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Speaker 1: This is Master's in Business with very rid holds on

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Speaker 1: Bloomberg Radio this week on the podcast what Can I Say?

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Speaker 1: Zeke Fox's book Number Go Up. Inside Crypto's Wild Rise

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Speaker 1: and Staggering Fall is just a shocking and hilarious and

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Speaker 1: fun read. I read it pretty quickly, in less than

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Speaker 1: a week, and I thought it was just fascinating. It

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Speaker 1: is a deep dive, a no holds barred look at

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Speaker 1: crypto and the many, many scams that take place across

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Speaker 1: everything from NFTs to icos, to hacks to bitcoin business models.

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Speaker 1: He is especially unhappy with Tether, which, by the way,

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Speaker 1: of all the scams in the book, Tether so far

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Speaker 1: seems to be holding up. It's really the thing that

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Speaker 1: pulled him into the world of crypto, and it's the

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Speaker 1: one that has outlasted the writing of the book. Lots

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Speaker 1: of other things fell apart, including FTX. I found the

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Speaker 1: book to be really entertaining and amusing and a little

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Speaker 1: bit horrifying. Parts of it are really just terrifying, But

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Speaker 1: Zeke is a fascinating guy. He is an award winning

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Speaker 1: investigative reporter for BusinessWeek and Bloomberg News. He won the

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Speaker 1: Lobe Award the Civil Gavel Award. He was a National

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Speaker 1: Magazine Award finalist. He's really an interesting guy with a

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Speaker 1: fascinating history, and the story of how he unraveled all

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Speaker 1: of the mayhem in the worlds of crypto is really

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Speaker 1: quite fascinating. Starting with a buddy who made a little

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Speaker 1: money and he just gets sucked into the netherworld of

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Speaker 1: everything from Luna to Tara, to Celsius, to Tether to

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Speaker 1: NFTs and the board Ape Yacht Club. It really is

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Speaker 1: just a very entertaining book, and I thought this conversation

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Speaker 1: was absolutely fascinating, with no further ado, my deep dive

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Speaker 1: into crypto with Business Weeks Zeke Fox. Normally here I

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Speaker 1: would say, welcome to Bloomberg. But Zeke Fox, you work

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Speaker 1: at Bloomberg, so welcome to the fifth floor. Let's talk

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Speaker 1: a little bit about your career and what led you

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Speaker 1: to write this book. A little background. We're recording this

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Speaker 1: in late October. Bitcoin touched thirty five thousand dollars. This

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Speaker 1: week it's settled somewhere around thirty two thousand. The FTX

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Speaker 1: trials are getting underway. Fun time to be covering crypto.

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Speaker 2: Yes, and I mean the title of the book, number

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Speaker 2: go up inside Crypto's wild rise and staggering fall. A

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Speaker 2: little bit giveaway my perspective there. I think this whole

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Speaker 2: thing is over and.

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Speaker 1: Over done, never never to rise from the ashes.

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Speaker 3: Sayin about it.

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Speaker 1: Yeah, so we'll talk more about that. We'll talk about

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Speaker 1: why number go up is a business mind and how

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Speaker 1: Crypto Winter seems to come more and more frequently. But

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Speaker 1: let's start a little bit with your background. Your beat

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Speaker 1: seems to be financial related crimes. How did you ever

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Speaker 1: find your way to this area of interest.

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Speaker 2: I don't like to say that because my job depends

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Speaker 2: on talking to people and getting me to tell their story.

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Speaker 2: So I prefer to describe it as I write profiles

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Speaker 2: of people who make a lot of money in an

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Speaker 2: interesting way. And I was drawn to that because I'm

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Speaker 2: somebody who plays by the rules.

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Speaker 3: You know.

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Speaker 2: I went to the school, I got pretty good grades,

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Speaker 2: I got a job. I've worked at Bloomberg for more

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Speaker 2: than a decade now. But I really like these characters

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Speaker 2: who are willing to take like crazy risks, and they

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Speaker 2: operate in great areas like loan sharks, pump and dump schemers,

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Speaker 2: deck collectors like I have spent my whole career writing

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Speaker 2: about these guys who operate on the fringes of Wall Street.

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Speaker 2: And I love getting to know these cares and figuring

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Speaker 2: out what makes them tick, because there's a lot you

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Speaker 2: can do if you are willing to run the risk

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Speaker 2: that like maybe the securities in exchange commission will suit you,

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Speaker 2: or like maybe you'll go to jail for a year,

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Speaker 2: you know, but maybe you're gonna make a lot of

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Speaker 2: money first.

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Speaker 1: Seems like a fair approach. Let's talk about how you

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Speaker 1: fell into crypto. It cracked me up. Your buddy Jay

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Speaker 1: made a bunch of money on doge coin. He's freaking

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Speaker 1: nostra Damis. Tell us about your conversations with Jay.

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Speaker 2: So I have a group text with a bunch of

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Speaker 2: friends from high school. We call it Dan's Basement because

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Speaker 2: that's where we used to hang out. And Jay is

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Speaker 2: a smart guy. He's a funny guy. We used to

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Speaker 2: write a humor call Umn together back in high school

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Speaker 2: in Cambridge, Massachusetts, And out of the blue, he starts

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Speaker 2: texting us about this thing that he calls doggy coin

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Speaker 2: and he.

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Speaker 1: Is not doge coin, doggie coin right.

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Speaker 2: And me, being like the know it all, you know

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Speaker 2: financial reporter, I tell him Jay it's call dogecoin, and

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Speaker 2: it's dumb. It went because this is twenty twenty, it's

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Speaker 2: the height of the pandemic. We're all stuck at home.

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Speaker 2: We're really bored.

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Speaker 1: Just before Elon starts tweeting about.

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Speaker 3: It, Yeah, it's starting to bubble up a bit.

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Speaker 2: I can see you here taking Jay's side in the

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Speaker 2: argument ahead of time, right, I mean, he is like, hey,

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Speaker 2: people are talking about it on Reddit, you know, let's

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Speaker 2: I can see this going up.

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Speaker 3: It's funny.

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Speaker 2: People everybody likes doggy coin. Get in early. And I'm

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Speaker 2: thinking to myself, I remember when this went sort of

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Speaker 2: viral a few years earlier. Already there had already been

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Speaker 2: a very funny segment on The Daily Show making fun

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Speaker 2: of crypto and doagecoin. And I'm like, it's pointless, and

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Speaker 2: he's like, I know it's pointless.

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Speaker 3: I don't care.

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Speaker 2: I just think it's funny. And I'm trying to argue

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Speaker 2: it's not funny. It won't go up. And this goes

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Speaker 2: on for like weeks and weeks, and it does go up,

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Speaker 2: and he keeps telling us about it. I'm getting kind

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Speaker 2: of jealous. Finally he sells out. I think he he

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Speaker 2: may have even called it right and sold before Elon

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Speaker 2: Musk hosted Saturday Night Live, which that was like a

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Speaker 2: you know, buy the rumor so loose moment, and he

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Speaker 2: went to Disney. He's sending selfie with his prosy. Yeah,

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Speaker 2: he made enough on on diagecoin to go to Disney.

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Speaker 2: He texted us, I am freaking noster Damis and I'm

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Speaker 2: a little I'm jealous that he made money and I didn't.

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Speaker 2: But more than that, I also I like being right,

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Speaker 2: and I think of myself as the one who knows

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Speaker 2: about finance and I'm an expert on pump and dump schemes, any.

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Speaker 1: Sort of scam or you know, fast talking salesman who

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Speaker 1: was gonna leave you holding the bag, right, Yeah, of

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Speaker 1: course you're gonna be skeptical. In fact, in the book

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Speaker 1: you describe bitcoin's first commercial application was silk Road. How

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Speaker 1: did that work out for everybody?

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Speaker 2: I mean it was pretty cool if you were not

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Speaker 2: that I did. But if you wanted to buy drugs

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Speaker 2: off the internet, you could just there was this new

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Speaker 2: magic Internet money. Just fire up your tour browser and

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Speaker 2: you know, send some of this new new fangled Internet

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Speaker 2: money to what are your LSD or whatever.

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Speaker 1: Actually, we're recording this October twenty twenty three. It was

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Speaker 1: literally a decade ago October twenty thirteen when silk Road

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Speaker 1: got busted, when the founder, Ross Olbright got busted, and

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Speaker 1: you note in the book, hey, bitcoin might have crashed,

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Speaker 1: but a month later it's up ten x to over

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Speaker 1: one thousand dollars, and that looked very suspicious.

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Speaker 2: Yeah, So silk Road was actually very important to the

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Speaker 2: early years of bitcoin. It got it on the map,

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Speaker 2: it got a lot of people buying. But really what

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Speaker 2: made bitcoin popular was not so much that it was

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Speaker 2: useful for anything. It was number go up. It was

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Speaker 2: the price going up and people seeing headlines about somebody

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Speaker 2: making money on bitcoin. Everybody had a friend like Jay

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Speaker 2: who was telling them, hey, I made some money on crypto,

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Speaker 2: maybe you should too, And it became hard to resist.

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Speaker 2: And it's interesting that in these early years there wasn't

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Speaker 2: much liquidity and bitcoin, and it was easy for people

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Speaker 2: to manipulate the prices. So since then it's come out

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Speaker 2: that some of the price changes that got people's attention

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Speaker 2: these early years may have been from manipulation.

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Speaker 1: A substantial portion of the volume were just various interested

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Speaker 1: companies trading coins back and forth with each other.

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Speaker 2: Yeah, I mean there's a coin called light coin, which

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Speaker 2: is like a Bitcoin knockoff, and its sense come out

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Speaker 2: that a lot of the early run up and light

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Speaker 2: coin that got people interested in light Cooin was the

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Speaker 2: result of just manipulation. But in those early years, even

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Speaker 2: more than today, like anything went, the Securities and Exchange

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Speaker 2: Commission was not following bitcoin trading closely at all.

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Speaker 1: And you mentioned number. Go Up is the title of

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Speaker 1: the book that's essentially the business model of bitcoin. It

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Speaker 1: will go up because it has gone up. Explain.

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Speaker 2: So I had resisted looking into crypto, took on the

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Speaker 2: assignment after this argument with Jay, and one of the

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Speaker 2: first places I went was Miami for Bitcoin twenty twenty one.

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Speaker 2: It was one of the first big conferences of pretty

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Speaker 2: much any kind since the COVID restrictions lifted. It was

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Speaker 2: like ten thousand people descended on this warehouse in the

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Speaker 2: Windwood district. And I'll go in kind of skeptical, but

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Speaker 2: also bitcoin people and crypto people are great at pr

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Speaker 2: and they spread this narrative that there's like this wave

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Speaker 2: of institutional adoption that's just around the corner. I think

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Speaker 2: at any time in like the last ten years, there's

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Speaker 2: always been the sort of sense that, oh, you've seen

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Speaker 2: a headline about like Blackrock or JP Morgan in Yeah,

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Speaker 2: the big guys are getting in on it. So I

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Speaker 2: go to this conference thinking, all right, I'm skeptical at crypto,

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Speaker 2: but I'm also sort of expecting to see regular Wall

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Speaker 2: Street guys there talking about financial technology in ways that

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Speaker 2: I can understand. Instead, on stage, I see like the

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Speaker 2: craziest guys that I've ever heard. People are just like screaming.

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Speaker 2: At that time, they were down on Elon Musk. People

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Speaker 2: are screaming about.

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Speaker 1: A tewan as kaiser from Russia television or I don't

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Speaker 1: know where he is today.

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Speaker 3: But yeah.

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Speaker 2: And one guy's on stage and he's talking about bitcoin

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Speaker 2: and he says the most important innovation in bitcoin is

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Speaker 2: number go up technology, and he's like, number go up

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Speaker 2: technology is a powerful piece of technology. It means when

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Speaker 2: the price goes up, more people will hear about it

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Speaker 2: and they'll want to buy it, and that'll make the

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Speaker 2: price go up some more, and then more people hear

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Speaker 2: about it, and then they'll buy it, and it'll go up

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Speaker 2: even higher, and pretty soon we'll all be rich.

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Speaker 1: So number go up technology sounds a lot like the

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Speaker 1: Greater fool theory of speculation.

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Speaker 2: Yeah, I mean it's it's like the logic of a

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Speaker 2: pyramid scheme. But for a couple of years there it

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Speaker 2: seemed to work, and the crypto people like to say, wag.

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Speaker 3: Me the w A G M I were all they

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Speaker 3: made it.

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Speaker 2: The idea was just buy, hold it, buy some more.

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Speaker 2: It's going to go up. As long as we don't

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Speaker 2: lose the faith and we keep promoting it to our friends,

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Speaker 2: we're all going to be rich.

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Speaker 1: The problem with that is at a certain point you

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Speaker 1: run out of people to come in and buy it.

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Speaker 1: This is true with every Pumpin' up scheme, every pyramid scheme,

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Speaker 1: and it comes out in some of the court documents

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Speaker 1: later that in some of the corporate slack accounts, one

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Speaker 1: of the people say they should be the director of

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Speaker 1: Ponzi economics. Tell us what is ponzi nomics?

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Speaker 2: This is slightly related to number go up technology. It's

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Speaker 2: about on that level. And some of these new coins

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Speaker 2: that were being started at that time would explicitly say

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Speaker 2: that they were adopting ponzi ish structures. And we're talking

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Speaker 2: about like DeFi apps. So these were like new crypto apps.

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Speaker 2: And what do we boil down to is that if

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Speaker 2: you start to doing whatever this thing was, they would

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Speaker 2: pay you in a new coin. And you might think, well,

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Speaker 2: why do I want rit Hole's coin And they'd say, well,

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Speaker 2: you need rit holts coin to use the rid Holt's app.

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Speaker 2: And it'd be like, well why do I want to

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Speaker 2: use the rit Holt's app And it's like, well, that's

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Speaker 2: how you earn more rit holes coin. Yes, it was

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Speaker 2: very circular, but it seemed like every couple of weeks

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Speaker 2: somebody was starting one of these things and it was

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Speaker 2: really taking off. And there was one that was got

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Speaker 2: very popular called step in and it's like a health

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Speaker 2: app on your phone. And to use the app, you

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Speaker 2: have to buy a virtual shoe for some reason, only

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Speaker 2: one shoe, I don't know, Yeah, only one. You just

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Speaker 2: buy one shoe. But yeah, so if you bought the

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Speaker 2: shoe and it costs like a thousand bucks equivalent, then

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Speaker 2: you could earn green Satoshi tokens. So the once you'd

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Speaker 2: spent your thousand bucks on the shoe, you'd better keep

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Speaker 2: walking every day or you're just throwing away your chance

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Speaker 2: to earn these valuable green satoshi tokens.

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Speaker 1: So it sounds like almost a legitimate business plan. We're

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Speaker 1: going to give you a financial incentive to exercise, and

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Speaker 1: it'll all take place in crypto on the blockchain, and

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Speaker 1: so not only are you going to get healthy, you're

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Speaker 1: also going to get rich. What could go wrong?

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Speaker 3: Right?

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Speaker 2: I mean, honestly, a lot of these pitches, if you

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Speaker 2: just heard them for a couple of minutes, they sounded

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Speaker 2: pretty good, not bad. Yeah, But the reality was was

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Speaker 2: people were that were like teams of bots planned step

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Speaker 2: in and it just boiled down to a pyramid and

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Speaker 2: they're trying to bring everyone who did step in was

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Speaker 2: dependent on new people wanting to do step in and

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Speaker 2: wanting to buy these shoes because otherwise there was no

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Speaker 2: use for these green satoshi tokens. And inevitably every other

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Speaker 2: game like this, the price crashed and shoe prices are

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Speaker 2: way down.

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Speaker 3: Yeah.

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Speaker 1: By the way, I found the book to be infuriated

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Speaker 1: and hilarious, very informative, very fun, but also serious. Lots

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Speaker 1: of really serious things were in it, and despite that,

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Speaker 1: some of the pros just really was laugh out loud.

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Speaker 1: What I want to do is read a couple of

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Speaker 1: quotes to you and get your reaction as to what's

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Speaker 1: going on here, and just give us a little color.

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Speaker 1: Starting with quote, I couldn't believe that everyday people sent

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Speaker 1: millions of perfectly good US dollars to the inspector gadget

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Speaker 1: creators Bahamian Bank in exchange for digital tokens conjured by

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Speaker 1: the Mighty Ducks guy and run by executives who were

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Speaker 1: targets of a US criminal investigation.

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Speaker 2: Explain, we're talking about Tether. There's a lot to unpack there,

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Speaker 2: and it was the first crypto company that I really

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Speaker 2: set out to investigate. In the regular financial world, if

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Speaker 2: you're investigating hedge fond of fintech company, basically, a lot

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Speaker 2: of times even the investigation that brings down the company,

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Speaker 2: the reporter just points out one red flag, like they'll

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Speaker 2: be like, hey, Enron, maybe what's with this off balance

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Speaker 2: sheet stuff. Maybe it's a bit fishy, and like that's

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Speaker 2: what brings down Enron right now. Tether, this is a

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Speaker 2: company that was like the central bank of crypto, and

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Speaker 2: when I started looking into it, it's it's a stable coin.

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Speaker 2: So they say that every Tether token is worth one dollar.

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Speaker 1: And there's a dollar in reserve somewhere.

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Speaker 2: Yeah, they're keeping a dollar in the bank for you. You

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Speaker 2: can always chade your token in for a real dollar.

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Speaker 2: So when I started looking into it, they had fifty

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Speaker 2: billion tether tokens. It gotten huge, and that meant they

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Speaker 2: were supposed to have fifty billion dollars in the bank somewhere.

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Speaker 1: How hard is it to show those ordited returns. It's

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Speaker 1: not even return on investment. Here's our fifty billion dollars.

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Speaker 2: Right, So they weren't saying where red flag number one,

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Speaker 2: Red Flag number two. One of the coin's inventors was

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Speaker 2: Rock Pierce, who is a child actor from The Mighty Ducks.

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Speaker 1: Emilio Estevez's younger self.

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Speaker 2: Yes, and he's in the flashback he misses this crucial

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Speaker 2: penalty shot that haunts coach scored in Bombay later in life.

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Speaker 2: This guy had had this crazy career in the dot

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Speaker 2: com bubble in World of Warcraft item trading, and then

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Speaker 2: he thought up this this Tether coin. Now he'd passed

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Speaker 2: on ownership to a new team, and I found that

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Speaker 2: the de facto boss of Tether was a former plastic

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Speaker 2: surgeon from Milan who had this crazy online diary where

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Speaker 2: he posted about his admiration, it seemed for Bernie Madoff.

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Speaker 1: And how does it Inspector Gadget get into this?

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Speaker 2: Oh yeah, we need to bring in all my favorite media.

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Speaker 2: So I'm looking for this fifty billion dollars. That's like

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Speaker 2: what gets me into crypto. I'm like, I'm the guy

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Speaker 2: who's gonna see if they have this fifty billion. I'm

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Speaker 2: going to track it down. And when I go, look,

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Speaker 2: the only bank that I can find that will say

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Speaker 2: we have any of this money is del Tech Bank

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Speaker 2: in the Bahamas and its chairman is Jean Schalapin. And

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Speaker 2: he's a French guy who got rich by creating Inspector Gadget.

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Speaker 1: Like really like the cartoon that kids.

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Speaker 2: Yes, And he's not just like the finance guy behind it,

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Speaker 2: Like he's the creator. Like I don't think he drew

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Speaker 2: the cartoons, but like he came up with the idea.

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Speaker 3: He was on the team.

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Speaker 2: This is what made him rich is that he created

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Speaker 2: an Inspector Gadget and then this whole cartoon company around it.

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Speaker 2: And he's honestly, he's like a character from James Bond movie.

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Speaker 2: He bought a castle with the Inspector Gadget money, right,

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Speaker 2: and he also bought a mansion in the Bahamas, a

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Speaker 2: pink colonial mansion on the beach that you can actually

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Speaker 2: see in a James Bond movie. In the movie, it's

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Speaker 2: the villain's house. He flew his own jet. He piloted it.

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Speaker 2: Very charming guy. And so he says, I am holding

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Speaker 2: some of Teather's money, and I say, okay, I'll see

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Speaker 2: you tomorrow in the Bahamas. So I fly down there.

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Speaker 2: We get to his office and when I walk in,

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Speaker 2: he pulls his book off the shelf. I think it's

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Speaker 2: called Misplaced Trust and it's about like financial schemes, and

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Speaker 2: he starts like sort of flipping through it and says, ah,

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Speaker 2: the strange things people do for money. And I'm just like, Jean,

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Speaker 2: are you Are you playing a character in this in

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Speaker 2: like a new episode of Inspector Gadget right now?

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Speaker 3: Like what is going on?

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Speaker 1: It was all foreshadowing.

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Speaker 3: Oh yeah.

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Speaker 2: But the weird thing about Tether was that they're all

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Speaker 2: these red flags and we didn't even mention they'd been

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Speaker 2: sued for fraud by the New York Attorney General, who

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Speaker 2: had shown that they'd lied about the reserves in the past.

