On November 2, the cryptocurrency exchange FTX was worth tens of billions of dollars. Its CEO, Sam Bankman-Fried, was a billionaire and one of the most prominent people in the crypto world.
But that morning, CoinDesk, an online publication about cryptocurrencies, released a scoop suggesting that FTX’s sister company, Alameda Research, was on shaky financial footing. A waterfall of problems for FTX and Mr. Bankman-Fried followed suit: Just over a week after the scoop, FTX and Alameda filed for bankruptcy. Mr. Bankman-Fried now faces federal fraud charges.
The article, by Ian Allison, raised the profile and readership for CoinDesk, one in a sea of publications launched over the past decade to cover cryptocurrencies. Many of the publications have been accused of stalking the industry, especially as it rocketed to new heights in 2020. Some, including CoinDesk, are in the unusual position of reporting from an industry that helps fund their operations, sparking debate over their independence.
But now the complications for CoinDesk are even greater. One of the companies owned by the parent company, Digital Currency Group, a venture capital firm with stakes in numerous crypto projects, is facing its own financial problems and questions about its activities. It is part of the wider fallout in the crypto industry since the collapse of FTX.
This month, Genesis, a cryptocurrency lender owned by DCG, laid off 30 percent of its staff. And on Thursday, federal regulators accused Genesis of offering unregistered securities through a program that promised investors high interest on deposits. The regulators said Genesis and Gemini Trust, a cryptocurrency exchange, raised billions of dollars in assets from hundreds of thousands of investors without registering the program.
The developments have forced CoinDesk to cover its owners and publish numerous articles about related developments in recent weeks.
“We cover DCG like any other company, that is part of our regular coverage,” CoinDesk Chief Content Officer Michael Casey wrote in a statement to The New York Times.
What you need to know about the collapse of FTX
What is FTX? FTX is a now-bankrupt company that used to be one of the world’s largest cryptocurrency exchanges. It enabled customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. Based in the Bahamas, the company built its business on risky trading options that are not legal in the United States.
Digital Currency Group communications chief Amanda Cowie, who declined to discuss the investigation, said the company was left out of editorial decision-making at CoinDesk.
“Like any top-tier media company, it is imperative for the industry that the leading outlet operate independently,” said Ms. Cowie.
CoinDesk started in 2013, five years after Bitcoin was introduced. The New York-based publication remained small for many years; in 2017 it had about 10 employees.
But growth accelerated during the crypto boom that peaked in 2021, and today the company has 160 employees, in countries like the United States, India and Turkey. CoinDesk has interns and a 24/7 news channel.
Under the leadership of Mr. Casey, CoinDesk’s coverage regularly features articles on policy, cryptocurrency markets, and the idea of a decentralized internet known as web3. The publication has newsletters that discuss crypto investments as well as government-industry interactions.
The publication related to FTX before Mr. Allison, including Mr. Bankman Fried; the addition of Jill Sommers, a former federal supervisor, to the company’s board of directors; and possible acquisitions.
Mr Allison had been gathering information about FTX’s financial condition when he was unofficially told at a conference in October that Alameda’s balance sheet was weak, he wrote in an email to The Times. The source said that FTT, a cryptocurrency that FTX invented for traders to use on its platform, was used to borrow other crypto assets. Mr. Allison later got the balance in the middle of his article.
The article attracted readers to the site. In November, the publication had 17 million page views, up 96 percent from October, the company said. More than five million of those views related to FTX’s coverage. CoinDesk also broke the news that Mr. Bankman-Fried had been dating Caroline Ellison, the CEO of Alameda.
Nick Baker, CoinDesk’s Deputy Editor-in-Chief, who has worked on the FTX coverage and Mr. Allison said he thought the scoop had brought CoinDesk more recognition.
The aftermath of FTX’s demise
The sudden collapse of the crypto exchange has stunned the industry.
“Our profile has improved tremendously,” said Mr. Baker, noting that major legacy media outlets have cited the publication.
At the same time, the collapse of FTX exposed some ties between the crypto industry and the publications dedicated to it. In December, Axios reported that The Block, which covers the industry, received undisclosed funding from Mr. Bankman-Fried, including a $16 million loan from Alameda that was used in part to finance an apartment in the Bahamas for Michael McCaffrey, the chief of The Block. managerial. Mr. Bankman-Fried’s funding raised questions about The Block’s coverage of FTX. Mr. McCaffery resigned. He could not be reached for comment.
DCG says it has not received any money directly from FTX or Alameda.
The site, which is free, relies on advertising for its revenue. The publication also monetizes the Consensus Festival, a cryptocurrency conference. Last year’s speakers included Elon Musk’s brother Kimbal Musk and Frances Haugen, the Facebook whistleblower.
Mr Casey said crypto companies’ marketing budgets were hurt by the industry’s financial downturn. He also said the next consensus will likely be smaller than last year due to less sponsorship money.
There have also been rumors that CoinDesk has received buyout offers. CoinDesk declined to provide details about finances or possible offers.
Mr Casey said the company was determined to build a sustainable media business that spans the entire industry. “My take on crypto is that it just isn’t going away no matter what anyone might want,” he said.
For now, that means covering DCG regularly. CoinDesk reported on layoffs at Genesis, federal regulators’ charges against Genesis, and an ongoing dispute between Barry Silbert, the CEO of DCG, and Cameron Winklevoss, a co-founder of Gemini.
“The crypto winter is clearly affecting a media platform like CoinDesk,” said Mr. Allison, the reporter with the major FTX scoop, referring to the huge slowdown in the crypto industry. “But I hope we can continue to build the team and bring in-depth independent reporting to crypto.”
