In many ways, James Block couldn’t be more different from Sam Bankman-Fried, the 30-year-old M.I.T. and Jane Street Capital alumnus who nuked FTX in a couple years and ensured that the ashes were spread equally across the hallowed halls of Wall Street, Congress, and Silicon Valley before moping around his family’s home in Palo Alto. Block, who is also 30, is from Michigan. He has a degree in biology from Hillsdale College (in Hillsdale, Michigan) and has a M.D./Ph.D. from Wayne State University School of Medicine (Detroit). He is now a resident at the University of Michigan (Ann Arbor) with a focus on emergency psychiatry and bipolar disorder. He has a Substack presence and is known on Twitter by the handle @dirtybubblemedia, a play on the villainous Sponge Bob character and the fact, as Block told me in a recent conversation, that crypto is “a dirty bubble; it’s a bubble and it’s filled with fraud and just dirty shit going on.”
As everyone knows by now, after weeks of verbal diarrhea, S.B.F. was arrested in the Bahamas on December 12 and extradited to the United States before Christmas. He pleaded not guilty to the numerous fraud charges filed against him by the Justice Department and the Securities and Exchange Commission. After pledging some $250 million of assets, he was released on bail to his parents’ home, where he continues to defy legal advice and has met with my friend and former colleague, Michael Lewis, and my friend and partner, Teddy Schleifer. His trial begins in October. (You can read Teddy’s fabulous piece from inside the brain and home of S.B.F. here.)
Meanwhile, in early November, Block got his hands on the now infamous one-page unaudited balance sheet that purported to show the assets and liabilities of Alameda Research, S.B.F.’s now defunct hedge fund that put to work (read: lost) many billions of dollars that he allegedly siphoned off from FTX’s many customers. Block received the information at about the same time as Coindesk, the cryptocurrency news site. Like Coindesk, Block knew pretty much immediately once he saw the document that, if it was close to accurate, then Alameda and FTX were built on a house of cards and would surely collapse. He had seen it all before, with Celsius Network, a multi-billion crypto lending firm with close ties to S.B.F. that had filed for bankruptcy last July after using its own spun-up crypto token to make it look like it had more assets than it actually did.