Speaker 1: Hello, Olins fans. This is a special episode of the
Speaker 1: podcast that was recorded June AIDHS at the Bloomberg In Conference.
Speaker 1: Our guest Ben mackenzie. He's a well known actor. You
Speaker 1: might remember him from the oc and he's the author
Speaker 1: of a forthcoming book called Easy Money about his journey
Speaker 1: into the world of cryptocurrency. Hello, and welcome to another
Speaker 1: episode of the Odd Lots Podcast. I'm Joe Wisenthal and
Speaker 1: I'm Tracy Alloway. Tracy, you know that intro video they showed,
Speaker 1: you know, use our line the perfect guest, But this week,
Speaker 1: of all weeks, we have a really good guest.
Speaker 2: Yeah, this week it's actually true. We're going to be
Speaker 2: talking crypto actually with someone who you wouldn't necessarily expect
Speaker 2: to be the perfect guest to discuss crypto.
Speaker 3: No, but he is.
Speaker 1: So obviously this week we're recording it the same week
Speaker 1: after the SEC filed suits against both coinbase and Binance,
Speaker 1: So we're going to be speaking with Ben McKenzie, a
Speaker 1: well known actor and the author of the forthcoming book
Speaker 1: Easy Money, Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud. Ben,
Speaker 1: thank you so much for joining us. How did you
Speaker 1: arrange that sort of like from a pr standpoint, that
Speaker 1: you got the government to file suits against Coinbase and
Speaker 1: Finance as a lead up to your book.
Speaker 3: That's very well done. Yeah yeah, I had nothing to
Speaker 3: do with it. OK, very grateful.
Speaker 4: And if they could just hold off on any DOJ
Speaker 4: pending action and to just wait.
Speaker 2: Until wonderful, you're going to have to keep rewriting the epilogue.
Speaker 2: I think, well, why don't I ask the obvious question,
Speaker 2: which is how does an actor get into the profession
Speaker 2: or hobby of investigating cryptocurrencies?
Speaker 3: Sure, there's a longer answer.
Speaker 4: The shorter answer is a sort of a mid mini
Speaker 4: midlife crisis, like a just sort of a It was
Speaker 4: the fall of twenty twenty. It was the height of
Speaker 4: the pandemic, and I came down with a serious case
Speaker 4: of fomo.
Speaker 3: I saw all these knuckleheads getting rich, and I thought, hey,
Speaker 3: maybe I should, you know, try to try to get
Speaker 3: rich as well. In a roundabout way. That that led
Speaker 3: me to crypto.
Speaker 4: A very good friend of mine who in my twenties
Speaker 4: encouraged encouraged me to invest in an obscure medical device
Speaker 4: company that was going to create synthetic blood and it
Speaker 4: was going to make a ton of money. A random
Speaker 4: guy at a wedding had assured him so, and so
Speaker 4: we definitely needed to invest in this. I put money
Speaker 4: into it and promptly lost almost all of it. Might
Speaker 4: have been a penny penny stock pumping up. Anyway, that
Speaker 4: same friend came back to me in twenty twenty one
Speaker 4: and said, you gotta buy.
Speaker 3: Bitcoin, and I thought, hmm, I wonder what.
Speaker 4: Is this cryptocurrency stuff. So I have a degree in
Speaker 4: economics from the University of Virginia. It's about twenty years old.
Speaker 4: So I dusted that off and I ended up writing
Speaker 4: this book. So as to why I'm here, I would
Speaker 4: say the book is really it's really.
Speaker 3: About money and lying, right. And I know about.
Speaker 4: Money because a little bit because I have an econ
Speaker 4: degree and it made a little bit up two decades
Speaker 4: of show essence. But I know about lying because I'm
Speaker 4: an actor and I do it for a living. And
Speaker 4: so when cryptocurrencies were calling themselves currencies, the first thing
Speaker 4: I bumped up on was the word. You know, as
Speaker 4: an actor and a storyteller, where it's are our tools,
Speaker 4: and they can be used for a variety of purposes.
Speaker 4: Some of them are honorable and some of them not.
Speaker 4: And although bitcoin, of course was intended to be a currency,
Speaker 4: and that was the intention supposedly of Soatoshi Nakamoto, it
Speaker 4: never really functioned that way, right, and it certainly wasn't
Speaker 4: functioning that way in twenty twenty, twenty twenty one, at
Speaker 4: the height of the mania.
Speaker 3: So that's where I started, like, these are our currencies?
Speaker 3: So what are that?
Speaker 1: So the friend came and you already had to be okay,
Speaker 1: this is the guy who lost you a bunch of money. Yeah,
Speaker 1: so rather than because you said you in fomo, so
Speaker 1: a lot of people like they just went out and
Speaker 1: bought when your first instinct was like a brush.
Speaker 3: Off the old economics books.
Speaker 1: Yeah, but what where where did you see? Okay, so
Speaker 1: you like plow your money into crypto at the top. No,
Speaker 1: but that's still like like, how did you sort of
Speaker 1: begin your exploration of this industry?
Speaker 3: Short?
Speaker 4: Well, I read a lot of so first I needed
Speaker 4: to understand, like, okay, where were we in in twenty
Speaker 4: twenty one? I very quickly came to the conclusion we
Speaker 4: were in a bubble, you know, a fairly obvious bubble
Speaker 4: perhaps retrospect, But the book is called easy money, not
Speaker 4: just because of this fake money called cryptocurrency, but also
Speaker 4: because of the easy money policies that have been around
Speaker 4: since the GFC, and that went nuts, you know, during
Speaker 4: the response to the pandemic, trillions of dollars jumped into
Speaker 4: the economy, and by the time I was thinking about
Speaker 4: entering the market, everything had gone crazy. So I took
Speaker 4: Gary Gensler, the head of the set, taught this course
Speaker 4: in MIT on blockchain and crypto, and it was available
Speaker 4: for free online. And again I had a lot of
Speaker 4: time on my hands, so I took that.
Speaker 3: I read a.
Speaker 4: Bunch, and I just I was stuck with the feeling
Speaker 4: that so fraud, historically speaking, runs rampant during easy money times,
Speaker 4: during bubble times for fairly obvious reasons. Right when there's
Speaker 4: access easy access to money and credit, people speculate wildly
Speaker 4: in term in search of high returns. Some of those,
Speaker 4: you know, innovative technologies are truly innovative, and people make
Speaker 4: a ton of money, but some of them are fraud.
Speaker 4: Charles Kendelberger's studied this, you know, extensively, and so I
Speaker 4: felt like there probably was a lot of fraud, and
Speaker 4: that became kind of a pandemic hobby of mine, you know,
Speaker 4: betting against fraudulent companies and stuff like that. And around
Speaker 4: that same time, my friend Dave came to me and said,
Speaker 4: bitcoin is is the Bee's knees. And I was troubled
Speaker 4: by by bitcoin and crypto because it was everywhere and
Speaker 4: the celebrities were selling it, and it was you know,
Speaker 4: this super Bowl was going to feature it heavily. And
Speaker 4: I thought, look, if I'm right, and maybe I wasn't.
