota Republican who serves on the House
Financial Services Committee, tweeted
<[link removed]> on Nov. 10
of Mr. Gensler. 'We're looking into this.'"

Emmer, who was just elected House majority whip, number three in the GOP
leadership, led the letter that tried to get Gensler to back down, in
fact. He took $11,600 from FTX employees personally for his campaign,
and his work as head of the National Republican Congressional Committee,
the election arm of House Republicans, was greatly buoyed by $2.75
million in donations from FTX co-CEO Ryan Salame and the company's
PAC. Emmer, who whined on Twitter
<[link removed]> about the

**Prospect**'s piece, praised Bankman-Fried a year ago
<[link removed]> in public
testimony, saying, "Sounds like you're doing a lot to make sure there
is no fraud or other manipulation."

Any of this could have been mentioned in the

**Times** story to give the proper context. None of it was.

If you read the bylines in these several offending pieces, you'll see
that one prime source of the charity toward Bankman-Fried and the
hostility to Gensler is a young

**Times** tech writer and cheerleader for crypto named David
Yaffe-Bellany. The worst

**Times** pieces are his, though the coverage generally has been too
soft.

Yaffe-Bellany wrote the Gensler takedown. Last January, he wrote a piece
called "The Rise of the Crypto Mayors
<[link removed]>," which
should be a major embarrassment to the

**Times**. In it, he touted crypto as a smart way to pay municipal
employees. He quoted one gung-ho mayor, Francis Suarez of Miami, as
whacking Gensler for not getting with the program.

Yaffe-Bellany is just one writer on a large business staff. Like a lot
of tech enthusiasts, he's just a few years out of school. He was
managing editor of the

**Yale Daily News**, and graduated in 2018.

But writers presumably have editors. Why wasn't some adult at the

**Times** paying attention to the spin?

~ ROBERT KUTTNER

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Democrats Rediscover Populism-and Not a Moment Too Soon
<[link removed]>
As Republicans took a radical turn, Democrats learned to talk to normal
people again. BY AUSTIN AHLMAN

But for the Blizzards, a Climate Utopia?
<[link removed]>
Ignore those six-foot snowbanks-if you want some climate security,
Buffalo wants you. BY GABRIELLE GURLEY

At Least the Tech Winter Will Kill Off Some Zombie Companies
<[link removed]>
A decade of ultra-cheap credit and weak consumer spending created some
of the biggest money-losing companies in history. BY RYAN COOPER

 

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