Crypto Crash & Conspiracy: FTX’s Fallout

In a groundbreaking exposé published on November 2nd, CoinDesk, a leading cryptocurrency news source, unveiled what is arguably their most significant story in its history. The report centered around a leaked balance sheet that illuminated the intertwined financial relationships between Sam Bankman-Fried’s trading powerhouse, Alameda Research, and his prominent digital asset exchange, FTX.

The publication of this information ignited a firestorm throughout the entire cryptocurrency community. Within a mere two weeks of the initial revelations, Alameda Research ceased operations; FTX filed for bankruptcy protection; and Sam Bankman-Fried, the once celebrated thirty-year-old billionaire, witnessed his vast fortune vanish into thin air. This sudden reversal of fortune transformed one of crypto’s most admired personalities into one of its most scrutinized figures.

The aftershocks of this debacle were quickly felt by crypto media outlets. Digital Currency Group (DCG), the parent company of CoinDesk, suspended withdrawals at its crypto brokerage arm, Genesis Trading, citing “unprecedented market turmoil” triggered by FTX’s downfall. At the time, DCG asserted that the temporary freeze would not impact its subsidiaries, including CoinDesk. However, the situation took a complicated turn when news outlets, including Bloomberg, reported that Genesis warned investors about a potential bankruptcy if they failed to secure emergency funding. While a Genesis representative reportedly refuted the claim that a bankruptcy filing was imminent, the future of the company remained uncertain.

Regardless of how things turn out, the situation shows the close connections between crypto news outlets and the industry they are reporting on—and highlights how the implosion of FTX is both a big story and a potential threat.

The FTX saga has proven to be an opportunity for specialized publications like CoinDesk, The Block, and Decrypt to attract a wider audience. However, numerous other outlets are competing for attention, ranging from Substack newsletters like Petition and Twitter accounts such as Autism Capital to established media organizations like Bloomberg, The New York Times, The Wall Street Journal, and the Financial Times.

All of this unfolds against the backdrop of a challenging economic environment for publishers, characterized by declining advertising revenue, newsroom downsizing, and layoffs. Crypto media professionals are now concerned that further fallout from the FTX collapse could further destabilize the industry or significantly reduce their advertising earnings.

Furthermore, various news organizations are now under intense scrutiny for their historical coverage of Bankman-Fried. Reporters covering the FTX disaster are being criticized by vocal cryptocurrency enthusiasts who see the coverage as damaging to the industry.

“We cover the good, the bad and the ugly,” stated Dan Roberts, the editor-in-chief of Decrypt, in a statement to Insider. “We believe the technology is cool, interesting, and here to stay, but that’s not the same as shrugging off bad news.”

Insider consulted with nearly a dozen senior editors and communications personnel from the crypto industry to gain insight into the challenges faced by publishers trying to maintain their newfound reach and legitimacy — even as they cover the very industry they rely on for their financial well-being.

Crypto media kicks into overdrive

Roberts noted that Decrypt’s website traffic doubled during the first week of the FTX crisis. The website temporarily crashed as the story gained traction.

According to Roberts, once cryptocurrency stories gain national prominence and mainstream media outlets begin covering them, website traffic tends to normalize. “In general, I think these things are good for crypto media,” he commented. “It’s a chance to be first and show our authority.”

The FTX story is an “all-hands-on-deck situation” for Decrypt, which has a staff of 15 full-time journalists, Roberts added. “Everyone, regardless of their usual beat, is covering this.”

A spokesperson for CoinDesk, which boasts a team of 100 editorial staff, reported that website traffic increased by 133% and social media engagement soared by 192% in the first two weeks of November compared to the preceding 14-day period.

Michael Casey, CoinDesk’s chief content officer and a former Wall Street Journal columnist, shared his observations with Insider, stating, “We are global, but we only have a few people in different time zones.” He praised the team’s collective efforts in ensuring every fast-moving, wild, unpredicted development in this story was covered.”

The company’s November 2nd scoop, penned by senior reporter Ian Allison, was based on a “private financial document” that revealed Alameda Research’s balance sheet was largely reliant on FTT, a digital token created by FTX. The New York Times, ABC, CNBC, and various other news outlets have cited CoinDesk’s reporting.

Allison shared in an email to Insider his satisfaction in being “so involved and ahead of the story,” adding, “We do have the advantage of having watched this industry evolve at every step over the past few years, so we are pretty plugged in.”

According to Andrew Feigenson, CEO of advertising intelligence at Kantar + Numerator, the upheaval occurs as the cryptocurrency advertising market has faced severe setbacks this year. FTX and other crypto-related companies, such as Binance, Grayscale, and Coinbase, have significantly cut back on their advertising expenditures.

Casey said, “The economy itself is weaker, and therefore marketing spend is not what it was.” “We have to compete with all of the other publications that are looking to grab those marketing dollars and say, ‘Why do you want to be with CoinDesk and not with them?'”

However, market challenges can create an opportunity to consider different ways of reaching consumers and making money from content. According to Casey, CoinDesk is thinking about other developments, including Web3 projects.

He said, “Advertising is still critical to all of our businesses, but there is a real opportunity to think outside the box,” he said. “Maybe in these moments of crisis is when you seize them for the opportunity that they are.”

‘This story has so much more behind it than just the Sam story’

While mainstream publications have largely focused on the troubles surrounding Bankman-Fried, specialized cryptocurrency publications have used their deep expertise to dissect the complicated story and publish important scoops.

Frank Chaparro, editor-at-large at The Block and former finance reporter at Insider, said, “This story has so much more behind it than just the Sam story.” He added that it “showcases how deep we can cover and track big crypto stories that might go missed by mainstream media,” such as “which funds are impacted or which trading firms are impacted.”

