Welcome to Dark Markets, a weekly roundup of investment frauds n’ scams. I’m David Z. Morris, former reporter for Fortune and CoinDesk, and Phd historian of technology.
In today’s edition I indulge in some loosey-goosey bearish predictionizing about crypto, AI, Elon Musk, and the mental environment. I’ve often been accused of being a delusional optimist, and here I indulge that impulse - so if you’re looking for silver linings, I’ve got you.
One Last Shill for the Year: If you haven’t bought my new book “Stealing the Future: Sam Bankman-Fried, Elite Fraud, and the Cult of Techno-Utopia,” please consider it. If you’ve bought/read the book and haven’t left a review, please do that - it helps immensely.
In today’s edition: The Dark Markets Best of 2025; the Minessota Daycare Scam; Barbarians at the Gate re-reviewed; and my Hopium for 2026.
A selection of our most popular, important, and impactful pieces of the year.
First off, a few previously paywalled pieces that free subscribers can now enjoy:
·
Aug 31
·
Apr 27
·
May 4
Dark Markets is a reader-supported publication. To receive full access to all posts, consider becoming a paid subscriber.
Subscribe
I was pleasantly surprised to be reminded that I wrote about a lot of things besides Sam Bankman-Fried this year.
·
Jan 28
·
Feb 17
·
Mar 11
·
Nov 7
·
May 6
·
Sep 23
I don’t usually write about fraud against the U.S. government, but I might need to change that - at least according to a Biden Administration GAO report, it amounts to hundreds of billions of dollars a year. (I was actually a victim of a very low-end version of this recently, having had a $4,000 tax refund check stolen and fraudulently deposited. I still haven’t been able to get that money back after close to two years.)
The level of fraud alleged in Minnesota in recent days is staggering even by, say, FTX standards. The Washington Post has a sober and factual writeup that posits on the order of $8 billion has gone missing in connection with pandemic-era relief programs. This discovery follows a smaller bust of $250 million stolen from a pandemic school-meal program called Feeding our Future.
The more I think about it, the more angry I get at this sort of fraud, relative to the investment fraud I’m usually focused on. Victims of investment fraud are often as much as anything victims of their own greed and ignorance, but services fraud takes money out of all of our pockets, while eroding trust in government - a far more toxic erosion than damaging trust in corporations.
Of course, the problem with the Minnesota scam in the current political environment is that it appears to have been largely conducted by Somali immigrants - 82 of 92 people arrested in the current sweep are Minnesotans of Somali background. This of course has made it catnip not just for internet racists like Elon Musk, but for the actual anti-immigrant FBI, who I’m sure are devoting way more resources to this problem than were ever committed to, say, investigating Rick Scott’s Medicare fraud.
(This one’s somewhere between a capsule and a full review - but the subject is worth it.)
Written in 1989 about the then-novel leveraged buyout (LBO) of the food-tobacco conglomerate RJR Nabisco, “Barbarians at the Gate” is a high-profile classic of financial and business journalism. But by 2025 standards, it’s remarkably lacking.
Specifically, “Barbarians” is a hyper-detailed chronicle of events, but doesn’t provide the analytical context to understand why any of those events are historically or socially significant. For that matter, it doesn’t dive deeply into the mechanics of the buyout, or even the RJR business: in one particularly annoying example, the book doesn’t walk the reader through why revenue modelling of potential efficiencies at RJR directly impacts the price various bidders are able to put on the table. The answer is bank financing, but you have to already understand what’s going on to know that.
More broadly, the book doesn’t hand readers much insight into why the rise of high-interest “junk bonds” changed the game for go-private efforts like this, or why they rose to such prominence as a tactic. Having spent ~20 hours with this thing (as I mentioned, I usually consume business nonfiction in audiobook form) I didn’t pick up anything about the changing conditions in finance that started making money so cheap and easy in the 1980s that it pushed LBO bidding wars beyond profitability. It’s a similar dynamic to what’s left our stock market so overvalued today, so it would have been nice to get a contemporary analysis.