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Speaker 2: That even John would say, I didn't know where all

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Speaker 2: the money was, I could only account for a portion

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Speaker 2: of it. So they are all these red flags enough

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Speaker 2: that in the traditional finance world investors would be scared off.

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Speaker 2: But in the crypto world, people kept trusting tether and

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Speaker 2: the coins still traded for a dollar, and like I

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Speaker 2: wrote there, people just kept sending in their real money

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Speaker 2: to get these tokens, and every day it's the most

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Speaker 2: traded crypto coin.

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Speaker 1: Let's go to the next quote that cracked me up.

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Speaker 1: You actually reference a tweet quote. Imagine if keeping your

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Speaker 1: car idling twenty four to seven produced solved seducos, you

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Speaker 1: could trade for heroin.

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Speaker 3: Explain love this tweet.

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Speaker 2: It's a great explanation of bitcoin, which in the bitcoin

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Speaker 2: mining process very power hungry. Yes, I mean, by some estimates,

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Speaker 2: bitcoin mining uses more energy than the whole country of Argentina.

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Speaker 2: And it's just like warehouses of these computers running around

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Speaker 2: the clock. And I was surprised to learn that there's

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Speaker 2: not really they're not really doing anything that's crucial to

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Speaker 2: the bitcoin network. They're just playing sort of this guessing

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Speaker 2: game that makes it difficult for anyone to hack bitcoin

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Speaker 2: and steal all the bitcoins. But it just uses this

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Speaker 2: insane amount of energy.

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Speaker 1: H here's one of my favorites, quote all my Apes Gone.

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Speaker 1: Tell us a little bit about your experience purchasing a

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Speaker 1: mutant ape n f T.

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Speaker 2: I got a lot of criticism from crypto guys as

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Speaker 2: I was researching this book, and they would say, how

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Speaker 2: are you writing about crypto if you don't have any

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Speaker 2: crypto And I would tell them, well, listen, first of all,

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Speaker 2: as a reporter, I'm not supposed to invest in anything.

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Speaker 1: I was told to ask you how much money have

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Speaker 1: you made shorting bitcoin? And the answer is, yeah, nothing.

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Speaker 1: You're not allowed to, right, yeah.

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Speaker 2: And the big the crypto people would say, actually, even

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Speaker 2: that policy introduces some bias because you're invested in standard

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Speaker 2: stock market funds and so you're sort of against crypto,

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Speaker 2: and how you don't know, you don't know about this.

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Speaker 3: You got to try it out.

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Speaker 2: And so eventually they kind of got to me and

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Speaker 2: I was like, you know what, I tried out step in.

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Speaker 2: I got a shoe. It had it was in the

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Speaker 2: middle of collapse by the time I bought a shoe,

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Speaker 2: but that that didn't do much for me.

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Speaker 1: So your poor wife, so you spend a couple hundred

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Speaker 1: bucks on a shoe. You spend twenty thousand dollars on

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Speaker 1: a mutant ape that fortunately you sold for almost all

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Speaker 1: your money back.

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Speaker 2: Yeah, I decided to try it out, and I was like,

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Speaker 2: I'm going straight for the top. I want to join

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Speaker 2: the board Ape yacht Club. Right, that's the crypto thing

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00:21:17,280 --> 00:21:18,800
Speaker 2: that the celebrities are doing.

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Speaker 1: But those are hundreds of thousands of dollars.

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00:21:20,920 --> 00:21:23,520
Speaker 2: Yeah, this is like a cartoon of a monkey, is

396
00:21:23,560 --> 00:21:27,240
Speaker 2: a very ugly cartoon. They were going for like five

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00:21:27,320 --> 00:21:30,160
Speaker 2: hundred grand, and they were having a party in New

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00:21:30,240 --> 00:21:32,360
Speaker 2: York called Apefest. You had to have one to go,

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00:21:32,840 --> 00:21:35,080
Speaker 2: and I found out you could still get in if

400
00:21:35,119 --> 00:21:37,240
Speaker 2: you got a mutant ape, which is still it's like

401
00:21:37,920 --> 00:21:39,840
Speaker 2: the ugly cousin of the board Ap.

402
00:21:39,800 --> 00:21:42,760
Speaker 1: And a much more reasonable twenty thousand dollars.

403
00:21:43,000 --> 00:21:46,199
Speaker 2: Yes, So when I asked my wife and she very

404
00:21:46,320 --> 00:21:48,520
Speaker 2: nicely said, yes, they're actually going for forty.

405
00:21:48,560 --> 00:21:51,840
Speaker 1: When I asked her, right, and good news, honey, it's collapsing.

406
00:21:51,880 --> 00:21:53,240
Speaker 1: It'll only cost us twenty.

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00:21:54,040 --> 00:21:55,720
Speaker 2: I was happy that I hitd a collapse, but I

408
00:21:55,720 --> 00:21:57,800
Speaker 2: was also like, wait, so if it went from forty

409
00:21:58,200 --> 00:22:02,920
Speaker 2: to twenty and like two, is it gonna go to ten,

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00:22:03,000 --> 00:22:04,600
Speaker 2: and I was like, please do not go to ten.

411
00:22:04,760 --> 00:22:07,280
Speaker 2: But even more than it going to ten, my fear

412
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Speaker 2: was does all my apes gone?

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Speaker 3: Thing?

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00:22:09,640 --> 00:22:13,159
Speaker 2: Because it actually I learned a lot from buying the

415
00:22:13,200 --> 00:22:16,200
Speaker 2: board ape. Because if a lot of people who even

416
00:22:16,240 --> 00:22:18,159
Speaker 2: if you are sort of into crypto, maybe you have

417
00:22:18,200 --> 00:22:20,439
Speaker 2: some bitcoin, you have some ethereum, you probably just do

418
00:22:20,480 --> 00:22:24,879
Speaker 2: it on coinbase or robinhood or whatever. You're not actually

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00:22:25,000 --> 00:22:27,320
Speaker 2: like using the blockchain, right, Like.

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Speaker 1: But to get the NFTs you have to go through

421
00:22:30,400 --> 00:22:33,960
Speaker 1: the blockchain, and it's a horrific arduous process.

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00:22:34,160 --> 00:22:36,600
Speaker 2: Yes, I mean i'd heard it would be bad. You know,

423
00:22:36,640 --> 00:22:38,840
Speaker 2: my expectations were low, but then I went to go

424
00:22:38,880 --> 00:22:41,040
Speaker 2: do it and I was like, oh my god, Like

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Speaker 2: no one normal will do this. I'll get like just

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00:22:43,119 --> 00:22:46,520
Speaker 2: it boils down to your money lives. Like you know,

427
00:22:46,600 --> 00:22:49,080
Speaker 2: where you put the URL in your web browser. You

428
00:22:49,160 --> 00:22:51,240
Speaker 2: might type in Google and then maybe you have like

429
00:22:51,280 --> 00:22:53,919
Speaker 2: a little red stop sign if you have ad block.

430
00:22:54,560 --> 00:22:57,080
Speaker 2: Now maybe next to it, how would you like to

431
00:22:57,119 --> 00:23:00,240
Speaker 2: add a picture of a foxhead? And that's where your money's.

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Speaker 1: You're on a Chrome extent, yes, And like before.

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00:23:03,200 --> 00:23:05,239
Speaker 2: You install it, they make you watch this video and

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00:23:05,280 --> 00:23:08,720
Speaker 2: it says, welcome to the wonderful world of crypto. Now,

435
00:23:08,760 --> 00:23:12,240
Speaker 2: please engrave your twelve word password on a piece of

436
00:23:12,280 --> 00:23:16,000
Speaker 2: metal and bury it in your backyard. And which I

437
00:23:16,000 --> 00:23:18,800
Speaker 2: did not do, but I just the process of getting

438
00:23:18,800 --> 00:23:22,040
Speaker 2: my twenty thousand dollars into this fox head so that

439
00:23:22,119 --> 00:23:25,280
Speaker 2: I could waste it on this mute ape was so

440
00:23:25,400 --> 00:23:27,760
Speaker 2: horrible that I was just like, this is a huge

441
00:23:27,800 --> 00:23:30,639
Speaker 2: obstacle the crypto ever taking off. No one normal is

442
00:23:30,680 --> 00:23:33,240
Speaker 2: gonna do this unless they think they're gonna get rich.

443
00:23:34,080 --> 00:23:36,920
Speaker 1: And tell us who said all my apes gone?

444
00:23:37,480 --> 00:23:40,000
Speaker 2: So once you got the apes, you gotta watch out

445
00:23:40,000 --> 00:23:42,239
Speaker 2: because you're gonna get hacked. They might get stolen. And

446
00:23:42,280 --> 00:23:47,200
Speaker 2: there was a art dealer who actually got hacked and

447
00:23:47,560 --> 00:23:50,199
Speaker 2: two million dollars of NFTs was stolen from him, right,

448
00:23:50,320 --> 00:23:54,000
Speaker 2: and he tweeted mid hack all my apes Gone, the

449
00:23:54,040 --> 00:23:56,560
Speaker 2: status tweet in all of crypto.

450
00:23:56,359 --> 00:23:59,480
Speaker 1: The saddest tweet in all of crypto. So let's talk

451
00:23:59,480 --> 00:24:04,200
Speaker 1: a little bit about Axie Infinity is a massive multiplayer

452
00:24:04,320 --> 00:24:11,399
Speaker 1: online game, and this quote is just bonkers. Crypto Bros.

453
00:24:11,440 --> 00:24:17,119
Speaker 1: And Silicon Valley vcs gave Filipinos false hope by promoting

454
00:24:17,200 --> 00:24:22,919
Speaker 1: an unstable bubble based on a Pokemon knockoff as the

455
00:24:23,080 --> 00:24:29,000
Speaker 1: quote future of work unquote, making matters worse, North Korean

456
00:24:29,000 --> 00:24:31,840
Speaker 1: hackers broke into the crypto exchange affiliated with the game

457
00:24:32,280 --> 00:24:35,000
Speaker 1: made off with six hundred million dollars worth of stable

458
00:24:35,040 --> 00:24:39,359
Speaker 1: coins and ether. The heist helped Kim Jehan un pay

459
00:24:39,400 --> 00:24:43,879
Speaker 1: for test launches of ballistic missiles. Instead of providing a

460
00:24:43,920 --> 00:24:47,960
Speaker 1: new way for poor people to earn cash, Axie Infinity

461
00:24:48,200 --> 00:24:53,480
Speaker 1: funneled their savings to a dictator's weapons program. I mean,

462
00:24:53,560 --> 00:24:57,119
Speaker 1: that is just a beautiful paragraph. So first off, I

463
00:24:57,200 --> 00:25:00,640
Speaker 1: love the pros, but second, what a horrible story.

464
00:25:01,000 --> 00:25:03,879
Speaker 2: Yes, and like I'm not making that up. Like the

465
00:25:04,040 --> 00:25:08,959
Speaker 2: US government has said, North Korea's nuclear program is partly

466
00:25:09,000 --> 00:25:12,720
Speaker 2: funded from hacking this Pokemon knockoff game.

467
00:25:12,920 --> 00:25:14,919
Speaker 3: And this was game AXI.

468
00:25:15,400 --> 00:25:17,880
Speaker 2: The crypto guys when it was going well, they love

469
00:25:17,960 --> 00:25:20,480
Speaker 2: to talk about it. This was their number one example

470
00:25:20,520 --> 00:25:24,719
Speaker 2: of Web three. You had to buy a team of monsters.

471
00:25:24,800 --> 00:25:26,560
Speaker 2: It was a game you played on your phone. You

472
00:25:26,600 --> 00:25:29,000
Speaker 2: had to buy the monsters before you could play, and

473
00:25:29,040 --> 00:25:33,400
Speaker 2: then you when you battled, you earned smooth love potions.

474
00:25:33,680 --> 00:25:36,440
Speaker 2: And it had the same circular logic where you needed

475
00:25:36,440 --> 00:25:39,240
Speaker 2: the potions to get more monsters. Why do you want

476
00:25:39,280 --> 00:25:41,520
Speaker 2: monsters well to get the potions? Why do you want

477
00:25:41,520 --> 00:25:42,800
Speaker 2: the potions to get monsters?

478
00:25:43,200 --> 00:25:44,880
Speaker 3: You know? But it was going.

479
00:25:44,680 --> 00:25:48,280
Speaker 2: Great for a while, and more than a million people

480
00:25:48,280 --> 00:25:51,720
Speaker 2: in the Philippines started playing. I went there to check

481
00:25:51,760 --> 00:25:54,600
Speaker 2: it out. I mean, even my driver had taken out

482
00:25:54,600 --> 00:25:57,080
Speaker 2: a loan for something like a thousand bucks to buy

483
00:25:57,119 --> 00:25:59,679
Speaker 2: a team of monsters, and it had lost it. For

484
00:25:59,760 --> 00:26:02,200
Speaker 2: these people who took out loans to get in on it,

485
00:26:02,200 --> 00:26:05,040
Speaker 2: it had been a real setback in their life. You know,

486
00:26:05,080 --> 00:26:07,480
Speaker 2: this was no joke to them. It's not like just

487
00:26:07,520 --> 00:26:08,320
Speaker 2: their pocket.

488
00:26:08,040 --> 00:26:11,960
Speaker 1: Money, serious serious damage. Here's could be my favorite Sam

489
00:26:12,000 --> 00:26:15,439
Speaker 1: Bankman Freed quote quote. It's like the narrative would be

490
00:26:15,560 --> 00:26:19,159
Speaker 1: sexier if it was like, holy, this is the world's

491
00:26:19,200 --> 00:26:20,680
Speaker 1: biggest Ponzi scheme, right.

492
00:26:21,960 --> 00:26:22,240
Speaker 3: Yeah.

493
00:26:22,400 --> 00:26:24,959
Speaker 2: So I spent a lot of time with Sam Bankman

494
00:26:25,000 --> 00:26:27,919
Speaker 2: Freed in reporting this book because it was clear he

495
00:26:27,960 --> 00:26:30,680
Speaker 2: was a major player in crypto, and it was actually

496
00:26:30,840 --> 00:26:33,399
Speaker 2: very fun. When I went to go write the book,

497
00:26:33,560 --> 00:26:36,560
Speaker 2: FTX had collapsed, and some of his quotes like that

498
00:26:36,600 --> 00:26:39,520
Speaker 2: one took on some new meaning and I'm like, was

499
00:26:39,560 --> 00:26:41,960
Speaker 2: this guy just toying with me? While he was giving

500
00:26:41,960 --> 00:26:42,640
Speaker 2: this interview.

501
00:26:42,920 --> 00:26:46,640
Speaker 1: That's hilarious. And then on the FTX bankruptcy, this could

502
00:26:46,720 --> 00:26:49,520
Speaker 1: be my favorite quote in the whole book. The shocking

503
00:26:49,560 --> 00:26:53,200
Speaker 1: reversal was the biggest news crypto had ever seen. It

504
00:26:53,320 --> 00:26:58,439
Speaker 1: was as if Sutoshi Nakamoto's identity was finally revealed and

505
00:26:58,480 --> 00:27:02,840
Speaker 1: it was Janet Yellen, the central banker hated by bitcoiners.

506
00:27:03,240 --> 00:27:07,399
Speaker 1: That's just a hilarious sentence. I mean, it's so great.

507
00:27:07,680 --> 00:27:13,400
Speaker 1: Everybody thought FTX was the most legitimate entity in all crypto,

508
00:27:13,680 --> 00:27:14,840
Speaker 1: turns out not so much.

509
00:27:15,720 --> 00:27:19,320
Speaker 2: Yeah, and I will admit I also thought I was

510
00:27:19,359 --> 00:27:22,520
Speaker 2: skeptical of crypto, but I thought I thought, hey, FTX

511
00:27:22,640 --> 00:27:26,560
Speaker 2: is a casino for cryptocurrencies. They're encouraging people to gamble there.

512
00:27:26,600 --> 00:27:29,600
Speaker 2: People will probably lose their money. I did not suspect

513
00:27:30,119 --> 00:27:32,960
Speaker 2: that Sam Bankman Freed was stealing all the money out

514
00:27:32,960 --> 00:27:34,320
Speaker 2: of the back of the casino.

515
00:27:34,119 --> 00:27:37,360
Speaker 1: So let's talk about some of the things that happened

516
00:27:37,920 --> 00:27:42,600
Speaker 1: after FTX collapsed. Here's a quote. The past two years

517
00:27:42,600 --> 00:27:47,879
Speaker 1: have felt like this perpetual gaslighting of anyone who expresses caution.

518
00:27:48,720 --> 00:27:53,119
Speaker 1: Now it's all unraveling very quickly. That's from Twitter. Someone

519
00:27:53,160 --> 00:27:56,480
Speaker 1: called bitfinext tell us a little bit about him and

520
00:27:57,040 --> 00:27:58,119
Speaker 1: what his role was.

521
00:27:58,600 --> 00:28:03,080
Speaker 2: So bitfin next has been tweeting about his skepticism of

522
00:28:03,160 --> 00:28:07,600
Speaker 2: crypto and especially tether for years and years now, a.

523
00:28:07,600 --> 00:28:10,639
Speaker 1: Long like seven eight years yea since it was formed.

524
00:28:10,720 --> 00:28:14,439
Speaker 2: Yeah, dozens of times a day. And he seemed to

525
00:28:14,440 --> 00:28:17,280
Speaker 2: have some pretty like sometimes he tweet photos or things.

526
00:28:17,320 --> 00:28:20,080
Speaker 2: It seemed like he was an insider. And I arranged

527
00:28:20,119 --> 00:28:24,800
Speaker 2: to meet him, and what I realized when I met

528
00:28:24,880 --> 00:28:27,920
Speaker 2: him was, oh, no, this is like a dude who

529
00:28:27,920 --> 00:28:29,760
Speaker 2: lives in his mom's basement.

530
00:28:31,359 --> 00:28:34,280
Speaker 1: But turns out to be pretty insightful as to what's

531
00:28:34,320 --> 00:28:34,760
Speaker 1: going on.

532
00:28:35,119 --> 00:28:36,399
Speaker 3: You know, his like me.

533
00:28:36,520 --> 00:28:39,560
Speaker 2: We both started out looking at tether, and it's turned

534
00:28:39,600 --> 00:28:42,600
Speaker 2: out that Tether has held up pretty well. Has actually

535
00:28:42,600 --> 00:28:45,800
Speaker 2: only grown since I started investigating it. It's up to

536
00:28:45,840 --> 00:28:46,760
Speaker 2: eighty four billion now.

537
00:28:46,880 --> 00:28:49,680
Speaker 1: It really is crazy. Let me run through a few

538
00:28:50,280 --> 00:28:53,480
Speaker 1: a few more quotes that just cracked me up. First,

539
00:28:53,680 --> 00:28:58,520
Speaker 1: did Peter Teel really col Warren Buffett a sociopathic grandpa

540
00:28:58,640 --> 00:28:59,959
Speaker 1: for doubting Bitcoin?

541
00:29:00,520 --> 00:29:00,720
Speaker 3: Yes?

542
00:29:00,840 --> 00:29:04,440
Speaker 2: That was at Bitcoin twenty twenty two in Miami. He

543
00:29:04,600 --> 00:29:06,800
Speaker 2: played the like Max Kaiser, role of the guy who

544
00:29:06,880 --> 00:29:08,840
Speaker 2: yelled the craziest stuff on stage.

545
00:29:08,560 --> 00:29:11,880
Speaker 1: Right, But at the same time you revealed that he

546
00:29:12,040 --> 00:29:15,200
Speaker 1: was secretly dumping all his crypto or not so secretly,

547
00:29:15,440 --> 00:29:17,640
Speaker 1: because you could track all this on the blockchain.

548
00:29:17,760 --> 00:29:21,360
Speaker 2: Yeah, his fund had had sold crypto and it only

549
00:29:21,400 --> 00:29:23,960
Speaker 2: came out after that speech, right.

550
00:29:23,760 --> 00:29:26,880
Speaker 1: A little misleading. There were a couple of other people

551
00:29:27,520 --> 00:29:30,280
Speaker 1: that you reference that I too, in particular. I just

552
00:29:30,320 --> 00:29:34,880
Speaker 1: have to ask about first Michael Sailor at micro Strategy.

553
00:29:35,400 --> 00:29:39,320
Speaker 1: My memory of micro Strategy when I was on a

554
00:29:39,400 --> 00:29:44,640
Speaker 1: trading desk was somebody had released what was a false,

555
00:29:44,760 --> 00:29:47,880
Speaker 1: a fake press release when micro Strategy was like, I

556
00:29:47,920 --> 00:29:50,480
Speaker 1: don't know, a buck fifty some crazy price, and it

557
00:29:50,640 --> 00:29:54,360
Speaker 1: plummets on this news it's halted, and then the company

558
00:29:54,360 --> 00:29:57,360
Speaker 1: comes out and says this isn't a real news release.