Speaker 4: If I'm right, this is something like the biggest Ponzi
Speaker 4: scheme in history. That troubled me. So I was actually
Speaker 4: reading my daughter the Emperor's New Clothes. My daughter is, yeah,
Speaker 4: it sounds made up, and I probably subconscious I was
Speaker 4: probably intending like I was, like, you know, but I
Speaker 4: did see it on this shelf and it did happen organically.
Speaker 3: She was six at the time.
Speaker 4: And I remember the gist of the story, but I
Speaker 4: had forgotten a couple of points. The first, the tailor's
Speaker 4: trick everyone basically an appeal to ego and statush worship. Right,
Speaker 4: only the smartest people can see this, only the people
Speaker 4: of highest station. And the second thing, the thing that
Speaker 4: really stuck with me, was as the at the end
Speaker 4: of the story is the Emperor's gallivanting through town naked,
Speaker 4: and the adults are pretending not to notice. It's a
Speaker 4: child who calls out scam. It's the only person brave
Speaker 4: enough to call truth is he doesn't know he's being brave,
Speaker 4: He's simply speaking the truth. Well, it was hard not
Speaker 4: to see myself as the child in that metaphor, right, Like,
Speaker 4: what the heck do I know? I'm just an actor.
Speaker 4: I have an undergraduate degree in economics twenty years old.
Speaker 3: But I don't know.
Speaker 4: Maybe I'm right right, like like, and how often in
Speaker 4: life do you get a chance to have an adventure?
Speaker 4: So I got high. I got my medical marijuana card
Speaker 4: over the pandemic because you know, I like alcohol, but
Speaker 4: like there's a limit, you know what I mean? And right,
Speaker 4: and I was definitely over it. And so I got high,
Speaker 4: and I was like, well, I should.
Speaker 1: Write a book about it's really retro that anyone would
Speaker 1: like go to the now that they literally on the street,
Speaker 1: that someone would go to the effort of like getting.
Speaker 4: A g No, I'm such a like goodie two shoes, right,
Speaker 4: I have my card and I like overpay for my marijuana, like,
Speaker 4: but yeah, I got high, and I was I should
Speaker 4: write a book about about crypto, and which sounded like
Speaker 4: it sounds like a really good idea when you're high.
Speaker 4: The next morning, sober, I realized I didn't know how
Speaker 4: to write a book. So I got high again, and
Speaker 4: I realized this journalist Jacob Silverman had written an article
Speaker 4: that that I really found quite funny. It was called
Speaker 4: even Donald Trump knows Bitcoin as a scam, which was
Speaker 4: basically Trump didn't really criticize crypto until he left office,
Speaker 4: and then he was like a scam. It brought together
Speaker 4: a couple things I've been thinking about, Golden Ajor fraud
Speaker 4: and all that. So I summoned the courage to DM
Speaker 4: him on Twitter as you do. I realized he lived
Speaker 4: in Brooklyn and took him to drinks and said, hey,
Speaker 4: what if we write a book that I don't know
Speaker 4: how to write about events that haven't happened yet, And
Speaker 4: he was going on parental leave, and he foolishly agreed.
Speaker 3: So I love that.
Speaker 2: During the debts of the pandemic, while other people were
Speaker 2: getting high and baking soury dough bread or watching Tiger King,
Speaker 2: you were like, I'm going to launch an all out
Speaker 2: investigation into the cryptocurrency market.
Speaker 3: Well, I'm a weird guy.
Speaker 2: You touched on the easy money aspect of it and
Speaker 2: also the fomo, but can you talk a little bit
Speaker 2: more about, like what is it that makes cryptocurrency so
Speaker 2: attractive to so many people, and particularly one segment of
Speaker 2: the population, it seems, which would be young men. Like,
Speaker 2: what is the you know, the attraction there?
Speaker 4: Well, that's a great that's a great question. So I
Speaker 4: kind of look at as a storyteller. I became fascinated
Speaker 4: by Robert Schiller's work, the Nobel Prizeman Economists, who's talked
Speaker 4: about how economic narratives form and their response to real events. Right,
Speaker 4: and so the Bitcoin white paper's release in October of
Speaker 4: two thousand and eight was at the height of the
Speaker 4: sun Prime crisis, and there was an understandable mistrust of
Speaker 4: legacy financial institutions banks all that banks were even more
Speaker 4: unpopular than they often are, and so the timing was
Speaker 4: perfect to set in motion the notion of a theoretically
Speaker 4: peer to pure currency. It didn't really work, It never
Speaker 4: didn't take off for a while. I think it's just
Speaker 4: sort of I guess to back up the reason that
Speaker 4: I think crypto appealed to so many people in so
Speaker 4: many different ways and so many different types of people
Speaker 4: forty million Americans about crypto is that they could kind
Speaker 4: of see anything in it that they wanted to right.
Speaker 4: I mean, on one level, it's very simple, it's a
Speaker 4: get rich quick scheme. But on another the technology people
Speaker 4: that were interested in sort of like libertarian politics could
Speaker 4: do that. The people that wanted to build It was
Speaker 4: marketed as generational wealth builder, was marketed as a way
Speaker 4: to unbank the bank bank the unbanked, so.
Speaker 2: Also the next big thing on Wall Street at the
Speaker 2: same time.
Speaker 4: Exactly what it was marketed is the future of money,
Speaker 4: and all you needed to invest in the future of
Speaker 4: money was the willingness to part with the current version
Speaker 4: of it. Yeah, so it had a very broad which
Speaker 4: was also one of the reasons why was so skeptical
Speaker 4: of its authenticity was that how can it be all
Speaker 4: of these different things at the same time, and yet
Speaker 4: of course it wasn't the currency, so then what the
Speaker 4: hell was it? Well, it seemed like an investment, right,
Speaker 4: I mean, people are putting real money into it, hoping
Speaker 4: to make real money off of it. That sounds like
Speaker 4: an investment contract to me. So I had to figure out,
Speaker 4: you know, how did biitclin come to be classified as
Speaker 4: a commodity, which is sort of an interesting, sort of
Speaker 4: dorky story. But and then what the heck were these
Speaker 4: twenty thousand other things?
Speaker 3: You know.
Speaker 1: One of the things that's a little bit surprising or
Speaker 1: sort of interesting is that for as much talk about
Speaker 1: crypto that exists, like, it's not that big, Like the
Speaker 1: total value of all the coins I think is the
Speaker 1: total value of all the coins I think is like
Speaker 1: around a trillion dollars supposedly, supposedly, and then like you know,
Speaker 1: we discover you know, and you've you've reported this out
Speaker 1: like it's it's small. There are a lot of people
Speaker 1: who are just like on a group chat together and
Speaker 1: they're all important industry. Can you talk about like how
Speaker 1: big is this industry? How real is this industry?
