How a scoop by a little-known crypto site led to the fall of Sam Bankman-Fried and implosion of FTX
November 24, 2022 at 15:48
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Allison had obtained a financial document that showed 30-year-old SBF had engaged in shady behavior to use his crypto company, FTX, to prop up his separate investment firm, Alameda.
But that wasn’t clear at first glance and it took “a couple days to figure out the story,” Baker recalled to me in a phone call this week.
On November 2, they hit publish on the explosive report, quickly capturing the attention of the crypto world and shaking the foundation of the mighty exchange FTX.
“Sam, whenever there is a big story about him, he is not shy about tweeting it.
That he didn’t say a thing.”That silence was likely because SBF knew CoinDesk had uncovered something big.
The article generated enormous doubt about the health of FTX, spurring an effective rush of investors to suddenly pull funds from the company which put its solvency in danger.
After the scoop, SBF’s chief competitor, Binance, suggested it would rescue the company through an acquisition.
But in a second major scoop that led to FTX’s implosion, Allison learned that the crucial deal would not happen.
Baker said it was publishing that story, which he knew would “unleash chaos and destruction” on the crypto world, that made him anxious.
“It was definitely a cold hands [moment] — not because I thought [the scoop] was wrong, but because I knew it was right.
“We dropped the story and in a week and two days they are bankrupt and this leading figure in crypto has fallen.