559
00:29:57,960 --> 00:30:02,160
Speaker 1: Somebody who's a former employee and reopens and it climbs

560
00:30:02,240 --> 00:30:04,840
Speaker 1: like two thirds of the way back. But a crazy,

561
00:30:04,960 --> 00:30:11,360
Speaker 1: crazy history. Michael Sailor, recently CEO of the company, becomes

562
00:30:11,520 --> 00:30:16,040
Speaker 1: a bitcoin maximalist and says, quote, I just hope I

563
00:30:16,040 --> 00:30:18,120
Speaker 1: don't get up one day and have to look at

564
00:30:18,120 --> 00:30:21,320
Speaker 1: myself in the mirror and say you had fifteen billion

565
00:30:21,360 --> 00:30:24,320
Speaker 1: dollars and you blew it all there's the guy who

566
00:30:24,360 --> 00:30:28,800
Speaker 1: flushed fifteen billion dollars down the toilet. Soon after he

567
00:30:28,920 --> 00:30:32,640
Speaker 1: loses thirteen and a half billion dollars. What was that about?

568
00:30:33,160 --> 00:30:37,280
Speaker 2: Sailor said that to The New Yorker in an amazing

569
00:30:37,320 --> 00:30:41,560
Speaker 2: profile about his dot com riches. He's the biggest loser

570
00:30:41,640 --> 00:30:46,280
Speaker 2: of the dot com bubble. But micro Strategy plugs along, and.

571
00:30:46,440 --> 00:30:48,280
Speaker 1: They had some real technology, some software.

572
00:30:48,360 --> 00:30:48,600
Speaker 3: Right.

573
00:30:48,600 --> 00:30:50,560
Speaker 2: It was like a real company that was making a

574
00:30:50,600 --> 00:30:54,200
Speaker 2: decent amount of money. And in recent years he's changed

575
00:30:54,240 --> 00:30:57,120
Speaker 2: the company to be all about bitcoin. He sunk all

576
00:30:57,160 --> 00:31:00,680
Speaker 2: the profits into bitcoin. He's levered up in orrowed money

577
00:31:00,720 --> 00:31:03,840
Speaker 2: and bought bitcoin. So now if you want to invest

578
00:31:03,880 --> 00:31:06,480
Speaker 2: in micro Strategy stock, it's just a bet on bitcoin.

579
00:31:06,680 --> 00:31:11,560
Speaker 2: And he's also become like the craziest bitcoin maximalist out there.

580
00:31:11,680 --> 00:31:14,160
Speaker 2: Who these are the guys who are like the priests

581
00:31:14,240 --> 00:31:17,800
Speaker 2: of the Bitcoin church, And he says things like bitcoin

582
00:31:17,960 --> 00:31:21,640
Speaker 2: is a flock of cyber hornets stinging the financial system

583
00:31:21,640 --> 00:31:23,800
Speaker 2: to death. Honestly, the real quote is crazier than that.

584
00:31:24,040 --> 00:31:26,920
Speaker 2: But it's people like him that are really They actually

585
00:31:27,000 --> 00:31:29,960
Speaker 2: are key to bringing in new people into this bitcoin world.

586
00:31:30,160 --> 00:31:33,400
Speaker 2: And it's actually why I would hesitate to bet against

587
00:31:33,440 --> 00:31:37,560
Speaker 2: bitcoin because it's become this cult and the people who

588
00:31:37,640 --> 00:31:39,480
Speaker 2: love it just love it so so so much.

589
00:31:39,680 --> 00:31:43,080
Speaker 1: Right, It's definitely has cult like aspects. You also take

590
00:31:43,080 --> 00:31:47,560
Speaker 1: a swing at the mooch at Anthony Scaramucci. Scaramucci fifty eight,

591
00:31:47,640 --> 00:31:52,120
Speaker 1: looking tanned and botox smooth, wearing a well fitted suit,

592
00:31:52,240 --> 00:31:56,680
Speaker 1: his pompadour freshly die jet black. Now I know the Mooch.

593
00:31:56,720 --> 00:32:00,160
Speaker 1: He's a good guy, good enough guy, botox and and

594
00:32:00,400 --> 00:32:01,920
Speaker 1: hair dye. Is that true?

595
00:32:02,120 --> 00:32:06,800
Speaker 2: So the book was thoroughly fact checked and not only

596
00:32:07,360 --> 00:32:10,200
Speaker 2: did the Mooch confirm that, I believe that that was

597
00:32:10,360 --> 00:32:13,680
Speaker 2: if I remember correctly, he announced this at this event.

598
00:32:13,840 --> 00:32:14,520
Speaker 1: Oh he did.

599
00:32:14,760 --> 00:32:16,520
Speaker 3: Oh, he was like, check out my hair. I got

600
00:32:16,520 --> 00:32:16,840
Speaker 3: a name.

601
00:32:17,160 --> 00:32:19,600
Speaker 1: He likes to say, this is a BRIONI shoot, these

602
00:32:19,600 --> 00:32:23,280
Speaker 1: are Ferragamos on my feet. Like he definitely drops brand

603
00:32:23,320 --> 00:32:24,960
Speaker 1: names on a regular.

604
00:32:24,760 --> 00:32:28,040
Speaker 2: We were at Crypto Bahama's, the big conference to celebrate

605
00:32:28,120 --> 00:32:31,040
Speaker 2: the success of Sam Bankman Freed. He had just made

606
00:32:31,080 --> 00:32:35,600
Speaker 2: this partnership with FTX, and the Mooch loves a press conference. Sure,

607
00:32:35,760 --> 00:32:37,760
Speaker 2: so he called. There were a lot of reporters there

608
00:32:37,800 --> 00:32:39,360
Speaker 2: at the conference, and he had this sort of press

609
00:32:39,360 --> 00:32:41,680
Speaker 2: conference at the beginning, but it seemed like, I mean,

610
00:32:41,720 --> 00:32:43,960
Speaker 2: the only thing he wanted to talk is he just

611
00:32:44,040 --> 00:32:46,600
Speaker 2: kept talking about how good he looked and how bad

612
00:32:46,640 --> 00:32:48,760
Speaker 2: Sam Bankman Freed looked. I was like, the point of

613
00:32:48,800 --> 00:32:49,760
Speaker 2: the press conference, I.

614
00:32:49,720 --> 00:32:52,600
Speaker 1: Forgot where I read that before the book. But all

615
00:32:52,680 --> 00:32:54,960
Speaker 1: he talked about is that. Maybe that's where the Brioni

616
00:32:55,000 --> 00:32:55,640
Speaker 1: suit came up.

617
00:32:55,880 --> 00:32:58,600
Speaker 2: Yeah, I mean that was sort of Sam Bankman's Freed thing.

618
00:32:59,000 --> 00:33:01,120
Speaker 2: It was this thing is I don't dress up for anybody.

619
00:33:01,440 --> 00:33:03,920
Speaker 2: Congress he would, uh, he put on a suit, although

620
00:33:03,920 --> 00:33:07,520
Speaker 2: he didn't tie his shoes famously, but at this conference,

621
00:33:08,040 --> 00:33:10,480
Speaker 2: the mooch look I mean, he looked great. Bankman Freed

622
00:33:10,680 --> 00:33:12,960
Speaker 2: was wearing you know, khaki shorts and a T shirt,

623
00:33:12,960 --> 00:33:14,760
Speaker 2: his hair all messed up, even when he was on

624
00:33:14,880 --> 00:33:19,680
Speaker 2: stage with Bill Clinton, Tony Blair, Tom Brady.

625
00:33:20,000 --> 00:33:20,920
Speaker 3: Yeah.

626
00:33:21,120 --> 00:33:22,920
Speaker 1: By the way, there's a famous photo. You have it

627
00:33:22,960 --> 00:33:26,760
Speaker 1: in the book of Sam Bakman Fried and Gizelle, and

628
00:33:26,960 --> 00:33:29,880
Speaker 1: you look at him and go, these aren't representatives of

629
00:33:29,920 --> 00:33:34,000
Speaker 1: the same species. These are two completely different life forms.

630
00:33:34,240 --> 00:33:37,320
Speaker 2: I love that photo because it must have been taken

631
00:33:37,680 --> 00:33:40,440
Speaker 2: backstage before they went out to speak at this conference,

632
00:33:40,600 --> 00:33:43,600
Speaker 2: and Sam just looks like a deer in the headlights,

633
00:33:43,640 --> 00:33:46,280
Speaker 2: like the flash has caught him off guard, and Gazelle like,

634
00:33:46,320 --> 00:33:47,480
Speaker 2: you're never gonna catch her off.

635
00:33:47,840 --> 00:33:49,480
Speaker 3: She's great, and also he's a.

636
00:33:49,480 --> 00:33:54,000
Speaker 2: Professional's absolutely, but they posed for an ad campaign together

637
00:33:54,440 --> 00:33:57,520
Speaker 2: that ran in like classy magazines like The New Yorker.

638
00:33:57,680 --> 00:33:59,800
Speaker 1: He didn't look much better in those acts either, Right,

639
00:33:59,800 --> 00:34:03,640
Speaker 1: It's it's the same sort of disheveled. I mean, I

640
00:34:03,640 --> 00:34:06,520
Speaker 1: guess that was part of the whole Mit Genius rap.

641
00:34:06,680 --> 00:34:08,640
Speaker 2: I will say this, it kind of worked on me.

642
00:34:09,040 --> 00:34:12,240
Speaker 2: It was like, I'm authentic, I don't care. I'm being myself.

643
00:34:12,320 --> 00:34:14,640
Speaker 2: I'm not gonna pretend. He didn't come off like this

644
00:34:15,000 --> 00:34:18,399
Speaker 2: slick salesman. He was like, I'm just the guy who

645
00:34:18,880 --> 00:34:21,440
Speaker 2: you know, spends all my time thinking about how to

646
00:34:21,480 --> 00:34:26,040
Speaker 2: make money trading crypto. I went down to shadow him

647
00:34:26,040 --> 00:34:28,120
Speaker 2: at his office when things were going great, and I

648
00:34:28,239 --> 00:34:30,320
Speaker 2: was just like, I'm not leaving untill he falls asleep

649
00:34:30,320 --> 00:34:32,319
Speaker 2: on that bean bag. I want to see him nap

650
00:34:32,320 --> 00:34:34,520
Speaker 2: on the bean bag. And he did, and he he

651
00:34:34,600 --> 00:34:37,040
Speaker 2: slept there for a couple hours, and he at one

652
00:34:37,040 --> 00:34:40,160
Speaker 2: point he woke up a little bit opened a package

653
00:34:40,200 --> 00:34:42,560
Speaker 2: of Nutter butters, ate them and kind of made a

654
00:34:42,600 --> 00:34:44,600
Speaker 2: mess on the beedback and then went back to sleep

655
00:34:44,680 --> 00:34:46,560
Speaker 2: because I had like one last question for him, and

656
00:34:46,600 --> 00:34:49,279
Speaker 2: I was like, I'm not gonna disturb his nap. So

657
00:34:49,320 --> 00:34:51,200
Speaker 2: he got those nutter butters. I was like, now's my chance.

658
00:34:51,239 --> 00:34:52,200
Speaker 2: Oh nope, back to sleep.

659
00:34:52,880 --> 00:34:54,440
Speaker 1: By the way, I see where the unior in the

660
00:34:54,440 --> 00:34:56,799
Speaker 1: book comes from. It's basically how you see the world.

661
00:34:56,880 --> 00:34:59,959
Speaker 1: It's really very funny. You start with the Tether web

662
00:35:00,120 --> 00:35:04,360
Speaker 1: site and you go through the various disclosures, including the

663
00:35:04,400 --> 00:35:07,880
Speaker 1: list of risks. The company could go bankrupt, bank holdings

664
00:35:07,880 --> 00:35:11,960
Speaker 1: could lose money, the government could confiscate its assets, and

665
00:35:12,000 --> 00:35:16,720
Speaker 1: then you notice what seems like a risk disclosure red flag,

666
00:35:17,440 --> 00:35:21,200
Speaker 1: or we could abscond with the reserve funds. What is

667
00:35:21,200 --> 00:35:25,279
Speaker 1: the thinking there, Hey, if we ever get prosecuted for

668
00:35:25,400 --> 00:35:28,440
Speaker 1: stealing money, we could always say, oh no, that was

669
00:35:28,480 --> 00:35:30,040
Speaker 1: a risk we disclosed upfront.

670
00:35:30,320 --> 00:35:32,680
Speaker 2: I mean, look at Sam beigman Fried. He's trying to

671
00:35:32,760 --> 00:35:35,880
Speaker 2: use the terms of service of FTX as a defense

672
00:35:35,960 --> 00:35:39,200
Speaker 2: now and basically trying to argue that they allowed him

673
00:35:39,239 --> 00:35:41,480
Speaker 2: to lend all the customer money to his hedge fund.

674
00:35:41,800 --> 00:35:44,600
Speaker 2: So you know, you never know what maybe it could

675
00:35:44,640 --> 00:35:45,600
Speaker 2: come in handy one day.

676
00:35:45,719 --> 00:35:49,880
Speaker 1: So early on you actually asked SBF about tether. FTX

677
00:35:49,920 --> 00:35:54,440
Speaker 1: has wired lots of money through three different jurisdictions and

678
00:35:54,520 --> 00:36:00,840
Speaker 1: intermediary banks to move US dollars to tether. What ftx's

679
00:36:00,880 --> 00:36:02,600
Speaker 1: relationship to the stable coin.

680
00:36:03,200 --> 00:36:07,399
Speaker 2: I met SBF because I wanted to ask him about tether.

681
00:36:07,880 --> 00:36:11,560
Speaker 2: They were one of the biggest users of tether. Something

682
00:36:11,600 --> 00:36:16,440
Speaker 2: like thirty five billion of tether passed through wow them. Now,

683
00:36:16,840 --> 00:36:19,360
Speaker 2: what I've learned more recently is that a lot of

684
00:36:19,400 --> 00:36:22,840
Speaker 2: that came because there was actually in the during the

685
00:36:22,840 --> 00:36:25,399
Speaker 2: crypto boom, there was demand for There was so much

686
00:36:25,440 --> 00:36:28,719
Speaker 2: demand for tether that on exchanges like FTX it often

687
00:36:28,760 --> 00:36:33,720
Speaker 2: traded slightly above a dollar. And so Alameda, his hedge fund,

688
00:36:34,160 --> 00:36:37,200
Speaker 2: could buy tethers. They had a relationship with Tether, the company.

689
00:36:37,440 --> 00:36:40,680
Speaker 2: They could buy tethers for a dollar and then go

690
00:36:40,760 --> 00:36:43,000
Speaker 2: sell them for a little bit more. The profits are

691
00:36:43,120 --> 00:36:46,920
Speaker 2: very small, but Alameda's cost of capital was very low since.

692
00:36:46,719 --> 00:36:49,840
Speaker 1: They were borrowing all the customer money. Right, So a

693
00:36:49,960 --> 00:36:52,879
Speaker 1: zero cost to capital one percent a day is real money.

694
00:36:52,880 --> 00:36:53,440
Speaker 1: It adds up.

695
00:36:53,560 --> 00:36:55,440
Speaker 2: Yeah, even if it was like a tenth of a percent,

696
00:36:55,480 --> 00:36:57,279
Speaker 2: they could do it, So I think that accounts for

697
00:36:57,320 --> 00:37:00,360
Speaker 2: why they were using so much Tether. He did not

698
00:37:00,440 --> 00:37:02,719
Speaker 2: disclose that at the time. If you think of all

699
00:37:02,719 --> 00:37:06,440
Speaker 2: the crypto exchanges, like different casinos, Tether is basically like

700
00:37:06,760 --> 00:37:10,200
Speaker 2: the cashier, and it's like in the early years of crypto,

701
00:37:10,360 --> 00:37:14,480
Speaker 2: these casinos had trouble receiving dollars, like banks did not

702
00:37:14,640 --> 00:37:18,880
Speaker 2: want to open bank accounts for crypto companies. So instead

703
00:37:18,960 --> 00:37:22,640
Speaker 2: the crypto companies would say, hey, customers, go to Tether,

704
00:37:22,920 --> 00:37:25,920
Speaker 2: send them some real money, get some Tether tokens. Then

705
00:37:25,960 --> 00:37:27,759
Speaker 2: you can bring them over here and gamble with them.

706
00:37:27,920 --> 00:37:32,880
Speaker 1: So what was supposed to be disintermediation became additional media.

707
00:37:32,920 --> 00:37:34,719
Speaker 1: You need to had another middleman in the way.

708
00:37:35,000 --> 00:37:40,040
Speaker 2: Right, Crypto is always sold as trustless, and in reality

709
00:37:40,160 --> 00:37:42,200
Speaker 2: it turns out you keep having to trust these people

710
00:37:42,440 --> 00:37:45,400
Speaker 2: who prove themselves to be totally untrustworthy.

711
00:37:46,239 --> 00:37:49,160
Speaker 1: So tell us a little bit about the leadership of Tether.

712
00:37:49,200 --> 00:37:51,440
Speaker 1: Who was the founder and who was the CEO.

713
00:37:51,920 --> 00:37:54,440
Speaker 2: One of the co founders was this the Mighty duckskuy

714
00:37:54,480 --> 00:37:58,880
Speaker 2: Brock Pierce, and I had a lot of fun meeting

715
00:37:58,960 --> 00:38:02,960
Speaker 2: him on his mega yacht off the coast of the Bahamas.

716
00:38:02,960 --> 00:38:05,920
Speaker 2: He sent a speedboat to pick me up. So you know,

717
00:38:05,920 --> 00:38:07,600
Speaker 2: I don't know how often that's gonna happen in my

718
00:38:07,760 --> 00:38:08,680
Speaker 2: journalistic career.

719
00:38:09,160 --> 00:38:10,759
Speaker 3: But in the.

720
00:38:10,719 --> 00:38:17,480
Speaker 2: CEO was this guy, Jean Louis Vanderveld, and we also

721
00:38:18,239 --> 00:38:22,560
Speaker 2: met in the Bahamas. The meeting was broken by Jean Chalapin,

722
00:38:22,920 --> 00:38:26,200
Speaker 2: the inspector gadget guy. So I'd gotten to the Bahamas

723
00:38:26,640 --> 00:38:28,680
Speaker 2: hoping that I would meet one of these Tether guys,

724
00:38:29,160 --> 00:38:31,680
Speaker 2: and I didn't see any of them there, even though

725
00:38:31,680 --> 00:38:33,600
Speaker 2: it was a big crypto conference. I thought they'd come.

726
00:38:33,800 --> 00:38:37,320
Speaker 2: But then finally Charalapin is like, get over here. JL

727
00:38:37,760 --> 00:38:42,480
Speaker 2: is he Vandervelt's here, and I see this tall Dutch

728
00:38:42,520 --> 00:38:45,640
Speaker 2: guy with silver hair, kind of a funny scar on

729
00:38:45,680 --> 00:38:49,160
Speaker 2: his nose. And Jean introduces me and he's like, Zeke,

730
00:38:49,640 --> 00:38:53,200
Speaker 2: if you screw this up, I'll kill you, really with

731
00:38:53,280 --> 00:38:55,959
Speaker 2: a smile like he's not killing me, but a good line.

732
00:38:56,000 --> 00:38:56,759
Speaker 3: I appreciated it.

733
00:38:57,160 --> 00:38:59,279
Speaker 2: So this guy JL, he's the CEO of one of

734
00:38:59,320 --> 00:39:01,920
Speaker 2: the biggest company and crypto. Most people in crypto love

735
00:39:02,000 --> 00:39:04,719
Speaker 2: to promote themselves. The skeptics like this guy bit the

736
00:39:04,760 --> 00:39:07,399
Speaker 2: next would say that there was so little out there

737
00:39:07,440 --> 00:39:09,960
Speaker 2: about JL. They were like, we don't even think he's

738
00:39:10,000 --> 00:39:13,799
Speaker 2: a real person. So I go to shake jl Vanderveld,

739
00:39:13,880 --> 00:39:17,040
Speaker 2: the CEO of Teather's hand, and I'm like, nice to meet,

740
00:39:17,400 --> 00:39:20,200
Speaker 2: and then he says the man who doesn't exist.

741
00:39:20,800 --> 00:39:22,960
Speaker 3: I'm like, wow, I just love these guys.

742
00:39:23,280 --> 00:39:26,279
Speaker 1: These guys, they're full bond villains. They're playing right into

743
00:39:26,320 --> 00:39:26,760
Speaker 1: the carriage.

744
00:39:26,800 --> 00:39:29,799
Speaker 3: Yeah, and we had we had a lot.

745
00:39:29,880 --> 00:39:32,439
Speaker 2: We spent hours talking in the casino, me and Jail

746
00:39:32,800 --> 00:39:35,920
Speaker 2: and had a conversation another conversation. I was very funny

747
00:39:35,920 --> 00:39:39,200
Speaker 2: in hindsight. I was telling him. I was like, listen, man,

748
00:39:39,520 --> 00:39:41,800
Speaker 2: I just spent a couple of days at Sam bankman

749
00:39:41,880 --> 00:39:44,920
Speaker 2: Fried's office. That guy doesn't have anything to hide. He

750
00:39:45,080 --> 00:39:47,000
Speaker 2: just let me see walk around the whole office and

751
00:39:47,040 --> 00:39:50,840
Speaker 2: see everything. Yeah, how come you're being so secret? And

752
00:39:50,880 --> 00:39:54,360
Speaker 2: then he wasn't like he totally bought into it. And

753
00:39:54,400 --> 00:39:56,600
Speaker 2: he was like, well, it's easy for Sam bankman Freed.

