The publisher “Morning Finance” has recently released a new book titled “Number Go Up,” written by Bloomberg investigative reporter Zeke Faux. In 2022, he approached the then-crypto prodigy SBF (founder of the now-defunct exchange FTX) with skepticism, which ignited his curiosity and set him on a journey of investigation into the cryptocurrency world. He wanted to know whether the crypto space was indeed the “epic Ponzi scheme” he suspected it might be. What answers did he find? The doubts raised in “Number Go Up” about the various aspects of the crypto world may also reflect your own concerns about entering this field!
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Excerpt: “I thought it was outrageous, but I didn’t expect it to be even more outrageous.”
Nassau, Bahamas
February 17, 2022
“I won’t lie to you,” Sam Bankman-Fried (SBF) said to me.
That statement itself was a lie!
We were in his office in the Bahamas, and I pulled my chair up to his desk to turn on the recorder. I was an investigative reporter for Bloomberg, sent to interview this key figure in the global crypto frenzy. SBF stared at the six screens in front of him, checking emails as he assured me that he would tell me everything there was to know about cryptocurrency. Forbes had just announced him as the youngest billionaire under thirty, but he looked like a student who had been woken from an all-nighter in the library, disheveled and barefoot, dressed in blue shorts and a gray T-shirt emblazoned with the logo of his cryptocurrency exchange, FTX. His frizzy hair was flattened at odd angles by his headphones, resembling a sheep that had been half-shorn. There was an open pack of chickpea curry on his desk, his lunch from the day before.
My original plan was to write a profile piece to introduce this crypto prodigy. At just twenty-nine years old, he seemed to have foreseen the future of currency. He was rising rapidly, so when he claimed that FTX would one day dominate Wall Street, many believed it was a real possibility. His net worth was at least twenty billion dollars, but he claimed he made money only to donate all of it away. He drove a Toyota Corolla and liked to sleep on a beanbag chair in the office; I could see that beanbag chair right next to his desk.
It was a compelling story. The problem was, it was entirely false. While the media, politicians, venture capitalists, and investment bankers praised him as a philanthropic golden boy—comparable to Buffett or J.P. Morgan in the digital age—he was secretly siphoning billions of dollars from customers, squandering it on bad trades, celebrity endorsements, and buying real estate on the island like a drug lord laundering money.
I wish I could tell you that I was the one who uncovered all of this, that I, the courageous investigative reporter, exposed the largest scam in history, but unfortunately, I, like everyone else, was deceived. I was sitting next to the biggest con artist since Bernie Madoff, able to clearly 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 the thing I want to do most right now,” SBF said, shaking his socked 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 moment I began researching the crypto space, I saw a slew of warning signs. Why do these companies set up headquarters in notorious offshore regulatory havens? What’s the deal with these obscure cryptocurrencies allegedly worth billions? Could this be the cause of future financial turmoil? Is it all a scam?
As I visited SBF’s empire built on a small island in the Bahamas, the rational logic of finance had already collapsed. Almost no one knew what cryptocurrency was for, not even the so-called experts could explain it. Nobody could figure out why many cryptocurrencies had value. Yet from 2020 to early 2022, the prices of Bitcoin and hundreds of other altcoins skyrocketed, many of their names sounding ridiculous, such as Dogecoin, Solana, Polkadot, and Smooth Love Potion.
Cryptocurrency advocates claimed they were pioneers of a revolution that would bring financial democratization and generational wealth to believers in crypto. The soaring prices drowned out the voices of doubt. A slew of incomprehensible terms, such as blockchain, decentralized finance (DeFi), Web3, and metaverse, became ubiquitous. What these terms meant was unimportant; newspapers, television, and social media continued to broadcast stories of people getting rich overnight thanks to these things.
Cryptocurrency was like a rigged slot machine, almost every pull of the lever seemingly profitable. Hundreds of millions of people around the world were tempted, knowing that someone had struck it rich, believing that as long as more people kept buying in, prices would go even higher.
However, the real world had not begun to adopt cryptocurrency in any meaningful way. No one was cutting up credit cards, shutting down bank accounts, or giving up cash for cryptocurrencies like Cardano. Instead, those promoters, enthusiasts, speculators, and outright con artists were getting rich, becoming incredibly wealthy—unimaginably so.
SBF told me that among his FTX colleagues, five were already billionaires, and that was just one cryptocurrency company. The founder of another exchange, Binance, Changpeng Zhao (CZ), had a net worth of about ninety-six billion dollars. These numbers were so staggering that even the most absurd cryptocurrency fantasies began to sound reasonable; it appeared that the rise of cryptocurrency was an unstoppable trend.
Of course, it would continue to rise until the house of cards collapsed.
Gamblers, programmers, traders, and billionaires
This was the craziest financial market ever. Initially, I intended to investigate Tether (the main function being to act as the bank for the crypto industry), but it unexpectedly turned into a two-year journey that took me from Manhattan to Miami, then to Switzerland, Italy, the Bahamas, El Salvador, and the Philippines. This book is based on hundreds of interviews I conducted with people from various levels of the crypto space, including gamblers, programmers, traders, and billionaires. I visited their yachts and parties during the peak of the frenzy and also went to their hideouts when the government began investigations.
From the beginning, I found cryptocurrency outrageous, but it turned out to be even more outrageous than I imagined. Never before had so much wealth been created based on such flimsy concepts. What truly shocked me was not how superficial the crypto people were, but the devastating consequences they brought to the world. By the end of my investigative journey, I found myself in Cambodia, tracking how cryptocurrency fueled human trafficking by Chinese scam syndicates.
In November 2021, as the crypto frenzy neared its peak, I proposed to the publisher that I write this book. At that time, I predicted that cryptocurrency would soon collapse, and I would be the chronicler of that 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 understand the secrets behind the crypto frenzy.
Yet I remained quite certain that this massive cryptocurrency market was essentially a pyramid scheme similar to a Ponzi scheme, just waiting to burst. The entire industry was thriving and likely would continue to rise after my deadline. Perhaps cryptocurrency would continue to attract more followers, and the upward momentum would become unstoppable. I didn’t know how this book would end.
After spending a few hours with SBF, I decided to get straight to the point with my concerns: Tether claimed to be a safe crypto bank, a cornerstone of cryptocurrency, but I thought it might be a scam that could bring down the entire industry.
SBF said I was wrong. Cryptocurrency was not a scam, nor was Tether, but he also didn’t think my question offended him. He said he completely understood my thinking, and then he did something that at the time didn’t strike me as odd, but in retrospect, I can’t help but wonder if he was hinting at something.
When I tried to explain further, SBF interrupted me, almost laughing as he said, “You think it would be more explosive if the answer was, ‘Wow! This is the biggest Ponzi scheme in the world,’ right?”
Well, yes.
Risk Warning
Investing in cryptocurrency involves a high risk, and its price may fluctuate wildly, resulting in a total loss of capital. Please assess the risks carefully.