Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is Everybody's business from Bloomberg Business Week.
Speaker 3: I'm Max Chafkin and I'm Stacy Vannoxsmith.
Speaker 2: Stacey. Have we got a story for you.
Speaker 4: It is about the wildest, weirdest, most interesting man in crypto.
Speaker 2: His name is Justin Sun will tell you all.
Speaker 3: About it, Okay, I'm looking forward to that. Before we
Speaker 3: get to that, We've got, of course, the big news
Speaker 3: of the week, Max, government shutdown.
Speaker 2: Oh Stacy, we're doing this again.
Speaker 3: I know, I know, government shutdowns they happen periodically, but
Speaker 3: this time I think is different. We've got Justin Wolfer's
Speaker 3: an economists here to help us break that down.
Speaker 4: And Stacy the underrated story of the week. Yeah, two
Speaker 4: words for you, little teas splendid.
Speaker 3: Daddy's splendid. Daddy's all right, hang around for that, Okay, Max.
Speaker 3: This week the news has been completely are taken by
Speaker 3: the government shutdown. It's all the headlines, it's everywhere, It's
Speaker 3: all anybody can talk about.
Speaker 4: Well, is Stacy, there is one very very positive economic
Speaker 4: indicator that we need to discuss.
Speaker 3: Yes, tell me I want some positive economic indicators.
Speaker 4: Life of a Showgirl the new Taylor Swift album hitting
Speaker 4: on Friday tomorrow. As we record this today, as you listen,
Speaker 4: you know, Taylor Swift obviously huge mega phenomenon. She she
Speaker 4: criss crosses the country raising hotel rooms.
Speaker 3: Hit pause on the podcast and just go listen to that.
Speaker 4: But I mean, seriously, this is it does feel like
Speaker 4: a big cultural moment. You know, Taylor Swift obviously the
Speaker 4: biggest pop star on the planet right now.
Speaker 2: She's had this amazing run.
Speaker 3: She's been mentioned in the Beige Book as I don't
Speaker 3: know what courses that has moved local economies when her
Speaker 3: concerts come through town.
Speaker 4: That's what I was alluding to, like the arostour when
Speaker 4: it would hit a town, like hotel room prices would
Speaker 4: go way up, you know, restaurants would sell more.
Speaker 2: I think there were literal earthquakes that.
Speaker 4: Happened because people were moving around so much in these stadiums.
Speaker 3: So you're saying, this is this moment, is the shutdown
Speaker 3: versus Taylor Swift? Can she do enough to salvage the
Speaker 3: US economy? I'm the government shutdown.
Speaker 4: Donald Trump and Chuck Schumer, they all have their calculations
Speaker 4: about where Americans are going to fall and how much
Speaker 4: pain are people going to be willing to accept? But
Speaker 4: they haven't counted on the fact that everyone's going to
Speaker 4: be distracted for like the next month listening to this.
Speaker 3: Album and dissecting all the lyrics.
Speaker 4: Indeed, that aside Stacy, I mean, the shutdown is happening,
Speaker 4: and like this sense of chaos, political chaos that then
Speaker 4: kind of tries to spill into the business world that's
Speaker 4: continuing this week, and I feel like that's maybe where
Speaker 4: we need to start.
Speaker 3: Yes, indeed, and in fact, I was at the University
Speaker 3: of Michigan earlier this week. I got to drop in
Speaker 3: on economist Justin Wolfer's ECON one oh one class, which
Speaker 3: was delightful. It's a class of five hundred students and
Speaker 3: at the end and I tracked some of them down
Speaker 3: and asked them how they were feeling about the economy
Speaker 3: and like what their worries were about the economy at
Speaker 3: this moment. Here's what they said. What scares you about
Speaker 3: the economy right now?
Speaker 2: The cost of living? Like I have like a girlfriend,
Speaker 2: and when we talk about.
Speaker 4: Like our future, it's like are we gonna be able
Speaker 4: to get a house or like what are we gonna do.
Speaker 2: I think it's a lot harder for people to get jobs.
Speaker 5: I think that's just a bigger worry and a lot
Speaker 5: of students' minds.
Speaker 6: I mean, I would agree with And I've applied to
Speaker 6: a bunch of jobs like Panera, bread and.
Speaker 4: Things like that, and I haven't heard bag at all.
Speaker 6: I was originally given a pelgrant and then it got
Speaker 6: taken away wit how saying I don't know, just like
Speaker 6: the current administration announced that they would be like repealing
Speaker 6: to a certain like student.
Speaker 3: Like your pel grant got taken away?
Speaker 6: Yeah, just literally gone. There wasn't an edification or email
Speaker 6: or anything.
Speaker 3: It's just what was gone that scares you about the
Speaker 3: economy right now, I would have.
Speaker 7: To say the tariffs, And that's really terrifying because President
Speaker 7: Trump does state that the other countries will be paying.
Speaker 2: These taxes, but as we've also learned in econ one on.
Speaker 1: One, American consumers will probably be paying a lot of
Speaker 1: the tax for it.
Speaker 2: The cost of food.
Speaker 6: Remember, like back in the day, like you could get
Speaker 6: a candy bar from ninety nine cents.
Speaker 2: Right now get king sized candy bars going.
Speaker 6: Up to like three dollars, three dollars fifty cents, Like
Speaker 6: at the stadium.
Speaker 2: A bottle of water could be like five six dollars.
Speaker 3: So what, oh is this when you guys go to games?
Speaker 3: Do you all go to games?
Speaker 6: Yeah?
Speaker 3: Yeah, really University of Michigan, Big ten school, they all
Speaker 3: go to the games.
Speaker 2: You know what I love about that?
Speaker 4: Like and I say love, but I mean what I
Speaker 4: appreciate about hearing those voices. We live in an era
Speaker 4: defined by kind of like reality television and social media,
Speaker 4: where like presentation is everything, and our politics is playing
Speaker 4: out essentially on screens, and you have these two sides
Speaker 4: like trying to spin stuff. But all these policies, all
Speaker 4: the stuff that's happening in the economy, it has consequences.