754
00:39:56,920 --> 00:39:59,839
Speaker 2: You know, he started his company more recently. You know, Tether,

755
00:40:00,320 --> 00:40:02,000
Speaker 2: we had a sketchy passed.

756
00:40:02,360 --> 00:40:02,600
Speaker 3: Yeah.

757
00:40:02,680 --> 00:40:04,680
Speaker 2: I mean He's basically like, there's stuff in our past

758
00:40:04,800 --> 00:40:06,680
Speaker 2: that we can't reveal for the record.

759
00:40:06,960 --> 00:40:10,359
Speaker 1: As we're recording this, Tether's trading at still a dollar.

760
00:40:10,480 --> 00:40:14,000
Speaker 1: The point it's a dollar and here you reference this

761
00:40:14,120 --> 00:40:18,200
Speaker 1: in the book. But their business model, now, with FED

762
00:40:18,280 --> 00:40:22,279
Speaker 1: funds over five percent, you could get riskless treasuries just

763
00:40:22,320 --> 00:40:26,160
Speaker 1: about five percent. Their business model is collect eighty five

764
00:40:26,239 --> 00:40:31,160
Speaker 1: billion dollars, put it in riskless treasuries. Hey, you're gonna

765
00:40:31,200 --> 00:40:34,520
Speaker 1: get a billion dollars a quarter for doing almost nothing.

766
00:40:34,920 --> 00:40:36,640
Speaker 1: That's not a bad business model.

767
00:40:36,920 --> 00:40:40,399
Speaker 2: So when I started looking into Tether, interest rates were zero,

768
00:40:40,640 --> 00:40:42,719
Speaker 2: and so Tyther was sitting on this huge pile of

769
00:40:42,760 --> 00:40:45,640
Speaker 2: money and they had incentive to put it at risk

770
00:40:45,920 --> 00:40:48,680
Speaker 2: because they needed to earn interest something. So that was

771
00:40:48,719 --> 00:40:51,800
Speaker 2: another reason to be suspicious of them. I found evidence

772
00:40:51,800 --> 00:40:55,760
Speaker 2: they'd invested in Chinese commercial paper, They'd been making loans

773
00:40:55,760 --> 00:41:00,279
Speaker 2: to other crypto companies. It seemed like not riskless, but now, yeah,

774
00:41:00,360 --> 00:41:02,839
Speaker 2: you just put it in treasuries earned five percent. They're

775
00:41:03,280 --> 00:41:05,840
Speaker 2: if you believe their numbers, they're one of the most

776
00:41:05,880 --> 00:41:09,120
Speaker 2: profitable companies in the world. It's a shoe string operation.

777
00:41:09,600 --> 00:41:12,399
Speaker 1: Assuming they have all eighty four billion dollars or eighty

778
00:41:12,400 --> 00:41:16,080
Speaker 1: five billion dollars accounted for free money to them. Now

779
00:41:16,120 --> 00:41:18,480
Speaker 1: that you're getting a yield, they really don't have to

780
00:41:18,480 --> 00:41:20,360
Speaker 1: do anything other than not get hacked.

781
00:41:20,760 --> 00:41:23,880
Speaker 2: Yes, I mean, which, to be fair, they have. They

782
00:41:23,920 --> 00:41:25,799
Speaker 2: were the victims of one of the biggest tacks ever,

783
00:41:26,239 --> 00:41:28,160
Speaker 2: so I don't know if they're that trustworthy on that front.

784
00:41:28,920 --> 00:41:32,759
Speaker 2: But yeah, even if let's say, just hypothetically, let's say

785
00:41:32,760 --> 00:41:35,080
Speaker 2: they had been a billion dollars in the hole, they

786
00:41:35,120 --> 00:41:37,880
Speaker 2: could easily earn their way out of it now the interest.

787
00:41:37,680 --> 00:41:40,279
Speaker 1: Rates are higher, right, very easily. Let's talk about some

788
00:41:40,320 --> 00:41:44,880
Speaker 1: of the other players in both crypto and stable coins.

789
00:41:45,960 --> 00:41:49,880
Speaker 1: Binance founder Chang Peng Zau, better known as cz is

790
00:41:49,920 --> 00:41:52,040
Speaker 1: he now the richest man in crypto.

791
00:41:53,120 --> 00:41:53,799
Speaker 3: He's got to be.

792
00:41:54,080 --> 00:41:59,160
Speaker 2: It's down to him and Justin Sun from the tron blockchain.

793
00:41:59,640 --> 00:42:04,880
Speaker 2: Both of them show a notable reluctance to enter us

794
00:42:04,920 --> 00:42:11,360
Speaker 2: soil g Yeah. Sun's been sued by the SEC and financed,

795
00:42:11,400 --> 00:42:14,960
Speaker 2: has a number of cases. These guys do still have

796
00:42:15,040 --> 00:42:17,920
Speaker 2: a ton of money. And when I went down to

797
00:42:17,960 --> 00:42:22,120
Speaker 2: the Bahamas after FTX failed and I was with Sam

798
00:42:22,120 --> 00:42:24,839
Speaker 2: Bankman freed. When he just before he got arrested, he

799
00:42:24,880 --> 00:42:25,440
Speaker 2: was still.

800
00:42:25,239 --> 00:42:27,080
Speaker 1: Thinking, how do I get myself here?

801
00:42:27,200 --> 00:42:29,439
Speaker 2: Yeah, I gotta bail myself out. I need to find

802
00:42:29,440 --> 00:42:31,800
Speaker 2: someone to give me five ten billion dollars so I

803
00:42:31,800 --> 00:42:33,440
Speaker 2: can get FTX going again.

804
00:42:33,280 --> 00:42:35,640
Speaker 1: Pocket change walking around cast so.

805
00:42:35,840 --> 00:42:37,960
Speaker 2: But it was interesting to me was I was like, so,

806
00:42:38,000 --> 00:42:41,040
Speaker 2: who's got five ten billion dollars? He'd already tried CZ.

807
00:42:41,200 --> 00:42:43,800
Speaker 1: That didn't worry And from the book it's pretty clear

808
00:42:43,920 --> 00:42:45,920
Speaker 1: CZ is the one who's stuck the knife in.

809
00:42:46,160 --> 00:42:49,680
Speaker 2: Oh yeah, you can't really blame CZ because I mean,

810
00:42:49,760 --> 00:42:52,520
Speaker 2: fraud is a fraud, you know if he but he's

811
00:42:52,560 --> 00:42:55,920
Speaker 2: the one who made a tweet that got people started

812
00:42:56,080 --> 00:42:59,280
Speaker 2: starting to pull their money out of FTX, which revealed

813
00:42:59,280 --> 00:43:02,239
Speaker 2: the hole at the sun of the exchange. But the

814
00:43:02,280 --> 00:43:05,640
Speaker 2: other people bankman Fried said had five ten billion dollars

815
00:43:05,680 --> 00:43:08,560
Speaker 2: were tether. They said, no, we're not bailing you out.

816
00:43:08,920 --> 00:43:12,800
Speaker 2: And this guy, Justin's son who has this coin tron

817
00:43:12,880 --> 00:43:15,560
Speaker 2: and is like a crazy character in himself. Missing chapter

818
00:43:15,640 --> 00:43:16,360
Speaker 2: from the book.

819
00:43:17,000 --> 00:43:21,560
Speaker 1: Let's talk about Celsius and is it Alex Mishinski another

820
00:43:21,640 --> 00:43:23,719
Speaker 1: stable coin, right, he.

821
00:43:23,840 --> 00:43:26,840
Speaker 2: Had a kind of Celsius was like a crypto bank,

822
00:43:27,000 --> 00:43:29,160
Speaker 2: and he was saying, send me your stable coins.

823
00:43:29,520 --> 00:43:30,919
Speaker 3: I'll pay you interest on them.

824
00:43:31,280 --> 00:43:34,759
Speaker 2: We met at Bitcoin twenty twenty one, my first crypto conference,

825
00:43:35,200 --> 00:43:37,480
Speaker 2: and I was there I wanted to gather info on Tether.

826
00:43:37,800 --> 00:43:40,279
Speaker 2: Celsius had done business with Tether, so I set up

827
00:43:40,280 --> 00:43:43,600
Speaker 2: a meeting with this guy, Mishinsky. He was a big hustler.

828
00:43:44,000 --> 00:43:45,839
Speaker 2: He was at every conference. He was the one giving

829
00:43:45,880 --> 00:43:48,000
Speaker 2: all the speeches. He always wore this t shirt that

830
00:43:48,000 --> 00:43:51,239
Speaker 2: said banks are not your friends. We sit down, he

831
00:43:51,280 --> 00:43:53,319
Speaker 2: told me his I asked. I'm polite, so before i

832
00:43:53,360 --> 00:43:56,960
Speaker 2: get to like the the investigative questions, I'm like, so,

833
00:43:57,040 --> 00:44:00,480
Speaker 2: what's your company do? And he's like, well, it's sort

834
00:44:00,480 --> 00:44:02,480
Speaker 2: of like a bank. Give us your coins, we'll pay

835
00:44:02,520 --> 00:44:05,319
Speaker 2: you up to eighteen percent interest, but if you want

836
00:44:05,320 --> 00:44:07,360
Speaker 2: a loan, we'll give that to you for free, like

837
00:44:07,400 --> 00:44:09,359
Speaker 2: we don't charge interest or a very low rate.

838
00:44:09,800 --> 00:44:12,600
Speaker 1: Of all the frauds in the world of crypto, when

839
00:44:12,640 --> 00:44:16,040
Speaker 1: you detail many of them, when interest rates are zero

840
00:44:16,360 --> 00:44:19,799
Speaker 1: and they're going to pay you eighteen percent on your coins,

841
00:44:20,160 --> 00:44:22,960
Speaker 1: it sounds like we're going to keep eighty two percent

842
00:44:23,000 --> 00:44:26,920
Speaker 1: of your coins and the eighteen percent is a scam. Well,

843
00:44:26,920 --> 00:44:29,480
Speaker 1: it just seems like, how can you pay when the

844
00:44:29,560 --> 00:44:32,120
Speaker 1: ten years yielding one and a half percent, How could

845
00:44:32,200 --> 00:44:38,080
Speaker 1: you legitimately pay eighteen percent other than number go up? Yeah,

846
00:44:38,120 --> 00:44:38,799
Speaker 1: is that all it is.

847
00:44:39,160 --> 00:44:41,239
Speaker 2: Maybe he bought a lot of those shoes and he

848
00:44:41,280 --> 00:44:43,200
Speaker 2: had a whole army of people walking in circles.

849
00:44:43,200 --> 00:44:45,360
Speaker 3: But he told me.

850
00:44:46,440 --> 00:44:48,600
Speaker 2: He told me at the I had the same reaction,

851
00:44:49,040 --> 00:44:51,280
Speaker 2: even when things were going great. This seemed very fishy.

852
00:44:51,520 --> 00:44:53,120
Speaker 2: And I was shocked when he told me he had

853
00:44:53,120 --> 00:44:56,279
Speaker 2: twenty billion dollars. But he told me, the banks are

854
00:44:56,280 --> 00:44:59,759
Speaker 2: the scammers. They're taking your deposits and they're earning huge

855
00:44:59,760 --> 00:45:02,279
Speaker 2: propit and they're lying to you, and they're saying they

856
00:45:02,280 --> 00:45:03,480
Speaker 2: can't pay you any interest.

857
00:45:04,120 --> 00:45:06,240
Speaker 1: By the way, they don't lie to you. They released

858
00:45:06,239 --> 00:45:09,239
Speaker 1: their profits every quarter. Hey, here's how much money we've

859
00:45:09,239 --> 00:45:11,480
Speaker 1: made on your demendon. It's all public. It's not like

860
00:45:11,520 --> 00:45:12,040
Speaker 1: it's hidden.

861
00:45:12,440 --> 00:45:15,960
Speaker 2: Yes, And I hated to find myself. I spent I

862
00:45:16,000 --> 00:45:19,120
Speaker 2: was over at Mashinski's apartment on the Upper East Side,

863
00:45:19,160 --> 00:45:22,640
Speaker 2: and I found myself like defending Wall Street being like,

864
00:45:22,760 --> 00:45:25,080
Speaker 2: listen to JP Morgan is very safe even in the

865
00:45:25,120 --> 00:45:28,120
Speaker 2: financial crisis. People didn't lose their deposits, right, But he's like,

866
00:45:28,239 --> 00:45:32,960
Speaker 2: somebody's lying. Either JP Morgan is lying or Celsius is lying.

867
00:45:33,520 --> 00:45:35,360
Speaker 2: And even in the moment, I was like, this is

868
00:45:35,400 --> 00:45:37,120
Speaker 2: a great line it's definitely Alex.

869
00:45:37,160 --> 00:45:37,600
Speaker 3: That's lying.

870
00:45:37,680 --> 00:45:42,560
Speaker 1: I'm gonna take Jamie Diamond over Alex Mashinsky just because

871
00:45:42,600 --> 00:45:45,799
Speaker 1: I'm fifty one to forty nine. I'm leaning Diamond's way.

872
00:45:46,239 --> 00:45:49,600
Speaker 2: Celsius did collapse in the end, and actually a month

873
00:45:49,680 --> 00:45:52,120
Speaker 2: or two ago, Mashinski got arrested and charged with fraud.

874
00:45:52,560 --> 00:45:55,960
Speaker 1: Unbelievable. So one of my favorite stories from this era

875
00:45:56,920 --> 00:46:02,360
Speaker 1: was the Terra Luna stable coin situation and a pretty

876
00:46:02,360 --> 00:46:06,880
Speaker 1: well regarded HEDGEPHND manager Mike Novograts. He got a howling

877
00:46:06,960 --> 00:46:10,640
Speaker 1: wolf Luna tattoo on his upper arm. Tell us a

878
00:46:10,640 --> 00:46:14,080
Speaker 1: little bit about Tara and Luna and Novograts.

879
00:46:14,360 --> 00:46:17,239
Speaker 2: So Novograts back a few years ago he gave an

880
00:46:17,239 --> 00:46:22,080
Speaker 2: interview to our colleague Eric Shatsker where he said something

881
00:46:22,120 --> 00:46:24,640
Speaker 2: that I thought was very honest and that I really

882
00:46:24,680 --> 00:46:27,359
Speaker 2: liked this quote. And he said, listen, this crypto thing

883
00:46:27,719 --> 00:46:30,720
Speaker 2: is the biggest bubble of our lifetime. There's great fortunes

884
00:46:30,719 --> 00:46:32,399
Speaker 2: to be made on the way up, and like, I'm

885
00:46:32,400 --> 00:46:34,640
Speaker 2: gonna get mine, And he.

886
00:46:34,640 --> 00:46:38,400
Speaker 1: Did for the most part. Let's give him credit. He

887
00:46:38,840 --> 00:46:41,840
Speaker 1: bought when things were low, he saw I'm not gonna

888
00:46:41,840 --> 00:46:45,000
Speaker 1: suggest he top ticked it, but he definitely cashed a

889
00:46:45,040 --> 00:46:48,320
Speaker 1: decent amount out right before the most recent collapse.

890
00:46:48,640 --> 00:46:52,280
Speaker 2: Yeah, I mean, I think his profits overall are high.

891
00:46:52,360 --> 00:46:55,000
Speaker 2: He was definitely wrong though on this Tara Luna one.

892
00:46:55,040 --> 00:46:57,799
Speaker 1: Well, the whole tattoo thing was just yeah, you know,

893
00:46:57,920 --> 00:47:00,799
Speaker 1: talk about talk about the wrong thing to etch on

894
00:47:00,840 --> 00:47:01,280
Speaker 1: your body.

895
00:47:01,320 --> 00:47:01,799
Speaker 3: Oh my god.

896
00:47:01,960 --> 00:47:05,400
Speaker 2: So it was run by this guy, this South Korean

897
00:47:05,440 --> 00:47:08,200
Speaker 2: guy named Do Kwan, who was very mean on Twitter.

898
00:47:08,200 --> 00:47:10,400
Speaker 2: He'd always just be insulting people if you ever questioned

899
00:47:10,400 --> 00:47:12,840
Speaker 2: tether But it pitch was a lot like Celsius. You

900
00:47:12,880 --> 00:47:15,280
Speaker 2: could earn eighteen percent. I think it actually was also

901
00:47:15,320 --> 00:47:16,560
Speaker 2: eighteen or nineteen percent.

902
00:47:16,719 --> 00:47:18,080
Speaker 1: That seems to be the magic number.

903
00:47:18,200 --> 00:47:21,399
Speaker 2: Yeah, that you could earn if you deposited your Terra

904
00:47:21,520 --> 00:47:25,959
Speaker 2: coins into the anchor protocol. And now, unlike Teather, which

905
00:47:26,000 --> 00:47:28,160
Speaker 2: is backed by real dollars in the bank or so

906
00:47:28,200 --> 00:47:32,080
Speaker 2: they say, the Terra coins were backed by lunar coins

907
00:47:32,480 --> 00:47:35,399
Speaker 2: and you could always trade your Terra coins for one

908
00:47:35,440 --> 00:47:38,640
Speaker 2: dollar worth of lunar coins. Now you might ask, why

909
00:47:38,680 --> 00:47:40,240
Speaker 2: do I want any lunar coins.

910
00:47:40,680 --> 00:47:43,040
Speaker 3: The answer is they don't ask about that.

911
00:47:43,120 --> 00:47:44,440
Speaker 1: They're back like Terra coins.

912
00:47:44,600 --> 00:47:47,080
Speaker 2: No, the lunar coins were there actually there was no

913
00:47:47,080 --> 00:47:49,799
Speaker 2: story from why you should buy the Lunar coins, and

914
00:47:50,239 --> 00:47:53,040
Speaker 2: a lot of people in crypto even when this was

915
00:47:53,080 --> 00:47:55,200
Speaker 2: going on, we're like, Zeke, you might want to take

916
00:47:55,200 --> 00:47:57,200
Speaker 2: a look at this uh Terra Luna one.

917
00:47:57,719 --> 00:48:00,799
Speaker 1: So even the crypto bros were skeptical of this.

918
00:48:01,200 --> 00:48:03,680
Speaker 2: Yes, but Nova Grats was a big investor in it,

919
00:48:03,760 --> 00:48:07,160
Speaker 2: and he got the Luna logo tattooed on his shoulder.

920
00:48:07,600 --> 00:48:09,680
Speaker 2: And I don't want to like totally let him off

921
00:48:09,680 --> 00:48:11,759
Speaker 2: the hook because what he said in his quote and

922
00:48:11,840 --> 00:48:14,239
Speaker 2: also by like tweeting about this, tweeting.

923
00:48:13,880 --> 00:48:15,120
Speaker 3: His tattoo, he was promoting.

924
00:48:15,200 --> 00:48:18,680
Speaker 2: He's promoting it, and he's bringing in people who because

925
00:48:18,680 --> 00:48:20,799
Speaker 2: the way to really make money on crypto is to

926
00:48:20,800 --> 00:48:21,640
Speaker 2: get in early.

927
00:48:21,560 --> 00:48:23,880
Speaker 1: Right, find greater fools to sell it to.

928
00:48:24,080 --> 00:48:26,560
Speaker 2: Yeah, and a lot of these insiders I'm not saying

929
00:48:26,640 --> 00:48:29,000
Speaker 2: him with Luna, I don't remember the details, but they

930
00:48:29,040 --> 00:48:31,759
Speaker 2: get special deals and they get the tokens at like

931
00:48:31,840 --> 00:48:33,719
Speaker 2: for a penny it can rise and fall and they're

932
00:48:33,760 --> 00:48:38,040
Speaker 2: still sitting pretty. And so these guys, by promoting these bubbles,

933
00:48:38,040 --> 00:48:40,040
Speaker 2: are bringing in new people who are going to lose

934
00:48:40,080 --> 00:48:40,600
Speaker 2: real money.

935
00:48:40,760 --> 00:48:44,000
Speaker 1: Speaking of losing real money, let's talk about the initial

936
00:48:44,120 --> 00:48:47,719
Speaker 1: point offerings. I was. I always thought they were sketchy.

937
00:48:48,040 --> 00:48:51,200
Speaker 1: I was shocked to read in the book eighty percent

938
00:48:51,360 --> 00:48:54,840
Speaker 1: of icos are fraudulent, explained.

939
00:48:54,640 --> 00:48:59,160
Speaker 2: Yeah, so this was the last bubble. It's important with

940
00:48:59,200 --> 00:49:01,560
Speaker 2: crypto you need to keep coming up with like a

941
00:49:01,640 --> 00:49:03,000
Speaker 2: new twist on the story.

942
00:49:03,120 --> 00:49:06,279
Speaker 1: So is that where NFTs come from and icos come from.

