Sam Bankman-Fried’s Power Was Contingent on Belief – The New York Times

Theranos, WeWork, countless early dot-coms and pre-2008 financial instruments: Almost all began as exciting business stories about people and companies that seemed poised to remake their industries in innovative ways and had the capital, growth or returns to suggest they might be on to something. Those articles continued right until the businesses imploded amid revelations of fraud, incompetence or brazen recklessness. “Whom the gods would destroy,” Paul Krugman wrote in a 2001 Times column about Enron, “they first put on the cover of Businessweek.”

These sorts of seductively optimistic possibilities — promises like painless blood testing or office space that builds community — naturally draw attention, but they also sit at the heart of deception and fraud. The worst narrative implosions may be less about bad individuals than how easy it can be to hide consequential information that might help reveal the difference. Public companies based in the United States must regularly open their books to investors, but private ones have no such obligation — especially ones based offshore, as FTX was. Private wealth has soared over the past 20 years, and so has the number of private companies, leading one S.E.C. official to warn recently that a rapidly increasing portion of the economy is “going dark.” This can enable dangerous carelessness or fraud….

Source: Sam Bankman-Fried’s Power Was Contingent on Belief – The New York Times