Another element of events that is documented but not analyzed is the conflicting motives of various players in a buyout - particularly including that many of them are more motivated by short-term fees rather than the long-term profitability of a buyout deal.
This is particularly problematic because the RJR story features a rotating cast of three or more nebulous buyout aspirants, including a management team led by the then-CEO, F. Ross Johnson, who kicked off the whole thing; a junk-bond loving private equity firm called Kohlberg Kravis; and a third faction of purists who want to ‘run the company right’ without resorting to junk bonds for the buyout. If the book had done a bit more context-setting, these three groups’ identities and motives could have been more clearly nailed down - which frankly would have made the narrative stronger.
So what you wind up with is a narrative that’s useful to a fairly narrow stratum of people interested in high-end business strategy, including the interpersonal elements: the social relationships between principals are more painstakingly recounted here than the bank balance sheets involved.
And that about sums up the strengths and weaknesses of “Barbarians”: It’s a book that still hinges on the Great Man theory of history, more or less, and considers the people at the table at a buyout the most important in the process. The reality, it has now become far more widely accepted, is that even the most powerful people on Earth are guided by forces still larger and more powerful than them.
It’s a rare sign of progress that a book like this, if it were written today, would unquestionably go further out of its way to explain those larger forces, and why they made the RJR buyout significant in the first place.
I have personally had a really solid 2025, and I see good things in 2026. More generally, I’ve also been accused of having a too-rosy view of the world: my mother often refers to me as a “pathological optimist.”
I know that’s not the case for everyone. There’s a lot of doom and gloom out there about what next year will look like - so I thought it might be nice to share a few of my upbeat takes on the way things might go in 2026.
These are sort of predictions - I think they’re plausible. If not in 2026, then certainly in the next few years.
But more importantly they’re things I’m hoping for - and that I will be actively working, in my own small way, to make happen. I hope you’ll join me.
Yeah, I think we continue to drag ass to nowhere in particular for most of next year. Possibly a small bump if Democrats sweep the midterms and promise some kind of diversion from Trump and co.’s impulsive and corrupt governance.
The “AI bubble” isn’t really a public markets thing, so it will mostly just fade into the woodwork as the AGI/ “cure for cancer” narrative continues to erode. By 2027, noone will be talking about OpenAI, any more than they’re talking about Horizon Worlds today.
Unless he gets off hard drugs, Elon Musk’s empire of leverage will begin to publicly unwind. Reading about his catastrophic takeover of Twitter has made clear to me that even billions of dollars can’t protect the guy entirely from his own self-destructive urges, which have pulled Tesla away from cars and towards fantasies, and led to the former Bird Site becoming essentially useless as a public square.
And on that subject …
Elon Musk’s purchase of Twitter has turned out to be a godsend for me personally, and I hope for many other people. About two and a half years after the takeover, he has destroyed the site so utterly I no longer feel the same compulsion to engage there that has dogged most of my waking hours since I joined Twitter in 2009.
Some people will lament that - and I managed to get a lot of followers right before the site’s relevance cratered, so I took some lumps too.
But I think Musk’s destruction of the productive heart of digital discourse is good, actually …
This one’s not just hopium, it’s outright shameless projection.
As I get off Twitter, I am reading a lot more. Like, compulsively more. Like levels of reading I haven’t done for more than a decade, I think it’s fair to say. And so everyone else must be experiencing the same thing too, right? The freedom of thought unleashed by getting the fuck offline?
Well, I have no actual evidence for that. And to be clear, I’m not talking about the average person - a lot of today’s adults, and especially kids, are simply cooked. If you’re not in a household rigorously committed to self-betterment, you’re going to get sucked into the content mines and spit out a husk of a human being.