Speaker 4: In your it's it's much much much smaller than then
Speaker 4: you know that one trillion dollar number for that market cap.
Speaker 3: Number, so and you don't have to take my word
Speaker 3: for it. In March of twenty twenty two, I was
Speaker 3: at south By Southwest.
Speaker 4: It was my first venture into the real world Jacob
Speaker 4: and I had done everything virtually up to that point.
Speaker 4: I ran into a guy named Alex Mashensky. Alex Mashchenski
Speaker 4: was the CEO of a crypto lending firm called Celsius.
Speaker 4: It's now bankrupt. I he agreed to be interviewed. I
Speaker 4: asked him how much real money is in crypto. He
Speaker 4: didn't ask me what real money was. He said ten
Speaker 4: to fifteen percent, said the rest of speculation. Now, in
Speaker 4: March of twenty twenty two, the crypto market cap was
Speaker 4: one point eight trillion dollars, So you know, give or
Speaker 4: take one point five trillion of that.
Speaker 3: Isn't there.
Speaker 4: It's it's speculations, leverage, it's all these other things. At
Speaker 4: Chill ran through my I mean he said, it's sort
Speaker 4: of nonchalantly, but at chill ran through my spine because
Speaker 4: regular people don't understand that. I mean, they think when
Speaker 4: they buy a bitcoin, they had, you know, bitcoins whatever.
Speaker 3: It is twenty six, twenty seven. I had no idea.
Speaker 4: They think they have twenty seven thousand dollars, but in
Speaker 4: a way they actually only have maybe ten or fifteen
Speaker 4: percent of that.
Speaker 3: Maybe if they can get it out, it's not.
Speaker 1: A sorry, sure, explain that if if someone has a
Speaker 1: bitcoin on coinbase or whatever, yeah, what's the twenty eight
Speaker 1: twenty six thousand? True, they could sell that and get
Speaker 1: twenty six thousands. So what do you mean when you
Speaker 1: say there's untill fifteen or twenty.
Speaker 3: Sure.
Speaker 4: Yeah, And that's a very good point, and I do
Speaker 4: want to covey on it. If you're going through a
Speaker 4: licensed exchange, well perhaps not a license exchange, but one
Speaker 4: that's operating as an exchange, and yeah, you're you're, you're,
Speaker 4: You're probably good. And if you're not trying to move
Speaker 4: a lot of money, you're probably good. But the liquidity
Speaker 4: in crypto is very, very low. And Brian Brooks.
Speaker 3: Who was the chief legal officer.
Speaker 4: Of Coinbase and then he was the acting control of
Speaker 4: the currency and then he went to binance US for
Speaker 4: like three months, he testified under oat to Congress about this,
Speaker 4: So you know, you don't have take my word for it.
Speaker 3: Again, like, the liquidity is very little, So how does
Speaker 3: it work?
Speaker 4: Well, most of the volume and crypto runs through the
Speaker 4: overseas exchanges, right, it ran through FTX before it was
Speaker 4: shut down. It's now running through finance or you know,
Speaker 4: finance is the biggest crypto exchange by a country model.
Speaker 4: It's huge, But the question is how much of that
Speaker 4: volume is real. Wash trading is an enormous part of cryptocurrency.
Speaker 4: I mean, you've seen it in the SEC charges against Finance.
Speaker 4: I believe the allegation of their first or second day
Speaker 4: they were set up was that ninety nine percent of
Speaker 4: the volume in the first hours wash trading, seventy percent
Speaker 4: on the first day.
Speaker 3: I've read papers, academic.
Speaker 4: Papers that have surveyed I think they surveyed twenty nine
Speaker 4: different exchanges.
Speaker 3: They found seventy percent wash trading on the unregulated exchanges.
Speaker 3: So it's just not there.
Speaker 4: People are able to create I'm leaving Bitcoin aside for
Speaker 4: the moment. Talking to the other cryptos. People are able
Speaker 4: to create as much crypto as they want. That allows you,
Speaker 4: if you can borrow against it, to create as much
Speaker 4: leverage as you want. When I testified against testified to
Speaker 4: Congress in December, Professor Hillary Allen, professor of American University,
Speaker 4: was on the other side with me.
Speaker 3: Testifying alongside me.
Speaker 4: She wrote a paper in February of twenty twenty two,
Speaker 4: so just a few months before crypto kind of fell
Speaker 4: apart and She compared the dynamics of crypto to the
Speaker 4: subprime crisis, and they're very similar in many ways. Leverage, complexity,
Speaker 4: rigidity plus a bank run.
Speaker 3: Equals a crash.
Speaker 4: The difference is in crypto, the leverage is unlimited because
Speaker 4: you can print as much crypto as you want.
Speaker 3: The complexity is similar.
Speaker 4: You know, these all of these things are so complicated,
Speaker 4: at least theoretically, right, staking pools and protocols and smart
Speaker 4: contracts and blah blah blah blah.
Speaker 3: The rigidity is even worse.
Speaker 4: Because of the things like the smart contracts, and even
Speaker 4: you know, the code itself, it's irreversible. It only moves
Speaker 4: in one direction. So it's a blockchain that can be
Speaker 4: added to but never subtracted from. So when fit hits
Speaker 4: the shan, there's nothing you can do.
Speaker 3: It just blows up.
Speaker 4: And if you combine that criminal activity, you know.
Speaker 3: A lot of people lose a lot of money, but
Speaker 3: not as much money as as clan.
Speaker 2: Can you talk a little bit more about the leverage
Speaker 2: example in the context of specifically I'm thinking about fts, yes, right,
Speaker 2: because they were sort of the trifecta of creating new
Speaker 2: tokens out of nothing, borrowing against them and then also
Speaker 2: potentially allegedly using wash trading to push the value of
Speaker 2: those tokens up so they could get even more credit.
Speaker 3: Exactly exactly right.
Speaker 4: So FTX said this token FTT, and I think you should.
Speaker 4: You know, let's just start with the obvious. You have
Speaker 4: an exchange that's issuing its own token, right, its own
Speaker 4: security basically, right, and as Finance has the same Finance
Speaker 4: has BnB, and.
Speaker 3: It also has its own stable coin b USD. So
Speaker 3: already you've got you know.
Speaker 4: Potential massive conflicts of interest, right. Imagine if the Nasdaq
Speaker 4: like issued its own you know, I mean, we're going
Speaker 4: to trade the stock, We're going to issue the stock.
Speaker 3: We're gonna.
Speaker 4: And another thing that I think was sort of the
Speaker 4: poker chips and the crypto casinos are tethers. Tether is
Speaker 4: the biggest stable coin in crypto by an enormous amount.
Speaker 4: There's supposedly eighty plus billion tethers out there. The biggest
Speaker 4: client of tether, according to protos is Crypto publication, was
Speaker 4: Alometer Research. Alometer Research supposedly bought I think it's thirty
Speaker 4: six point eight.
Speaker 3: Billion dollars worth of tether. How how did that work?