Speaker 4: And that, like that woman talking about the pelgrant, Yeah,
Speaker 4: is a consequence.
Speaker 2: I mean sounds really bad. It sounds really tough.
Speaker 4: And I do wonder as we think about how the
Speaker 4: consequences of this government shutdown that we're entering right now
Speaker 4: are going to play out. Those are the kinds of
Speaker 4: stories that are going to define like how we experience it,
Speaker 4: not like what Trump says on TV, not what Schumer
Speaker 4: whoever says on TV. It's going to be stories like
Speaker 4: that and and I don't know, I just feel like
Speaker 4: we have to keep talking to those people. So good job, Stacey.
Speaker 3: The teacher of these really lovely students is economist Justin Wolfers,
Speaker 3: and he is here today to talk government shutdown. Thanks
Speaker 3: again for letting me sit it on your class and welcome.
Speaker 3: Hey Stacey, Justinould, what did you think of what your
Speaker 3: students had to say?
Speaker 7: Well, they're brilliant. They I think, well, try and articulate.
Speaker 7: And I think it's so lovely to hear young voices
Speaker 7: engaging in our economic debates. We're fighting about the future,
Speaker 7: and that's who they are.
Speaker 3: Is all around.
Speaker 5: That's what I say, Oh, you're for grade inflation now.
Speaker 3: But Justin, we brought you on to talk about the
Speaker 3: government shutdown, that terrible moment when politics and economics meet
Speaker 3: and it is a mess. And right now we are
Speaker 3: in the middle of a shutdown. Before we kind of
Speaker 3: jump into the more granular issues, what do you see
Speaker 3: as going on here?
Speaker 5: Mostly politics.
Speaker 7: I understand that people's first instinct at a moment like
Speaker 7: this is to call an economist because it feels like
Speaker 7: a big deal economically. I think the reality is, if
Speaker 7: we think about the macroeconomy, the ups and downs of
Speaker 7: GDP and unemployment and recessions and booms and.
Speaker 5: Stuff like that. It's just not that big of a deal.
Speaker 7: So for folks who are not working in or very
Speaker 7: closely with the government, what I think the appropriate status
Speaker 7: is sort of disappointed parent.
Speaker 3: But seven hundred and fifty thousand people are not working
Speaker 3: today because of this, that feels like a big economic deal.
Speaker 7: Absolutely, Although Stacy, there's one hundred and forty million people
Speaker 7: who are and one hundred and forty million is substantially big.
Speaker 7: In seven hundred and fifty thousand, we're probably talking about
Speaker 7: a matter of weeks rather than the full year, and
Speaker 7: so you start to do this sort of math and
Speaker 7: it starts to become fractions of a percentage point. Look,
Speaker 7: two things are true, and I want to be really
Speaker 7: clear about it, and I thank you for drawing it.
Speaker 7: It can be that something's not a major macroeconomic issue
Speaker 7: yet still is a dumb and horrendous and pointless waste.
Speaker 7: And were I president, it wouldn't change the reality that
Speaker 7: a billion dollars is both a tiny fraction of GDP
Speaker 7: and a ton of money and wasting it for no
Speaker 7: reason whatsoever. Feels utterly pointless and utterly disparity.
Speaker 4: So justin you're saying it, it doesn't matter economically, or
Speaker 4: at least on a macroeconomic point of view. And I
Speaker 4: feel like Stacey and I talked about this. We've both
Speaker 4: been business journals for a long time. These shutdowns come
Speaker 4: with some frequency, right, the last one was in twenty eighteen.
Speaker 4: We're constantly hitting the debt ceiling. And if you've been
Speaker 4: through this a few times, a dozen times, however many
Speaker 4: it's been, you basically just start to feel like, eh,
Speaker 4: like this is like they're going to get it figured out.
Speaker 4: This is a sort of a manufactured political crisis. The
Speaker 4: only thing that matters really is who gets blamed.
Speaker 2: Right.
Speaker 4: I do wonder if this one is a little bit different,
Speaker 4: only because this is coming in a larger context, which
Speaker 4: is that the Trump administration has been since the beginning,
Speaker 4: since January, just trying in various ways to kind of
Speaker 4: kneecap parts of the federal government. Right, and to me,
Speaker 4: this really feels like an almost repeat of Doge, which
Speaker 4: might seem weird to say, but like we had during
Speaker 4: the first couple months of the administration, Elon Musk going
Speaker 4: around sort of purporting to close various federal agencies laying
Speaker 4: people off. I think it's yesterday as we record this
Speaker 4: on Thursday, October two, that the workers who took deferred
Speaker 4: resignations are are in fact leaving the government. It's like
Speaker 4: another one hundred thousand workers. And when you listen to
Speaker 4: what the Trump administration is saying, and we listen to
Speaker 4: what russ Vote the head of the OMB is saying,
Speaker 4: they see this as an opportunity not just to furlough workers,
Speaker 4: but to attack parts of the bureaucracy permanently.
Speaker 7: Yes, so much. There max so full of ideas. Let
Speaker 7: me start with the first one. You're like, eugh, another,
Speaker 7: the government shutdown? Who cares? The problem with that thinking
Speaker 7: is the thing that eventually ends the shutdown is people
Speaker 7: are like, holy cow, this is terrible, and it causes
Speaker 7: political pain for one side or other of politics. That
Speaker 7: causes enough that pushes them back to the table, and
Speaker 7: they sort it allowed. If we all sit around and
Speaker 7: take people like me seriously and say, hey, it's not
Speaker 7: that big of a deal, then actually it will never resolve.
Speaker 7: And so I think your point that we're all sort
Speaker 7: of a little bit indifferent, right, Well, battered, bruised, and
Speaker 7: used to large scale shocks to how the government works.