943
00:49:06,640 --> 00:49:09,560
Speaker 2: Yeah, I would say that. I mean people in the

944
00:49:09,600 --> 00:49:14,120
Speaker 2: new in the most recent bubble, people talked about coins right,

945
00:49:14,160 --> 00:49:17,319
Speaker 2: and even in sort of like a loving way. They'd

946
00:49:17,320 --> 00:49:20,279
Speaker 2: be like, oh, I'm buying the latest like coin It's

947
00:49:20,320 --> 00:49:21,000
Speaker 2: going to the moon.

948
00:49:21,280 --> 00:49:23,759
Speaker 1: And that literally, by the way, was the cover of

949
00:49:23,800 --> 00:49:27,319
Speaker 1: a BusinessWeek edition rhymes with bitcoin.

950
00:49:27,719 --> 00:49:28,240
Speaker 3: Oh yeah.

951
00:49:28,440 --> 00:49:31,719
Speaker 2: Even people who like NFTs will tell you they're basically

952
00:49:32,040 --> 00:49:35,600
Speaker 2: coins with pictures on them. And so icos are like

953
00:49:35,600 --> 00:49:39,160
Speaker 2: the previous iteration of this technology. Back in twenty seventeen,

954
00:49:39,520 --> 00:49:42,319
Speaker 2: you could just say, Hey, I'm gonna put dentistry on

955
00:49:42,360 --> 00:49:46,680
Speaker 2: the blockchain. I got denti coin. That's like a real one.

956
00:49:47,239 --> 00:49:49,200
Speaker 3: Actually, I think one of the more legit ones.

957
00:49:49,400 --> 00:49:51,200
Speaker 1: But they got like a man, how is that more

958
00:49:51,280 --> 00:49:52,360
Speaker 1: legit than others?

959
00:49:52,760 --> 00:49:54,719
Speaker 2: I like there was some real effort to like get

960
00:49:54,800 --> 00:49:57,440
Speaker 2: dentists to update their tooth databases or something.

961
00:49:57,520 --> 00:50:00,640
Speaker 1: So the most legit thing I read had to do

962
00:50:00,760 --> 00:50:04,719
Speaker 1: with ethereum and smart contracts. And you can imagine a

963
00:50:04,960 --> 00:50:08,359
Speaker 1: use case where if Taylor Swift were to put her

964
00:50:08,400 --> 00:50:12,320
Speaker 1: tickets up for sale, she could build into it. Hey, no,

965
00:50:12,320 --> 00:50:16,160
Speaker 1: nobody can can go out and sell these these for

966
00:50:16,280 --> 00:50:20,640
Speaker 1: fifty times what fans want to pay. If you resell them,

967
00:50:20,760 --> 00:50:22,959
Speaker 1: I get half of the proceeds, and that that would

968
00:50:23,040 --> 00:50:26,640
Speaker 1: keep the scalpurn to a minimum. Like that is a

969
00:50:26,760 --> 00:50:29,560
Speaker 1: use case that makes sense. None of these other things

970
00:50:29,600 --> 00:50:31,480
Speaker 1: seem to have a real use case.

971
00:50:31,560 --> 00:50:34,080
Speaker 2: Yeah, and even I mean even that use case. I

972
00:50:34,239 --> 00:50:38,960
Speaker 2: was frankly surprised is continually surprised to the downside in

973
00:50:39,000 --> 00:50:42,440
Speaker 2: this crypto world. With Apefest, you would think that this

974
00:50:42,560 --> 00:50:45,040
Speaker 2: is like the premiere NFT event. There's all this talk

975
00:50:45,080 --> 00:50:47,320
Speaker 2: about how NFTs will be good, the blockchain will be

976
00:50:47,360 --> 00:50:50,239
Speaker 2: good for ticketing. It turns out they do not use

977
00:50:50,280 --> 00:50:53,040
Speaker 2: the NFTs for ticketing, right. There's this whole other, like

978
00:50:53,080 --> 00:50:56,040
Speaker 2: complicated system set up to figure out how you get

979
00:50:56,040 --> 00:50:57,600
Speaker 2: in there. And I think a lot of this stuff

980
00:50:57,640 --> 00:51:00,960
Speaker 2: sounds good in theory, But wait till my mom buys

981
00:51:01,000 --> 00:51:03,560
Speaker 2: her Taylor Swift tickets for two thousand dollars. She tries

982
00:51:03,600 --> 00:51:06,239
Speaker 2: to send it to the Foxhead and then she can't

983
00:51:06,280 --> 00:51:09,120
Speaker 2: remember where she buried the password in her backyard. Like,

984
00:51:09,280 --> 00:51:12,520
Speaker 2: nobody's gonna like that. People like customer service, They like,

985
00:51:12,600 --> 00:51:14,319
Speaker 2: you know, to use their credit card, they get a

986
00:51:14,360 --> 00:51:17,680
Speaker 2: refund if they get scammed, you know. So I'm not

987
00:51:17,760 --> 00:51:20,880
Speaker 2: even sure that the idea that there really is demand

988
00:51:20,920 --> 00:51:24,600
Speaker 2: to have concert tickets be controlled in some decentralized database,

989
00:51:24,920 --> 00:51:26,799
Speaker 2: you know. I think there's a reason why for all

990
00:51:26,840 --> 00:51:29,600
Speaker 2: that we complain about Ticketmaster, there's a reason why, like

991
00:51:29,640 --> 00:51:33,240
Speaker 2: a central authority has grown to dominate this market.

992
00:51:33,520 --> 00:51:36,960
Speaker 1: And you use the example that bitcoin has been around

993
00:51:37,680 --> 00:51:39,799
Speaker 1: for as long as it took us to go from

994
00:51:39,840 --> 00:51:45,200
Speaker 1: the first website to the iPhone, longer than Airbnb and

995
00:51:45,320 --> 00:51:49,000
Speaker 1: Uber have been around, and those have become real businesses.

996
00:51:49,840 --> 00:51:54,720
Speaker 1: What is the problem that bitcoin is trying to solve.

997
00:51:55,120 --> 00:51:57,520
Speaker 2: I don't deny if we had a bitcoin, if we

998
00:51:57,520 --> 00:52:00,839
Speaker 2: had Michael Saylor here, he could probably talk quite convincingly

999
00:52:00,920 --> 00:52:04,000
Speaker 2: about how great bitcoin is in theory, and I would

1000
00:52:04,040 --> 00:52:07,439
Speaker 2: just say, look at what's happened in practice. Nobody's using

1001
00:52:07,440 --> 00:52:10,440
Speaker 2: it for anything. Even in El Salvador, where it was

1002
00:52:10,480 --> 00:52:12,839
Speaker 2: really promoted as this great success story, where we see

1003
00:52:12,840 --> 00:52:15,600
Speaker 2: bitcoin in the real world. Nobody likes it, nobody's using it.

1004
00:52:16,040 --> 00:52:19,000
Speaker 2: And if this crypto stuff was so great it would

1005
00:52:19,000 --> 00:52:21,480
Speaker 2: sell itself, you wouldn't need to be pushing it on people.

1006
00:52:21,760 --> 00:52:25,400
Speaker 2: The technology is that people like just spread virally.

1007
00:52:25,760 --> 00:52:28,759
Speaker 1: Huh really amusing. I want to talk about some of

1008
00:52:28,760 --> 00:52:31,399
Speaker 1: the damage from crypto, but before we get to that,

1009
00:52:31,920 --> 00:52:35,520
Speaker 1: you've been going to the Sam Bankman Freed trial about

1010
00:52:36,280 --> 00:52:41,439
Speaker 1: ftx's collapse. It seems from this book there's a lot

1011
00:52:41,480 --> 00:52:45,360
Speaker 1: of blame to people like Carolyn Ellison who ran Alami

1012
00:52:45,440 --> 00:52:49,720
Speaker 1: to research, Gary Wang, who was their technologist and wrote

1013
00:52:49,719 --> 00:52:53,799
Speaker 1: all the code, and Nichad Sing. Is it just that

1014
00:52:54,000 --> 00:52:58,360
Speaker 1: they played the prisoner's dilemma better than Sam Bankman Freed,

1015
00:52:58,560 --> 00:53:01,920
Speaker 1: like everybody was so quick to throw him under the bus.

1016
00:53:02,040 --> 00:53:05,000
Speaker 1: Looks like there's a lot of culpability on the rest

1017
00:53:05,000 --> 00:53:09,160
Speaker 1: of that crew. They were all adults running a business

1018
00:53:09,200 --> 00:53:12,480
Speaker 1: that had lots of fraudulent activity going on.

1019
00:53:12,920 --> 00:53:15,640
Speaker 2: What the trial has been so far is Sam sitting

1020
00:53:15,640 --> 00:53:19,760
Speaker 2: there and there's been a parade of his best friends,

1021
00:53:19,800 --> 00:53:23,360
Speaker 2: his colleagues, and they've each been saying, I'm really sorry,

1022
00:53:23,920 --> 00:53:26,680
Speaker 2: I committed fraud. I did it with that guy over there,

1023
00:53:27,040 --> 00:53:29,920
Speaker 2: and like the jury has been falling asleep for some

1024
00:53:29,960 --> 00:53:30,719
Speaker 2: of the details.

1025
00:53:30,840 --> 00:53:33,319
Speaker 1: Does the defense get up and say so, tell us

1026
00:53:33,320 --> 00:53:35,799
Speaker 1: about the fraud. You were an adult, right, you didn't

1027
00:53:35,800 --> 00:53:38,000
Speaker 1: do this when you were fourteen. Tell us about the

1028
00:53:38,040 --> 00:53:41,560
Speaker 1: fraud you committed when you were running this hedge funds

1029
00:53:41,920 --> 00:53:44,800
Speaker 1: or when you were writing the code. It's kinda that

1030
00:53:45,000 --> 00:53:46,359
Speaker 1: kind of laid back, aren't they.

1031
00:53:46,560 --> 00:53:49,200
Speaker 2: The problem is that if the more they hammer in

1032
00:53:49,239 --> 00:53:53,839
Speaker 2: that these witnesses committed fraud, that would show that these

1033
00:53:53,880 --> 00:53:56,680
Speaker 2: people know a lot about the fraud. And they're all

1034
00:53:56,719 --> 00:53:59,160
Speaker 2: saying that they did it with Sam. A lot of times.

1035
00:53:59,200 --> 00:54:02,120
Speaker 2: They have a lot of details about which fraud they

1036
00:54:02,120 --> 00:54:04,239
Speaker 2: worked on and how they did it. They pulled out

1037
00:54:04,239 --> 00:54:06,600
Speaker 2: like Google docs that show them doing the fraud. Some

1038
00:54:06,680 --> 00:54:09,120
Speaker 2: of them even have comments from Sam on the Google doc.

1039
00:54:09,520 --> 00:54:11,440
Speaker 2: And it's not like you get a free ride just

1040
00:54:11,480 --> 00:54:13,719
Speaker 2: because you plead guilty. They're probably all going to jail

1041
00:54:13,800 --> 00:54:15,640
Speaker 2: for a couple of years at least.

1042
00:54:15,480 --> 00:54:17,239
Speaker 1: But not twenty or thirty years. No.

1043
00:54:17,640 --> 00:54:22,720
Speaker 2: Caroline, the head of Alameda, Sam's ex girlfriend. She cried

1044
00:54:22,760 --> 00:54:25,640
Speaker 2: on the stand when she was talking about how bad

1045
00:54:25,680 --> 00:54:28,920
Speaker 2: she felt about participating in this fraud. I don't think

1046
00:54:28,920 --> 00:54:32,320
Speaker 2: they're trying to minimize their own involvement. They're just saying

1047
00:54:32,640 --> 00:54:34,680
Speaker 2: this guy was the boss, and like we did it

1048
00:54:34,719 --> 00:54:36,560
Speaker 2: with him fair enough.

1049
00:54:36,600 --> 00:54:38,919
Speaker 1: So let's talk a little bit about In the book,

1050
00:54:38,960 --> 00:54:43,000
Speaker 1: you talk a lot about some of the damage crypto

1051
00:54:44,080 --> 00:54:49,200
Speaker 1: and tether has caused. Probably the most harrowing section was

1052
00:54:49,400 --> 00:54:54,400
Speaker 1: on human trafficking. You go to Cambodia to look at

1053
00:54:54,480 --> 00:54:59,319
Speaker 1: some of these sleeve or prisons. How else do you

1054
00:54:59,360 --> 00:55:00,000
Speaker 1: describe these?

1055
00:55:00,320 --> 00:55:03,480
Speaker 2: It's pretty accurate. I mean it's really crazy. You know,

1056
00:55:03,640 --> 00:55:06,880
Speaker 2: we all get these spam text messages right like they're

1057
00:55:06,920 --> 00:55:09,400
Speaker 2: like Sam, did you pick up the milk on your

1058
00:55:09,440 --> 00:55:11,880
Speaker 2: way home for the dog? They're not like that great

1059
00:55:11,640 --> 00:55:15,920
Speaker 2: at English that don't always make sense these messages I learned.

1060
00:55:16,960 --> 00:55:20,120
Speaker 2: They will try and make friends with you, and they'll

1061
00:55:20,160 --> 00:55:23,359
Speaker 2: eventually try to get you to trade crypto with them

1062
00:55:23,440 --> 00:55:26,080
Speaker 2: to try out some new hot crypto app, and they

1063
00:55:26,120 --> 00:55:29,919
Speaker 2: always use tether. They'll say, hey, I got this great

1064
00:55:30,000 --> 00:55:33,239
Speaker 2: trade idea for you. Just go buy some tether on

1065
00:55:33,600 --> 00:55:36,200
Speaker 2: coinbase or some regular app and send it to my

1066
00:55:36,280 --> 00:55:38,160
Speaker 2: special app, or we'll make lots of money.

1067
00:55:38,360 --> 00:55:41,680
Speaker 1: You got a spam text from Vicky who sent you

1068
00:55:41,719 --> 00:55:44,279
Speaker 1: pictures clearly not from New York, which is what she

1069
00:55:44,400 --> 00:55:47,160
Speaker 1: told you, and you sent her one hundred dollars worth

1070
00:55:47,200 --> 00:55:49,960
Speaker 1: of tether and you were able to track it. Yeah,

1071
00:55:49,960 --> 00:55:52,240
Speaker 1: which is kind of surprising because we've always been told

1072
00:55:52,600 --> 00:55:55,000
Speaker 1: all this crypto stuff is anonymous. Turns out not to

1073
00:55:55,040 --> 00:55:56,160
Speaker 1: be very anonymous either.

1074
00:55:56,600 --> 00:55:59,840
Speaker 2: It's kind of weird that way. I mean, it's pseudonymous.

1075
00:56:00,239 --> 00:56:03,560
Speaker 2: So everybody's wallet has an address that's not associated with

1076
00:56:03,640 --> 00:56:05,880
Speaker 2: their name. It's just like a string of random numbers,

1077
00:56:06,360 --> 00:56:10,959
Speaker 2: and you can see all the transaction. If I know, like, hey,

1078
00:56:11,000 --> 00:56:14,239
Speaker 2: this string of random numbers is Barrie's address, I might

1079
00:56:14,280 --> 00:56:17,120
Speaker 2: even be able to go see like what exchanges you

1080
00:56:17,280 --> 00:56:19,319
Speaker 2: used or where you sent your money. But if I

1081
00:56:19,320 --> 00:56:21,800
Speaker 2: don't have that first clue that says this is Barry's address,

1082
00:56:22,120 --> 00:56:25,400
Speaker 2: then it might as well be anonymous. So these messages

1083
00:56:25,400 --> 00:56:28,840
Speaker 2: are coming from Cambodia or elsewhere in Southeast Asia, and

1084
00:56:28,960 --> 00:56:33,360
Speaker 2: I learned that the people sending them are often victims themselves.

1085
00:56:33,480 --> 00:56:35,439
Speaker 2: I mean I spoke with one guy. He's a young

1086
00:56:35,480 --> 00:56:39,799
Speaker 2: guy from Vietnam. He'd been lurned to Cambodia, thinking that

1087
00:56:39,880 --> 00:56:41,640
Speaker 2: he was going to be doing something else. When he

1088
00:56:41,680 --> 00:56:45,520
Speaker 2: gets there, they're like, no, you're gonna scam twenty four

1089
00:56:45,520 --> 00:56:48,080
Speaker 2: hours a day. You're not leaving this building unless you

1090
00:56:48,160 --> 00:56:51,399
Speaker 2: pay us thousands of dollars. If you don't scam enough,

1091
00:56:51,600 --> 00:56:54,759
Speaker 2: we're gonna beat you. We're gonna shock you with these

1092
00:56:54,960 --> 00:57:00,399
Speaker 2: electric batons. And there's actually entire office parks in the book.

1093
00:57:00,400 --> 00:57:03,239
Speaker 2: I go to one called Chinatown in western Cambo Tototos.

1094
00:57:03,400 --> 00:57:04,279
Speaker 1: They're horrifying.

1095
00:57:04,640 --> 00:57:08,920
Speaker 2: Yeah, it's like dozens of towers, each of them filled

1096
00:57:08,920 --> 00:57:11,920
Speaker 2: with people, thousands of people who are sending these spam

1097
00:57:11,960 --> 00:57:15,239
Speaker 2: messages who can't escape. Obviously it doesn't prove anything, but

1098
00:57:15,280 --> 00:57:19,240
Speaker 2: what really seemed quite telling to me. I get to Chinatown,

1099
00:57:19,840 --> 00:57:23,400
Speaker 2: the most famous of this scam compound site where this

1100
00:57:24,000 --> 00:57:27,120
Speaker 2: Vietnamese guy interviewed had escaped from where people were tortured,

1101
00:57:27,160 --> 00:57:29,840
Speaker 2: people were killed. What do I see right at the

1102
00:57:30,040 --> 00:57:35,040
Speaker 2: entrance to this compound a closed shop that was a

1103
00:57:35,080 --> 00:57:38,040
Speaker 2: currency exchange and it says right on the on the

1104
00:57:38,080 --> 00:57:42,080
Speaker 2: big sign out front USDT like we will trade your

1105
00:57:42,160 --> 00:57:44,280
Speaker 2: tether four dollars right here.

1106
00:57:44,360 --> 00:57:46,760
Speaker 1: So if you want to pay ransom to get someone freed,

1107
00:57:47,200 --> 00:57:48,560
Speaker 1: you can do it then and there.

1108
00:57:48,920 --> 00:57:52,200
Speaker 2: So the crypto guys would say, Hey, the scams existed

1109
00:57:52,200 --> 00:57:55,520
Speaker 2: before crypto, This isn't really crypto stuff, But I think

1110
00:57:55,520 --> 00:57:58,520
Speaker 2: that crypto made all this a lot easier, made it

1111
00:57:58,600 --> 00:58:02,080
Speaker 2: possible on a bigger scale. I spoke to a veteran

1112
00:58:02,160 --> 00:58:06,560
Speaker 2: human trafficking investigator from Taiwan who'd been to Cambodia to

1113
00:58:06,720 --> 00:58:09,920
Speaker 2: rant some young women who'd been tricked into going there

1114
00:58:09,920 --> 00:58:12,560
Speaker 2: from Taiwan. He told me, used to be these human

1115
00:58:12,560 --> 00:58:15,600
Speaker 2: traffickers use banks, and like maybe they'd set up give

1116
00:58:15,600 --> 00:58:18,080
Speaker 2: fake names or whatever when they open their bank accounts,

1117
00:58:18,080 --> 00:58:18,920
Speaker 2: but those were clues.

1118
00:58:19,000 --> 00:58:21,280
Speaker 3: Now they use tether. What am I supposed to do?

1119
00:58:21,480 --> 00:58:23,440
Speaker 2: I can't try, you know, he was like, this is

1120
00:58:23,520 --> 00:58:27,280
Speaker 2: making my job of investigating human trafficking a lot harder.

1121
00:58:27,480 --> 00:58:30,800
Speaker 1: I'm genuinely shocked the United Nations hasn't stepped into this

1122
00:58:30,840 --> 00:58:33,000
Speaker 1: because this is really horrific.

1123
00:58:33,280 --> 00:58:36,680
Speaker 2: You know, it is actually risen to their attention now,

1124
00:58:36,960 --> 00:58:39,840
Speaker 2: and they actually put out a report where they estimate

1125
00:58:40,320 --> 00:58:43,600
Speaker 2: that as many as two hundred thousand people work in

1126
00:58:43,600 --> 00:58:44,960
Speaker 2: these scam compounds.

1127
00:58:44,640 --> 00:58:46,080
Speaker 1: Skill Yes, that's horrible.

1128
00:58:46,200 --> 00:58:49,280
Speaker 2: The Chinese government has cracked down and there's been a

1129
00:58:49,320 --> 00:58:52,560
Speaker 2: number of busts, a lot of the worst compounds that

1130
00:58:52,720 --> 00:58:57,120
Speaker 2: have moved to me and mar where they're essentially like

1131
00:58:57,240 --> 00:58:59,800
Speaker 2: outside of the reach of law enforcement. They're in these

1132
00:58:59,840 --> 00:59:02,760
Speaker 2: like border regions where even like the police don't go.

1133
00:59:03,600 --> 00:59:06,480
Speaker 2: I went to one in a national park in Cambodia

1134
00:59:06,560 --> 00:59:08,560
Speaker 2: behind like a big, big hotel.