Chaparro, who joined The Block in 2018 as its first reporter, has watched its newsroom swell to more than 40 journalists. He told Insider that, following the FTX meltdown, the site has experienced “triple digit percentage traffic growth week over week.”

While some giants like Bloomberg News have set up teams designated to cover crypto full-time, many others still report on the asset class only intermittently or at a surface level. But crypto editors said the FTX story has emboldened them to increase the granularity of the beats in their newsrooms, and that they’re considering expanding their coverage into areas like bankruptcy, law enforcement, and criminal investigations.

Stacy-Marie Ishmael, the managing editor for Bloomberg’s crypto team, likened burgeoning crypto coverage to 1990s coverage of the Internet. “You used to have one Internet reporter who would write about these wild dotcom companies,” she said. “Now you have tech teams at pretty much every single media organization.”

At Bloomberg, “crypto really entered spaces that naturally aligned with and overlapped with what we consider our core coverage,” she added.

Maintaining momentum after the FTX story diminishes is a key focus for crypto publications. Rachael Horwitz, the chief marketing officer at San Francisco-based investment firm Haun Ventures and a former communications executive at crypto brokerage Coinbase, expressed confidence that these publishers are well-positioned to do so.

“The crypto journalists absolutely know what projects and personalities matter in this space right now, and that’s why they can be bold and pretty confident when they are critical of people or products,” Horwitz stated. “They have built up muscle memory over time to understand what spokespeople are credible and who’s not.”

“I don’t think they’ll ease up,” Horwitz added.

Conspiracy theories and suspicion among diehard crypto defenders

The past year has been filled with challenges for the cryptocurrency industry, including declines in Bitcoin’s value, bankruptcies of lenders like Voyager and Celsius, and the ongoing FTX crisis.

Negative headlines have dominated the industry. Cryptocurrency reporters see this as part of comprehensive coverage, but fervent supporters of the asset class view it as treacherous and have attacked journalists for their reporting.

This phenomenon has even been given the acronym “FUD,” which stands for “fear, uncertainty, and doubt.” Cryptocurrency journalists say they are accustomed to readers accusing them of spreading misinformation. Social media critics labeled Allison’s early November scoop as “fake news,” with some claiming that a competitor of Bankman-Fried had orchestrated the story.

According to Prime XBT, a cryptocurrency exchange, “Retail investors might get spooked out of positions easily after such negative news is spread.” “Conspiracy theorists believe that whales and the elite and wealthy are often behind spreading FUD in an effort to negatively impact the value of Bitcoin or crypto, and use this as part of a devious strategy.”

“We get accused of FUD all the time,” said CoinDesk’s Casey, who recently wrote an op-ed on the subject. “People have their passions anywhere in the world about anything, but in crypto, they have those passions attached to an investment asset that gives them an even greater reason to be attached to that passion.”

Senior cryptocurrency editors interviewed by Insider stated that adversarial journalism benefits the entire ecosystem, and that the FTX story highlights the crucial role of journalists in crypto’s long-term survival. While Bankman-Fried evaded scrutiny long enough for FTX to become a $32 billion company, journalists were the first to seriously challenge his empire.

“We need as many people as possible covering crypto,” said Emily Parker, CoinDesk’s executive director of global content. When asked if the events of the past two weeks would have transpired at all without Allison’s initial scoop, she responded: “The fact that you’re even asking this question — that, if it wasn’t for this article, would people know? — shows that there’s a real transparency problem in the industry.”

SBF’s rise, his fall, and a media ‘mea culpa’ over FTX coverage

Among crypto industry leaders, Bankman-Fried was an outlier for many reasons — one of which was his willingness to engage with the media. While other big names like Brian Armstrong, CEO of Coinbase, have made no secret of their distaste for the business press, Bankman-Fried delighted in granting interviews and speaking on podcasts.

His openness may have endeared the young entrepreneur to some journalists and publications. Plus, he had a penchant for writing big checks to news-gathering organizations, donating millions to the nonprofit investigative outlet ProPublica and investing in the media startup Semafor.

Following FTX’s collapse, Bankman-Fried went radio silent — save for the occasional Twitter thread — for several days, before surfacing in a lengthy interview with the New York Times, published on November 14. On social media, critics were quick to accuse the paper of failing to hold him to account. Armstrong tweeted, “Twitter has broken just about every piece of this FTX story using blockchain analytics, while NYT is writing puff pieces on a criminal. Feels like a turning point for citizen journalism and loss of trust in [mainstream media].”

The incident illustrates the distinct points of view the large publications and smaller crypto news sites have brought to their coverage of the FTX meltdown. While trade publications have often shone a light on its more technical aspects, some of the larger business publications have zeroed in on Bankman-Fried’s perplexing tweets, romantic relationships, or suspected whereabouts.

As with Theranos founder Elizabeth Holmes, members of the business media are now asking whether the halo effect around Bankman-Fried blinded them to signs of a coming fall.

This summer, Fortune put Bankman-Fried on its cover. “It’s now a situation where the crypto media has egg on their face. Everyone has egg on their face. I put him on the cover of Fortune!” Jeff John Roberts, Fortune’s crypto editor and author of its Bankman-Fried profile, told Insider. “We put the biggest newsmakers on the cover, and he hands down was.”

In a first-person missive for Fortune this month, Roberts reflected on the summer cover and characterized Bankman-Fried’s stunning fall from grace as a “mea culpa” moment for business reporters.

The headline of his piece? “How SBF fooled everyone — including me.”

Additional reporting by Claire Atkinson.

Are you a media insider? Contact these reporters. Reed Alexander can be reached via email at ralexander@insider.com, or SMS/the encrypted app Signal at (561) 247-5758. Steven Perlberg can be reached via email at sperlberg@insider.com.