Speaker 4: How Alameda gave thirty six point eight billion real US
Speaker 4: dollars to Tether. That seems unlikely to be true, given
Speaker 4: that that Alameda had raised a few billion from vcs
Speaker 4: and allegedly perhaps had stolen some money from their clients.
Speaker 4: But how did you get to thirty six point eight
Speaker 4: So how did it work?
Speaker 3: I don't know.
Speaker 1: So there's been a lot of skepticism about the existence
Speaker 1: and the persistent existence of Tether over the years, and
Speaker 1: I think both of us have joked that, like, you know,
Speaker 1: in the year twenty two one hundred, whether there's still
Speaker 1: gonna it's like the cock croach surviving the new their winner.
Speaker 1: It's like somehow Tether's gonna be there holding the peg.
Speaker 1: But it is kind of weird because it's like, you know,
Speaker 1: it has not blown up, right, and many other things
Speaker 1: that people thought were professionally run, I would say FTX
Speaker 1: and the associated entities have blown up. What did you
Speaker 1: learn about Tether and what's interesting about it?
Speaker 3: In the course of writing this book, t Other's a
Speaker 3: fascinating company.
Speaker 4: The c fo is paid a sixty five thousand dollars
Speaker 4: settlement to Microsoft for software piracy. The CEO hasn't been
Speaker 4: seen in public in many years. That public face of
Speaker 4: the company is their CTO. The Wall Street Journal reported
Speaker 4: that as recently as twenty nineteen, four individuals controlled eighty six.
Speaker 3: Percent of Tether.
Speaker 4: So it's this very very small company supposedly dealing in
Speaker 4: you know, up to eighty billion dollars.
Speaker 3: Yeah.
Speaker 4: I don't know how much more I should say except
Speaker 4: that that's very suspicious and it is incredible that they've survived.
Speaker 4: But they have deep ties to to SAM and FTX
Speaker 4: and Alameda, and you know, I guess we'll see what happens.
Speaker 2: Let me ask that question in a slightly different way,
Speaker 2: which is because I think one of the frustration for
Speaker 2: a lot of journalists is, you know, cryptocurrencies have been
Speaker 2: around for a long time at this point, and I've
Speaker 2: certainly written my share of eulogies for things like that coin.
Speaker 2: I think the first one I wrote was in twenty eleven,
Speaker 2: if you can imagine, Yeah, and then I did it
Speaker 2: again in twenty seventeen, and each time it comes back.
Speaker 2: So what would it take What would be the catalyst
Speaker 2: for something like Tether to finally and definitively, you know,
Speaker 2: break the peg and be put to bed.
Speaker 3: These are not honest markets. I don't know how.
Speaker 4: Else to to say it, given the amount of wash
Speaker 4: trading and god knows what else what other shenanigans, you know,
Speaker 4: Sam into Twitter spaces. Somebody asked him, did you even
Speaker 4: make these trades? Like this even exists? And he said
Speaker 4: some of it no. So that's a bucket shop, right,
Speaker 4: I mean, that's that's what that is. Bucket shops or
Speaker 4: maybe I llegal in the twenties, So in some senses
Speaker 4: we are revisiting, you know, a century ago. So as
Speaker 4: as to why it hasn't fallen apart.
Speaker 3: In what it would take, I believe it would take
Speaker 3: law enforcement action to to to really kind of get
Speaker 3: to the bottom of where the actual real money is.
Speaker 3: We'll see if that happens.
Speaker 4: But you're you're getting closer to I mean, the season
Speaker 4: assists that the SEC issued to Finance to freeze their money.
Speaker 4: I think is sort of the next thing to kind
Speaker 4: of watch because they're clearly concerned that that the money
Speaker 4: could be could be moved away and that the customers,
Speaker 4: US customers can't get the money up.
Speaker 1: So again we started this conversation by noting the timing
Speaker 1: this week of the what is Finance where did this?
Speaker 1: I mean, it's obviously massive, and there's been a lot
Speaker 1: of reporting on it, but in terms of like how
Speaker 1: you studied the company in your book, like what is
Speaker 1: it the gay that just like such an extraordinary footprint
Speaker 1: in the global market, How did it establish this? And
Speaker 1: how crucial is it to like all of the you know,
Speaker 1: these fake prices, the.
Speaker 3: Prices that exist on binance. It's absolutely crue finance.
Speaker 4: I don't know today, but it's I believe actually it's
Speaker 4: still over half of the of the volume in crypto
Speaker 4: is a spot volume trades through finance. I think it's
Speaker 4: been as much as I believe seventy percent, So it's
Speaker 4: just absolutely massive, just dwarfs every other exchange. As to
Speaker 4: how it succeeded, I mean, chanpeng Xiao started early when
Speaker 4: when when crypto is in a much smaller stage. He's
Speaker 4: very aggressive about courting clients, especially big firms, to trade
Speaker 4: on it, and he funded things like FDx. He was
Speaker 4: an initial investor in FTX, and he's been very good
Speaker 4: at finance. Global has no headquarters. There is no finance headquarters,
Speaker 4: which is a pretty neat trick because it becomes difficult to.
Speaker 2: Pin you down there is a rumored headquarters, but yeah,
Speaker 2: we won't go into it.
Speaker 3: Yeah, let's not go into that quite unless you want
Speaker 3: to know what there are our local.
Speaker 4: Affiliations, Right, there's a Binance US, there was a Finance Australia.
Speaker 3: I think all these places.
Speaker 4: Well, in the SEC lawsuit they mentioned this tai chi document.
Speaker 4: So the tai chi document is this allegedly a document,
Speaker 4: the internal document from Finance.
Speaker 3: Basically, we're going to practice tai chi.
Speaker 4: We're going to set up locally compliant places like Finance
Speaker 4: US that are going to plain ice with the authorities
Speaker 4: and follow the rules.
Speaker 3: But the volume, we're going to push all the volume.
Speaker 4: Onto the main exchange, so redirect to the regulator's energy
Speaker 4: towards the towards the local shops. If that's true, then
Speaker 4: interesting strategy, heretofore successful. I believe the yen of Champeg
Speaker 4: Jao's tai chi may meet the yang of US law enforcement.
Speaker 3: But I guess we'll see. Well.
Speaker 2: So one thing on that note, I mean, the proximate
Speaker 2: cause of a lot of the recent crypto drama was
Speaker 2: CZ starting to criticize FTX and ft T TOE, in
Speaker 2: which a lot of people I think commented at the
Speaker 2: time was kind of weird. If you think of crypto
Speaker 2: as a sort of house of cards market that involves
Speaker 2: a few big players, it seems like a very dangerous
Speaker 2: strategy to start attacking each other. Do you have any
Speaker 2: idea or like conspiracy theory about what was.
Speaker 3: Going on there?
Speaker 4: Well, I mean I was talking to Sam. I interviewed
Speaker 4: Sam in July last year, and then we continue a
Speaker 4: DM conversation through October. Things were clearly getting pretty bad.
