The New York Times Is in the Tank for Crypto

Today on Tap: There is far too much cheerleading and not nearly enough skeptical reporting.

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In a recent post, 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 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 ran rings around the Times version, explaining the interlocks and the sheer illegality.

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But the most appalling recent Times piece was their take on SEC Chair Gary Gensler, 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, 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 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 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 about the Prospect’s piece, praised Bankman-Fried a year ago 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,” 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?

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