Beyond Digital Dystopia: Zeke Faux's Satirical Look at Crypto’s Wild Side
A Book Review of “Number Go Up: Inside Crypto's Wild Rise and Staggering Fall” by Zeke Faux
This week saw some of the most dramatic moments yet in the fraud trial of Sam Bankman-Fried (SBF), as his former girlfriend and alleged conspirator Caroline Ellison testified against him in court. In the ever-evolving world of high finance, cryptocurrency has emerged as a polarizing topic, drawing both its ardent supporters and vehement skeptics. Amid this backdrop, journalist Zeke Faux has released a new book, “Number Go Up,” that is the most recent examination of the crypto sector. Written with a skeptical eye toward the industry, Faux takes readers on a global journey, delving deep into the heart of the crypto universe and introducing readers to its most controversial figures.
At the center of Faux’s narrative is Bankman-Fried, whom the author provocatively labels the world’s “biggest conman since Bernie Madoff.” Now, with SBF's trial well underway, his alleged misdeeds serve as a compelling focal point for the book. That said, the book’s scope extends far beyond this one flawed individual.
Faux’s writing style is refreshingly candid, blending snarky humor with incisive observations. The book introduces readers to a cast of eccentric characters, from a former child actor of “Mighty Ducks” fame turned crypto magnate to a sketchy plastic surgeon at the helm of Tether. These vignettes paint a picture of the crypto industry as a digital Las Vegas, with the FTX stock exchange—where SBF is accused of embezzling billions—at its bustling epicenter.
One unexpected thread in Faux's narrative is his fixation on Tether, the stablecoin that has raised suspicions in recent years. For the uninitiated, stablecoins like Tether are cryptocurrencies pegged to other assets, in this case the U.S. dollar, maintaining a fixed value ratio.
Despite the myriad of firms that crumbled during the 2022 crypto crash, Tether remained relatively unscathed. Faux is perplexed by this, but basic financial principles elucidate why. Tether operates akin to a fully capitalized mutual fund, where every dollar invested is matched by a dollar (or close dollar substitute) held, without using borrowed money to finance investments. This structure insulates it from many risks, including the potential for bank runs that plagues other financial entities. Even if Tether’s leadership raises eyebrows, its foundational stability positions it as a resilient force in the crypto market.
Faux also delves into the real-world implications of the crypto industry, highlighting its darker underbelly. A particularly harrowing account involves Cambodian human traffickers and their “pig butchering” operations, which are digital scams that take advantage of gullible Westerners. Supposedly facilitated by Tether, and overseen by Chinese gangsters, is a Cambodian compound ominously named Chinatown, which the author visits. Yet, while Faux lays the blame for such operations squarely at crypto’s doorstep, it’s worth acknowledging that these crimes might persist even in its absence.
All told, Faux’s analysis, while entertaining, comes across as a bit unfair. While certain elements of the crypto world, such as Non-fungible Tokens and Initial Coin Offerings, may resemble pyramid schemes, the industry as a whole comprises many distinct firms issuing a variety of unique assets, and these shouldn’t all be lumped together.
In a twist of irony, Tether probably exemplifies the potential of crypto. While its association with illicit activities warrants scrutiny, Tether’s investments in presumably profitable real-world projects offers a glimpse into crypto’s promise as a mainstream financial tool.
Post-FTX, the crypto industry should take time to self-reflect and refocus attention on having real-world impact. The value created by any financial institution ultimately relates to its ability to translate savings into productive investments.
Crypto firms do not need to be 100 percent capitalized to create tangible value. Leveraged institutions make worthwhile investments, and even the most speculative parts of the financial economy, like high speed trading, play a social role in the form of providing liquidity to parts of the financial ecosystem. Thus, there are a variety of institutional features productive crypto firms could have.
As crypto assets gain acceptance and stability, they can serve as collateral for loans or be directly invested into new business ventures. By viewing cryptocurrency as a tangible asset that serves as a store of value, its potential can be unlocked, much like homeowners leverage the equity in their homes to secure loans to make upgrades or fund entrepreneurial ventures. But for crypto to gain such widespread acceptance, it must foster genuine investments and be allowed to engage with established financial institutions.
“Number Go Up” is a masterful exploration of the crypto landscape, blending Faux’s impressive journalistic chops with his extreme skepticism of the industry and rye humor. It is undoubtedly an entertaining read. That said, I suspect Faux is on the wrong side of history. Crypto is an industry at a crossroads, and while the book underscores the pitfalls and excesses of the crypto world, it ignores its potential to reshape the financial landscape. Faux’s book ultimately serves as a timely reminder of the chaos and controversies of an industry still finding its footing, but it overlooks a tremendous opportunity on the horizon for genuine innovation and growth.