But what I’m talking about here are people like me - ambitious people committed to real meaning and real understanding. Especially with the continuing rise of Substack as a place for us to gather, the fast-take economy is increasingly going to be left to those who don’t exercise the willpower to escape it.
The divide between social media addicts and the rest of us is going to be nothing compared to the deep split between AI addicts and those who resist the urge to replace their personality and relationships with weighted decision trees.
I am already seeing mass bans on AI-generated text and images on real digital communities and forums across the internet, such as Subreddits. Any space actually frequented by thoughtful and engaged people is going to ultimately go the same direction, probably including lifetime bans for participants trying to pass AI off as their own work.
(And because I’m sure you’re thinking about it: I use AI for images here when I’m going for the disgusting, surreal, or absurd. It’s really, really good at creating shit that looks bizarre, uncanny, and disturbing. Credit where it’s due! But I think demand for that particular application is pretty vanishingly small.)
Again, this means we will see a new and strongly protected social divide. On the one hand, platforms like Facebook, Twitter, and maybe even YouTube will surrender their algorithms to AI slop. The rest of us, alienated and disgusted, will retreat to Substack, magazines, and other forms of real discourse to try and rebuild society without the constant interjection of some of the dumbest, weirdest, saddest people on Earth.
***
Hey, I said these predictions were wildly optimistic.
But the difference between optimism and delusion is actually working to make it happen.
Join me.
Dark Markets is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Subscribe
Subscribe to Dark Markets
Dark Markets👁️ Bullish and EOS: “A Fraud in Plain Sight”
The team behind Bullish brutally rugpulled their earliest investors. They'll do the same to public markets.
Dark Markets👁️ The Metaverse is On Its Last Legs
Say goodbye to the Previous Thing. Also: Salesforce gets f*cked by AI, Tesla's Roadster scam, and more.
Dark Markets👁️Not Even Past: Bullish and Ethereum's Shared Origin at Bitcoin Miami 2014
Ages and ages and ages thence
<100 subscribers
Welcome to Dark Markets, a weekly roundup of investment frauds n’ scams. I’m David Z. Morris, former reporter for Fortune and CoinDesk, and Phd historian of technology.
In today’s edition I indulge in some loosey-goosey bearish predictionizing about crypto, AI, Elon Musk, and the mental environment. I’ve often been accused of being a delusional optimist, and here I indulge that impulse - so if you’re looking for silver linings, I’ve got you.
One Last Shill for the Year: If you haven’t bought my new book “Stealing the Future: Sam Bankman-Fried, Elite Fraud, and the Cult of Techno-Utopia,” please consider it. If you’ve bought/read the book and haven’t left a review, please do that - it helps immensely.
In today’s edition: The Dark Markets Best of 2025; the Minessota Daycare Scam; Barbarians at the Gate re-reviewed; and my Hopium for 2026.
A selection of our most popular, important, and impactful pieces of the year.
First off, a few previously paywalled pieces that free subscribers can now enjoy:
·
Aug 31
·
Apr 27
·
May 4
Dark Markets is a reader-supported publication. To receive full access to all posts, consider becoming a paid subscriber.
Subscribe
I was pleasantly surprised to be reminded that I wrote about a lot of things besides Sam Bankman-Fried this year.
·
Jan 28
·
Feb 17
·
Mar 11
·
Nov 7
·
May 6
·
Sep 23
I don’t usually write about fraud against the U.S. government, but I might need to change that - at least according to a Biden Administration GAO report, it amounts to hundreds of billions of dollars a year. (I was actually a victim of a very low-end version of this recently, having had a $4,000 tax refund check stolen and fraudulently deposited. I still haven’t been able to get that money back after close to two years.)
The level of fraud alleged in Minnesota in recent days is staggering even by, say, FTX standards. The Washington Post has a sober and factual writeup that posits on the order of $8 billion has gone missing in connection with pandemic-era relief programs. This discovery follows a smaller bust of $250 million stolen from a pandemic school-meal program called Feeding our Future.