Speaker 3: He talked of a stable coin war with CZ and Binance,
Speaker 3: so there was clearly some animosity there. And then yeah,
Speaker 3: I mean, what I know.
Speaker 4: Publicly, what's been presented publicly is that seat that Sam
Speaker 4: and as cohort Bran Salem started kind of mocking CZ
Speaker 4: on Twitter, saying can CZ even come to this country?
Speaker 4: Things like that because CZ's a Chinese Canadian.
Speaker 3: Pretty bold strategy.
Speaker 4: And then the balance sheet of Alamito leaked I was
Speaker 4: reported by coin desk and it was you know, can
Speaker 4: I say shit show on on the okay? It was
Speaker 4: it was a ship show and and CZ had this chip,
Speaker 4: which is that he owned he had a lot of
Speaker 4: the FTT token.
Speaker 3: Sam had tried to separate himself from CZ. I believe.
Speaker 4: I think they fell out over a Malta as a
Speaker 4: license in Malta. That that's allegedly that Caz he didn't
Speaker 4: want to fill out the paperwork or something.
Speaker 3: It's like, if you don't want to fill out the
Speaker 3: paperwork in Malta.
Speaker 4: Anyway, Uh, then so they couldn't pay him real money,
Speaker 4: so they so they gave him some I think, but
Speaker 4: but he was mainly paid out in FTT, which gave
Speaker 4: him this chip to play right if he has the
Speaker 4: law of the supply. So all of a sudden there
Speaker 4: was a round on FTT. Sam's cohort Caroline Ellison, tried
Speaker 4: to stop the bleeding by saying, you know, by all
Speaker 4: the FTT you wanted this price. Since Ceci said no,
Speaker 4: let the market play out, and it collapsed in spectacular fashion.
Speaker 4: And then there was this brief moment where cz considered
Speaker 4: buying the company and a non binding letter of intent,
Speaker 4: which of course was immediately transformed by certain members of
Speaker 4: the media into he was definitely gonna buy the company,
Speaker 4: but of course it's a non binding letter of intent.
Speaker 3: So twelve hours later he said no, I'm good.
Speaker 1: What was your take What was your takeaway from interviewing
Speaker 1: Sam obviously prior to the events of November, like, well,
Speaker 1: what were your interactions with him?
Speaker 4: Like, well, our interview in person was interesting. It was
Speaker 4: July twentieth, twenty twenty two. Was in a midtown hotel
Speaker 4: in Midtown.
Speaker 3: Right around here.
Speaker 4: At the time, Crypto had done it sort of first crash,
Speaker 4: the May crash of Taro Luna.
Speaker 3: So it was seemingly on life support. But Sam was
Speaker 3: the golden boy, right.
Speaker 4: Sam was, you know, spending a lot of money on
Speaker 4: Capitol Hill. He was trying to get a particular piece
Speaker 4: of legislation through the Ad Committee, the DCPA. He was
Speaker 4: meeting with the CFTC Commissioner. I believe he met with
Speaker 4: him at least ten times. And he was being called
Speaker 4: the JP Morgan of Crypto by none other than Anthony Scaramucci,
Speaker 4: the Booch with whom he had a business relationship anyway.
Speaker 4: So and he was going to buy up the JP
Speaker 4: Morgan references reference to nineteen oh seven when JP Morgan
Speaker 4: and his palace had to come in and kind of
Speaker 4: rescue the financial system from collapse. He was going to
Speaker 4: come in and buy all these companies that were failing,
Speaker 4: right like Celsius and blockfying all these companies. So that
Speaker 4: was the circumstance under which I interviewed him. Boy, I'll
Speaker 4: put it this way. The chapter devoted to that interview
Speaker 4: is entitled The Emperor Is but ass Naked.
Speaker 3: So it was weird. It was really weird because I
Speaker 3: asked him some questions.
Speaker 4: I wanted to understand how he could explain cryptocurrency is
Speaker 4: what good it did? I found that answer very unsatisfying.
Speaker 4: He said he kind of tried to duck it, and
Speaker 4: then he went into remittances or sending payments between borders.
Speaker 4: I had just come from Al Salvador, the only country
Speaker 4: in the world trying to use crypto as real money.
Speaker 4: El Salvador's economy, the foundation, I would argue of El
Speaker 4: Salvador's economy is remittances. A quarter of the Al Savonor
Speaker 4: economy is people of Savador and descent who lived in
Speaker 4: the United States, two to three million of them sending
Speaker 4: money home.
Speaker 3: So the government had.
Speaker 4: You know, for reasons that we could go into in
Speaker 4: another question, had decided to set up a system Chibo wallet,
Speaker 4: and it was suddenly gonna, you know, bring in tourists.
Speaker 4: But it was going to be a way for the
Speaker 4: savonor people to profit by or to not spend money
Speaker 4: on money Gram and Western Union traditional services. And it
Speaker 4: was going to be this huge boon to the economy. Well,
Speaker 4: nobody used it. It was a failure. It was complete
Speaker 4: failure for a lot of the reasons that plague crypto.
Speaker 4: More broadly, the system didn't work. The chi was system
Speaker 4: just like malfunction. All the time, people got defrauded, people
Speaker 4: lost their money, and so they decided they would rather
Speaker 4: stick with traditional services. So, according to the government's own figures,
Speaker 4: less than two percent of remittances used this system. So
Speaker 4: I just come from there and he was saying it's
Speaker 4: remittances and I'm saying, Sam, baloney bs. And then we
Speaker 4: went round around around, and when I came back to
Speaker 4: that same question, because the question was give.
Speaker 3: Me one company.
Speaker 4: Just give me one company, give me one comedy that's
Speaker 4: doing anything, anything of productive value.
Speaker 3: Just tell me.
Speaker 4: And he eventually told me Solana. Well, Solana was known
Speaker 4: as one of Sam's.
Speaker 3: Coins because he owned a lot of it.
Speaker 4: I think it was like a billion dollars worth of
Speaker 4: it when they went when they went kablue. Did he
Speaker 4: really believe in Solana or was he trying to pump
Speaker 4: his bat, like what was that? Also, Solana has the
Speaker 4: unfortunate to shut down. It just stops working. I think
Speaker 4: it stopped working at least a dozen times over the
Speaker 4: course of its history, so that I found those answers
Speaker 4: very unsatisfying. You can't give me one company that's of
Speaker 4: any use in your industry. So there was those questions,
Speaker 4: and then there are questions.
Speaker 3: About his donations. Probably the most.
Speaker 4: Nervous I think he got was seemingly was when he
Speaker 4: wanted to talk about his effective altruism. He's going to
Speaker 4: give his money away, pandemic preparedness, all that stuff. So
Speaker 4: how much money have you given to that stuff? He
Speaker 4: said fifty to one hundred million, So okay, how much
Speaker 4: have you given to politicians? And he froze and he
Speaker 4: turned in his seat and deal with stuff. And you know,
Speaker 4: he's kind of a twitchy guy, and I get that
Speaker 4: he's got add I'm not trying.
