NPR Covers for FTX’s Massive Left-Wing Corporate Fraud and Embezzlement

  • Collapse of major cryptocurrency exchange FTX is blamed by NPR on lack of regulation
  • Major conflicts of interest and close relations by FTX CEO with regulators is ignored

  • FTX connection to major left-wing donors and funders ignored in story

OUR RATING: Trash Journalism, aka the Daily Beast.

Indicted Outlet: David Gura | National Public Radio | Link | Archive | 11/23/22

NPR is subtly trying to reinforce a narrative frame around the FTX collapse that the cryptocurrency markets are unregulated and therefore the lack of regulations led to the current collapse.

But that narrative fundamentally misrepresents the known facts in the story and dodges some of the central reasons why the story is so important: politically-connected elites embezzled billions of dollars from FTX. Embezzlement can topple any company no matter how well-run. Instead, NPR wants to advocate for regulations so they push that narrative while downplaying the actual crimes involved. It’s dishonest reporting.

Major Violations:

  • Missing Context
  • Ignoring the Central Issue
  • Creating False Connections

On November 11, 2022 FTX declared bankruptcy. FTX is a cryptocurrency exchange. [1] An exchange, put simply, is where retail customers can transfer cash into cryptocurrency, where they can exchange their cash for tokens or coins of various cryptocurrencies.

Cryptocurrency operates by issuing ‘coins’ or ‘tokens’ that are branded with various trade names. Bitcoin is, by far, the most famous ‘coin’ though it is not properly considered a ‘crypto’ because its transactions are not secret.

Earlier this year, FTX was estimated to be worth $32 billion. In less than a month, financial investigators have discovered widespread financial problems at the company, including $10 billion inappropriately transferred from user accounts. A reported $1 billion is considered ‘missing’ from the books. Those funds were used to cover losses at a related company owned by the FTX CEO, Alameda Research. [2]

The founder and now-former CEO was Sam Bankman-Fried, known in the media by his initials as “SBF.”

Bankman-Fried had his girlfriend Caroline Ellison running Alameda Research. [3]

The scheme so far seems to involve taking the billions in cash deposited by users into FTX, and then transferring those liquid assets into a coin owned and issued by Bankman-Fried. His coin is known as FTT. [4] Bankman-Fried then loaned billions of dollars of FTX user funds to Alameda Research to separately invest in and speculate in other cryptocurrencies. [5]

His first major mistake was taking investor deposits and converting them into a coin he held a stake in, and then his second major mistake was taking those deposited funds and using them to capitalize an investment company on the side.

To make a comparison to a retail bank, it would be as though Wells Fargo took consumer deposits and transferred all of the dollar deposits into the currency of Iceland, the Krona, because Wells owned Iceland. And then, on top of that, if Wells borrowed from consumer deposits without asking to start and run a separate investment company in other currencies using depositor funds.

This missing context is absent from NPR’s reporting.

Unsurprisingly there are a wide variety of laws against doing these exact kind of schemes.

So here’s how NPR covers for this massive fraud and embezzlement of customer funds in their opening sentence:

“Lawyers for the once-mighty crypto-exchange FTX described a company riddled with dysfunction and mismanagement…”

It’s not actually a ‘dysfunction’ or ‘mismanagement’ when the company runs exactly as it was intended: it invested in an unstable token they had a self-interest in, and then siphoned off funds to invest in speculative markets. The company might be poorly managed, but it’s core problems came from a well-functioning and well-managed criminal scheme.

Instead NPR makes it sound like rascally teens running a late-night Dairy Queen.

The reporting is ignoring the central issue. The issue is not the lack of regulation in cryptocurrency markets, it’s that this company was being run by a fraudster con man and was being propped up by well-connected elites who were also steering major donations to the political left.

NPR just leans into the complexity of cryptocurrency without even trying to explain it to its readers. They use some key phrases to make it seem super complicated and hard-to-understand.