Speaker 7: Right now, this would have been outrageous six years ago,
Speaker 7: and you and I I think our blood would have boiled.
Speaker 7: And this might be the thirteenth worst thing to have
Speaker 7: happened so far in October. That removes the urgency. And
Speaker 7: if you remove the urgency, that then creates the possibility
Speaker 7: that this one actually runs on a whole lot longer.
Speaker 7: So the last one went thirty four days. When I
Speaker 7: say government shutdowns are not a huge event, I should
Speaker 7: say one, We're already shut down most of the government
Speaker 7: two days every week, so if we made it a
Speaker 7: third wouldn't be a big deal.
Speaker 3: So the government gets shut down right now, it's not
Speaker 3: that huge of a deal macroeconomically, and potentially, you know,
Speaker 3: thousands of people will lose their jobs.
Speaker 7: Wait, Stacy, could we just hold up because they want
Speaker 7: to get the premise right. So what has historically happened
Speaker 7: is non essential employees are told not to do any work.
Speaker 7: The government remains shut down for two weeks then and
Speaker 7: then they shutdown ends and they come back to work.
Speaker 7: And usually in every past case, Congress has passed a
Speaker 7: law saying even though you didn't do any work for
Speaker 7: those two weeks, we're going to pay you anyway. So
Speaker 7: no one historically was losing their jobs through this. And
Speaker 7: then there's the essential workers who keep working, but they
Speaker 7: keep working without getting paid, and then they'll get repaid later,
Speaker 7: So there's no job cuts that are essential to this.
Speaker 7: What this gets to, though, is Max's earlier point, which
Speaker 7: is this is a political escalation at the current moment.
Speaker 7: This one's different because normally presidents are embarrassed by their
Speaker 7: inability to keep the government open.
Speaker 3: Right this is like a shameful moment, like, oh, you
Speaker 3: couldn't get it together and make a deal again, And.
Speaker 5: What we have is escalation.
Speaker 7: Certainly in claims the president says he's going to go
Speaker 7: after democratic priorities. He's going to definitely not collect the
Speaker 7: trash from outside Max's house, and so on. This president's saying, well,
Speaker 7: you guys are doing me, I'm just going to fight back.
Speaker 7: So it sounds like when my kids were five. He
Speaker 7: has no new powers to fire people right now that
Speaker 7: he didn't have yesterday. So if there was whole departments
Speaker 7: he wanted to shut down, if he could do it,
Speaker 7: he could do it. Two days ago, and he could
Speaker 7: still do it in two days time. So the presidents
Speaker 7: claim that this brings on an escalation. There's no structural
Speaker 7: change that creates that escalation. So the escalation, though, is
Speaker 7: that he would be taking advantage of the political moment
Speaker 7: that somehow the press and the people would let it
Speaker 7: slide that he's going to do something, and other times
Speaker 7: we would find repugnant.
Speaker 4: You know, I spent earlier this year a couple of
Speaker 4: months reporting on Russ Vote, who I said, head of
Speaker 4: the OMB, super interesting character. He wrote part of the
Speaker 4: Project twenty twenty five. I think he was involved in
Speaker 4: the last government shutdown in fact, and he was kind
Speaker 4: of like hanging behind the scenes with Doge.
Speaker 2: Right.
Speaker 4: I described him as like, you know, I can't remember
Speaker 4: the words I actually use, but like the real mastermind
Speaker 4: or the ideological mastermind or something like that. And what's
Speaker 4: interesting is Vote had been saying for like a decade
Speaker 4: basically that if we could, we should just like cut
Speaker 4: all these woke agencies, defang the deep state, massively cut
Speaker 4: back in the government, and that that was like a
Speaker 4: political end in itself, and that's what we saw essentially
Speaker 4: with Doge A couple months ago right where where they
Speaker 4: did this and then discovered, oh crap, it's unpopular. Elon
Speaker 4: Musk suddenly had people protesting outside of his dealerships. People
Speaker 4: were suddenly putting bumper stickers on their cars, you know,
Speaker 4: trading their teslas in. People hated this because, you know,
Speaker 4: for all the times we sort of complain and grouse
Speaker 4: about the ways that the government doesn't work, like it
Speaker 4: actually does work pretty well.
Speaker 2: That was one of the things I think we learned
Speaker 2: with Doge.
Speaker 4: And now they're kind of trying to run it back,
Speaker 4: but this time blame the Democrats. And like you said,
Speaker 4: justin nothing's really changed from a legal perspective, although I'm
Speaker 4: sure there might be arguments to be made about, oh,
Speaker 4: maybe it's an emergency or something like that, But really
Speaker 4: this is about can we pin this on Chuck Schumer?
Speaker 4: And I don't know what the answer to that. I
Speaker 4: don't think any of us actually know what the answer
Speaker 4: to that. I'm not even sure russ Vote Donald Trump
Speaker 4: or Chuck Schumer knows the answer.
Speaker 7: I'm not a very good political scientist, so I'm far
Speaker 7: less interested in who we pined on, although that's ultimately
Speaker 7: going to be what results. Is right one side or
Speaker 7: the other will find the situation's not working well for
Speaker 7: them and it's better for them to end it. There's
Speaker 7: a deeper economics here, which is why was Dozier failure
Speaker 7: and why would the same logic fail at the current moment.
Speaker 7: So many of us have an image in our minds
Speaker 7: of the federal government is big and bloated and pointless.
Speaker 7: And last time I went to the DMV, I thought
Speaker 7: the person behind the count it might actually have been
Speaker 7: a sloth.
Speaker 5: There's a kid's movie where it's Zutopia. It is Utopia.
Speaker 2: Yeah, I got three little ones about twenty times.
Speaker 7: It's a wonderful movie. But yeah, you walk in and like, literally,
Speaker 7: the DMV is run by a sloth. And I've been
Speaker 7: in that DMV and the sloth isn't even cute. They're
Speaker 7: resentful and middle aged and slow moving. And we take.
