A review of Number Go Up, on crypto shenanigans

This is Patrick McKenzie so it’s a bit hard to follow. It’s not just a book review, there are some interesting revelations here.

Number Go Up, by Bloomberg’s Zeke Faux, is the best book yet written about cryptocurrency. It is even better if you haven’t closely followed the rogues gallery committing a Shrekian onion of scams.

And yet I found it at times exasperating, perhaps because of the narcissism of small differences. I am also a long-time cryptocurrency skeptic, and perhaps if one squints a great deal a professional in financial writing, and it is not exactly the book I would have written. Of course, I did not spend two years of my life diligently talking to ne'er-do-wells and writing down what they said.

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What does Number Go Up do well? It sends our protagonist Zeke all over the world in search of lies. Bloomberg clearly has a very generous travel budget and if you missed the subtle hints dropped by inclusion of multiple chapter-length travelogs of Switzerland and the Bahamas, this subtext is eventually promoted to text. Zeke is, very definitely, a character in his own book. He’s engaging, he’s sometimes self-aware, and by God, does he write well.

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The New York Times outed Chalopin as controlling Moonstone Bank. Financial journalism sometimes does actually do the thing everything believes it does: ferreting out wrongdoing before the feds indict everyone involved!

Oh, to have been a fly on the wall in that investigation. How could it possibly have happened? Let us speculate.

Perhaps a source emailed the New York Times a packet of documents. Perhaps that source followed crypto skeptics Twitter. Perhaps a participant in it DMed him a link to a consequential press release. Perhaps that source understood that Maryland Business Entity Search exists and that D20033544 is more interesting than almost everything in it. Perhaps that source knew that D20033544 was significant because new bank holding companies are announced in the Federal Register. Perhaps that source was absolutely dumbstruck when he saw Chalopin’s name at the bottom of the Maryland document, because he knew Chalopin to be a bagman. And, because a genre convention of Bond films is that expository scenes happen in locations the audience finds exotic, perhaps that call was placed from Tokyo.

Sadly, the world will never know, because journalists don’t reveal their sources.

Chalopin buying a U.S. bank is a very significant fact, because Chalopin is a bagman, and bagmen should not gain control of regulated U.S. financial institutions. However, some complex mix of lacking-object-permanence and believing-in-innocent-until-proven-guilty apparently makes it difficult for both regulators and financial journalists to take consequential real-time actions in light of Chalopin being a bagman.

But they do, eventually, and so bully for regulators and financial journalists.

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Zeke hires a Tagalog interpreter to talk to people far more intimately affected by Axie than most of the crypto community was. That act is a valuable public service. They say things which are very predictable to any competent person who thought about Axie for more than a minute. But they are real people who exist in the real world, in circumstances well-paid Americans would not wish on their worst enemy, who we built a machine to exploit because Number Go Up. But we speedrun Axie's rise and collapse. Crypto has a new pay-to-earn to pitch (Zeke covers a few pivots) and Zeke himself is off to Cambodia, for the book’s (by far) most disturbing chapter.

Slavery is an institution which continues to exist. We react to that with the appropriate amount of moral horror, and nowhere near the appropriate amount of physical action, for understandable reasons. Zeke flies to Cambodia and pulls out his I’m An American So You (Probably) Can’t Kill Me card to get far physically closer to slaves than most Americans ever will.

Some of the slaves are being used to staff cryptocurrency scams operated by Chinese gangsters. Those scams take payment over Tether; this is probably a more incidental fact of their slavery than the text tries to leave you with. One gains sympathy for Sam Bankman-Fried, and isn’t that a sentence, when he tells Zeke that the situation is fucked and he has no idea what to do about it.

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Every non-fiction book is paired with a notional anti-book, the part of the story which through some alchemy of authorial intent and happenstance was not told. The anti-book to Number Go Up would have covered, in appropriate detail, how crypto (and not just Sam Bankman-Fried) is making a concerted effort at regulatory capture and claims to have cleaned up its act. The anti-book would quote, at length, the adults who are newly in the room, and the consequences of their actions.

In the anti-book, the Canadian pension fund CDPQ which invested several hundred million dollars into Celsius would have been interviewed at length about their decision to buy equity in an insolvent financial entity at a non-zero valuation. Neither financial journalists nor their readers are particularly skilled at decoding balance sheets, but investment committees at pension funds are. The anti-book would print the balance sheet that the pension fund was swindled by, then quote an Accounting 101 professor explaining how even a C student could see it might as well be written in crayon, then quote the pension fund’s investment memo. Then the anti-book would triumphantly say “And then they lost all the money, because of course they did.”, and be very smug about it.