That was Chamath Palihapitiya, a venture capitalist known for setting up VC fund Social Capital and a former Facebook executive, speaking on the All-In podcast about how the allegations behind FTX went unnoticed by traditional media outlets in the last two years.
In episode 106 of the All-In podcast with Paypal co-founder David Sacks, angel investor David Friedberg and Uber investor Jason Calacanis, Palihapitiya said because of Sam Bankman-Fried’s pbringing, private education and political donations, mainstream media “fell for it and embraced him.” The media is still going on easy on Bankman-Fried because doing otherwise would result in having to admit that they “got it wrong.”
“He wrapped himself in this blanket of a progressive left-leaning cause called effective altruism and all of the mainstream media fell for it and embraced him, as well as some politicians, because it met everything that they themselves also bought into,” he said.
“This is an enormous financial fraud that was perpetrated on tens of millions of people and there’s no accountability because in order to do so, the media would effectively have to admit that they missed it and they got it wrong,” he added.
Friedberg replied that if the implosion of FTX didn’t happen at Bankman-Fried’s hands, “it was going to be someone else” because of the non-regulatory environment of crypto.
But Sacks disagreed, saying Bankman-Fried was smart in every decision in setting up FTX and its holding companies.
“There’s too much evidence of sophisticated behavior. Here again he overnight went from portraying himself as a smart guy in the room to the babe in the woods,” he told the others.
“I think what Chamath is kind of saying here is that the big enabler here is not crypto per se, it’s all these institutional biases and elite biases that he was able to play into partly because he was a big insider,” Sacks added.
Calacanis said that all three groups – mainstream media, regulators and venture capitalist investors – failed to do due diligence with FTX.
Speaking on FTX’s investors, he said “capital allocators failed apparently to due diligence here and install proper governance. You cannot put a company like this in business with billions of dollars and have no board of directors or he lied to them, which is possible.”
Later in the episode, Calacanis told Palihapitiya that he was wrong to blame the press for the FTX fiasco.
“For you to blame journalists who are reflecting the crime and not putting any light on VC’s and the capital allocators who made this investment and who did no diligence and not put governance in it is the height of arrogance, Chamath,” he said.
Palihapitiya disagreed, saying it was possible for reporters to reveal what was going on at FTX, referring to John Carreyrou’s investigation of the fraud behind blood testing start-up Theranos for the Wall Street Journal.