Speaker 3: That experience with that, I'm just kidding.
Speaker 7: We take that experience and we projected on the rest
Speaker 7: of government. There's a few things to recognize here. First
Speaker 7: of all, most of our experiences with government, with these
Speaker 7: annoying officers are actually state and local.
Speaker 4: I was just gonna say, you're talking about a state
Speaker 4: agency that's a problem from Michigan.
Speaker 7: Absolutely, but we all have that idea, and that's why
Speaker 7: there's this strong current, particularly through public and politics. Oh,
Speaker 7: let's run the government like a business, or let's choke it,
Speaker 7: or let's get rid of all these useless employees, which
Speaker 7: is what you're hearing a lot of right now. That's
Speaker 7: the wrong model for the federal government. There's an old
Speaker 7: saying about the federal government. It's an insurance company with
Speaker 7: an army. What do I mean by that? The federal
Speaker 7: government most of its spending is on what we call
Speaker 7: insurance programs. It's unemployment insurance, it's Medicare, it's Medicaid, and those.
Speaker 3: Are like not an issue here at all. I mean,
Speaker 3: those are mandatory things. That is not This is what
Speaker 3: always blows my mind about the shutdowns. It's not about
Speaker 3: the big stuff, you know. I looked into this. I
Speaker 3: got really interested in how big a share of the
Speaker 3: federal budget went to federal workers, and so I actually
Speaker 3: looked this up, and as it turns out, if you
Speaker 3: count the military of salary benefits, everything adds up to
Speaker 3: about seven percent of the US budget, and if you
Speaker 3: don't count the military, it's about five percent. So this
Speaker 3: is a very small part of the budget. And then
Speaker 3: this healthcare subsidy, the thing that's become a big point
Speaker 3: of contention between the right and the left, these sort
Speaker 3: of extra subsidies that got rolled out during the pandemic
Speaker 3: to help people afford health insurance. I mean, that is
Speaker 3: like zero point two percent of the budget. That's really little,
Speaker 3: and it's just it really striking to me that so
Speaker 3: much is happening over something that is such a small
Speaker 3: part of the seven trillion dollar budget that we spend
Speaker 3: every year.
Speaker 7: The federal government's it's a small share of the economy.
Speaker 7: Much of its function is printing Social Security chicks does
Speaker 7: checks is still going to go out. There are important
Speaker 7: things the federal government does. Some of them will be
Speaker 7: shut down for a small number of weeks. Maybe I
Speaker 7: just want to come back to this is not a
Speaker 7: macroeconomic moment. Every dollar we waste is a dollar we
Speaker 7: didn't have to waste, and it's all for political posturing.
Speaker 7: So it's as if we've just given several billion dollars
Speaker 7: to both Democrats and Republicans to spend on political advertising
Speaker 7: so they can yell at each other.
Speaker 3: And the billion dollars is that the cost or what is.
Speaker 7: The cost here, It's going to be several billion, which
Speaker 7: again is a real amount of money. I hate wasting
Speaker 7: a billion dollars. We could spend that billion building schools,
Speaker 7: or feeding hungry or giving tax cuts to people whose
Speaker 7: yachts are not big enough, guilding the White House, gilding.
Speaker 7: We could probably guild another whole room with that. One
Speaker 7: part of the story we haven't told is the public servants. Right,
Speaker 7: These are real people who I teach the other job
Speaker 7: I have you started with my economic students. I also
Speaker 7: teaching the Ford School of Public Policy. These are young
Speaker 7: things in their early twenties who answered Kennedy's call to
Speaker 7: ask not what your country can do for you, but
Speaker 7: what you can do for your country, who believe deeply
Speaker 7: and profoundly in public service and have gone off to
Speaker 7: school to become smarter at it, and can't wait to
Speaker 7: go back out there and serve the greater good. And
Speaker 7: they're being treated appallingly. They're being treated as if they're
Speaker 7: the public enemy. For the generation of students I'm teaching
Speaker 7: right now, there may not be jobs for them. For
Speaker 7: the folks who are currently in the federal government, which
Speaker 7: includes many of my former students. They're being asked to
Speaker 7: go without pay for as long as the politicians decide.
Speaker 7: And that's the thing I will just tell you. This
Speaker 7: is not being an economist, This is being a person.
Speaker 7: I find it utterly dismaying the extent to which we
Speaker 7: are using people as pawns in greater political games. And
Speaker 7: I've seen more of that since January of twenty twenty
Speaker 7: five than I've ever seen in my life. And every
Speaker 7: time I see it, it churns my stomach a lot.
Speaker 2: Wow, justin, thank you for being here. Thank you, justin,
Speaker 2: thank you very much.
Speaker 3: Okay, Max, at the top of the show, you promised
Speaker 3: that we were going to hear about the most interesting
Speaker 3: man in crypto. It is time to deliver.
Speaker 4: Yeah, but we need to back up, and I just
Speaker 4: need to explain a little bit about Trump and crypto
Speaker 4: because I think that's what the big issue here is.
Speaker 3: Okay. I do feel like the first six months of
Speaker 3: the Trump presidency there's been a lot of crypto news.
Speaker 3: Some of it I followed, some of it not so much.
Speaker 3: So what is going on right now with Trump and crypto?
Speaker 4: Yeah, this is an industry that Trump seemed to despise,
Speaker 4: during his first term. It's also one that I'm sure
Speaker 4: most listeners know. Lots of controversy, lots of allegations, some
Speaker 4: big ups, some big downs, and many of the leading
Speaker 4: lights you know going back a few years ago were
Speaker 4: either criminally charged or convicted or the subject of SEC cases.
Speaker 4: And basically Stacy, with a couple of exceptions, all those
Speaker 4: cases pretty much are gone now they've been.
Speaker 3: The President has his own coin, the Converted.
Speaker 4: Indeed, yeah, he's he's in the crypto business now. And
Speaker 4: there's an amazing BusinessWeek story out right now that kind
Speaker 4: of explains this.