1135
00:59:08,800 --> 00:59:12,720
Speaker 1: You know, it's really unbelievable. Another statistic from the book

1136
00:59:12,760 --> 00:59:18,160
Speaker 1: that blew my mind. FTX had donated money to one

1137
00:59:18,520 --> 00:59:21,760
Speaker 1: in three members of Congress. How is that possible?

1138
00:59:22,120 --> 00:59:25,560
Speaker 2: Yeah, So, Sam, he had this idea that you know,

1139
00:59:25,560 --> 00:59:27,960
Speaker 2: a lot of people say there's too much money in politics.

1140
00:59:28,360 --> 00:59:31,400
Speaker 2: He said, there's not enough money in politics. Just think

1141
00:59:31,400 --> 00:59:34,360
Speaker 2: about how And his logic kind of made sense.

1142
00:59:34,400 --> 00:59:35,320
Speaker 1: No, it definitely does.

1143
00:59:35,440 --> 00:59:38,920
Speaker 2: The Congress controls these huge pots of money. And if

1144
00:59:38,960 --> 00:59:43,360
Speaker 2: you can influence Congress to spend on your preferred causes,

1145
00:59:43,760 --> 00:59:46,120
Speaker 2: even if it costs you, you know, one hundred million

1146
00:59:46,160 --> 00:59:50,600
Speaker 2: dollars to buy influence, that could actually be very small

1147
00:59:50,600 --> 00:59:53,040
Speaker 2: in comparison to how much money you get Congress to spend.

1148
00:59:53,360 --> 00:59:56,680
Speaker 2: So he basically funneled as much money as he could

1149
00:59:56,680 --> 00:59:59,720
Speaker 2: to everybody in Congress, and he took this really cynical

1150
01:00:00,040 --> 01:00:04,000
Speaker 2: and illegal approach to it, where he was like, I

1151
01:00:04,000 --> 01:00:07,640
Speaker 2: can't just give to everybody, because then the Publicans won't

1152
01:00:07,680 --> 01:00:08,960
Speaker 2: like me because they know that I give to a

1153
01:00:09,000 --> 01:00:11,560
Speaker 2: lot of Democrats. The Democrats won't like me if they

1154
01:00:11,600 --> 01:00:14,200
Speaker 2: see that I'm not on their team. So he picked

1155
01:00:14,280 --> 01:00:17,160
Speaker 2: two of his lieutenants and he was like, all right,

1156
01:00:17,160 --> 01:00:20,120
Speaker 2: you're the Democrat and you're the Republican. We're going to

1157
01:00:20,160 --> 01:00:22,200
Speaker 2: funnel our donations through you.

1158
01:00:22,600 --> 01:00:25,960
Speaker 1: It was mostly two Democrats, but a lot once Republican.

1159
01:00:26,120 --> 01:00:26,400
Speaker 3: Yeah.

1160
01:00:26,400 --> 01:00:29,440
Speaker 2: So he was one of the biggest donors to the

1161
01:00:29,440 --> 01:00:33,360
Speaker 2: Biden campaign. Gave something like five million dollars. And these

1162
01:00:33,360 --> 01:00:35,919
Speaker 2: were not like you know, cash and bags. These were

1163
01:00:35,960 --> 01:00:39,600
Speaker 2: like donations that like other corporations give. And I think

1164
01:00:39,680 --> 01:00:42,160
Speaker 2: it was like pretty much two thirds to Democrats but

1165
01:00:42,240 --> 01:00:44,080
Speaker 2: still a third to Republicans.

1166
01:00:44,320 --> 01:00:45,960
Speaker 1: He used to work at a hedge fund. He knows

1167
01:00:46,000 --> 01:00:47,240
Speaker 1: how to hedge his bets, right.

1168
01:00:47,240 --> 01:00:49,200
Speaker 2: Yeah, And and he had a lot of things, a

1169
01:00:49,200 --> 01:00:51,240
Speaker 2: lot of priorities. But one of the things he wanted

1170
01:00:51,920 --> 01:00:56,280
Speaker 2: was for the CFTC to regulate crypto. It seemed to me,

1171
01:00:56,800 --> 01:00:59,600
Speaker 2: even when things were going well, he was basically trying

1172
01:00:59,600 --> 01:01:03,800
Speaker 2: to get his preferred crypto legislation passed that would effectively

1173
01:01:03,840 --> 01:01:07,360
Speaker 2: cement FTX as like the go to crypto exchange that

1174
01:01:07,400 --> 01:01:09,960
Speaker 2: followed all the rules and box out some of his

1175
01:01:10,000 --> 01:01:14,840
Speaker 2: competitors like Binance, that were not run by Americans, didn't

1176
01:01:14,840 --> 01:01:18,320
Speaker 2: have the same political influence and wouldn't be able to comply.

1177
01:01:18,840 --> 01:01:21,800
Speaker 2: I think that was part of his plan to grow

1178
01:01:21,840 --> 01:01:24,400
Speaker 2: and grow and grow and get out of this hole

1179
01:01:24,480 --> 01:01:25,880
Speaker 2: of borrow money that he was in.

1180
01:01:26,080 --> 01:01:30,280
Speaker 1: Huh. So you also mentioned in the book two of

1181
01:01:30,320 --> 01:01:35,360
Speaker 1: my favorite authors, the first being Carl Hiassen, who I

1182
01:01:35,440 --> 01:01:39,760
Speaker 1: just love everything he ever writes, just the best Beach

1183
01:01:39,840 --> 01:01:45,360
Speaker 1: reads about the endless corruption in Florida. He's an amazingly

1184
01:01:45,680 --> 01:01:49,840
Speaker 1: entertaining writer. But also Michael Lewis, who has a book

1185
01:01:49,840 --> 01:01:53,320
Speaker 1: out Going Infinite that came out just around the same

1186
01:01:53,360 --> 01:01:56,680
Speaker 1: time you guys did. What are your thoughts on Lewis's

1187
01:01:56,720 --> 01:01:59,520
Speaker 1: portrayal of SBF What did he get wrong?

1188
01:02:00,080 --> 01:02:04,440
Speaker 2: I was writing this book, I became aware that pretty

1189
01:02:04,640 --> 01:02:08,439
Speaker 2: early on that Lewis might be working on crypto book too.

1190
01:02:08,880 --> 01:02:11,120
Speaker 2: And this is my first book. You know, he's like

1191
01:02:11,160 --> 01:02:13,040
Speaker 2: the goat like.

1192
01:02:12,600 --> 01:02:15,360
Speaker 1: Poet laureate of financial rights, right right.

1193
01:02:16,200 --> 01:02:18,680
Speaker 2: So that was pretty that was pretty scary to me.

1194
01:02:19,040 --> 01:02:23,080
Speaker 2: But then I was at Crypto Bahamas where I saw

1195
01:02:23,080 --> 01:02:26,680
Speaker 2: the Mooch. I saw Michael Lewis interviewing Sam Bankman feed

1196
01:02:26,760 --> 01:02:28,760
Speaker 2: on stage. I was looking forward to hearing what he

1197
01:02:28,800 --> 01:02:31,640
Speaker 2: had to say. At this point, I'd learned about the shoes,

1198
01:02:31,680 --> 01:02:34,160
Speaker 2: I learned about the Pokemon game. I mean, I came

1199
01:02:34,160 --> 01:02:36,680
Speaker 2: in pretty skeptical of Crypto and all I was seeing

1200
01:02:36,760 --> 01:02:39,200
Speaker 2: was like a bunch of scams. And then I see

1201
01:02:39,440 --> 01:02:44,080
Speaker 2: Michael Lewis on stage interviewing Sam, and he's just like

1202
01:02:44,200 --> 01:02:46,600
Speaker 2: fawning all over him. He's saying great things about him,

1203
01:02:46,720 --> 01:02:49,440
Speaker 2: and it goes beyond just being polite. He says, listen,

1204
01:02:49,920 --> 01:02:53,800
Speaker 2: look at the traditional financial world, look at the crypto world.

1205
01:02:54,120 --> 01:02:54,960
Speaker 3: Crypto's better.

1206
01:02:55,280 --> 01:03:00,320
Speaker 2: And I'm like, Michael Lewis, like, I grew up reading books.

1207
01:03:00,320 --> 01:03:02,320
Speaker 2: I learned a lot about finance from you. But I

1208
01:03:02,360 --> 01:03:05,560
Speaker 2: really think I can't believe you would say that. So

1209
01:03:05,720 --> 01:03:08,720
Speaker 2: at that point I actually wondered, maybe he's not writing

1210
01:03:08,760 --> 01:03:11,439
Speaker 2: a book, maybe he's just here giving speeches, or maybe

1211
01:03:11,440 --> 01:03:13,920
Speaker 2: he's working on a documentary or something. It turned out

1212
01:03:14,120 --> 01:03:16,240
Speaker 2: he said he was not paid and he did.

1213
01:03:16,160 --> 01:03:17,600
Speaker 3: Write a book. He was there to write a book.

1214
01:03:17,640 --> 01:03:19,640
Speaker 1: So he wrote a book which turned out to be

1215
01:03:19,680 --> 01:03:22,680
Speaker 1: a best seller, and he sold the movie rights to

1216
01:03:22,720 --> 01:03:24,800
Speaker 1: Apple TV for a decent amount of money.

1217
01:03:24,920 --> 01:03:25,200
Speaker 3: Yeah.

1218
01:03:25,360 --> 01:03:27,880
Speaker 2: Now, he said something in what I assume was a

1219
01:03:27,880 --> 01:03:31,720
Speaker 2: paid speech. He spoke at Bitcoin twenty twenty three in Miami.

1220
01:03:32,120 --> 01:03:35,480
Speaker 2: He was on stage with Arthur Hayes, the head of bitmes,

1221
01:03:35,560 --> 01:03:38,440
Speaker 2: and Michael Lewis said he got asked about He was like,

1222
01:03:38,440 --> 01:03:40,600
Speaker 2: you know, all you guys here want to know do

1223
01:03:40,680 --> 01:03:44,640
Speaker 2: I believe in crypto? And he's like, you, you remind

1224
01:03:44,680 --> 01:03:48,520
Speaker 2: me of the born again Christians that I met when

1225
01:03:48,560 --> 01:03:51,080
Speaker 2: I was writing The blind Side. You everyone wanted to

1226
01:03:51,120 --> 01:03:54,680
Speaker 2: know if I believed And he's like, listen, it doesn't

1227
01:03:54,720 --> 01:03:57,479
Speaker 2: matter what I think about crypto. My book isn't about

1228
01:03:57,480 --> 01:04:00,560
Speaker 2: what I think about crypto. My book's about Sam bang Minfreed,

1229
01:04:00,960 --> 01:04:03,680
Speaker 2: and it only matters what he thinks about crypto. And

1230
01:04:04,120 --> 01:04:07,040
Speaker 2: I think this is a mistake. I think that crypto

1231
01:04:07,440 --> 01:04:13,000
Speaker 2: it's like the biggest financial mania in modern times, and

1232
01:04:13,040 --> 01:04:17,120
Speaker 2: there's no way to write about that accurately without having

1233
01:04:17,160 --> 01:04:21,280
Speaker 2: an opinion about crypto. By just like saying, oh, I'm neutral,

1234
01:04:21,760 --> 01:04:25,400
Speaker 2: I think you're missing out on explaining what's happened over

1235
01:04:25,440 --> 01:04:26,320
Speaker 2: the last few years.

1236
01:04:26,480 --> 01:04:30,920
Speaker 1: So if you read the end of Going Infinite, Michael

1237
01:04:31,000 --> 01:04:37,720
Speaker 1: Lewis suggests that the bankruptcy trustee who said FTX was

1238
01:04:37,760 --> 01:04:40,640
Speaker 1: a bigger mess than Enron, which was a giant mess

1239
01:04:40,640 --> 01:04:44,400
Speaker 1: in and of itself. He implied that by the time

1240
01:04:44,480 --> 01:04:46,240
Speaker 1: this is all said and done, by the time they

1241
01:04:46,320 --> 01:04:50,680
Speaker 1: liquidate the venture investments and everything else, the missing eight

1242
01:04:50,720 --> 01:04:54,120
Speaker 1: billion dollars is going to be found. Is that still

1243
01:04:54,160 --> 01:04:58,240
Speaker 1: the case today, or has that gap marrowed has gotten wider?

1244
01:04:58,560 --> 01:05:01,560
Speaker 1: What's going on with that rec of the missing funds?

1245
01:05:01,840 --> 01:05:06,720
Speaker 2: It's still a bit mysterious. Now bankruptcy claims traders are

1246
01:05:06,760 --> 01:05:09,320
Speaker 2: not paying, you know, ninety cents on the dollars for

1247
01:05:09,440 --> 01:05:12,640
Speaker 2: FTX claims. They're going for like forty cents, all.

1248
01:05:12,640 --> 01:05:15,280
Speaker 1: Right, so a little above average, but not a whole

1249
01:05:15,320 --> 01:05:15,760
Speaker 1: lot above that.

1250
01:05:15,880 --> 01:05:17,960
Speaker 2: So, I mean what that suggests is that they think

1251
01:05:18,000 --> 01:05:20,040
Speaker 2: there's going to be a pretty good recovery, but not.

1252
01:05:20,040 --> 01:05:21,520
Speaker 1: The whole something like that.

1253
01:05:21,640 --> 01:05:25,040
Speaker 2: Yeah, Now, Sam Bankman Fried's lawyers, this is the defense

1254
01:05:25,080 --> 01:05:28,240
Speaker 2: of Sam Bankman Freed. But like, hey, the money isn't

1255
01:05:28,280 --> 01:05:29,440
Speaker 2: actually gone, right.

1256
01:05:29,440 --> 01:05:33,320
Speaker 1: It's just misplaced. Like literally other places are saying, hey,

1257
01:05:33,360 --> 01:05:36,200
Speaker 1: is this your three hundred million dollars in bitcoin we're

1258
01:05:36,240 --> 01:05:36,840
Speaker 1: holding now.

1259
01:05:37,080 --> 01:05:39,600
Speaker 2: First of all, it's come out at trial. Everyone at

1260
01:05:39,720 --> 01:05:42,680
Speaker 2: all the witnesses have said, we committed fraud, We took

1261
01:05:42,680 --> 01:05:45,120
Speaker 2: the customer's money, we knew it was wrong. And Sam

1262
01:05:45,120 --> 01:05:48,080
Speaker 2: bankman Fried's lawyers have brought this up and they're like, hey,

1263
01:05:48,320 --> 01:05:50,360
Speaker 2: how about we bring up as a defense that like

1264
01:05:50,960 --> 01:05:53,000
Speaker 2: some of these bets worked out and maybe the money's

1265
01:05:53,040 --> 01:05:56,600
Speaker 2: not gone. And the judge addressed this and he said

1266
01:05:56,760 --> 01:06:00,280
Speaker 2: the argument that you're making, and that Michael Lewis is

1267
01:06:00,440 --> 01:06:02,800
Speaker 2: semi making in the book, He's like, that would be

1268
01:06:02,880 --> 01:06:05,800
Speaker 2: like I robbed the Federal Reserve and then I went

1269
01:06:05,840 --> 01:06:09,360
Speaker 2: and bought a million Powerball tickets. Then I won, and

1270
01:06:09,400 --> 01:06:12,400
Speaker 2: I've returned the million dollars. It doesn't matter. You still

1271
01:06:12,480 --> 01:06:14,560
Speaker 2: rob the Federal Reserve, You're still going to jail.

1272
01:06:14,880 --> 01:06:18,480
Speaker 1: So, to be fair, Lewis says, it wasn't that the

1273
01:06:18,520 --> 01:06:20,840
Speaker 1: bets were going to pay off. It's that all the

1274
01:06:20,840 --> 01:06:26,240
Speaker 1: money wasn't accounted for properly, and if that happens, maybe

1275
01:06:26,240 --> 01:06:29,760
Speaker 1: that money you'll be missing. Since then, we've learned a

1276
01:06:29,800 --> 01:06:33,200
Speaker 1: lot of that money has been speculated with or gambled with.

1277
01:06:33,440 --> 01:06:36,240
Speaker 2: If Lewis was saying that the money was simply misplaced,

1278
01:06:36,600 --> 01:06:39,120
Speaker 2: like that has been proven to be wrong. The money

1279
01:06:39,160 --> 01:06:41,920
Speaker 2: was definitely not just misplaced, and they found it like

1280
01:06:42,000 --> 01:06:45,560
Speaker 2: it was bat on a lot of things. And for example,

1281
01:06:45,840 --> 01:06:48,520
Speaker 2: it came out at the trial that customers give money

1282
01:06:48,520 --> 01:06:51,400
Speaker 2: to the exchange, they're counting on the exchange holding it

1283
01:06:51,680 --> 01:06:53,640
Speaker 2: and giving it back when they want to withdraw, just

1284
01:06:53,640 --> 01:06:55,919
Speaker 2: like you'd count on e trade to have your money

1285
01:06:55,920 --> 01:06:58,080
Speaker 2: when you want to take it out. And what he

1286
01:06:58,160 --> 01:07:00,439
Speaker 2: had done in one instance was give f five hundred

1287
01:07:00,480 --> 01:07:03,000
Speaker 2: million dollars to his hedge fund to invest in some

1288
01:07:03,120 --> 01:07:07,040
Speaker 2: AI company, and that turned out to be it looks

1289
01:07:07,080 --> 01:07:08,000
Speaker 2: like it was a pretty.

1290
01:07:07,720 --> 01:07:08,960
Speaker 1: Good bet, giant winner.

1291
01:07:09,120 --> 01:07:12,760
Speaker 2: Yeah, but it doesn't mean it was okay. The customers

1292
01:07:12,800 --> 01:07:15,760
Speaker 2: never agreed that he could gamble with their money. They

1293
01:07:15,760 --> 01:07:18,520
Speaker 2: thought that they were gambling with their money on dogecoin

1294
01:07:18,640 --> 01:07:19,080
Speaker 2: or whatever.

1295
01:07:19,600 --> 01:07:22,600
Speaker 1: Right this is, you know. Part of the description was

1296
01:07:23,520 --> 01:07:30,960
Speaker 1: Alameda had broader parameters for going over the limits, the

1297
01:07:31,040 --> 01:07:34,960
Speaker 1: lending limits, because they were helping to facilitate making a market.

1298
01:07:35,280 --> 01:07:37,800
Speaker 1: But that would have been a little over not billions

1299
01:07:37,840 --> 01:07:39,919
Speaker 1: of dollars, over tens of billions of dollars over.

1300
01:07:40,040 --> 01:07:43,000
Speaker 2: Yeah, And what the witnesses have testified to is that

1301
01:07:43,440 --> 01:07:46,640
Speaker 2: from actually very early on, Alameda was allowed to treat

1302
01:07:46,640 --> 01:07:49,320
Speaker 2: like the customer money like a piggy bank and use

1303
01:07:49,360 --> 01:07:51,760
Speaker 2: it to gamble on whatever. And actually, one of the

1304
01:07:51,800 --> 01:07:55,880
Speaker 2: things that Michael Lewis has said that has also been

1305
01:07:55,960 --> 01:08:00,000
Speaker 2: shown to not be true at the trial, he said, FTX,

1306
01:08:00,240 --> 01:08:03,480
Speaker 2: if you set aside the fraud, it was a good business, right.

1307
01:08:03,920 --> 01:08:07,480
Speaker 1: Well, the argument is, hey, we're gonna do a bajillion

1308
01:08:07,560 --> 01:08:10,160
Speaker 1: crypto trades and take a tiny little piece of each

1309
01:08:10,560 --> 01:08:12,400
Speaker 1: and it's a couple of billion dollars a year.

1310
01:08:12,720 --> 01:08:16,160
Speaker 2: So the problem is that FTX, the way the exchange

1311
01:08:16,200 --> 01:08:18,320
Speaker 2: was set up, they claimed they had this great risk

1312
01:08:18,400 --> 01:08:22,400
Speaker 2: management system, this amazing liquidation engine, but it turned out

1313
01:08:22,479 --> 01:08:25,759
Speaker 2: that they didn't, and the exchange over the years actually

1314
01:08:25,800 --> 01:08:28,719
Speaker 2: took big hits at different times, and that they covered

1315
01:08:28,760 --> 01:08:32,479
Speaker 2: those up by shunting the losses to Alameda.

1316
01:08:32,040 --> 01:08:34,919
Speaker 1: So not just hacks, but actually trading losses.

1317
01:08:35,240 --> 01:08:39,240
Speaker 2: Yes, so the exchange lost almost a billion dollars because

1318
01:08:39,439 --> 01:08:42,200
Speaker 2: of a failure of the liquidation engine on something called

1319
01:08:42,360 --> 01:08:47,040
Speaker 2: mobile coin. And if they had disclosed this first of all,

1320
01:08:47,240 --> 01:08:49,760
Speaker 2: that would have erased all the exchange's profits, right, so

1321
01:08:49,880 --> 01:08:53,200
Speaker 2: like no more venture capital, you know, thirty two billion valuation.

