“On behalf of everyone here and the public, thank you for engaging in a time of truth, when I know you have not been advised not to. Thank you very much.”

These are the words that Andrew Ross Sorkin, Columnist and Editor-at-Large at the New York Times, said to renowned criminal and fugitive Sam Bankman-Fried, a man who has stolen billions of dollars in an interview at the Dealbook Conference this week.

Sorkin, an esteemed journalist with decades of experience, said “thank you” to Sam (likely a criminal and a thief) five times in total, with three of those coming from Sorkin after Bankman-Fried stopped talking. He thanked Bankman-Fried (Thankman-Fried) for returning to the interview when he had technical trouble, and thanked him for joining. Sorkin referred to “a generous view…that {SBF is] a young man who made a series of terrible, terrible, very, very bad decisions,” and the “less generous” view that Sam operated a Ponzi scheme and manipulated the system. One might think that the co-creator of Billions, a show that regularly features high-stakes financial fraud peddled by single-mindedly greedy individuals, might be more aware of how to deal with the second coming of Bernie Madoff.

And then the audience applauded him.

Sorkin would spend his 40-minute-long interview asking questions that I - as a person that trains people to do this for a living - would have been thrilled to deal with. Sam was able to hand-wave around money, FTX’s terms of service, and any responsibility as Sorkin sat and said “interesting” without really listening to the answer. Take this exchange, for example:

BANKMAN-FRIED: I think it had been, in some ways, reducing. When you scroll back to 2019, Alameda and FTX were very connected in a number of ways. One of these was that Alameda was the primary liquidity provider on FTX. It was 40-something percent of volume. It was the backstop liquidity provider. You scroll forward to 2022, it was down to 2 percent of volume. We had a lot of backstop liquidity providers. But it still had a big margin position on it. I was failing to pay nearly enough attention to positions and positional risk on the exchange, and to Alameda’s in particular. And I also, frankly, made a mistake that I feel pretty embarrassed to have made. A lot of these are. I substantially underestimated what the scale of market crash could look like and what the speed of it could look like and how correlated it would be.
SORKIN: Does that just suggest that you were just hoping — perhaps hoping against hope — that this would all work out and that nobody, therefore, would realize what this commingling was all about?

It is the height of irresponsibility to give your source the benefit of the doubt, and there is no justification to do so, even if you believe they’re going to slip up. Sorkin gave Bankman-Fried a pleasant ride - an opportunity to do lots of talking, which I assume he will use to justify his possum-adjacent aggressiveness - one which allowed Bankman-Fried to continue to spin the lie that he was this innocent, stupid kid that made a huge mistake, just like Sorkin suggested. I cannot think of a reason to both-sides one of the largest frauds in history, but that’s what Sorkin did.

Specifically, Sorkin accepted the outright lie that Bankman-Fried had “surface-level" awareness of Alameda Research (if you’re new to the FTX saga, please read this) and their positions. Forbes responded by revealing the lengths to which Bankman-Fried had taken to convince them that he was a billionaire, repeatedly updating Forbes’ billionaires’ team with very specific information about Alameda Research’s finances:

Updates like this arrived periodically–practically whenever Forbes asked for them. In September 2021, Bankman-Fried added a new tab to the Google Sheet. Alameda’s funds under management had grown to $37.6 billion, $16.8 billion counting only unlocked tokens. The business had made some Solana trades, he explained, and the number of FTT tokens on his balance sheet had also shifted. Bankman-Fried was well versed in the details: “[W]e used ~20mm FTT tokens as part of the funds to purchase back FTX equity from Binance (causing the decrease), and then subsequently repurchased that FTT in the market,” he wrote to Forbes. “So, as of now (a bit different from a few weeks ago!), we're back up to 186,442,198 unlocked FTT (after having sold off a bit on the recent rally).”

In fact, Bankman-Fried was so involved with Alameda that he was capable of “working on” acquiring a breakdown of Alameda’s balance sheets as recently as August, when he promised to “work on them” for Forbes. Bankman-Fried lied to Sorkin, which was inevitable, but was also allowed to lie because of the timid, friendly way that he was approached.

Good Morning America’s George Stephanopolous somehow did a better job, but was somehow - despite saying “I am no cryptocurrency expert and no financial expert, but did you know FTX deposits were used to pay Alameda creditors,” and Sam paused, nodded, and took several seconds to come up with the comment that he “didn’t know of FTX deposits being used to pay off Alameda creditors.” Stephanopolous eventually got him to sort of admit that he knew about it, but the answer was still mealy-mouthed - a half-admission that he didn’t know about any “improper” use.

