What happens when a crypto mogul holds the crypto equivalent of a press conference and is confronted with his role in a crypto media scandal?
Sam Bankman-Fried was grilled this morning about Friday's revelation of his secret payments to the Block, a cryptocurrency publication founded in 2018. The question came at the end of a Twitter Spaces hosted by Unusual Whales, a pseudonymous Twitter account that gained a following by tweeting about congressional stock trades during the pandemic and now offers a financial information service with a heavy emphasis on crypto data.
For the record, it resembled many old-fashioned press conferences, albeit in a new setting: Bankman-Fried dodged the question and exited the conversation.
But the moment emphasizes how much crypto-native media exists and how quickly it has developed its own online information realm that is largely distinct from the mainstream media. Crypto media, on the other hand, is a full-fledged entity in its own right. Much of it appears to be traditional outlets with newsrooms, articles, and podcasts that happen to cover a niche topic.
However, it is also inextricably linked to Twitter, the chat platform Discord, the encrypted messaging app Telegram, and tools for direct analysis of blockchain data. And it has a lot of overlap with the rest of the anti-establishment digital media sphere, as the FTX collapse demonstrates better than anything else.
Indeed, as part of the mogul’s ongoing apology tour, crypto entrepreneur Mario Nawfal, who hosted Musk for a Twitter Spaces to discuss the "Twitter Files," also hosted a Spaces with Bankman-Fried. To truly understand the crypto media sphere, go back to the early stages of the FTX collapse — one of the biggest stories in the world right now — and examine how much of it occurred in this largely self-contained ecosystem.
Bankman Fried's problems began with a Nov. 2 report by CoinDesk, a decade-old crypto news service owned by Digital Currency Group, a crypto-focused venture capital firm. According to financial records obtained by CoinDesk, FTX was more financially intertwined with its sister firm, the hedge fund Alameda Research, than previously known.
The report sparked online speculation that Bankman Fried's empire was not financially sound and that the price of FTX's native token, FTT, had been inflated. Changpeng Zhao, the CEO of rival exchange Binance, announced on Twitter four days later that his company was selling its FTT holdings.
Bankman-Fried and Alamada's CEO, Caroline Ellison, fought back on Twitter, assuring the cryptocurrency community that their finances were solid. On-chain analysis — the interpretation of publicly available blockchain data — suggested that the two were not as confident in FTX's financial position as they showed up. According to The Data Nerd, a pseudonymous Twitter account dedicated to on-chain analysis, Alameda sent more than $250 million in stablecoins to FTX in a single day.
As the collapse began, much of the most foresighted real-time analysis of FTX's precarious financial position came in Tweet threads and Twitter Spaces from Dylan LeClair, a contributor to Bitcoin Magazine.
As the fallout from the collapse unfolds, Autism Capital — a Twitter account created in 2020 and linked to a Discord chat — is one source of extensive leads and tips about it. It sometimes reports details of the fallout before mainstream media outlets. The account tweeted on December 4 that Ellison was represented by the law firm WilmerHale. Bloomberg has since confirmed this.
Of course, mainstream media outlets have covered the FTX story as well. POLITICO has covered the intricacies of Washington's response; the FT and Wall Street Journal have scooped stories about internal corruption; a Vox reporter published a damning interview with Bankman-Fried; and the New York Times landed a much-watched live interview with Bankman-Fried.
The tone of coverage, on the other hand, frequently varies. The FTX story is mostly about the dangers of cryptocurrency, with its lack of regulation and ever-present scams, in mainstream media. More emphasis is being placed in the crypto media world on the extent to which Bankman-Fried funded establishment media outlets and politicians while becoming the crypto mogul most embraced by those establishments.
What's the big picture here?
Media ecosystems tend to form around important human interaction sites, such as governments and markets.
Governments' core activities generate fundamental units of information (e.g. bills and executive orders). Markets are the same way (prices and trading volumes). More elaborate media ecosystems can sprout up around these core pieces of information to cover everything else that's going on.
These digital networks also generate basic information, such as social media posts. Furthermore, blockchain networks — a new subset of digital networks — are abandoning on-chain data.
Could they one day support similarly robust media ecosystems?
It is astounding how large and developed the crypto media ecosystem has become. However, it is possible that it is too large.
After all, as Byron Guilliam, senior markets strategist at Blockworks, a crypto media firm aimed at financial institutions, told DFD, "the entire crypto market cap is smaller than Apple, and Apple does not have 15 media outlets covering it."
The demise of the FTX could point to the future of digital information. Or, as the crypto markets remain stagnant and the Block is now rocked by scandal, it could be the last gasp of a crypto media bubble about to burst.