Here are a few of the phrasings that work to create that image of complexity in just the first four paragraphs of the story:

“…sprawling empire…”

“…one of the most abrupt and difficult collapses in the history of corporate America…”

“…part of a large and complex bankruptcy filing.”

“…And its new management team, brought in right before the exchange filed for Chapter 11, is just beginning to understand the magnitude of the mess they inherited.”

“Here’s what we learned…”

It’s not hard to notice what they’re doing here: they’re saying it’s so complex we’ll never really know what happened. They’re saying, “don’t look too closely here or it’ll just make your brain hurt” as if most corporate frauds are really that complex.

Financial crimes are much like any other crime: they exist when someone who doesn’t deserve something takes the thing. Something of value gets taken from someone who owns it, and goes to someone else via fraud or coercion. If a bank steals from depositors, that issue isn’t complicated. If a company executive embezzles funds, it’s not complicated.

That person might have excuses, they might have their reasons, it might be in a complex industry, but the illegality of what they’ve done isn’t complicated. It’s not complicated here. The available mainstream reporting makes pretty basic claims as to the founder’s criminality.

Those claims could be wrong, they could be #fakenews, but so far Bankman-Fried has largely been admitting to everything that’s being claimed in the papers. [26]

Billions of dollars lost to millions of customers and NPR can only focus on hackers and whether there was a run on the bank causing the collapse.

NPR also engages in missing necessary context when it talks about the investors into FTX. Here is the offending paragraph:

“FTX’s legal team outlined how much money the company has gotten from investors since it was founded in 2019, and in its most recent funding round, it raised an additional $400 million for its U.S. business, and $500 million for its larger international operations.”

NPR completely ignores the controversial original funders of FTX, including notorious investment firm BlackRock. [6] It then also ignores the redactions in bankruptcy filings of the creditors owed funds from FTX. [7] What would the motivation be to keep creditors secret? If anything, other investors should be warned about the potential exposure to an FTX bankruptcy that might wipe out accounts for other businesses or investment groups.

But this all matches the weak reporting on FTX and the reporting avoidance of their political donations to Democrats. The media largely ignores the massive political donations, over $40 million, made by FTX to Democrats [8] and hard-left causes such as Transgenderism. [9]

That would generate too many questions about whether the reporting on the topic is too biased and prejudiced in favor of the elites connected to the company, and against the many investors in that space who have done nothing wrong but who are now suffering political pressure to have the government regulate away their financial sector.

A significant unreported part of the story is that the original investors in FTX are the major banks who stand to lose the most from widespread adoption of cryptocurrency. The crypto market, in many ways, is a grassroots rejection of conventional banking and state-driven monetary policy.

Banks tried to kill crypto as their first choice, but failed. [10] Governments hate crypto because they allow dissidents and vulnerable populations the freedom and power to be economically independent of state coercion. [11]

That aspect of the story is missing from this NPR story, and from almost every other story on FTX’s collapse. Those who funded FTX in the first place are entities who wanted to see cryptocurrencies fail. That’s potentially enormously ironic or one hell of a coincidence.

There are also reports that FTX was used to launder money through Ukraine back into U.S. domestic politics. [12] These donations were illegal even by Biden’s orders. [13] FTX donations were even used by the GOP leadership to take out America First politicians like Madison Cawthorn. [14]

Those issues might seem fantastic at first, but examining those close to and around FTX begins to make some of those issues obviously relevant to any fair reporting about the topic. To their credit, the New York Times covers this aspect of the scandal by pointing out the extensive political and social network that Bankman-Fried used to build his company. [15]

As just one example, the media typically completely ignores the involvement of Bankman-Fried’s Stanford Law Professor father Joe Bankman. [16]

Also ignored is that Bankman-Fried’s girlfriend, Catherine Ellison, is the daughter of Glenn Ellison [17] of  Massachusetts Institute of Technology, known more often as “MIT.” Glenn Ellison previously worked with and allegedly oversaw Gary Gensler. [18] Gensler is now head of the government’s regulatory arm overseeing the misconduct at FTX and Alameda Research, the Securities and Exchange Commission. [19]

