The publisher "Morning Finance" recently published a new book Number Go Up written by Bloomberg investigative reporter Zeke Faux. In 2022, he interviewed the then crypto wunderkind SBF (founder of the now-defunct exchange FTX) with skepticism, which sparked his curiosity and led him on an investigative journey into the crypto world. He wanted to find out if the crypto world was the "epic Ponzi scheme" he had a vague feeling about, and what answers he would get. The crypto landscape suspected in Number Go Up may also be the concerns you have when entering this field!
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Book Excerpt: "I Thought It Was Ridiculous, But It Turned Out to Be Even More Ridiculous"
Nassau, Bahamas
February 17, 2022
"I won't lie to you," Sam Bankman-Fried (SBF) told me.
That was a lie!
We were in his office in the Bahamas, and I had pulled my chair up to his desk and turned on the recorder. I was a Bloomberg investigative reporter, sent by the company to interview this key figure in the global crypto frenzy.
SBF stared at the six screens in front of him, checking emails and telling me he would be completely open and honest with me about cryptocurrencies. Forbes had just named him the world's youngest billionaire under 30, but he looked like a student who had been pulled out of the library after an all-nighter, disheveled, barefoot, wearing blue shorts and a gray T-shirt with the logo of his crypto exchange FTX. His explosion of hair was lopsided from the headphones, like a half-sheared sheep. On his desk was an open bag of chickpea curry, his lunch from the day before.
My original plan was to write a profile piece to introduce this crypto wunderkind to the world. This 29-year-old seemed to have foreseen the future of money. His rise was meteoric, so when he said FTX would one day dominate Wall Street, everyone thought it was quite possible. He was worth at least $20 billion, but he claimed he only made money to donate all his wealth. He drove a Toyota Corolla and liked to sleep on the beanbag next to his desk, which I could see.
It was an irresistible story. The problem was, it was all fake. While the media, politicians, venture capitalists, and investment bankers hailed him as a philanthropic wunderkind - the Warren Buffett or J.P. Morgan of the digital age - he was secretly misappropriating billions of dollars of customer funds, squandering them on bad trades, celebrity endorsements, and real estate purchases on a small island, like a drug lord laundering money.
I wish I could tell you that I was the one who exposed all this, that I was the heroic investigative reporter who unraveled the biggest scam in history, but unfortunately, I was fooled just like everyone else. I sat next to the second-largest con man after Bernie Madoff, with clear access to his emails, internal chat logs, and transaction records, but I still didn't know what the hell he was up to.
"For me, the most important thing right now is to explain things clearly," SBF said, frantically shaking his feet in socks. "You can consider me your source."
"I understand," I said, nodding amiably.
This is a rigged, large slot machine - come and play!
Of course, I had many questions. From the moment I started researching the crypto world, I saw all the warning signs. Why were these companies headquartered in notorious offshore tax havens? What was the deal with those obscure alt-coins supposedly worth billions of dollars? Could this be the cause of future financial turmoil? Was this all a scam?
As I visited SBF's empire on a small Bahamian island, the rational logic of the financial world had already collapsed. Almost no one knew what cryptocurrencies were for, not even the so-called experts could explain it. No one really understood why many cryptocurrencies had value. But from 2020 to early 2022, the prices of Bitcoin and hundreds of other altcoins continued to skyrocket, and many of the coin names were ridiculous, like Dogecoin, Solana, Polkadot, and Smooth Love Potion.
The crypto advocates claimed they were the vanguard of a revolution that would democratize finance and bring generational wealth to those who believed in cryptocurrencies. The relentless price increases drowned out the voices of skepticism. Incomprehensible terms like Blockchain, DeFi, Web3, and metaverse have become ubiquitous. It doesn't matter what these terms mean, newspapers, TV, and social media are still broadcasting stories of people getting rich overnight with these things.
Cryptocurrencies are like a rigged, large slot machine - you can make money almost every time you pull the lever. Hundreds of millions of people around the world have been tempted, knowing that someone has hit the jackpot, believing that as long as more people keep buying in, the prices will just keep going up.
However, the real world has not started using cryptocurrencies. No one is cutting up their credit cards, closing their bank accounts, and abandoning cash in favor of Cardano or the like. All we see are the promoters, fanatics, speculators, and outright con artists getting incredibly, unimaginably, and impossibly rich.
SBF told me that among his FTX colleagues, there are already five billionaires, and this is just one crypto company. The founder of another crypto exchange, Binance (CZ), has a net worth of around $96 billion. These numbers are so huge that even the most absurd crypto fantasies sound reasonable, and it seems that the crypto rally is unstoppable.
Of course, it will keep rising until the house of cards collapses.
Gamblers, Programmers, Hype Men, and Billionaires
This is the craziest financial mania in history. Initially, I planned to investigate Tether, the main function of which is to act as the bank of the crypto industry, but it turned into a two-year journey from Manhattan to Miami, Switzerland, Italy, the Bahamas, El Salvador, and the Philippines. This book is based on hundreds of interviews I conducted with different people in the crypto world, including gamblers, programmers, hype men, and billionaires. I attended their yachts and parties during the peak of the crypto frenzy, and I also visited their hideouts when the authorities started investigating.
From the beginning, I thought crypto was ridiculous, but it turned out to be even more absurd than I imagined. Never before has so much wealth been created based on such a flimsy concept. What really shocked me was not how shallow the people involved in crypto are, but the devastating consequences they have brought to the world. Towards the end of my investigation journey, I went to Cambodia to trace how crypto has fueled Chinese fraud groups in human trafficking.
In November 2021, when the crypto frenzy was approaching its peak, I proposed the idea of writing this book to the publisher. At the time, I predicted that crypto would crash soon, and I would be the chronicler of this disaster. Three months later, I sat in SBF's office in the Bahamas, looking at his computer screen behind his messy explosion of hair, completely unaware of the massive fraud unfolding before my eyes. In fact, I even worried that I might never fully understand the secrets behind the crypto frenzy.
However, I am still very certain that this massive crypto market is essentially a Ponzi scheme, it just hasn't collapsed yet. The entire industry is thriving, and it's likely to keep rising even after I finish this book. Perhaps crypto will continue to attract more followers, and the upward trend will be unstoppable. I don't know how this book will end.
After spending a few hours with SBF, I decided to be straightforward and raise my concerns: Tether claims to be a secure crypto bank, the backbone of the crypto industry, but I believe it might be a scam that could bring down the entire industry.
SBF said I was wrong. Crypto is not a scam, and neither is Tether, but he didn't think my question was offensive to him. He said he fully understood my perspective, and then he did something that didn't seem strange to me at the time, but now, looking back, I can't help but wonder if he was hinting at something.
When I tried to explain further, SBF interrupted me and said with a chuckle, "You're hoping the answer is 'Wow, this is the biggest Ponzi scheme in the world,' aren't you?"
Yes, that's exactly it.
Risk Warning
Crypto investment is highly risky, and its price may fluctuate dramatically. You may lose your entire principal. Please carefully evaluate the risks.