The problem is that in both of these cases, the interviewers do not have the experience nor the interest to do a deep enough dive to ask Bankman-Fried the right questions. This is the nature of such a high-profile story - this is a huge get of an interview, and thus the terms were likely (though not explicitly stated) that Mr. Bankman-Fried would be grilled to his intended doneness. The Times could have - and should have - paid someone like Ian Allison of Coindesk, who broke the original Alameda balance sheet story to do the interview, and ask pointed questions such as:

What do you know about the stability of the rest of the cryptocurrency industry?
- You previously mentioned that other exchanges may be insolvent - can you reveal them? If not, why not?
On the day before everything fell apart, you tweeted that a competitor is trying to after you with false rumors, and that FTX’s assets were fine. Why did you say that when you knew it wasn’t true?
- When SBF says “oh I had no idea,” you cite the Dealbook interview when he mentioned knowing things were going wrong around November 6th.
What do you think of Binance? Do you believe Binance is solvent?
What do you think of Tether? What was your relationship with Tether, and do you believe they are solvent?
- You would then ask him targeted questions attuned to this piece about the numerous questions around Tether.

In fact, the crypto community has done a significantly better job of interrogating Bankman-Fried, including YouTuber CoffeeZilla (who caused SBF to walk out of their interview) and Frank Chaparro of The Block, who interviewed Bankman-Fried for two hours and found out, among other things, that FTX didn’t have bank accounts for years, instead choosing to pass money through Alameda Research’s bank accounts.

Sidebar: I will say one thing: I wish everybody would learn to give this guy less time to talk. Two hours of Sam Bankman-Fried talking is extremely boring - he mumbles, he rambles, he repeats himself, and he must be dealt with almost entirely with yes or no questions. He is Colin Robinson from What We Do In The Shadows.

I will be blunt: I no longer care about polycules, or expenditures, or that FTX owes a Margaritaville resort $50,000, or whether or not Sam knew or did not know stuff. Sam Bankman-Fried is a liar attempting to cover his tracks, and treating him as a source acting in good faith is a mistake that will be made for one reason: it’s great fuckin’ entertainment.

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The Bankman-Fried Show

The FTX story is one that is fundamentally around several greedy and rational twenty-somethings using technology to steal billions of dollars. It is not about “mistakes,” or “bad accounting,” or “bad trading strategies.” To its very core, this is a story about exploitation, one where several people knowingly and repeatedly took advantage of institutional and retail investors at a scale that, unless the media is very careful, will happen again, and in a way that hurts more people and takes longer to stop.

The problem with this story is that it’s a much easier-to-digest story if we consider Bankman-Fried the victim of hubris and ignorance. The prosecutors involved are likely to be aggressive, but a jury could be swayed in Bankman-Fried’s favor - but I am not an expert in criminal law, bird law, or any other kind of law.

What I am fairly well-versed in is media narratives, and I can tell you that Bankman-Fried is currently engaging in softening his fall for when he invariably leaves jail, much like Martin Shkreli, a criminal and a scumbag who laundered his reputation to the point a journalist fell in love with him.

While Bankman-Fried isn’t quite as canny or charming as Shkreli - and that is far more of an insult to Bankman-Fried - he is building a narrative that frames him as a dopey child with a squeaky voice that got confused by all the big numbers. He is not being questioned about the fundamentals of what he did, nor are major media players doing a good job of following the right details.

On November 11, when most of the things I mention in this newsletter happened, I watched as people rushed to hear Elon Musk and a crypto bro speculate about what happened with FTX instead of watching the transactions that were happening, because too many people are focused on the fun stuff and not the fraud.

This is exactly what Sam Bankman-Fried and the larger cryptocurrency industry wants.

Bankman-Fried’s intention with his current press strategy is to get people to think he’s a dweeb. He wants to be seen as a confused, sad child that lost track of his Google Sheets, rather than a form of financial mastermind that creatively and wilfully defrauded millions of people from billions of dollars. He loves having hours-long rambling diatribes about how he didn’t know what was going on, obfuscating every fact and thought with a mulch of hesitations and corollaries.

To give you an example, Sam Bankman-Fried created the Serum decentralized exchange on Solana in 2020 (when it increased 1500% in value within 12 hours of launching), and then likely generated Serum tokens in 2022 to bump up Alameda Research’s balance sheets in the same way that he did with the FTT token - tokens that could not be sold, but could be used in future loans.

