In what could outstrip Enron as the biggest accounting-fraud scandal ever, Sam Bankman-Fried’s crypto-currency exchange, FTX, and the associated hedge fund Alameda Research came crashing down over the course of a few weeks in November. The noise that started the avalanche turns out not to have come from a professional journalist, or a government regulator, but from a hobbyist named James Block, who self-publishes on the newsletter platform Substack, and who only started writing and reporting this calendar year. It’s amazing what one self-described “nerd” can do in his spare time.
FTX, which according to recent reports has an $8 billion shortfall and more than a million creditors, has declared bankruptcy. Bankman-Fried, a major political donor who had appeared on the covers of Forbes and Fortune, is now under investigation. And the millions of dollars in grants promised by the FTX Foundation’s Future Fund, for causes such as pandemic prevention and protection against rogue A.I., are now worth about as much as the company’s digital tokens. That’s a dramatic comedown for a 30-year-old billionaire that had Tom Brady hawking his product during the Super Bowl, plus a branded N.B.A. arena in Miami. Or, as Bankman-Fried put it in an interview with The New York Times, “I’ve had a bad month.”