1322
01:08:53,720 --> 01:08:56,760
Speaker 2: So instead they had Alameda take the hit. And Alameda

1323
01:08:56,800 --> 01:08:59,479
Speaker 2: could take the hit because they had a limited access

1324
01:08:59,479 --> 01:09:01,080
Speaker 2: to the customer money, right, and there.

1325
01:09:01,040 --> 01:09:04,320
Speaker 1: Were no outside real owners because it was all mostly

1326
01:09:04,360 --> 01:09:05,240
Speaker 1: sam bankman Freed.

1327
01:09:05,439 --> 01:09:12,000
Speaker 2: So that is not a good business. And it's looking

1328
01:09:12,040 --> 01:09:13,960
Speaker 2: like the truth is much closer to this was a

1329
01:09:14,000 --> 01:09:16,960
Speaker 2: fraud from the start. Then this was a good business

1330
01:09:17,000 --> 01:09:20,080
Speaker 2: that was that got out of control because Sam bankmcfreed

1331
01:09:20,120 --> 01:09:20,880
Speaker 2: wasn't paying attention.

1332
01:09:21,400 --> 01:09:25,120
Speaker 1: So the summation that I came away from with your book,

1333
01:09:25,200 --> 01:09:27,800
Speaker 1: as opposed to lots of of the other things I've

1334
01:09:27,840 --> 01:09:33,640
Speaker 1: read on crypto, is there's no regulation, there's no disclosure requirements,

1335
01:09:33,680 --> 01:09:38,080
Speaker 1: there's no transparency. When there's a billion dollar loss, nobody

1336
01:09:38,120 --> 01:09:42,040
Speaker 1: says anything. It's all covered up. And on top of

1337
01:09:42,080 --> 01:09:45,320
Speaker 1: all of that, there's no federal Reserve or federal government

1338
01:09:45,439 --> 01:09:50,160
Speaker 1: as a backstop. As much as the libertarian crypto bros,

1339
01:09:50,640 --> 01:09:53,479
Speaker 1: the FDIC and the government. Hey, no matter what happened

1340
01:09:53,520 --> 01:09:56,280
Speaker 1: during the financial crisis or during even during the pandemic,

1341
01:09:57,160 --> 01:09:59,240
Speaker 1: my ATM card still worked.

1342
01:09:59,600 --> 01:10:02,280
Speaker 2: I don't talk about the SEC that much in the book,

1343
01:10:02,479 --> 01:10:04,760
Speaker 2: and I actually would blame the SEC for not being

1344
01:10:04,760 --> 01:10:07,320
Speaker 2: a little quicker to crack down on some of this

1345
01:10:07,360 --> 01:10:10,600
Speaker 2: crypto stuff. But I think the book is, if anything, like,

1346
01:10:10,600 --> 01:10:13,160
Speaker 2: an argument for financial regulation and saying that some of

1347
01:10:13,200 --> 01:10:16,120
Speaker 2: these age old rules make sense. There's a reason why

1348
01:10:16,160 --> 01:10:19,680
Speaker 2: companies have to disclose stuff, and it's to prevent exactly

1349
01:10:20,080 --> 01:10:22,040
Speaker 2: things like this FTX collapse.

1350
01:10:22,000 --> 01:10:25,360
Speaker 1: Really really interesting stuff. So you guys have sniped at

1351
01:10:25,360 --> 01:10:29,080
Speaker 1: each other a little bit in public, You've traded barbs.

1352
01:10:29,520 --> 01:10:32,799
Speaker 1: What's it like when an author whose books you've loved

1353
01:10:33,560 --> 01:10:34,600
Speaker 1: is taken a swing at you.

1354
01:10:35,000 --> 01:10:39,360
Speaker 2: Yeah, he said some pretty nasty things to The New

1355
01:10:39,479 --> 01:10:40,400
Speaker 2: York Times about me.

1356
01:10:40,640 --> 01:10:42,280
Speaker 1: Oh really, what did he say?

1357
01:10:42,640 --> 01:10:43,280
Speaker 3: He called me?

1358
01:10:43,360 --> 01:10:47,000
Speaker 2: He said that I was skeevier than Sam Bankman Freed.

1359
01:10:47,600 --> 01:10:50,000
Speaker 1: Come on, really, Uh that's not right.

1360
01:10:50,400 --> 01:10:54,759
Speaker 2: Yeah, So look, I didn't like that, And I think

1361
01:10:55,040 --> 01:10:57,559
Speaker 2: it's been pretty cool. A lot of the reviews have

1362
01:10:57,720 --> 01:11:02,599
Speaker 2: compared our books, and I really didn't imagine that people

1363
01:11:02,600 --> 01:11:06,160
Speaker 2: would prefer my book to Michael Lewis's, and I've been

1364
01:11:06,520 --> 01:11:09,200
Speaker 2: amazed to see that it's gotten such good reviews.

1365
01:11:09,439 --> 01:11:11,960
Speaker 1: This is the book to read on crypto, is what

1366
01:11:12,800 --> 01:11:15,839
Speaker 1: wired said, read the other SBF book.

1367
01:11:16,040 --> 01:11:18,519
Speaker 2: What I realized when I finished the book is that

1368
01:11:19,280 --> 01:11:21,160
Speaker 2: before all this, I was just like, you know what,

1369
01:11:21,920 --> 01:11:25,519
Speaker 2: this was an amazing adventure. I've always wanted to write

1370
01:11:25,520 --> 01:11:27,760
Speaker 2: a book like this. I'm really proud of how it

1371
01:11:27,800 --> 01:11:30,640
Speaker 2: came out. I'm sure Michael Lewis's book is going to

1372
01:11:30,680 --> 01:11:32,639
Speaker 2: be a hit, but like whatever, I don't care about

1373
01:11:32,640 --> 01:11:35,360
Speaker 2: his book. I think people should read this, and it's

1374
01:11:35,360 --> 01:11:37,200
Speaker 2: going to be and it's a lot of fun. I

1375
01:11:37,240 --> 01:11:39,080
Speaker 2: actually just don't know where I'm going to get another

1376
01:11:39,120 --> 01:11:41,200
Speaker 2: story like this, Like this is like the story I've

1377
01:11:41,240 --> 01:11:42,519
Speaker 2: been waiting for my whole life.

1378
01:11:42,680 --> 01:11:46,400
Speaker 1: Well, you're a relatively young guy. I'm sure there's another

1379
01:11:46,479 --> 01:11:51,479
Speaker 1: book that will come along. This is really a deeply

1380
01:11:51,640 --> 01:11:56,400
Speaker 1: researched work of investigative journalism. Number go up. And if

1381
01:11:56,400 --> 01:12:01,639
Speaker 1: you were skeptical or even just crypto curious beforehand, it's

1382
01:12:01,680 --> 01:12:04,080
Speaker 1: hard to read this and not come away with the

1383
01:12:04,120 --> 01:12:07,720
Speaker 1: thought that this is a massive bubble that will end

1384
01:12:07,760 --> 01:12:09,479
Speaker 1: badly for everybody involved.

1385
01:12:09,840 --> 01:12:10,120
Speaker 3: You know what.

1386
01:12:10,160 --> 01:12:13,719
Speaker 2: I've been particularly pleased. I've gotten some comments from crypto

1387
01:12:13,760 --> 01:12:17,000
Speaker 2: people and they've said that they actually really liked the book,

1388
01:12:17,360 --> 01:12:20,000
Speaker 2: and one guy said, please stay in crypto. We need

1389
01:12:20,040 --> 01:12:20,920
Speaker 2: you to make fun of us.

1390
01:12:21,720 --> 01:12:25,519
Speaker 1: So when I put something out on Twitter yesterday saying hey,

1391
01:12:25,520 --> 01:12:27,880
Speaker 1: I got Zeke Fox tomorrow, what should I ask him?

1392
01:12:28,120 --> 01:12:30,880
Speaker 1: There were a handful of kund of goofy questions. Ask

1393
01:12:30,960 --> 01:12:36,000
Speaker 1: him if he's shorted bitcoin was one of them. Someone said, hey,

1394
01:12:36,040 --> 01:12:39,160
Speaker 1: you know, would you and Michael Lewis ever this Someone

1395
01:12:39,200 --> 01:12:41,559
Speaker 1: slipped into a DM and said, hey, would you and

1396
01:12:41,600 --> 01:12:44,439
Speaker 1: Michael Lewis ever sit down on a stage together and

1397
01:12:44,479 --> 01:12:48,280
Speaker 1: have a debate about Sam bankmin Freed, FTX and crypto.

1398
01:12:48,520 --> 01:12:51,400
Speaker 2: I would love to do it, Michael Lewis, if you're listening,

1399
01:12:51,920 --> 01:12:52,519
Speaker 2: let's do it.

1400
01:12:52,680 --> 01:12:53,320
Speaker 3: You know we can.

1401
01:12:54,400 --> 01:12:56,280
Speaker 2: You're a big draw, we can sell tickets, we can

1402
01:12:56,360 --> 01:12:59,240
Speaker 2: give money to one of the charities that SBF stiffed.

1403
01:13:00,560 --> 01:13:03,280
Speaker 1: And to be fair, I really enjoyed both books, but

1404
01:13:03,360 --> 01:13:06,160
Speaker 1: they're two very different types of books. The one other

1405
01:13:06,280 --> 01:13:08,160
Speaker 1: question I wanted to ask you before we get to

1406
01:13:08,200 --> 01:13:11,519
Speaker 1: our favorite questions. You were part of the team that

1407
01:13:11,800 --> 01:13:18,400
Speaker 1: wrote this interesting BusinessWeek series on how local New York

1408
01:13:18,439 --> 01:13:23,639
Speaker 1: state courts had been weaponized by debt collectors. Signed here

1409
01:13:23,680 --> 01:13:26,400
Speaker 1: to Lose Everything. You want a lob award for that?

1410
01:13:26,960 --> 01:13:30,200
Speaker 1: Tell us a little bit about that bit of investigative journalism.

1411
01:13:30,760 --> 01:13:33,479
Speaker 2: One of the best threads that I pulled in my

1412
01:13:33,560 --> 01:13:38,360
Speaker 2: whole career has been this world of brokers who sell

1413
01:13:38,439 --> 01:13:42,800
Speaker 2: small business loans. It's called merchant cash advance. And basically

1414
01:13:43,400 --> 01:13:45,960
Speaker 2: the guys who were like worked for Jordan belfourt like

1415
01:13:46,000 --> 01:13:48,960
Speaker 2: back in the nineties. That whole business of cold calling

1416
01:13:49,000 --> 01:13:51,559
Speaker 2: people and selling stocks has dried up and if you're

1417
01:13:51,560 --> 01:13:53,920
Speaker 2: still but if you still want to cold call people

1418
01:13:53,960 --> 01:13:56,280
Speaker 2: and earned commission, a lot of those guys now sell

1419
01:13:56,360 --> 01:13:59,479
Speaker 2: merchant cash advance to small businesses. It's like calling up

1420
01:13:59,479 --> 01:14:02,679
Speaker 2: a boudet and being like, hey, do you need ten grand.

1421
01:14:02,680 --> 01:14:05,360
Speaker 2: I'll get it to tomorrow. But if you sign up,

1422
01:14:05,400 --> 01:14:07,360
Speaker 2: you're going to have to pay back like fifteen and

1423
01:14:07,479 --> 01:14:10,040
Speaker 2: two months or something like that. Crazy rates way higher

1424
01:14:10,080 --> 01:14:10,679
Speaker 2: than loan sharks.

1425
01:14:11,200 --> 01:14:13,439
Speaker 1: Sounds usurious and should be illegal.

1426
01:14:13,760 --> 01:14:16,439
Speaker 2: Yeah, but they've got all these loopholes, and the series

1427
01:14:16,560 --> 01:14:21,200
Speaker 2: was about this one amazing loophole that they came up with.

1428
01:14:21,280 --> 01:14:25,479
Speaker 2: These guys are super creative, and it was like, this is.

1429
01:14:25,520 --> 01:14:28,920
Speaker 1: The confession of judgment that's been around for a long time,

1430
01:14:28,920 --> 01:14:30,400
Speaker 1: but it wasn't really used.

1431
01:14:30,600 --> 01:14:33,680
Speaker 2: Yeah, so these guys they would if if you were

1432
01:14:33,720 --> 01:14:36,479
Speaker 2: the bodega, you would have to before you got the loan,

1433
01:14:36,520 --> 01:14:40,040
Speaker 2: you'd have to sign a paper that said I have

1434
01:14:40,320 --> 01:14:43,960
Speaker 2: defaulted on this loan and if judge when you see

1435
01:14:43,960 --> 01:14:47,240
Speaker 2: this document, please rule against me and seize my assets.

1436
01:14:47,520 --> 01:14:50,040
Speaker 2: So the lender would be holding that document and if

1437
01:14:50,040 --> 01:14:50,519
Speaker 2: they ever.

1438
01:14:50,560 --> 01:14:53,120
Speaker 1: Dated or undated, because if you're getting the loan on

1439
01:14:53,760 --> 01:14:57,760
Speaker 1: October first and the confession of judgment is dated October first,

1440
01:14:57,760 --> 01:14:58,759
Speaker 1: seems a little sketchy.

1441
01:14:58,960 --> 01:15:01,679
Speaker 2: They had all that cover. The wording was not exactly

1442
01:15:01,720 --> 01:15:03,720
Speaker 2: how I just said it. It was it all. It

1443
01:15:03,720 --> 01:15:06,920
Speaker 2: would all get stamped. It would be the point of

1444
01:15:06,920 --> 01:15:09,280
Speaker 2: the series is this was legal. You could do this.

1445
01:15:09,439 --> 01:15:12,080
Speaker 2: You could take it to court. So what would happen

1446
01:15:12,160 --> 01:15:15,839
Speaker 2: is the bodega misses a payment and yeah, the lender

1447
01:15:15,880 --> 01:15:19,080
Speaker 2: goes to court with this document no warning. They get

1448
01:15:19,080 --> 01:15:22,240
Speaker 2: it stamped because you already signed it. And then, amazingly,

1449
01:15:22,840 --> 01:15:27,879
Speaker 2: the lender could take this document to New York City Marshall,

1450
01:15:28,240 --> 01:15:31,760
Speaker 2: who was like a sheriff sheriff, and that sheriff would

1451
01:15:31,800 --> 01:15:35,479
Speaker 2: then fact something to the bank where the bodega has

1452
01:15:35,520 --> 01:15:39,000
Speaker 2: a bank account and get the whole fifteen thousand right there.

1453
01:15:39,400 --> 01:15:41,720
Speaker 2: So instead of waiting two months to get your you

1454
01:15:41,840 --> 01:15:44,200
Speaker 2: serious return, you get it in like a week or

1455
01:15:44,240 --> 01:15:47,479
Speaker 2: two if the bodega missed a payment, or even if

1456
01:15:47,479 --> 01:15:49,439
Speaker 2: you just claim they did, because there's no chance for

1457
01:15:49,479 --> 01:15:50,280
Speaker 2: them to contest it.

1458
01:15:50,439 --> 01:15:50,639
Speaker 1: Wow.

1459
01:15:50,760 --> 01:15:53,880
Speaker 2: So me and my colleague Zach Miterer did a series

1460
01:15:53,920 --> 01:15:57,960
Speaker 2: about this. We wrote about a bunch of crazy characters

1461
01:15:58,000 --> 01:16:02,799
Speaker 2: who were exploiting this loophole, and New York State passed

1462
01:16:02,800 --> 01:16:05,519
Speaker 2: the law closing this loophole. After that, they moved to

1463
01:16:05,560 --> 01:16:08,679
Speaker 2: Connecticut and started doing it there. We exposed that loophole,

1464
01:16:08,720 --> 01:16:11,640
Speaker 2: Connecticut passed the law closing the loophole. I'm sure they

1465
01:16:11,640 --> 01:16:12,439
Speaker 2: found a new state.

1466
01:16:12,680 --> 01:16:15,240
Speaker 1: So how did you talk about a thread to pull?

1467
01:16:15,520 --> 01:16:16,439
Speaker 1: How did you find this?

1468
01:16:16,800 --> 01:16:20,200
Speaker 2: I was writing about these crooked brokers and I was

1469
01:16:20,240 --> 01:16:22,439
Speaker 2: doing I did a kind of fun story about how

1470
01:16:22,760 --> 01:16:24,519
Speaker 2: it was around the time The Wolf of Wall Street

1471
01:16:24,560 --> 01:16:26,599
Speaker 2: came out, and it was the point of the story

1472
01:16:26,720 --> 01:16:28,120
Speaker 2: was sort of like these guys are down on their

1473
01:16:28,200 --> 01:16:31,040
Speaker 2: luck and like the cold calling business is no good anymore.

1474
01:16:32,520 --> 01:16:34,360
Speaker 2: And a lot of these guys so I was spent

1475
01:16:34,400 --> 01:16:38,559
Speaker 2: a long time taking them out for you know, stakes

1476
01:16:38,600 --> 01:16:42,800
Speaker 2: at Harry's or whatever downtown, and they a lot of

1477
01:16:42,800 --> 01:16:46,000
Speaker 2: them told me they'd gotten into this cash advanced business. Finally,

1478
01:16:46,040 --> 01:16:48,360
Speaker 2: I was like, what is this cash advanced business that

1479
01:16:48,400 --> 01:16:48,960
Speaker 2: you're all doing?

1480
01:16:48,960 --> 01:16:50,439
Speaker 3: Now? This might be kind of interesting.

1481
01:16:51,040 --> 01:16:53,479
Speaker 2: And one of the first guys I met in it,

1482
01:16:53,760 --> 01:16:56,080
Speaker 2: this is back in like twenty fourteen. I went to

1483
01:16:56,120 --> 01:16:58,640
Speaker 2: this guy's office. So the Financial district like it's like

1484
01:16:58,680 --> 01:17:01,400
Speaker 2: the it's got the low office rents in New York.

1485
01:17:01,640 --> 01:17:04,000
Speaker 2: These offices are like dumps. I go to this guy.

1486
01:17:04,160 --> 01:17:05,920
Speaker 1: It's a Wall Street address, right.

1487
01:17:05,920 --> 01:17:08,479
Speaker 2: So I go to this guy's office who runs this

1488
01:17:08,520 --> 01:17:12,160
Speaker 2: thing called Pearl Capital. I meet this guy named Abe

1489
01:17:12,520 --> 01:17:16,280
Speaker 2: runs Pearl Capital, and it's one of these cash advands

1490
01:17:16,280 --> 01:17:19,800
Speaker 2: outfits that charge like five hundred percent interest. And it's

1491
01:17:19,840 --> 01:17:22,320
Speaker 2: like this dumpy office with like cases of red bulls

1492
01:17:22,320 --> 01:17:22,880
Speaker 2: stacked up.

1493
01:17:23,080 --> 01:17:25,920
Speaker 1: They're not wasting money on marble and walnut.

1494
01:17:26,200 --> 01:17:26,920
Speaker 3: No, no, no.

1495
01:17:27,160 --> 01:17:30,600
Speaker 2: And I meet one of his his minions, who is

1496
01:17:30,640 --> 01:17:33,400
Speaker 2: like eighteen years old. He had this He has his

1497
01:17:33,479 --> 01:17:36,040
Speaker 2: minion give me a ride home. The guy's driving like

1498
01:17:36,120 --> 01:17:40,840
Speaker 2: a V twelve Mercedes. He has this like high school

1499
01:17:40,960 --> 01:17:45,400
Speaker 2: dropout who can with this thick Brooklyn accent. And as

1500
01:17:45,400 --> 01:17:48,120
Speaker 2: he drives me home in his one hundred thousand dollars car.

1501
01:17:48,479 --> 01:17:52,160
Speaker 2: He's calling these bodega owners and being like, you're laid

1502
01:17:52,160 --> 01:17:54,680
Speaker 2: on your payment, and I'm just like, what is with

1503
01:17:54,920 --> 01:17:57,960
Speaker 2: these guys? And so Abe told me, you see my

1504
01:17:58,040 --> 01:18:01,280
Speaker 2: empire here with like the staying I'm going to sell

1505
01:18:01,320 --> 01:18:03,800
Speaker 2: this company to like a hedge fund. We're making so

1506
01:18:03,920 --> 01:18:05,960
Speaker 2: much money. I'm going to make a hundred million dollars.

1507
01:18:06,120 --> 01:18:06,960
Speaker 2: I'm gonna be rich.

1508
01:18:07,479 --> 01:18:11,160
Speaker 1: Just just don't tell any of that to an investigative

1509
01:18:11,200 --> 01:18:14,280
Speaker 1: reporter from Business Week, and you might have something left

1510
01:18:14,280 --> 01:18:14,639
Speaker 1: to sell.

1511
01:18:15,000 --> 01:18:15,200
Speaker 3: Well.

1512
01:18:15,400 --> 01:18:17,599
Speaker 2: So he did tell me that, and then I was like,

1513
01:18:18,080 --> 01:18:20,040
Speaker 2: I was newer at this, so I wasn't quite sure

1514
01:18:20,040 --> 01:18:22,479
Speaker 2: how to do the story. But then one day I

1515
01:18:22,560 --> 01:18:28,040
Speaker 2: obtained a letter and it said, dear Abe, we would

1516
01:18:28,080 --> 01:18:33,400
Speaker 2: like to buy your company for a hundred million dollars, sincerely,

1517
01:18:33,439 --> 01:18:34,200
Speaker 2: Goldman Sachs.

