On Monday, renowned publication The New Yorker published a completely off-kilter article that compared FTX to a bank, infantilized Sam Bankman-Fried, and let his family decry their treatment by the media with little to no pushback whatsoever.
While articles like this are frustrating to those of us covering crypto, it’s also important to discuss why they’re not just annoying but could paint a potentially misleading picture to those not quite as immersed in the industry.
Misinformed with PR-like commentary
The article offers little in the way of substance, but more important are the completely twisted, misinformed false equivalencies. These include “It is standard practice for banks to take depositors’ money and use it for other activities.”
The article’s author, Sheelah Kolhatkar, isn’t new to the dark world of finance and unregulated industries: she’s previously written a well-received book called Black Edge that covers Steve Cohen (now owner of the New York Mets baseball team, and head of S.A.C. Capital). The fact she’s bothering to compare FTX — a cryptocurrency exchange that wasn’t supposed to be lending out customers’ assets at all — to a bank is mind-boggling and more than a little concerning.
Then there’s the little issue of FTX not just lending out customer assets, but lending out those assets to a sister organization that was then using those funds to leverage up and bet against FTX customers — customers whose assets were completely uninsured, unlike customers at any US bank.
The entire comparison whitewashes the significance of the crimes that Bankman-Fried is alleged to have committed.
Just a boy making mistakes
Another point that readers seemed to take issue with was how the article infantilized Bankman-Fried. “At thirty-one, he in many ways still looks like a boy,” Kolhatkar states. Much of Kolhatkar’s time in his family’s house revolves around his mom, Barbara Fried, babying her son, offering him pasta and vegetables, and telling the author that he “will never speak an untruth.” None of his hundreds, if not thousands, of untruths are mentioned after this.
As his family would spin it — which is really the only perspective presented by The New Yorker — Bankman-Fried “made mistakes but did not knowingly commit crimes.”
Even a statement as simple as this runs counter to previous comments Bankman-Fried has made about Alameda Research and why it was given its name. These include, “We knew banks were gonna shut us down… we knew that was gonna be a thing and if we named our company like Shitcoin Daytraders Inc. that they’d probably just reject us… compliance would have a field day with that. But no one doesn’t like research.”
David versus Goliath
There’s also a theme that runs through the article; one of the Bankman-Frieds against the world. Clearly, with evidence — and witnesses — mounting against them, this must be what it feels like for the family.
And it’s clear that they’ve not had it all their own way in the run-up to the trial. Bankman-Fried has been denied release on a number of occasions after he was found by judges to have violated bail conditions. This, according to his lawyers, has left him with insufficient WiFi and severely hindered his ability to prepare for his day in court.
But it’s also important to remember that the plucky underdogs are also leveraging millions of dollars worth of assets to raise a defense against the government. Not to mention the fact that they have incredibly strong legal backgrounds themselves.
As such, this isn’t really David versus Goliath at all. It’s more like ‘Wealthy Stanford Professors and Alleged Fraud Son versus the Department of Justice’ and portraying all the allegations as a misunderstanding without presenting evidence to the contrary seems unfair.
Bankman-Fried trial begins in a week
It’s worth noting — as pointed out in The New Yorker article itself — that Bankman-Fried’s trial begins on October 3. And, with a readership of at least 1.2 million individuals, the idea that painting the Bankman-Frieds as victims of circumstance and “McCarthyite” reporting could sway public perception isn’t out of the question.
The title of Kolhatkar’s article — ‘Inside Sam Bankman-Fried’s Family Bubble’ — is certainly an appropriate one. However, it’s necessary to explain exactly why they’re in a bubble and what details they appear to be avoiding to stay there.
Unfortunately, The New Yorker doesn’t do this, instead presenting an image of a close-knit, all-American family, with a mom who goes on two-hour hikes without drinking water, a soft-spoken genius dad, and the little pride and joy who’s the apple of his parents’ eye.
Meanwhile, the alternative narrative — the one that’s being widely debated outside the Bankman-Fried bubble — is one of a delusional family, unwilling to reckon with reality, and unable to cope with the fact that all signs appear to point to them.
In the end, it doesn’t matter how many column inches are dedicated to propping up the image of the misunderstood, completely innocent altruist genius. It’s up to the defense team, not The New Yorker, to make a compelling argument for Bankman-Fried and his parents and to explain the loss of billions of dollars worth of customer assets.