The more I think about it, the more angry I get at this sort of fraud, relative to the investment fraud I’m usually focused on. Victims of investment fraud are often as much as anything victims of their own greed and ignorance, but services fraud takes money out of all of our pockets, while eroding trust in government - a far more toxic erosion than damaging trust in corporations.
Of course, the problem with the Minnesota scam in the current political environment is that it appears to have been largely conducted by Somali immigrants - 82 of 92 people arrested in the current sweep are Minnesotans of Somali background. This of course has made it catnip not just for internet racists like Elon Musk, but for the actual anti-immigrant FBI, who I’m sure are devoting way more resources to this problem than were ever committed to, say, investigating Rick Scott’s Medicare fraud.
(This one’s somewhere between a capsule and a full review - but the subject is worth it.)
Written in 1989 about the then-novel leveraged buyout (LBO) of the food-tobacco conglomerate RJR Nabisco, “Barbarians at the Gate” is a high-profile classic of financial and business journalism. But by 2025 standards, it’s remarkably lacking.
Specifically, “Barbarians” is a hyper-detailed chronicle of events, but doesn’t provide the analytical context to understand why any of those events are historically or socially significant. For that matter, it doesn’t dive deeply into the mechanics of the buyout, or even the RJR business: in one particularly annoying example, the book doesn’t walk the reader through why revenue modelling of potential efficiencies at RJR directly impacts the price various bidders are able to put on the table. The answer is bank financing, but you have to already understand what’s going on to know that.
More broadly, the book doesn’t hand readers much insight into why the rise of high-interest “junk bonds” changed the game for go-private efforts like this, or why they rose to such prominence as a tactic. Having spent ~20 hours with this thing (as I mentioned, I usually consume business nonfiction in audiobook form) I didn’t pick up anything about the changing conditions in finance that started making money so cheap and easy in the 1980s that it pushed LBO bidding wars beyond profitability. It’s a similar dynamic to what’s left our stock market so overvalued today, so it would have been nice to get a contemporary analysis.
Another element of events that is documented but not analyzed is the conflicting motives of various players in a buyout - particularly including that many of them are more motivated by short-term fees rather than the long-term profitability of a buyout deal.
This is particularly problematic because the RJR story features a rotating cast of three or more nebulous buyout aspirants, including a management team led by the then-CEO, F. Ross Johnson, who kicked off the whole thing; a junk-bond loving private equity firm called Kohlberg Kravis; and a third faction of purists who want to ‘run the company right’ without resorting to junk bonds for the buyout. If the book had done a bit more context-setting, these three groups’ identities and motives could have been more clearly nailed down - which frankly would have made the narrative stronger.
So what you wind up with is a narrative that’s useful to a fairly narrow stratum of people interested in high-end business strategy, including the interpersonal elements: the social relationships between principals are more painstakingly recounted here than the bank balance sheets involved.
And that about sums up the strengths and weaknesses of “Barbarians”: It’s a book that still hinges on the Great Man theory of history, more or less, and considers the people at the table at a buyout the most important in the process. The reality, it has now become far more widely accepted, is that even the most powerful people on Earth are guided by forces still larger and more powerful than them.
It’s a rare sign of progress that a book like this, if it were written today, would unquestionably go further out of its way to explain those larger forces, and why they made the RJR buyout significant in the first place.
I have personally had a really solid 2025, and I see good things in 2026. More generally, I’ve also been accused of having a too-rosy view of the world: my mother often refers to me as a “pathological optimist.”
I know that’s not the case for everyone. There’s a lot of doom and gloom out there about what next year will look like - so I thought it might be nice to share a few of my upbeat takes on the way things might go in 2026.
These are sort of predictions - I think they’re plausible. If not in 2026, then certainly in the next few years.
But more importantly they’re things I’m hoping for - and that I will be actively working, in my own small way, to make happen. I hope you’ll join me.