1518
01:18:34,400 --> 01:18:36,360
Speaker 1: Get out yes, and did he sell?

1519
01:18:37,040 --> 01:18:39,120
Speaker 2: He did sell. He didn't get quite a hundred million.

1520
01:18:39,240 --> 01:18:41,879
Speaker 2: He sold to a different company, and he had actually

1521
01:18:42,240 --> 01:18:44,439
Speaker 2: he moved. He did the Puerto Rico tax thing, right.

1522
01:18:44,520 --> 01:18:46,240
Speaker 1: But you talked about in the book, By the way,

1523
01:18:46,400 --> 01:18:50,519
Speaker 1: what is it about Puerto Rico, Miami, Bahamas? All these

1524
01:18:50,560 --> 01:18:53,799
Speaker 1: fraudsters they like warm weather. What's that about.

1525
01:18:54,080 --> 01:18:56,200
Speaker 2: You can actually, you can get out of all your

1526
01:18:56,240 --> 01:18:58,920
Speaker 2: taxes by moving her company and yourself to.

1527
01:18:58,840 --> 01:19:02,920
Speaker 1: Puerto Rico for Puerto Rican tax rate. That's all you are.

1528
01:19:03,000 --> 01:19:06,360
Speaker 2: Yeah, no federal tax, capital Dames tax. Yeah, but you

1529
01:19:06,439 --> 01:19:08,920
Speaker 2: have to live in Puerto Rico for more than half

1530
01:19:08,920 --> 01:19:09,280
Speaker 2: the year.

1531
01:19:09,600 --> 01:19:12,080
Speaker 1: So if you don't want to pay New York state tax,

1532
01:19:12,560 --> 01:19:14,760
Speaker 1: New York doesn't care where you live as long as

1533
01:19:14,760 --> 01:19:17,720
Speaker 1: you're not in New York for more than half the year.

1534
01:19:17,800 --> 01:19:20,280
Speaker 1: Puerto Rico is saying, no, you have to be here,

1535
01:19:21,360 --> 01:19:25,040
Speaker 1: rainy season, hots it whatever. Yeah, half a year and

1536
01:19:25,120 --> 01:19:25,439
Speaker 1: a day.

1537
01:19:25,760 --> 01:19:27,719
Speaker 2: And so it takes like a certain kind of person

1538
01:19:27,800 --> 01:19:31,400
Speaker 2: who's so concerned about maximizing their money that they're willing

1539
01:19:31,439 --> 01:19:31,880
Speaker 2: to do that.

1540
01:19:32,720 --> 01:19:35,000
Speaker 1: Why would you want to live someplace if you could

1541
01:19:35,040 --> 01:19:35,720
Speaker 1: afford not to.

1542
01:19:36,080 --> 01:19:38,479
Speaker 2: Well, this this ave guy, he had a funny he

1543
01:19:38,600 --> 01:19:42,000
Speaker 2: was a great character. At one point, James Franco was

1544
01:19:42,000 --> 01:19:43,720
Speaker 2: talking to him about playing him in the movie. That

1545
01:19:43,760 --> 01:19:47,240
Speaker 2: didn't help really, but he said he so he grew

1546
01:19:47,320 --> 01:19:49,719
Speaker 2: up poor in Brooklyn. He was from this big family

1547
01:19:50,080 --> 01:19:53,360
Speaker 2: and he said that, you know, like riding the subway

1548
01:19:53,479 --> 01:19:55,200
Speaker 2: was a treat because the parents weren't going to pay

1549
01:19:55,240 --> 01:19:58,599
Speaker 2: like twenty bucks to swipe everybody in, right, And he

1550
01:19:58,680 --> 01:20:00,719
Speaker 2: was like, when I was younger, when I was poor,

1551
01:20:01,400 --> 01:20:03,479
Speaker 2: if you asked me, I would have said, what's the

1552
01:20:03,520 --> 01:20:06,280
Speaker 2: difference between ten million dollars and one hundred million dollars?

1553
01:20:06,640 --> 01:20:08,600
Speaker 2: And he's like, now that I got it, I know

1554
01:20:08,640 --> 01:20:11,160
Speaker 2: there's a difference, and like he really wanted to get

1555
01:20:11,160 --> 01:20:13,040
Speaker 2: to that next level.

1556
01:20:13,240 --> 01:20:16,880
Speaker 1: That's really interesting. All right, So I only have you

1557
01:20:17,000 --> 01:20:20,080
Speaker 1: for a few more minutes. Let me jump to my

1558
01:20:20,200 --> 01:20:23,960
Speaker 1: favorite questions. We'll kind of make this a speed round,

1559
01:20:24,080 --> 01:20:27,240
Speaker 1: starting with what have you been streaming? Tell us some

1560
01:20:27,320 --> 01:20:31,960
Speaker 1: of your favorite Netflix, Amazon Prime, or even podcasts you

1561
01:20:32,040 --> 01:20:32,360
Speaker 1: listen to.

1562
01:20:32,880 --> 01:20:38,879
Speaker 2: So my recommendation is a series of Korean action movies.

1563
01:20:38,920 --> 01:20:39,880
Speaker 2: I love action movies.

1564
01:20:39,960 --> 01:20:41,639
Speaker 1: Oh really, It's.

1565
01:20:41,479 --> 01:20:43,880
Speaker 2: Called The one that I like the best is called

1566
01:20:43,880 --> 01:20:47,719
Speaker 2: The Roundup. That's entry number two in the Crime City series,

1567
01:20:48,200 --> 01:20:51,599
Speaker 2: and it stars this guy down Lee, and he plays

1568
01:20:51,680 --> 01:20:55,000
Speaker 2: he's like the prototypical cop from like an eighties nineties

1569
01:20:55,040 --> 01:20:58,479
Speaker 2: action movie, where like he doesn't follow the rules, but

1570
01:20:58,479 --> 01:21:00,880
Speaker 2: he always gets his guy right. You know, he's always

1571
01:21:00,960 --> 01:21:03,840
Speaker 2: like beating up the suspect instead of you know, asking

1572
01:21:03,880 --> 01:21:06,840
Speaker 2: him the questions, like the other cops do. And it's

1573
01:21:06,840 --> 01:21:09,519
Speaker 2: got it's funny, it's got great action scenes.

1574
01:21:10,680 --> 01:21:11,240
Speaker 3: I love it.

1575
01:21:11,400 --> 01:21:13,880
Speaker 1: Yes title or you watch it dubbed.

1576
01:21:14,000 --> 01:21:17,400
Speaker 2: You gotta get subtitles. And I'm waiting there's the roundup.

1577
01:21:17,560 --> 01:21:20,519
Speaker 2: Three is out. It came out in theaters, but you

1578
01:21:20,520 --> 01:21:23,320
Speaker 2: can't stream it yet, so I'm waiting for for number three.

1579
01:21:23,479 --> 01:21:25,720
Speaker 1: All right, so let's talk about your early mentors who

1580
01:21:25,800 --> 01:21:27,679
Speaker 1: helped shape your career.

1581
01:21:28,080 --> 01:21:32,559
Speaker 2: My first job as a reporter was at a paper

1582
01:21:32,600 --> 01:21:34,719
Speaker 2: called the Brooklyn Paper. It was like a free weekly

1583
01:21:34,760 --> 01:21:37,400
Speaker 2: you got at the supermarket. I was an unpaid intern.

1584
01:21:37,800 --> 01:21:41,559
Speaker 2: My boss was Gersh Kuntsman, and he was like a

1585
01:21:41,600 --> 01:21:44,160
Speaker 2: tabloid guy he'd worked at the Post. He was an

1586
01:21:44,200 --> 01:21:48,160
Speaker 2: amazing mentor because he was he was a very tough editor,

1587
01:21:48,200 --> 01:21:51,840
Speaker 2: and he insisted that each of the stories be interesting,

1588
01:21:52,080 --> 01:21:54,920
Speaker 2: like we couldn't, we wouldn't. There was no like meandering.

1589
01:21:55,200 --> 01:21:57,479
Speaker 2: The story had to have a point right before when

1590
01:21:57,520 --> 01:21:58,920
Speaker 2: you pitch the story, had to think of like what

1591
01:21:58,960 --> 01:22:01,280
Speaker 2: the headline would be and why anybody would care about this?

1592
01:22:01,680 --> 01:22:05,200
Speaker 2: He even if you came back. I was working for

1593
01:22:05,280 --> 01:22:08,599
Speaker 2: him when Obama won and he was like, all right,

1594
01:22:08,640 --> 01:22:10,920
Speaker 2: go find some people who are happy. About this interview

1595
01:22:10,960 --> 01:22:12,760
Speaker 2: him come back with some quotes, and I think it

1596
01:22:12,800 --> 01:22:14,920
Speaker 2: was rainy, so I spent like a couple hours out

1597
01:22:14,920 --> 01:22:17,120
Speaker 2: in the rain, stopping people on their way home from

1598
01:22:17,200 --> 01:22:18,760
Speaker 2: work and being like, what do you think about this?

1599
01:22:19,120 --> 01:22:21,320
Speaker 2: You know, not like the most fun assignment. I came

1600
01:22:21,360 --> 01:22:23,200
Speaker 2: back with what I thought were some pretty good quotes,

1601
01:22:23,520 --> 01:22:26,320
Speaker 2: and he was like, those quotes are boring. Get back

1602
01:22:26,320 --> 01:22:29,000
Speaker 2: out there, and like. I didn't like it at the time,

1603
01:22:29,120 --> 01:22:32,160
Speaker 2: especially because I was not getting paid, but I think

1604
01:22:32,200 --> 01:22:34,680
Speaker 2: that that's a It's true. You got to put in

1605
01:22:34,720 --> 01:22:36,880
Speaker 2: the time in this crypto world. I spent day after

1606
01:22:36,960 --> 01:22:37,920
Speaker 2: day talking to these guys.

1607
01:22:38,120 --> 01:22:41,400
Speaker 1: You you must have been twenty countries in the book.

1608
01:22:41,800 --> 01:22:43,599
Speaker 1: I mean, you traveled all around the world.

1609
01:22:43,800 --> 01:22:45,599
Speaker 2: I really thought, all right, it's my first book.

1610
01:22:45,760 --> 01:22:46,200
Speaker 3: I don't know.

1611
01:22:46,520 --> 01:22:48,639
Speaker 2: I don't want to disappoint anybody. I want the reader

1612
01:22:48,680 --> 01:22:50,559
Speaker 2: to feel like I did my best. I went to

1613
01:22:50,600 --> 01:22:53,360
Speaker 2: look at everything I could think of, and like, any

1614
01:22:53,439 --> 01:22:55,800
Speaker 2: questions you had, I really did my best to go

1615
01:22:56,040 --> 01:22:58,360
Speaker 2: to Cambodia to answer them, or to El Salvador to

1616
01:22:58,360 --> 01:23:01,040
Speaker 2: see if, like this bitcoin experiment it was real. So

1617
01:23:01,160 --> 01:23:03,160
Speaker 2: maybe some part of that came from Gersh telling me

1618
01:23:03,320 --> 01:23:06,360
Speaker 2: quotes are boring. Get back out there to the subway station,

1619
01:23:06,479 --> 01:23:08,000
Speaker 2: ask people about the election.

1620
01:23:08,439 --> 01:23:11,040
Speaker 1: So let's talk about some other books. What are you

1621
01:23:11,120 --> 01:23:13,080
Speaker 1: reading and what are some of your favorites.

1622
01:23:13,400 --> 01:23:16,320
Speaker 2: My picks are there's a pretty mainstream because the kind

1623
01:23:16,360 --> 01:23:18,280
Speaker 2: of book that I wrote is the kind of book

1624
01:23:18,320 --> 01:23:21,280
Speaker 2: that I love. Like when I was a teenager, I

1625
01:23:21,320 --> 01:23:26,240
Speaker 2: always I loved these crazy nonfiction adventures. So that was

1626
01:23:26,360 --> 01:23:31,080
Speaker 2: like Into thin Air by John Krakauer or The Perfect Storm,

1627
01:23:31,479 --> 01:23:35,479
Speaker 2: or I loved Bringing Down the House by Ben Mezrich

1628
01:23:35,920 --> 01:23:38,880
Speaker 2: about the Mit Blackjack Kids. And I still love that

1629
01:23:38,960 --> 01:23:41,720
Speaker 2: kind of book, like David gran The Last City of

1630
01:23:41,840 --> 01:23:45,920
Speaker 2: z or Patrick Rading Keith. I just I love these

1631
01:23:45,960 --> 01:23:49,960
Speaker 2: like true stories that are too crazy to believe.

1632
01:23:50,720 --> 01:23:56,720
Speaker 1: Have you ever read Endurance the Shackleford story. No, that

1633
01:23:56,840 --> 01:23:59,000
Speaker 1: put that at the top of your list. The book

1634
01:23:59,040 --> 01:24:01,599
Speaker 1: has to be true because if it was fiction, people

1635
01:24:01,600 --> 01:24:03,719
Speaker 1: would throw it away and say, this is just too

1636
01:24:04,200 --> 01:24:07,360
Speaker 1: not believable. If you like Into thin Air, oh this

1637
01:24:07,400 --> 01:24:10,160
Speaker 1: is the book that started that genre. It's insane.

1638
01:24:10,240 --> 01:24:11,880
Speaker 3: Oh nice, I will check it out.

1639
01:24:11,960 --> 01:24:14,760
Speaker 1: So that's a good I have a more often.

1640
01:24:14,520 --> 01:24:17,040
Speaker 2: One that you might you might want to check out

1641
01:24:17,120 --> 01:24:21,320
Speaker 2: is called The Tiger by John Valiant, and it's about

1642
01:24:21,360 --> 01:24:24,000
Speaker 2: like a killer tiger in Siberia.

1643
01:24:24,360 --> 01:24:24,519
Speaker 3: Huh.

1644
01:24:24,560 --> 01:24:27,040
Speaker 2: And the guys who like they're guys who are like

1645
01:24:27,120 --> 01:24:29,519
Speaker 2: tiger detectives who have to go find the killer tiger

1646
01:24:29,560 --> 01:24:31,559
Speaker 2: are all true, right, I mean, one of the best

1647
01:24:31,560 --> 01:24:35,679
Speaker 2: of nonfiction books of this genre. Right now, I'm reading

1648
01:24:35,720 --> 01:24:39,719
Speaker 2: a lot of Diary of a Wimpy Kid to my children.

1649
01:24:39,800 --> 01:24:42,080
Speaker 2: I have twins who are six, right, and my son

1650
01:24:42,520 --> 01:24:45,759
Speaker 2: loves this serious Diary of the Wimpy Kid. Actually very boring.

1651
01:24:45,800 --> 01:24:49,200
Speaker 2: I don't like it. I actually like children's books a

1652
01:24:49,200 --> 01:24:51,559
Speaker 2: lot of the time, but these Wimpy Kid books, it's

1653
01:24:51,600 --> 01:24:52,720
Speaker 2: the number one children's book.

1654
01:24:52,720 --> 01:24:53,680
Speaker 3: They're super regular.

1655
01:24:54,040 --> 01:24:56,800
Speaker 2: They're just like it's a it's a kid's diary, you know,

1656
01:24:56,960 --> 01:24:59,880
Speaker 2: it's it's a little repetitive. There's like twenty of them,

1657
01:25:00,120 --> 01:25:02,559
Speaker 2: almost to the end. But then they eli said, we're

1658
01:25:02,560 --> 01:25:03,679
Speaker 2: going to start back at the beginning.

1659
01:25:04,920 --> 01:25:09,440
Speaker 1: No good. So let's get to our last two questions.

1660
01:25:09,880 --> 01:25:12,360
Speaker 1: What sort of advice would you give to a recent

1661
01:25:12,400 --> 01:25:15,920
Speaker 1: college grad who was interested in a career in journalism,

1662
01:25:16,080 --> 01:25:20,960
Speaker 1: investigative reporting, finance, or crypto. What would you suggest to them.

1663
01:25:20,920 --> 01:25:23,960
Speaker 2: If you get into financial journalism, one thing I didn't

1664
01:25:24,040 --> 01:25:28,360
Speaker 2: really understand is that finance guys, a lot of them

1665
01:25:28,479 --> 01:25:31,080
Speaker 2: are on their on the phone all day. They're just

1666
01:25:31,160 --> 01:25:33,680
Speaker 2: gossiping with their buddies, and you can like get in

1667
01:25:33,720 --> 01:25:36,360
Speaker 2: the mix. And if you just act like you belong,

1668
01:25:36,720 --> 01:25:38,639
Speaker 2: you can call these guys up and be like, hey,

1669
01:25:39,080 --> 01:25:41,479
Speaker 2: did you hear about Jill at Goldman Sachs, Like I

1670
01:25:41,520 --> 01:25:43,800
Speaker 2: heard she took a big loss last week, And they'll

1671
01:25:43,920 --> 01:25:45,800
Speaker 2: talk about it with Happy to Dish. You know, they're

1672
01:25:45,840 --> 01:25:48,080
Speaker 2: talking with their friends about the same stuff. If you

1673
01:25:48,080 --> 01:25:50,559
Speaker 2: don't act super official and you just feel like you're

1674
01:25:50,600 --> 01:25:53,160
Speaker 2: part of the mix, people will talk to you about

1675
01:25:53,160 --> 01:25:54,200
Speaker 2: what's going on at work.

1676
01:25:54,040 --> 01:25:56,320
Speaker 1: Because now you let them in on the secret method.

1677
01:25:56,840 --> 01:25:58,120
Speaker 3: Yeah, go for it.

1678
01:25:59,200 --> 01:26:01,479
Speaker 1: That's amazing. And finally, what do you know about the

1679
01:26:01,520 --> 01:26:06,600
Speaker 1: world of again investigative journalism, reporting, or finance today? You

1680
01:26:06,600 --> 01:26:08,599
Speaker 1: wish you knew? I don't know, when did you begin

1681
01:26:08,640 --> 01:26:10,679
Speaker 1: your career, like fifteen twenty years ago?

1682
01:26:11,000 --> 01:26:11,680
Speaker 3: That's about right.

1683
01:26:11,760 --> 01:26:14,680
Speaker 2: Yeah, There's one thing about the world of crypto that

1684
01:26:14,720 --> 01:26:16,679
Speaker 2: I wish I knew when I started this book, which

1685
01:26:16,880 --> 01:26:20,360
Speaker 2: is that number goes up, numbergo I actually wish I

1686
01:26:20,439 --> 01:26:24,439
Speaker 2: knew that. Alameda Research Sam bank, mcfred's head fund was

1687
01:26:24,479 --> 01:26:28,200
Speaker 2: secretly borrowing all the customer money from FTX cause I'm

1688
01:26:28,200 --> 01:26:30,360
Speaker 2: still kicking myself that I didn't catch this guy. That

1689
01:26:30,400 --> 01:26:31,800
Speaker 2: could have been like my claim to fame.

1690
01:26:32,000 --> 01:26:34,840
Speaker 1: Really interesting stuff. Thanks Zeke for being so generous with

1691
01:26:34,880 --> 01:26:38,400
Speaker 1: your time. We have been speaking with Zeke Fox, author

1692
01:26:38,600 --> 01:26:43,080
Speaker 1: of Number Go Up, Inside Crypto's Wild Ride and Staggering Fall.

1693
01:26:43,680 --> 01:26:46,640
Speaker 1: If you enjoy this conversation, check out on any of

1694
01:26:46,640 --> 01:26:50,160
Speaker 1: the previous five hundred or so discussions we've had over

1695
01:26:50,200 --> 01:26:56,240
Speaker 1: the past nine years. You can find those at iTunes, Spotify, YouTube,

1696
01:26:56,280 --> 01:27:00,320
Speaker 1: wherever you find your favorite podcast. Sign up for my

1697
01:27:00,479 --> 01:27:03,320
Speaker 1: daily reading list at rid Helts dot com. Follow me

1698
01:27:03,400 --> 01:27:07,240
Speaker 1: on Twitter at Ridholts. Follow all of the Bloomberg Family

1699
01:27:07,280 --> 01:27:11,639
Speaker 1: of podcasts on Twitter at podcast. I would be remiss

1700
01:27:11,640 --> 01:27:14,000
Speaker 1: if I did not thank the crack team who puts

1701
01:27:14,000 --> 01:27:18,400
Speaker 1: these conversations together each week. Rich Subnani is my audio

1702
01:27:18,479 --> 01:27:22,599
Speaker 1: engineer at Tika of Albrond is my project manager. Anna

1703
01:27:22,680 --> 01:27:26,920
Speaker 1: Luke is my producer. Sean Russo is my researcher. I'm

1704
01:27:26,960 --> 01:27:30,840
Speaker 1: Barry Ridholts. You've been listening to Masters in Business on

1705
01:27:30,960 --> 01:27:33,520
Speaker 1: Bloomberg Radio.