https://www.semafor.com/article/01/11/2023/the-media-loved-sam-bankman-fried-it-hated-brian-armstrong

Crypto exchange Coinbase has for years tracked how the company is portrayed in the press and online, and that “sentiment” measure has fluctuated depending on the price of cryptocurrencies and other factors.

One thing remained constant for years: Its competitor, FTX, the exchange founded by Sam Bankman-Fried, was a notch higher, according to people who’ve seen the analysis. (Bankman-Fried is an investor in Semafor.)

That changed only recently, when FTX collapsed dramatically and Bankman-Fried was indicted on several federal criminal charges related to allegedly stealing customer funds.

Reuters/Dado Ruvic

Last August, when the crypto markets were in freefall, The Wall Street Journal and The New York Times ran almost identical articles on the same day. They were deeply-reported features about how Brian Armstrong, Coinbase’s CEO, apparently mismanaged the company and caused its stock price to plummet.

Both articles called into question Armstrong’s management decisions, linking them to Coinbase’s plummeting stock price. They both had juicy anecdotes from inside the company, but neither proved with strong evidence that the company’s sinking valuation was due to Armstrong’s “failures” or because his initiatives “floundered,” rather than the market downturn. They focused on the fact that Armstrong, like many other tech CEOs, hired too fast during the boom years.

The most remarkable thing about these two articles: Both compared Armstrong’s management unfavorably to that of Bankman-Fried, who since then has been criminally charged with defrauding customers.

“The company is at risk of squandering its head start, as nimbler competitors like FTX and Binance continue expanding despite the downturn,” The New York Times said.

While the article cited Coinbase’s drop in revenue, disclosed in its audited financials, it got FTX’s revenue from Bankman-Fried, who provided in an email a ballpark figure that showed FTX was hardly affected by the “crypto winter.”

The Wall Street Journal mentioned FTX had a comparatively low headcount of 300 people, which in retrospect should have been more of a red flag than a sign of leanness.

It’s easy to criticize the imperfections of daily journalism after the fact, and I worked at the Wall Street Journal for 12 years and I’m sure had my own share of stories I missed. And The New York Times raised questions about the potential for consumers to get in over their heads trading on FTX.

But the Armstrong profiles illustrate a broader phenomenon, reflected through the coverage of the two firms: The way in which CEOs position themselves in America’s polarized political and cultural conflicts, particularly on Twitter, cascades into coverage of often unrelated questions about their companies.

While Bankman-Fried awaits a federal trial slated for October, Armstrong is having a more ordinarily challenging winter. Coinbase is currently retrenching amid the crypto downturn, laying off staff while its stock price falls and dealing with regulatory headaches.

In retrospect, the difference between the companies are blindingly obvious.

FTX was formed in Hong Kong and then moved to the Bahamas, which helped it avoid U.S. regulations and oversight. Not much was known about how the company was organized or how much money it made, other than what it said publicly or leaked to journalists. The auditing firm for its international operation was little-known and unorthodox.

Coinbase subjected itself to U.S. laws and the kind of scrutiny that comes with being a publicly-traded company. Armstrong also surrounded himself with adults. Coinbase’s CFO had the same job at OneWest Bank. Its chief policy officer comes from Goldman Sachs and served for nearly 10 years in government, including on the National Security Council. Its board includes former federal prosecutor turned venture capitalist Katie Haun and the former CFO of Cisco.

But the larger contrast is more superficial. Armstrong never figured out the media, and approached journalists with the suspicion now endemic to Silicon Valley. He was selective about giving interviews, and took to Twitter to snub reporters and financial regulators.