3 min read

🗞 Coinbase, FTX, NYTimes and Gell-Mann Amnesia

Last week mega popular crypto exchange FTX declared chapter 11 bankruptcy.

Founder SBF tweets about bankruptcy

This is the largest blow up in crypto history (by USD value). Per Bloomberg, the hole on the FTX balance sheet is over $6 billion.

Sam confirms that customer deposits were lost and invested in illiquid securities in these tweets from November 10th.

This looks like gigantic fraud on the part of FTX so certainly the paper of record would reflect that in its coverage of events.

Of course, that's not how it went down.

Instead, the NYTimes's puff piece posted about FTX founder Sam Bankman-Fried cites: how Sam built an "ambitious philanthropic operation", donated to political campaigns, and even used video games (developed by companies that Sam owns) to "unwind" - what a relatable guy!

Certainly, the NYTimes wouldn't write as glowing a review of Bernie Madoff (who defrauded 1000x fewer investors than FTX albeit for a larger dollar figure)

Maybe the NYTime is just a big fan of crypto companies?

Unfortunately if you've been following along, that's not the case either.

NYT Coverage of Coinbase vs FTX

When Coinbase laid off some staff, the NYTimes sentiment wasn't as chipper, and (more importantly) we didn't find out which video games CEO Brian Armstrong was playing to decompress.

Instead we learned about: how Coinbase barely pulled together their ultra viral Super Bowl Ad (according to "two people familiar with the matter"), how "rudderless" the Coinbase new hires are, and how Coinbase's industry leader status has been threatened by a "series of missteps".

Again, no mention of Brian Armstrong's favorite video games.

What's most egregious here is the fact that Brian Armstrong and Coinbase didn't do anything illegal while SBF and FTX meddled in customer funds and lost retail investors billions of dollars

So the NYTimes is full of 💩, who cares Rhett?

I know they're full of 💩, and you know they're full of 💩, but we (society) need to do a better job in treat their legitimacy with the full of 💩-ness that it deserves.

If you had a friend who regularly lied to you or exaggerated their claims in a clearly biased direction - you'd take notice and wouldn't give that person much credibility anymore.

This idea has been succinctly captured by author Michael Crichton. It's called Gell-Mann Amnesia

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”
– Michael Crichton (1942-2008)

We (the bitcoin and crypto community) have enough information to know that the NYTimes was full of 💩 on these Coinbase and FTX stories.

But will we forget how full of 💩 they are when we metaphorically turn the page to a story about politics or international relations?

Probably not, but knowing is half the battle.

If you want to learn more about the FTX blow up, check out this video I did on the rise and fall of FTX

Have a great weekend,