Bloomberg Journalist’s New Book “The Inevitable Rise of Cryptocurrency”: A Journey into the Crypto Investigation Sparked by an Interview with SBF – Are His Answers Deceptive?

The publisher “Morning Finance” has recently released a new book titled “Number Go Up,” written by Bloomberg investigative reporter Zeke Faux. In 2022, driven by skepticism, he interviewed the then-rising star of the cryptocurrency world, SBF (founder of the now-defunct exchange FTX). This encounter ignited his curiosity and embarked him on a journey of investigation into the cryptocurrency sphere. He sought to determine whether the cryptocurrency world was indeed what he subtly perceived as an “epic Ponzi scheme,” and what answers he would ultimately uncover. The doubts expressed in “Number Go Up” about the various facets of the cryptocurrency realm may also resonate with your own concerns as you enter this field.

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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.

This statement itself was a deception!

At the time, we were in his office in the Bahamas. I pulled my chair up to his desk and turned on the recorder. I was an investigative reporter for Bloomberg, sent by the company to interview this key figure in the global cryptocurrency frenzy. SBF was staring at six screens, checking emails while assuring me that he would share everything he knew about cryptocurrencies. Forbes had just announced him as the youngest billionaire under thirty, yet he looked like a student who had been jolted awake after an all-nighter in the library—disheveled, barefoot, wearing blue shorts and a gray T-shirt emblazoned with the logo of his cryptocurrency exchange, FTX. His frizzy hair was tousled by his headphones, resembling a sheep halfway through shearing. On his desk lay an open package of chickpea curry, leftovers from his lunch the previous day.

My original plan was to write a profile piece to introduce this cryptocurrency prodigy. This twenty-nine-year-old seemed to have foreseen the future of money. His rise was meteoric, and when he claimed that FTX would one day dominate Wall Street, many found it plausible. His net worth was at least $20 billion, yet he claimed to earn money solely to donate all his wealth away. He drove a Toyota Corolla and preferred to sleep on a beanbag in his office, which I could see was right next to his desk.

It was an irresistible story. The problem was, it was entirely fabricated. While the media, politicians, venture capitalists, and investment bankers hailed him as a benevolent prodigy—comparable to a digital age Warren Buffett or J.P. Morgan—he was secretly misappropriating billions of dollars of client funds, squandering them on disastrous trades, celebrity endorsements, and extravagant real estate purchases on a small island, akin to a drug lord laundering money.

I would love to tell you that I was the one who uncovered it all, that I, this brave investigative reporter, exposed the largest scam in history, but unfortunately, I was duped just like everyone else. I sat next to the biggest fraudster since Bernie Madoff, able to see his emails, internal company chats, and trading records, yet I still had no idea what he was up to.

“For me, clarifying things is what I most want to do right now,” SBF said while shaking his sock-clad feet, “You can consider me your source.”

“I understand,” I replied, nodding kindly.

This is a rigged slot machine; come play!
Of course, I had many questions. From the day I began researching cryptocurrencies, I noticed a multitude of warning signs. Why were these companies headquartered in notorious offshore regulatory havens? What was the deal with those obscure virtual currencies supposedly worth billions? Could this be the cause of future financial turmoil? Was everything just a scam?

At the time of my visit to the empire SBF had built on a small Bahamian island, rational logic in finance had already crumbled. Almost no one understood what cryptocurrencies were for, not even those so-called experts who couldn’t explain it. People were completely baffled as to why many virtual currencies held any value. Yet from 2020 to early 2022, the prices of Bitcoin and hundreds of other altcoins soared, and many of their names were rather absurd, such as Dogecoin, Solana, Polkadot, and Smooth Love Potion.

Cryptocurrency advocates claimed they were the vanguards of a revolution that would bring about financial democratization and wealth for generations to those who believed in cryptocurrencies. The skyrocketing prices drowned out dissenting voices. A slew of incomprehensible terms—such as blockchain, decentralized finance (DeFi), Web3, and the metaverse—became ubiquitous. The exact meanings of these terms seemed irrelevant; newspapers, television, and social media continued to broadcast tales of overnight riches thanks to these phenomena.

Cryptocurrencies resembled a rigged slot machine, where nearly every pull of the lever yielded profits. Hundreds of millions around the world were enticed, knowing that some had struck it rich, believing that as long as more people kept buying in, prices would soar even higher.

However, the real world showed no signs of adopting cryptocurrencies. No one was cutting up credit cards, closing bank accounts, or ceasing to use cash in favor of cryptocurrencies like Cardano. It was the promoters, zealots, speculators, and outright fraudsters who became immensely wealthy, their fortunes almost unfathomable.

SBF told me that among his FTX colleagues, five had already become billionaires, and that was just one cryptocurrency company. The founder of another exchange, Binance, Changpeng Zhao (CZ), boasted a net worth of about $96 billion. These figures were so colossal that even the most absurd cryptocurrency fantasies appeared rational; it seemed the rise of cryptocurrencies was an unstoppable trend.

Of course, this would continue until the house of cards collapsed.

Gamblers, Programmers, Speculators, and Billionaires
This was the craziest financial market in history. Initially, I intended to investigate Tether (Tether), which primarily functions as the bank of the cryptocurrency industry, but it morphed into a two-year journey that spanned from Manhattan to Miami, and further to Switzerland, Italy, the Bahamas, El Salvador, and the Philippines. This book is based on hundreds of interviews I conducted with various tiers of people in the cryptocurrency realm, including gamblers, programmers, speculators, and billionaires. I visited their yachts and parties during the height of the frenzy and later went to their hideouts when the government began investigations.

From the outset, I found cryptocurrencies absurd, but reality proved it to be even more ludicrous than I had imagined. Never before had so much wealth been created based on such flimsy concepts. What truly shocked me was not the superficiality of those involved in cryptocurrencies, but the devastating consequences they brought to the world. By the end of my investigative journey, I found myself in Cambodia, tracing how cryptocurrencies fueled human trafficking by Chinese scam syndicates.

In November 2021, as the cryptocurrency frenzy peaked, I proposed to the publisher the idea of writing this book. At that time, I predicted that cryptocurrencies would soon crash, and I would be the chronicler of this disaster. Three months later, I sat in SBF’s office in the Bahamas, watching his computer screen from behind his messy hair, completely oblivious to the massive scam unfolding before my eyes. In fact, I was even worried that I might never uncover the secrets behind the cryptocurrency frenzy.

Yet I remained quite certain that this vast cryptocurrency market was essentially a pyramid scheme similar to a Ponzi scheme, just waiting to burst. The entire industry was thriving and likely to keep rising even after my deadline. Perhaps cryptocurrencies would continue to attract more followers, with the upward trend becoming unstoppable. I had no idea what the conclusion of this book would be.

After spending a few hours with SBF, I decided to address my concerns directly: Tether claimed to be the safe bank of cryptocurrencies, a pillar of the industry, but I believed it might be a scam that could drag down the entire sector.

SBF told me I was wrong. Cryptocurrencies were not a scam, nor was Tether, but he did not find my questions offensive. He said he completely understood my thoughts, and then he did something that at the time I didn’t find peculiar, but in hindsight, I can’t help but wonder if he was hinting at something.

As I tried to elaborate, SBF interrupted me, almost laughing, and said, “You think it would be more explosive if the answer was, ‘Wow! This is the largest Ponzi scheme in the world,’ right?”

Well, yes.

Risk Warning
Investing in cryptocurrencies carries a high risk, and their prices can be highly volatile; you may lose your entire principal. Please assess the risks carefully.