Yeah, I think we continue to drag ass to nowhere in particular for most of next year. Possibly a small bump if Democrats sweep the midterms and promise some kind of diversion from Trump and co.’s impulsive and corrupt governance.
The “AI bubble” isn’t really a public markets thing, so it will mostly just fade into the woodwork as the AGI/ “cure for cancer” narrative continues to erode. By 2027, noone will be talking about OpenAI, any more than they’re talking about Horizon Worlds today.
Unless he gets off hard drugs, Elon Musk’s empire of leverage will begin to publicly unwind. Reading about his catastrophic takeover of Twitter has made clear to me that even billions of dollars can’t protect the guy entirely from his own self-destructive urges, which have pulled Tesla away from cars and towards fantasies, and led to the former Bird Site becoming essentially useless as a public square.
And on that subject …
Elon Musk’s purchase of Twitter has turned out to be a godsend for me personally, and I hope for many other people. About two and a half years after the takeover, he has destroyed the site so utterly I no longer feel the same compulsion to engage there that has dogged most of my waking hours since I joined Twitter in 2009.
Some people will lament that - and I managed to get a lot of followers right before the site’s relevance cratered, so I took some lumps too.
But I think Musk’s destruction of the productive heart of digital discourse is good, actually …
This one’s not just hopium, it’s outright shameless projection.
As I get off Twitter, I am reading a lot more. Like, compulsively more. Like levels of reading I haven’t done for more than a decade, I think it’s fair to say. And so everyone else must be experiencing the same thing too, right? The freedom of thought unleashed by getting the fuck offline?
Well, I have no actual evidence for that. And to be clear, I’m not talking about the average person - a lot of today’s adults, and especially kids, are simply cooked. If you’re not in a household rigorously committed to self-betterment, you’re going to get sucked into the content mines and spit out a husk of a human being.
But what I’m talking about here are people like me - ambitious people committed to real meaning and real understanding. Especially with the continuing rise of Substack as a place for us to gather, the fast-take economy is increasingly going to be left to those who don’t exercise the willpower to escape it.
The divide between social media addicts and the rest of us is going to be nothing compared to the deep split between AI addicts and those who resist the urge to replace their personality and relationships with weighted decision trees.
I am already seeing mass bans on AI-generated text and images on real digital communities and forums across the internet, such as Subreddits. Any space actually frequented by thoughtful and engaged people is going to ultimately go the same direction, probably including lifetime bans for participants trying to pass AI off as their own work.
(And because I’m sure you’re thinking about it: I use AI for images here when I’m going for the disgusting, surreal, or absurd. It’s really, really good at creating shit that looks bizarre, uncanny, and disturbing. Credit where it’s due! But I think demand for that particular application is pretty vanishingly small.)
Again, this means we will see a new and strongly protected social divide. On the one hand, platforms like Facebook, Twitter, and maybe even YouTube will surrender their algorithms to AI slop. The rest of us, alienated and disgusted, will retreat to Substack, magazines, and other forms of real discourse to try and rebuild society without the constant interjection of some of the dumbest, weirdest, saddest people on Earth.
***
Hey, I said these predictions were wildly optimistic.
But the difference between optimism and delusion is actually working to make it happen.
Join me.
Dark Markets is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Subscribe
Subscribe to Dark Markets
<100 subscribers
Dark Markets👁️ Bullish and EOS: “A Fraud in Plain Sight”
The team behind Bullish brutally rugpulled their earliest investors. They'll do the same to public markets.
Dark Markets👁️ The Metaverse is On Its Last Legs
Say goodbye to the Previous Thing. Also: Salesforce gets f*cked by AI, Tesla's Roadster scam, and more.
Dark Markets👁️Not Even Past: Bullish and Ethereum's Shared Origin at Bitcoin Miami 2014
Ages and ages and ages thence
Share Dialog
Share Dialog
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