There is absolutely no way that Sam Bankman-Fried didn’t have a hand in Alameda Research - in fact, I believe that Bankman-Fried would have done this again and again had Coindesk not received the Alameda balance sheets, and, of course, had CZ of Binance chosen not to announce their intent to liquidate.

You see, this was not just about Sam Bankman-Fried covering Alameda’s loans. It’s obvious that the FTT token existed to create liquidity for FTX, which was created as a means of funding Alameda Resarch. Bankman-Fried even slipped up in his interview with Good Morning America, saying that “[…Bernie Madoff’s fraud] was just one big ponzi scheme…FTX, that was a real business,” and while you could be kind and say this was an attempt to differentiate the situations, I’d argue it equates them quite well, considering they both did exactly the same thing. Bankman-Fried knew what he was doing.

Sidebar: David Morris of Coindesk did an excellent job of calmly explaining that FTX was not an accident, but a crime, laying out the exact criminal actions of Bankman-Fried and his toadies.

The problem with a sustained narrative around Bankman-Fried’s ignorance is that ignorance can often be mistaken for innocence. He may very well go to jail, but his life will be easier if he has fans, acolytes, and people in the media that he calls “friends.” Unless he is legally bound to stop using cryptocurrency - which would be both very funny and quite difficult to do - he will come back and do this again, in another way, in another form, possibly under another name.

More importantly, the focus is not on cryptocurrency and blockchain. By taking the focus off the tools used to steal billions of dollars, the media will continue exposing innocent people to exploitation.

Burn It Down

To put it in plain English, Sam Bankman-Fried got rich because he could generate fake money. He created the FTT token, which had no value of any kind other than the nebulous one he created through the FTX exchange. He created the Serum (SRM) token, and he used that to puff his balance books up. And a 2019 lawsuit from an entity called “Bitcoin Manipulation Abatement LLC” accused FTX, Alameda and Bankman-Fried of manipulation of the cryptocurrency markets, something that he would have been fully capable of with his absolute control of the FTX exchange.

All of this was possible because of the unregulated cryptocurrency landscape. The current cryptocurrency industry mantra is to say that “this wasn’t crypto or blockchain, it was fraud.” That Sam Bankman-Fried was just a bad egg, when he specifically used cryptocurrency to do the fraud, because it was a tool that was fantastic at doing this specific kind of fraud in this specific kind of way.

Generating a cryptocurrency token, using one’s relationship as a dominant cryptocurrency exchange to have it listed on another exchange, and then taking advantage of having the overwhelming supply of that token - these are things that are only possible through the lack of regulation and technical “innovations” of cryptocurrency.

Do not believe the cryptocurrency industry when they say “FTX isn’t crypto” because it was a centralized exchange. Sam Bankman-Fried’s empire was built on his ability to create what will one day be considered an unregistered security and use it as leverage to get money. This would not be possible if cryptocurrency did not exist. Bankman-Fried would not have got the capital without Bitcoin, nor would he have been able to do anything he did without the ability to create ERC-20 or Solana tokens. Had cryptocurrency and cryptocurrency exchanges been regulated, Bankman-Fried wouldn’t have been able to do what he did, and anyone saying otherwise is doing so because this is the single largest existential threat to cryptocurrency.

In 2021 and the front half of 2022, the media saw the rise of cryptocurrency prices as a validation of the industry’s existence. It led to reporters like Kevin Roose pumping the bags of NFT penguins and Helium, a company run by liars, all because of the “possibilities” that were imagined based on, well, magic coins being worth a lot of money.

If we do not use this as an opportunity to fundamentally interrogate the entire cryptocurrency industry, and treat those who sell “tokens” as suspicious, we will get a bigger, nastier Sam Bankman-Fried. One that will be a little more careful and a lot more deadly. Cryptocurrency must be regulated, and it must be regulated now.

If you are reading this and saying that I am alarmist, I have a simple question:

What if Bitcoin hits $40,000 again? Do you think people will look away, or will they see this as another opportunity to get rich? Do you not think, right now, there is somebody trying to work out if there’s a way to do exactly what Bankman-Fried did, but better? And do you not think that person will be there to trick people all over again?

Sam Bankman-Fried is a criminal - a morally bankrupt fraudster, fully aware of his actions, who used cryptocurrency to enrich himself and his cronies. His empire was enabled and built upon an unregulated financial system that has enriched some of the worst people in the world. He is a crook, and a product of an industry that lacks the moral fiber to accept responsibility.

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Sam Bankman-Fried Is A Criminal, And…