Speaker 2: It's focused on Justin Sun, who.
Speaker 4: Is, like I said, this wild figure in the industry.
Speaker 4: He's the founder of the blockchain network Tron will explain
Speaker 4: what that is in a second. He owns that big
Speaker 4: famous banana or the banana that was duct taped to
Speaker 4: the wall, oh.
Speaker 3: The art piece. Is he the guy who ate the banana?
Speaker 2: He ate the banana.
Speaker 4: And the best thing about this story is that it
Speaker 4: was written by our colleague Zeke Fox, who wrote a
Speaker 4: book about crypto It's called Number Go Up. It's really
Speaker 4: like the best book that I've read on the subject.
Speaker 4: Zeke is basically an expert in all kinds of financial chicanery.
Speaker 4: He covered all those ups and downs that I mentioned,
Speaker 4: and I wanted to talk to him and try to
Speaker 4: understand the story and why all these guys who I
Speaker 4: thought of as controversial figures, who would never find themselves
Speaker 4: in a room with anybody close to the presidency, are
Speaker 4: now in position of power.
Speaker 2: What do they want? What does it mean for our country?
Speaker 3: So this story is called a crypto Billionaire's Path from
Speaker 3: Pariah to Trump Moneyman, and ze grote it with Muyaushin
Speaker 3: Max take.
Speaker 2: It away, Zeke, thanks for joining us.
Speaker 1: Thanks Max.
Speaker 4: So you and I I think have covered aspects of
Speaker 4: this world for a long time. I thought of you
Speaker 4: always as like an expert on the on financial scams,
Speaker 4: of which there are many in the world of crypto,
Speaker 4: and I had kind of gotten interested because of tech
Speaker 4: and politics and the way that crypto guys we're trying
Speaker 4: to be influential, and Justin Son kind of fits into
Speaker 4: both of these worlds.
Speaker 2: He was sued by the SEC.
Speaker 4: In twenty twenty three, accused of I'm selling unregistered securities,
Speaker 4: of manipulating the market for tokens and tron He denied wrongdoing,
Speaker 4: but then also, and this is where things get kind
Speaker 4: of interesting, the suit was paused after Sun happened to
Speaker 4: pay seventy five million dollars. It's a lot of money
Speaker 4: to a company controlled by the Trump family. And at
Speaker 4: some point he also invested fifteen million dollars. For those
Speaker 4: keeping track at home, that's ninety million total in Trump's
Speaker 4: mean coin. We're not sure of the timing there. Maybe
Speaker 4: he was before or after the sec thing, but either way,
Speaker 4: after this big initial investment, Justin Son and the Trump
Speaker 4: family go into business together.
Speaker 2: Did I get all that right, Zeke.
Speaker 1: Yeah, as long as we're just very strict on the
Speaker 1: we're talking about time here. Son first invested ninety million
Speaker 1: dollars in Trump coins, and then the lawsuit was paused.
Speaker 1: We don't know why exactly.
Speaker 4: I'm just kind of curious that somebody who had kind
Speaker 4: of followed these figures in crypto for a long time,
Speaker 4: Justin Son being kind of an important figure in this world.
Speaker 4: Were you surprised when he just like showed up in
Speaker 4: Trump world, you know, when he appeared at this event
Speaker 4: in Arlington and like gave a speech next to Trump.
Speaker 1: Yes and no. Within crypto, Son is infamous as lawyers
Speaker 1: for Coinbase, the biggest US crypto company, once set in court.
Speaker 1: He's kind of mysterious, like people aren't quite sure how
Speaker 1: rich he is or how he made his money, but
Speaker 1: he's really out there. He loves publicity stunts. He commissioned
Speaker 1: a theme song for his blockchain tron by the Oscar
Speaker 1: winning composer Hans Zimmer. He paid millions of dollars to
Speaker 1: have lunch with Warren Buffett try to pitch him on crypto.
Speaker 1: It did not work.
Speaker 2: Yeah, Buffett not a fan of crypto in general.
Speaker 1: Hates crypto. And he ran for prime minister of the
Speaker 1: libertarian micro state liber Land.
Speaker 2: Right, which, as I understand, that's somewhere in the Balkans.
Speaker 2: Is he is he the prime minister.
Speaker 1: He's the prime Minister, right.
Speaker 4: Okay, And he likes to be referred to as your excellency.
Speaker 4: He has a title to that effect from Janata.
Speaker 1: Yes, the title does come from Grenada, and this was
Speaker 1: because he was appointed their ambassador to the World Trade Organization.
Speaker 2: I'm going to take a wild guess of how you
Speaker 2: get that appointment.
Speaker 1: So at the time, it has since come out that
Speaker 1: there was kind of a scandal there and diplomatic posts
Speaker 1: were for sale for one hundred and fifty thousand dollars.
Speaker 1: We asked Son how he got his post, and his
Speaker 1: lawyer said there was no impropriety.
Speaker 2: Okay.
Speaker 4: So Sun is this larger than life figure, and like
Speaker 4: you said, you know, he's sort of everywhere and nowhere
Speaker 4: in crypto. I think over the last like ten years
Speaker 4: or so, this company Tron, was at the center of
Speaker 4: this sec thing that was dropped.
Speaker 2: It's his main thing, Like what is Tron?
Speaker 1: Yeah, so Sun's been around since the twenty seventeen ICO
Speaker 1: boom initial coin offering. Yes, and this was like the
Speaker 1: first crypto bubble when it seemed like anybody who just
Speaker 1: said the word blockchain could raise tons of money for whatever.
Speaker 1: The pitch was like pretty vague. It was going to
Speaker 1: be like a new decentralized Internet, it was going to
Speaker 1: be for content, it was going to be an app store.