Speaker 3: To but like it was weird and he wouldn't tell me.
Speaker 4: And at the time, I'm thinking, this is really strange
Speaker 4: because this information is public, right, Like, I mean, we
Speaker 4: know he gave forty million to Biden. We know his
Speaker 4: core gave twenty three million to the Republicans, Like, why
Speaker 4: doesn't he just and now you know, what's alleged is
Speaker 4: that he was running a ninety three million dollar straw
Speaker 4: don't so maybe I don't know, maybe that was why
Speaker 4: it was a really bizarre interview. It was really one
Speaker 4: of the most strange hours of my life.
Speaker 2: We've we've had our own weird interview with Well that's right, yes.
Speaker 4: Well that was very informative. So, I mean, if you
Speaker 4: don't mind, I'm just gonna you know. So, in the
Speaker 4: spring of that year, he had been on your podcast
Speaker 4: with Matt Levine and he talked about I believe it
Speaker 4: was magic boxes out of which money comes.
Speaker 2: The question was how does yield farming work, right, And
Speaker 2: we were expecting a technical answer of you know, oh,
Speaker 2: there's this protocol and then this protocol.
Speaker 3: Yes, yes, yes.
Speaker 4: Instead it was magic boxes out of which money comes,
Speaker 4: and Matt correctly said that sounds like a Ponzi scheme.
Speaker 4: I think Sam laughed. I don't know what happened after that,
Speaker 4: but it's real. It was really strange for me. I mean,
Speaker 4: I'm you know, I got an ego and stuff, but
Speaker 4: I'm just I have an undergraduate degree.
Speaker 3: I'm I'm an actor.
Speaker 4: I've just been looking at this for a couple of years,
Speaker 4: and I'm here soon talking to the supposed JP Morgan
Speaker 4: a crypt like, can you give me one satisfying answer?
Speaker 4: Can we get one moment where we could kind of
Speaker 4: I could see how this was going to work. I
Speaker 4: left basically with a lot of questions, but they were
Speaker 4: all the same one What the fuck was that all about?
Speaker 3: Like? What was that? It was really weird?
Speaker 2: Yes, all of this sounds familiar. You mentioned law enforcement earlier,
Speaker 2: so again let me ask the basic question, but where
Speaker 2: are the regulators? So we're starting to see some actions now,
Speaker 2: notably from the SEC and the CFTC also sued Finance
Speaker 2: earlier this year. But where have they been and why
Speaker 2: the reluctance to crack down on this industry?
Speaker 3: Yeah?
Speaker 4: So I believe it was twenty fourteen when the CFTC
Speaker 4: Commissioner Tomy the Massad asserted CFTC.
Speaker 3: Control over over bitcoin.
Speaker 4: Said, because there's futures were being traded, and under the CEA,
Speaker 4: the Commodity Change Act making thirty six, they could they
Speaker 4: could argue that the bitcoins of commodity. Okay, so that
Speaker 4: already creates a little bit of a gray area, right
Speaker 4: because if the if bigcoins a commodity, but these, these
Speaker 4: twenty other twenty thousand other cryptos came into existence, what
Speaker 4: are they? You can say the sec hasn't been as
Speaker 4: aggressive as it should have been, and I don't I
Speaker 4: don't disagree with that. I think the politics are interesting.
Speaker 4: I mean, people are now very angry Gary Gensler in
Speaker 4: the crypto industry, and they're angry that he allowed Coinbase
Speaker 4: to go public. Coinbase was listed on April fourteenth, twenty
Speaker 4: twenty one. Gary Gensler assumed office on April seventeenth of
Speaker 4: twenty twenty one. Say what you will about Gensler, but
Speaker 4: he does not have a time machine. So look what.
Speaker 4: Here's what I'll say. Crypto has exploited a gray area
Speaker 4: between how we classify commodity use and securities. I do
Speaker 4: think this is a problem. We are the only country
Speaker 4: in the world that separates our commodities regulation from our
Speaker 4: securities regulation in the way that we do. We have
Speaker 4: two different agencies. They are overseen by different committees in
Speaker 4: both the House and the Senate. That creates really bad incentives.
Speaker 4: As a you know, armchair economist. That's very bad incentive wise, right,
Speaker 4: because people want to get on Politicians want to get
Speaker 4: on elected members want to get on those committees to oversee.
Speaker 3: The industries, but also to get donations, right.
Speaker 4: And the regulators are fighting for turf, sometimes friendly, sometimes not.
Speaker 4: The crypto industry really really wants the CFTC to be
Speaker 4: in charge. The CFDC is the smaller agency. It's about
Speaker 4: a quarter of the budget a quarter of the budget
Speaker 4: of the SEC. So there's a lot of blame to
Speaker 4: go around, I would say. But in the defense of regulators,
Speaker 4: it does take time to build cases, to be photographies
Speaker 4: and how to require a law.
Speaker 1: You know, we've talked a lot about the industry, but
Speaker 1: your story starts with like a friend, and obviously a
Speaker 1: lot of people have lost a ton of money.
Speaker 3: Over the last couple of years.
Speaker 1: Particularly, Can you talk a little bit more in the
Speaker 1: course of your reporting, like truly the types of people
Speaker 1: that you met on just this sort of like the buyers,
Speaker 1: like the people who liked sucked in at the top.
Speaker 3: It's everybody.
Speaker 4: I mean, it's really fascinating. Like you could interview and
Speaker 4: I did. I interviewed everyone from you know, kind of
Speaker 4: regular traders. I walked around the Bitcoin conference in Miami
Speaker 4: last year just talking to random people.
Speaker 3: And then of course there are more sophisticated players.
Speaker 4: There are hedge funds, they're you know, high frequency trading
Speaker 4: firms things like that.
Speaker 3: And then there are the sort of the core players.
Speaker 4: Which you know, we're Sam and CZ and you know,
Speaker 4: the folks that are kind of facilitating these transactions. So
Speaker 4: amongst the kind of the regular folks. Again, I kind
Speaker 4: of go back to this point of like crypto just
Speaker 4: becomes whatever you want.
Speaker 3: It to become. Right, It's like it's a way of.
Speaker 4: You expressing your like your your freedom, your you know,
Speaker 4: get off the shackles of tradfy and like find your own,
Speaker 4: create your own financial destiny kind of stuff. And I
Speaker 4: get that that that is such an intoxicating pitch sales pitch.
Speaker 4: That's why Schiller talks about these narratives and how powerful
Speaker 4: they can be and how difficult they are to It
Speaker 4: compares them to to viruses. You know, it's sort of
Speaker 4: you have to study the epidemiology of them, and we
Speaker 4: kind of have to you know, reach herd immunity here,
Speaker 4: which I think we kind of are getting to now
Speaker 4: in crypto.
Speaker 3: But it's also very sad because I tell a story
Speaker 3: at the end of the book about a particular case.
Speaker 3: It's pretty pretty rough. But you are also getting into.
Speaker 4: Gambling addiction. I mean, let's be honest, it's young men.
