The FTX fiasco shows us why we need crypto-native media

FTX ex-CEO Sam Bankman-Fried was able to gain credibility with mainstream media that lacked crypto spidey senses of their crypto-native peers.

Man reading newspaper with Bitcoin on the front page, art generated by Midjourney.

Since its inception, the crypto industry has faced skepticism and condemnation from mainstream media, financial institutions, and regulators. Negative portrayals and misrepresentations of the facts have contributed to a biased perspective on the entire space. As the industry gained prominence and adoption, mainstream media's coverage often failed to provide accurate information and instead resorted to fearmongering tactics, focusing on hacking, scams, and other sensationalist stories instead of the technology's positive impact and revolutionary potential to fix financial exclusion worldwide. It is crucial to recognize that mainstream media's understanding of the crypto industry has been limited, leading to a lack of balanced reporting.

The rise of crypto-native media

As the industry matured, many of its thought leaders recognized the gaps in mainstream media’s coverage and went off to start their own media channels and digital publications. While much of it resembled traditional media outlets, with newsrooms, editors, and podcasts, it was also deeply intertwined with crypto’s social media communities — mostly on Twitter, Discord, and Telegram — as well as tools for direct analysis of blockchain data. Keeping the pulse on the industry 24/7, they were able to gain the edge over their less crypto-savvy mainstream counterparts.

To fully grasp the significance of crypto-native media for the industry, it’s worth going back to the earliest stages of the collapse of cryptocurrency exchange FTX, which was valued at $32 billion right before the bankruptcy and had big ambitions to shape crypto regulation in Washington. Hailed as the white knight of crypto, FTX’s CEO Sam Bankman-Fried was able to convince mainstream media, venture capitalists, and celebrities into thinking that his exchange was a real deal. But it turned out that the “emperor” had been swimming naked — and it was just one leaked financial sheet that tanked his empire and exposed a years-long multi-billion fraud.

How crypto media played a key role in FTX’s rapid demise

The FTX collapse began with a report by CoinDesk, a decade-old crypto news outlet owned by the now-troubled Digital Currency Group, which obtained financial records indicating a deep financial connection between FTX and its sister quant trading firm, Alameda Research.

The report provided strong evidence that Alameda’s assets were artificially propelled by FTT, a token issued by FTX that granted users discounts on trading fees and access to extra features on the platform. Four days later, Changpeng Zhao, the CEO of rival exchange Binance, announced that his company will liquidate its FTT holdings, which tanked the price of the token as customers rushed to withdraw their crypto from the platform.

As Binance walked away from its nonbinding agreement to buy the company, FTX had no choice but to file for Chapter 11 bankruptcy. Hours after the announcement, an alleged hacker drained around $477 million from the platform.

Mainstream media reaction to FTX collapse

While entrepreneurs, investors, and crypto advocates were quick to acknowledge the damage to the industry caused by the FTX collapse, mainstream media outlets took a different stance. Often focused on highlighting the dangers, scams, and lack of regulation in crypto, mainstream coverage neglected the magnitude of losses incurred by the general public. What’s more, some of them were initially hesitant to point to Sam Bankman-Fried as the mastermind behind what has been revealed to be one of the biggest financial frauds in US history, focusing instead on his charity projects and seemingly noble intentions.

The prime example was a New York Times article on November 14, which many outraged crypto pundits called a “puff piece.” The report failed to mention SBF’s involvement in the potential fraud and crimes, and instead portrayed him simply as a failed entrepreneur who acted in good faith but made a human error.

This discrepancy in coverage emphasizes the need for crypto-native media, which provides a more nuanced perspective and uncovers critical aspects that mainstream outlets may overlook.

Crypto media didn’t buy into SBF’s narration

Not only were crypto media first to unwind crypto’s naked king, but they were also the ones who questioned his approach way before the collapse of his multibillion empire. According to crypto journalist Brady Dale, who documented FTX’s dramatic fall in his new book, SBF: How the FTX Bankruptcy Unwound Crypto’s Very Bad Good Guy, the disgraced entrepreneur was able to fool mainstream reporters by not fully buying into crypto’s core tenets of decentralization and trustlessness.

“I think the other thing about Sam that charmed mainstream reporters and made a lot of people in crypto skeptical about him is that he didn’t really buy into crypto himself. He was never speaking about crypto in a missionary way that a lot of other people in crypto do, which I think turns off mainstream reporters,” Dale said in an interview with Quartz.

Crypto Newswire Integration

In the traditional media landscape, newswire syndication services are commonly used to distribute press releases and announcements from companies. However, the crypto industry has been disconnected from such services due to their limited reach across crypto-native media. Recognizing this gap, newswire syndication services tailored specifically for the Web3 industry, like Chainwire, have emerged. These services aim to bridge the gap between mainstream and crypto-native media, and simultaneously help crypto projects reach their target audience.

Read also: Best crypto PR agencies for 2023: top 8 choices to drive your brand forward

“PR newswire services play an important role in the traditional media ecosystem, and it’s high time we had something that catered to the needs of crypto projects,” Chainwire CMO, Alon Keren, told Coinpaper. “The ongoing bias and misrepresentation of the industry by traditional media outlets have been incredibly detrimental to crypto’s growth and development, so it’s important that Web3 projects are given access to the same level of visibility that has been afforded to their traditional counterparts for so many years.”