Speaker 1: But at that time it didn't really matter. And Son
Speaker 1: had kind of a following from his podcast in China
Speaker 1: called the Road to Financial Freedom Revolution, and so he
Speaker 1: raised I think seventy million dollars or so for Tron
Speaker 1: in this ICO despite the kind of vague pitch and
Speaker 1: what tron is is very similar to other blockchains. So
Speaker 1: if you only think of crypto as like a replacement
Speaker 1: for dollars, that's kind of like a outdated vision of
Speaker 1: the industry, And a blockchain is kind of like a ledger.
Speaker 2: The thing.
Speaker 4: The thing usually here is that it's a distributed ledger.
Speaker 4: It's like a way of keeping track of payments. But
Speaker 4: there are lots of people who think it could be
Speaker 4: useful for other things like tracking inventory or something like that.
Speaker 2: I think that's the explanation and.
Speaker 4: The one that is used when people are trying to
Speaker 4: explain why crypto isn't just a bunch of guys essentially
Speaker 4: trying to pump up worthless currencies.
Speaker 1: Yeah, and tron has become There's one particular thing that
Speaker 1: it's mainly used for, which is a stable coin called Tether,
Speaker 1: just sort of like a digital dollar, And often when
Speaker 1: people transact in Tether, they're using tron to do so.
Speaker 4: So and Tether is used by people who are investing
Speaker 4: in cryptocurrencies.
Speaker 2: It's also.
Speaker 4: Very very useful for people who are trying to move
Speaker 4: money around without it being noticed, so that could be
Speaker 4: like money launders, criminals, terrorists, and so on.
Speaker 1: Yeah, in the last few years, word has definitely spread
Speaker 1: around the criminal world that there is this cool new
Speaker 1: way of moving money from person to person that does
Speaker 1: not involve revealing your identity.
Speaker 4: Right, and a bunch of disclaimers here, number one, pretty
Speaker 4: much everyone in the crypto industry. When when people point
Speaker 4: this out, we'll say something like, you know, US dollars
Speaker 4: are used by money launders and drug dealers. No one
Speaker 4: is trying to get rid of the US dollar. Does
Speaker 4: it make the Federal Reserve complicit in drug dealing? We
Speaker 4: are trying to stop illegal activity. This is just like
Speaker 4: kind of a bad thing that's happening. And then the
Speaker 4: last thing they bring up is that, you know, many
Speaker 4: of these currencies are decentralized, like we don't even control
Speaker 4: like what is happening on this network.
Speaker 1: Really, they try to say, like a blockchain like Bitcoin
Speaker 1: or Tron, it's like the protocols that power email or websites. Right,
Speaker 1: we don't see anyone going after them this technology. Yeah,
Speaker 1: Tron and Tether formed the T three Financial Crime Unit,
Speaker 1: and they've said that even know it's just technology, we
Speaker 1: don't want people doing bad things here. We're going to
Speaker 1: try our best to root out crime.
Speaker 4: So just to take a few steps back from the
Speaker 4: sort of questions around Justin Son, he was part of
Speaker 4: this larger, essentially like romance between Trump and the crypto industry.
Speaker 4: It started, you know, sort of mid campaign last year.
Speaker 4: I BLUs is like July at the Bitcoin conference, and
Speaker 4: I think the conventional wisdom for why Donald Trump, a
Speaker 4: populist who had in the past said that he, you know,
Speaker 4: thinks crypto is terrible, he prefers the dollar, you know,
Speaker 4: in all sorts of ways, doesn't seem like the kind
Speaker 4: of guy who would want to embrace crypto. The conventional
Speaker 4: wisdom I think for why he embraced it is basically money.
Speaker 4: That this is a big class of donors and they
Speaker 4: were all writing him checks and as a result, you
Speaker 4: had this kind of confluence where Trump took a lot
Speaker 4: of crypto money, he got into the crypto business, and
Speaker 4: he's also been changing policy and making and causing the
Speaker 4: SEC to drop cases such as the one that Justin
Speaker 4: Sun's involved in. If you had to make a case
Speaker 4: for like why Trump would embrace crypto at that moment,
Speaker 4: like what is the case for doing it outside of donations,
Speaker 4: just like trying to please donors, like is there any
Speaker 4: way that what these guys are offering, either for the
Speaker 4: American economy or for the global economy somehow like fits
Speaker 4: Trump's agenda.
Speaker 1: I mean, the Trump argument is that the traditional players
Speaker 1: in a financial system have been discriminating against conservatives. They've
Speaker 1: been cutting off bank accounts of people like the Trumps
Speaker 1: because of like the perceived risk of dealing with them.
Speaker 2: Right, this is the decentralization thing.
Speaker 4: Maybe you can't stop money laundering as well as you
Speaker 4: could if it were centralized, but you also can't discriminate
Speaker 4: against ideological viewpoints.
Speaker 2: Yeah.
Speaker 1: I think that Trump he has a lot of respect
Speaker 1: for other rich people, and that in the past he
Speaker 1: may have thought that crypto was not real money and
Speaker 1: that these people were not really rich, But then once
Speaker 1: he saw that they had lots of real money in
Speaker 1: addition to cryptocurrency, he was like, all right, they seem
Speaker 1: like my kind of guys. Maybe we should hang out,
Speaker 1: Like if they're buying memberships at mar A Lago, but
Speaker 1: they're donating to his campaign.
Speaker 4: I also feel like there's something about Justin Sun that's
Speaker 4: kind of trumpy, Like he's totally this like self created
Speaker 4: who's like using like all of these tools to sort
Speaker 4: of create an image, like you brought up the Hans
Speaker 4: Zimmer theme song for his company, which is funny, like,
Speaker 4: like what company needs a Han Zimmer theme song? I
Speaker 4: almost want to hear it kind of coming up in
Speaker 4: the background as we're discussing it.
Speaker 2: Have you heard the theme song?
Speaker 1: I definitely have, but don't I cannot describe it properly.
Speaker 4: And then you know he bought this, this piece of art,
Speaker 4: the banana that had been duct taped to the wall,
Speaker 4: you brought the buffet lunch.