Speaker 4: Forty two percent of men eighteen to twenty nine have
Speaker 4: purchased US bought cryptocurrency.
Speaker 3: That's a big number. Almost half.
Speaker 4: It's gamified, right, the apps are. It's very similarish to
Speaker 4: robin Hood, but unregulated, and it's easy to hide from
Speaker 4: friends and family, I mean gambling addiction. We talked to
Speaker 4: some gambling experts for this and they told us that
Speaker 4: there's a husband wife. They run a boutique firm in Brooklyn,
Speaker 4: but that services a lot of Wall Street clients and
Speaker 4: so they're treating all kinds of addictions. But they saw
Speaker 4: a trickle during the last craze of twenty eighteen twenty seventeen,
Speaker 4: but they saw a tsunami recently.
Speaker 3: It's just it was all men under forty. Some of
Speaker 3: them are.
Speaker 4: Sophisticated Wall Street guys, sophisticated in people that really know
Speaker 4: their stuff about all sorts of other financial stuff.
Speaker 3: But have gotten drawn in.
Speaker 4: And everything down to teenagers. I mean parents coming in
Speaker 4: with their teenagers saying they're gambling away their their minimum
Speaker 4: wage job, you know, their summer job, paycheck on this stuff.
Speaker 3: And that's where it gets into the casino capitalism.
Speaker 4: That's why I want the book to be about more
Speaker 4: than just crypto, because I do worry that we are
Speaker 4: Canes said this actually you know when I won't try
Speaker 4: to quote him exactly, but basically, when you turn the
Speaker 4: nation's capital into capital markets into a casino, you know
Speaker 4: the job is likely to be ill done. You are
Speaker 4: not servicing an effective use of capital. And I believe
Speaker 4: we need to look at some of these things through
Speaker 4: the lens of how much social harm they can do.
Speaker 4: Gambling addiction, I've heard from several people, has the highest
Speaker 4: rate of suicide of all the addictions.
Speaker 3: It's much easier to hide because all you need is a.
Speaker 4: Phone and a few minutes or even seconds to make
Speaker 4: some trades, and so by the time families find out
Speaker 4: about the predictive that usually their son or husband partner
Speaker 4: is in, it can be too late and money's gone.
Speaker 3: It is treatable.
Speaker 4: It is a retreatable addiction, but you have to take
Speaker 4: some pretty serious measures sometimes and remove the ability to
Speaker 4: make the trades and.
Speaker 3: To actually access the accounts.
Speaker 4: So yeah, I'm not to turn it into a bummer,
Speaker 4: but like, I really think we need to talk about
Speaker 4: these things, because the marketing was, of course the exact opposite.
Speaker 3: It was all the shiny stuff and all the amazing things.
Speaker 4: But when you come down to it, economically speaking, cryptos
Speaker 4: a zero something game. It's poker because it doesn't do
Speaker 4: anything productive, is strictly competitive. For someone to win, someone
Speaker 4: else has to lose. But it's not a fair game.
Speaker 4: You're not playing in a rate. You're not playing in
Speaker 4: Vegas now. You're playing in Vegas in the fifties.
Speaker 3: When the mafia rend, you know what I mean.
Speaker 4: And then like Vegas, where there's entertainment value, you get comps,
Speaker 4: some drinks, have a dinner, see a show. You know,
Speaker 4: Cryptos like Vegas without the drinks, the dinner or the show.
Speaker 4: So you're gonna lose. You know you're gonna lose. Ninety
Speaker 4: nine percent of people are gonna lose.
Speaker 2: In the book, you actually talk talk quite a bit
Speaker 2: about the overlap between online poker and crypto, and you
Speaker 2: almost almost draw connection between the end of online poker
Speaker 2: and the beginning of Bitcoin talk to us more about
Speaker 2: the overlap that you see there.
Speaker 4: Sure, so in the original code that became the Bitcoin
Speaker 4: white white paper code, there's a poker lobby. So whoever
Speaker 4: Satosh and a Kamoto is was whoever they are, we
Speaker 4: do know they were interested in poker at the tame
Speaker 4: similar time to when the Bitcoin White Paper came out,
Speaker 4: online poker.
Speaker 3: Was about to get crushed. It had moved overseas.
Speaker 4: All these online poker rooms had been set up, and
Speaker 4: eventually the government got around to to shutting them down
Speaker 4: on you know what's become famous as Black Friday and
Speaker 4: online poker, and it was because they were cheating their customers.
Speaker 4: There's a company called Ultimate Bet that was had a
Speaker 4: secret god mode where insiders could see the other players cards. Uh.
Speaker 4: The compliance officer for the holding company of SCAPSA of
Speaker 4: Ultimate Bet is a guy named Stuart Stuart Hogner. He's
Speaker 4: now Tether's general counsel. Daniel Friedberg. Also, Daniel Friedberg also
Speaker 4: worked at SCAPSA.
Speaker 3: He was ftx's lawyer.
Speaker 4: They think he then became their chief regulatory officer or
Speaker 4: something like that. Interesting, where were the signs? They're really
Speaker 4: strong parallel, So maybe crypto's maybe bitcoin was set up
Speaker 4: to be this emancipatory new form of peer to peer currency,
Speaker 4: or maybe it was literally online gambling two point zero
Speaker 4: a way of a way of moving money overseas and
Speaker 4: you know, using it to facilitate gam you know.
Speaker 1: One thing that you've talked about, and I think it's
Speaker 1: it might be it's probably There's probably been other cases
Speaker 1: like this, but there's a lot of there's been a
Speaker 1: lot of pure pressure in crypto. It's like people telling
Speaker 1: their friend it's like you've got to get into the
Speaker 1: your friend, or just being told online have fun to
Speaker 1: stay poor if.
Speaker 3: You don't, they don't. They tried that line on me.
Speaker 1: But like, you know, that's wasn't there in like online poker,
Speaker 1: like that degree to which like the sort of like
Speaker 1: crowd whips its own members into a friends face.
Speaker 4: Yeah, and that's where I think you get into a
Speaker 4: multi level market marketing scheme. The abuse of language is similar,
Speaker 4: the way that they're sort of twisting words and trying
Speaker 4: to create a pressure filled environment where you feel like,
Speaker 4: you know, fomo, you're you're going to miss out if
Speaker 4: you don't invest. Now you know really quick, you got
Speaker 4: you gotta really quickly invest in the future of money,
Speaker 4: because otherwise you're not going to get in there, which
Speaker 4: is a bizarre but those tactics are very similar. And
Speaker 4: I would say, here's the thing that's a big tell
Speaker 4: of me. The use of the word community. The use
Speaker 4: of the word community is just fascinating. You're not an investor,
Speaker 4: you're not a client or a sucker. You're a member
Speaker 4: of a community. I'm going to be reborn to the
Speaker 4: land of the free.
Speaker 3: Strange to characterize a financial relationship, especially with people you
Speaker 3: don't even know, right, I mean, so much of this
Speaker 3: stuff is done online and through synonymous accounts.