Many in the crypto world are rightfully pointing out that this appears to be a significant conflict of interest. [20] Some in Congress are making this same point. [21] Notably SEC head Gensler held a 45 minute Zoom meeting with Bankman-Fried months prior to the FTX collapse where Bankman-Fried proposed an SEC-sanctioned crypto trading platform. [22]

Earlier this year the SEC under Gensler hired 50 additional ‘crypto cops’ to police the cryptocurrency space, [23] and yet they managed to completely miss the ongoing fraud and mismanagement at FTX.

Zero of this context appears in the NPR reporting on the topic.

The biased and prejudiced NPR reporting is also evidence in how it contrasts with other financial frauds. You can see it in the way that NPR covers a similar case of founder misdeeds in the Elizabeth Holmes case, published on the same day as the FTX article. [24]

In the second paragraph about Holmes NPR says:

“When U.S. District Judge Edward Davila ordered prison time for the former CEO last week, one thing was pivotal: How much money investors had lost because of her crimes.”

NPR isn’t focusing here on the complexity of biology or blood testing, they aren’t losing readers in the briar patch of finances, securities, investments, venture capital, they are focusing on the central issue: investors lost money because of a criminal act.

That sums up the story: a company founder committed a crime in order to take money that wasn’t rightfully theirs.

In Holmes’ case she took investments from millionaires for a testing device that wasn’t ready and possibly would never be ready.

In Bankman-Fried’s case he took investments from the masses for a currency exchange that he secretly denominated in his own coin, and then siphoned off client funds to run his own separate investment company for his own personal benefit. 

The story really isn’t that complex or complicated.

When talking about Holmes, NPR talks about the investors who were involved since many were Republicans. Holmes was leading Theranos, hoping to create a blood testing service that would conduct a wide variety of tests with only a small amount of blood sample from users. Holmes’ vision was practically extremely difficult, if not impossible, to achieve and as her company expanded she met deadlines by faking results. Yet NPR focuses greatly on her criminal activity even though, for the most part, it involved defrauding investors while likely seeking to get more time to achieve her result.

In the case of Bankman-Fried, if the various news accounts are accurate, he was misappropriating user funds in the first place by converting them into a coin/token that he held personally, the FTT coin. He was then embezzling those funds in order to separately invest them with Alameda Research run by his girlfriend.

Holmes’ actions are somewhat understandable, while still unethical and illegal, because she appears to have been buying time to try and make her blood testing device work.

Bankman-Fried’s actions are not at all defensible or understandable, because he was breaching his fiduciary duties to his customers from the start, and then taking those funds for personal gain on top of it. Bankman-Fried, again to the extent that the news accounts are accurate, was not just committing fraud he was also converting those assets into his own personal gain. He was enriching himself and even donating funds to personal causes using funds that were not his own.

That is larceny, embezzlement, misappropriation of funds, theft, crimes that are very clear cut and very obvious.

On top of it all, Bankman-Fried told the media that ethics were a “dumb game we woke westerners play.” [25] This reveals his state of mind, which is one of a remorseless sociopath criminal.

This is what NPR considers the five main takeaways from the FTX collapse story:

1) Customers’ money is M.I.A.  
2) FTX has bad data and intentionally destroyed internal messages  
3) Estimates that FTX was worth $32 billion may be too low  
4) It wasn’t just a “run on the bank” that led to FTX’s collapse  
5) Everyone is worried about hackers, and there are major disputes brewing about how to handle customer data

This is such a dishonest rendering of the story and the ‘major revelations’ of the story. NPR isn’t just missing this story, they are purposefully covering up the major revelations in the story because it doesn’t fit their obvious ideological imperatives. 

There are other major revelations about this story that NPR is not covering, it’s a major disservice to their readers that they are so grossly negligent while reporting this topic. 

OUR RATING: Trash Journalism, aka the Daily Beast. 

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