Speaker 2: He basically like, if there's any way.
Speaker 4: To signal status or to use money to signal status,
Speaker 4: just the Sun is gone for it.
Speaker 2: Yeah.
Speaker 1: I mean, actually it's kind of funny because like Trump,
Speaker 1: he's willing to sell any sort of like status symbol
Speaker 1: that you want as long as it's like a Trump
Speaker 1: status symbol. Like he's like, pay me money and you
Speaker 1: can live in a Trump apartment, or you can wear
Speaker 1: a Trump watch or whatever. And Sun is like the
Speaker 1: perfect customer because he loves to spend lots of money
Speaker 1: on things that might make him look rich or important.
Speaker 2: He got a Trump watch. In fact, he.
Speaker 1: Got a Trump watch. He actually played a really key
Speaker 1: role in Trump, the Trump's getting into the crypto business.
Speaker 1: So Trump gave the speech he said, you know, I
Speaker 1: love crypto. I'm gonna deregulate the industry. It's going to
Speaker 1: be great. Everyone liked that. And then a few weeks
Speaker 1: later Trump said, and I'm going to get into the
Speaker 1: crypto business myself. I've got this company called World Liberty
Speaker 1: and the crypto industry. A lot of people were like,
Speaker 1: oh man, this is like you're in it for the
Speaker 1: wrong reason, right. We thought you just like want to
Speaker 1: to decentralize things. We didn't think you were trying to
Speaker 1: make money off of us. And so the sales of
Speaker 1: Trump's first cryptocurrency were really slow. It was looking like
Speaker 1: the project might not get off the ground. They'd set
Speaker 1: out to sell like hundreds of millions of dollars with
Speaker 1: these tokens and they only sold a couple of million.
Speaker 1: And Son stepped in and bought initially thirty million dollars
Speaker 1: in one go, and this like got a lot of
Speaker 1: momentum for the Trump project. Sun got named and advisor
Speaker 1: to World Liberty, and it kind of put them right
Speaker 1: in the in the Trump's orbit.
Speaker 4: And Son, in addition to this money that went into
Speaker 4: World Liberty. He also bought one of the Trump Meme coins.
Speaker 4: That's another payment that effectively goes to companies controlled by
Speaker 4: the Trump family. I feel like I have to ask
Speaker 4: the question that like everybody is thinking, but maybe everyone
Speaker 4: is afraid to ask, which is first of all, Justin
Speaker 4: Sun's born in China, he is not allowed to make
Speaker 4: political contributions to political candidates. You're also not, I don't think,
Speaker 4: allowed to just say, hey, I'm going to write a
Speaker 4: seventy five million dollar check to help with an SEC problem.
Speaker 2: How is this not improper?
Speaker 4: I mean he's making a payment to Trump's or many
Speaker 4: payments to Trump's family, and also getting a bunch of
Speaker 4: policy considerations.
Speaker 5: Yeah.
Speaker 1: I think Trump has made it very clear that he
Speaker 1: sees nothing wrong with accepting payments with his family, accepting
Speaker 1: payments from people who have business before his administration. And
Speaker 1: for this to be illegal, you'd have to prove that
Speaker 1: favors had been done in exchange for these payments. I mean,
Speaker 1: absence that proof, they can just say, hey, you know,
Speaker 1: Son really wanted to buy these coins. He thought they
Speaker 1: were investments. And then Trump has you know, said I
Speaker 1: want to deregulate crypto because I see it as the
Speaker 1: future of money. And this case against Sun was just
Speaker 1: one of many lawsuits the SEC had filed. I'm instructing
Speaker 1: them to toss all of them. So it's not hard
Speaker 1: to find examples where there's a conflict of interest. But
Speaker 1: so far, I haven't seen anyone who's nailed down something
Speaker 1: where they've proven that like a particular action was taken
Speaker 1: because of a particular payment, which is like the current
Speaker 1: standard for what constitutes corruption.
Speaker 4: Well, and like you said, Trump just blends his personal
Speaker 4: identity and his political identity. It's all kind of tied
Speaker 4: up together. And I feel like this story and this
Speaker 4: guy is just like one example maybe the best example
Speaker 4: of what of how Trump is changing, you know, the presidency.
Speaker 1: There's something that Trump said, and this was about the
Speaker 1: four hundred million dollar jet that his administration was accepting
Speaker 1: from the government of Cutter that I think illustrates his attitude.
Speaker 1: And he said I could say no, no, no no,
Speaker 1: or I could say thank you very much.
Speaker 4: And okay, zeke to finish up here. We said at
Speaker 4: the beginning that tron is decentralized. But in August, the
Speaker 4: Bloomberg Billionaires Index published an accounting of Justinsun's assets. That accounting,
Speaker 4: and I'm pulling this from your story, was based on
Speaker 4: material that had been provided to Bloomberg by Justin. Sun
Speaker 4: had all a bunch of his assets, including his art
Speaker 4: collection which I believe was worth fifty five million, his
Speaker 4: plane and airbus two hundred million, and then this crypto wallet,
Speaker 4: and using this crypto wallet, Bloomberg calculated that Sun had
Speaker 4: sixty billion Tron tokits, which is a majority of the supply.
Speaker 2: And he's suing Bloomberg over this.
Speaker 1: Yes, So after Bloomberg Billionaires published this valuation, Sun sued
Speaker 1: in federal court in Delaware, and he claimed that this
Speaker 1: report included details that he'd been promised wouldn't be in there,
Speaker 1: something Bloomberg has denied. And he said that listing his
Speaker 1: crypto holdings put him at risk of hacking or kidnapping.
Speaker 1: And he also said that the list of holdings that
Speaker 1: he provided to Bloomberg mistakenly included wallets that did not
Speaker 1: belong to him, and that he does not in fact
Speaker 1: own a majority of Tron's tokens. But when Bloomberg went
Speaker 1: to ask him, which of these holdings are not actually yours?