Speaker 4: That's your community. I'm not saying people don't find community.
Speaker 4: What's interesting is some of the strongest communities I've found
Speaker 4: are the participants in the class action lawsuits against companies
Speaker 4: that have allegedly defrauded them because they're bound by the
Speaker 4: fact that they had a similar experience where they they
Speaker 4: had a lot of high hopes and then they were
Speaker 4: let down.
Speaker 2: It is true. No one talks about the community of
Speaker 2: like T bill investors. Yeah, exactly, it's not really a thing.
Speaker 2: Let me ask a devil's advocate question. But you know,
Speaker 2: we've been talking about cryptocurrency mostly as a monolith. We
Speaker 2: did touch on the narrative flexibility around bitcoin, so the
Speaker 2: idea that it can be many things to many people
Speaker 2: all at once. One of the things that it seems
Speaker 2: to be now, or at least there are some people
Speaker 2: pushing the story is the anti crypto. So if you
Speaker 2: lost money in some random coin because of a centralized
Speaker 2: exchange that did something bad, you should buy bitcoin because
Speaker 2: it's truly decentralized and only you have access to it
Speaker 2: in your cold storage wallet or whatever. How valid do
Speaker 2: you think that argument is?
Speaker 4: So you're saying you need to be more pure, you
Speaker 4: need to believe more in the decentralization.
Speaker 2: If you don't like crypto, you should buy the original.
Speaker 3: Crypto exactly exactly. Not a cult, I think. So that's
Speaker 3: the flip and answer.
Speaker 4: On one level, there is some truth in the sense
Speaker 4: that bitcoin is more decentralized by nature of the proof
Speaker 4: of work, but that cuts the other way too, because
Speaker 4: of course proof of work means it can't scale. Bitcoin
Speaker 4: can only process five to seven transactions a second. It
Speaker 4: hits limit, it hits what's called a red queen's race,
Speaker 4: where like you're using more and more energy depending on
Speaker 4: how many competitors are there. The more competitors come in,
Speaker 4: the more energy is expended for the same same block.
Speaker 4: So you know, it's like what the what the queen
Speaker 4: says to Alice, Right, You're gonna run twice as fast
Speaker 4: to get anywhere. It also, because of that energy usage
Speaker 4: has an environmental problem. I mean, I went to the
Speaker 4: biggest crypto mind in the country. It's outside of my
Speaker 4: hometown of Austin, Rockdale, Texas. It took over a former
Speaker 4: Alco aluminum smelting plant. And the reason it took that
Speaker 4: over is because it's connected to the grid, so it
Speaker 4: can handle a lot of power. You know, in twenty
Speaker 4: twenty one, the Bitcoin network and other cryptocurrencies used the
Speaker 4: energy equivalent of Argentina, the entire country. That's a problem
Speaker 4: if you view it as I do, as a zero
Speaker 4: sum game. It's not doing anything productive and you're using
Speaker 4: a lot of energy. So on one level, you could
Speaker 4: make the argument, oh, you're you know, you're more pure,
Speaker 4: you're more decentralized. But in terms of stepping back for
Speaker 4: the rest of us, why why should why should this
Speaker 4: can why should at least at least not be taxed
Speaker 4: at an extraordinary level.
Speaker 1: Real quickly, we just have a couple mints left. You know,
Speaker 1: you mentioned we're to use the virus analogy and you
Speaker 1: talk about maybe reaching herd immunity. And then the question
Speaker 1: is like, is there some pool of new money or
Speaker 1: new people that could be brought in to like keep
Speaker 1: it going, Like do you think that like the sort
Speaker 1: of potential pool of would be crypto buyers are more
Speaker 1: or less exhausted.
Speaker 3: Well, it has utility, you know, for gambling. I mean,
Speaker 3: you can gamble in anything, so I don't think that
Speaker 3: makes it unique.
Speaker 4: But it has utilities as a gambling device, and it
Speaker 4: has utility to facilitate crime because you can use it
Speaker 4: for money laundering and avoiding capital controls, tax evasion, sanctionization, whatever.
Speaker 4: And I understand that there's there's an arguments like some
Speaker 4: of that's good, right, we don't like some of these
Speaker 4: authoritarian governments, Okay, sure, But also if it goes that way,
Speaker 4: it also has to go the other way, right, If
Speaker 4: the good guys can use it, the bad guys can
Speaker 4: use it.
Speaker 3: So yeah, I just yeah, I don't know how to
Speaker 3: answer that question.
Speaker 2: Actually maybe a related question, but are you planning to
Speaker 2: write another book.
Speaker 4: What's next, Well, I've filmed a lot of these conversations,
Speaker 4: so I'm working on a documentary and yeah, I don't know.
Speaker 4: I mean, I've had such a blast on this book.
Speaker 4: It's been such an adventure. I think the best part.
Speaker 4: I know it's a cliche, but it's really the people
Speaker 4: I've met, especially the skeptics. Skeptics are just a great
Speaker 4: group of eccentric, wonderful, you know, nerds like we're just
Speaker 4: it's just fun and it's opened up my view of
Speaker 4: the world. I just have this much more I just understand.
Speaker 4: I think I'm not saying I just have a much
Speaker 4: more varied experience in the world, right, Like, it's really
Speaker 4: been an adventure.
Speaker 3: So yeah, I don't know what the.
Speaker 4: Next book is, but I really appreciate that everyone asked
Speaker 4: you that just as soon as your first book that's
Speaker 4: not even out yet.
Speaker 1: Ben Mackenzie, thank you so much for joining us the
Speaker 1: book Easy Money July teen. Thank you, congratulations, and thank
Speaker 1: you so much for coming on up. I really enjoyed
Speaker 1: talking to Ben. You know, I feel like we're so
Speaker 1: in this uh you know, follow the crypto stories so much.
Speaker 1: It's good to sort of zoom out a little bit
Speaker 1: and talk to someone who kind of came at it
Speaker 1: with fresh eyees.
Speaker 2: Well, totally and to his point, it was all about
Speaker 2: the outsider perspective. So it was a fun conversation.
Speaker 3: Shall we leave it there?
Speaker 1: Let's leave it there.
Speaker 2: This has been another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 2: Tracy Alloway, and.
Speaker 1: I'm Joe Wisenthal. You can follow me on Twitter at
Speaker 1: the Stalwart. Follow our guest Ben mackenzie. He's at Ben McKenzie.
Speaker 1: Follow our producers Carmen Rodriguez at Carmen Arman and dash
Speaker 1: Oll Bennett at dashbot. And check out all of the
Speaker 1: Bloomberg podcasts under the handle at podcasts. And for more
Speaker 1: odd Lads content, go to Bloomberg dot com slash odd Lots,
Speaker 1: where we plush the transcripts. We have a blog and
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Speaker 1: all types of topics that we talk about on the show,
Speaker 1: including crypto.
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Speaker 1: Thanks for listening and thanks for watching.