Speaker 1: To get a little more detail on what he was saying.
Speaker 1: They did not respond. We've published our story. The lawsuit
Speaker 1: is still pending.
Speaker 2: Zeke Fox, thanks for being here.
Speaker 1: Thanks Max.
Speaker 4: All Right, Stacy, the underrated part of the show. You're
Speaker 4: gonna love this story. I feel right, this is gonna
Speaker 4: be an economic indicator that.
Speaker 2: Is meaningful to you.
Speaker 4: Okay, shoot, Okay, I'm joking because I know you hate it.
Speaker 4: But this is a story in Bustle. The headline is
Speaker 4: even the sugar daddies are feeling the squeeze, and it
Speaker 4: is about how the economic forces that we have been
Speaker 4: talking about on the show, the Vibe Session, are impacting
Speaker 4: this sector of the economy, the sugar daddy sector of
Speaker 4: the economy, essentially where wealthy men are essentially women to
Speaker 4: be their girlfriends. These men are feeling less wealthy, these
Speaker 4: sugar daddies, and they are cutting back and there the
Speaker 4: article suggests that people in this world have a new
Speaker 4: term to describe them, splendid daddies, because they're so cheap,
Speaker 4: Because I splend it as kind of a crappier.
Speaker 2: Version of sugar.
Speaker 4: And so basically this is the Vibe Session but playing
Speaker 4: out in the world of sex work.
Speaker 3: Right, Okay, well, I obviously care about these issues a lot.
Speaker 3: I wrote a book about women in the workplace, Machiavelli
Speaker 3: for Women, And what this makes me think of immediately is,
Speaker 3: you know, for most of history, like women's economic opportunities
Speaker 3: was this attaching themselves in whatever way they could to
Speaker 3: a man because that was the only way to earn
Speaker 3: money or one of the only ways to earn money.
Speaker 3: I find it a little distressing that that still exists,
Speaker 3: but we still have, you know, like a gender pay
Speaker 3: gap is still a really serious thing. So I just
Speaker 3: see when I hear these stories, I just feel like
Speaker 3: the economic limitations of women in the economy have not
Speaker 3: gone like I It makes me sad. I just feel
Speaker 3: like Bustle should do better because it's supposed to be
Speaker 3: a feminist publication and women are having a hard enough
Speaker 3: time in this economy right now. Women the participation in
Speaker 3: the workforce has gone backwards recently for the first time
Speaker 3: in a long time, because childcare expenses have gotten so high,
Speaker 3: and women's earning potential is lower than often their male
Speaker 3: partners or whatever husbands, And so if there's if it's
Speaker 3: a couple, often it's more economically feasible for the man
Speaker 3: to work and the women to stay home. These are
Speaker 3: all the things going through my head right now when
Speaker 3: I hear about sugar daddies. I just feel like it's
Speaker 3: a very old profession finding a rich boyfriend. But I
Speaker 3: just feel like, of all the messions, it is the hardest.
Speaker 4: You're saying, like, of all the economic stories, the fact
Speaker 4: that these guys are like cutting back on their spending,
Speaker 4: we shouldn't be talking about it, like we should be
Speaker 4: talking about something else other than the tough times and sugaring.
Speaker 2: Well.
Speaker 3: I just think it's alarming that this is still a
Speaker 3: career path for women. I'm surprised and saddened that Bustle
Speaker 3: would cover this.
Speaker 4: So yeah, Stacy, And when we talked about this offline,
Speaker 4: it was even more Stacy is sort of is being
Speaker 4: gentle right now that she had some.
Speaker 3: I've had some time to digest it.
Speaker 4: So but one thing I wanted to say about this
Speaker 4: story is that the story is sort of premised on
Speaker 4: the idea that this is like the vibe session. So
Speaker 4: you have these guys who are like I think the
Speaker 4: lead anecdote is like a tennis coach. He's not able,
Speaker 4: he doesn't have as many clients right, people are cutting
Speaker 4: back on their tennis lessons. Therefore he's cutting back on
Speaker 4: his expenses and essentially sending his girlfriends less money and
Speaker 4: and so like.
Speaker 2: That is one possible explanation.
Speaker 4: The other possible explanation that the story suggests, and that
Speaker 4: some of the women who are in this world put forward,
Speaker 4: is that these guys are just cheap, and that it's
Speaker 4: not that the economy is bad, it's that, like dating websites,
Speaker 4: it's that there's like a market problem.
Speaker 3: I would find it funnier if I felt like the
Speaker 3: steaks were lower. I just feel like the stakes are high,
Speaker 3: you know, like a lot of women are single parents,
Speaker 3: a lot of households count on women, women live a
Speaker 3: long time. I just want to see women able to
Speaker 3: thrive in this economy. But I don't know that I
Speaker 3: do better, do better, report on something else. The show
Speaker 3: is produced by Stacy Wong. Magnus Henrickson is our supervising producer,
Speaker 3: and Amy Kean is our executive producer. Kelly garat Handle's Engineering,
Speaker 3: and Dave Purcell factchecks. Sage Bauman heads Bloomberg Podcasts Special
Speaker 3: thanks to Jeff Muskus, Julia Rubin, and Maria ling. If
Speaker 3: you have a minute, please rate and review the show.
Speaker 3: It means a lot to us. And if you have
Speaker 3: a story that should be our business, please send us
Speaker 3: an email. Everybody's at Bloomberg dot net. That is, everybody's
Speaker 3: with an us at Bloomberg dot net. We love to
Speaker 3: hear from you. Thank you for listening, and see your
Speaker 3: next time.
Speaker 2: Ye send us stories you hate too, We'll we'll walk
Speaker 2: about those.
Speaker 3: We're fine.
Speaker 2: We're good with that.
Speaker 3: We want to hear stories you hate. I control max
Speaker 3: with them. Next time, we want us to talk about
Speaker 3: sugar daddies.