1 00:00:04,559 --> 00:00:07,800 Speaker 1: In late January, Roger Vere woke up on the island 2 00:00:07,840 --> 00:00:12,319 Speaker 1: of St. Kitts. Roger lives in Tokyo, but spends a 3 00:00:12,320 --> 00:00:15,360 Speaker 1: lot of time in this Caribbean tax haven, which is 4 00:00:15,400 --> 00:00:19,080 Speaker 1: a popular hangout for people like him in the bitcoin community. 5 00:00:19,960 --> 00:00:23,040 Speaker 1: On this particular morning, he was in for a surprise. 6 00:00:23,680 --> 00:00:25,599 Speaker 1: I think I woke up in the morning and you know, 7 00:00:25,680 --> 00:00:27,480 Speaker 1: check the daily news at one of the first the 8 00:00:27,520 --> 00:00:29,160 Speaker 1: first thing I do every day when I wake up 9 00:00:29,200 --> 00:00:30,800 Speaker 1: wherever I am in the world, is to check the 10 00:00:31,360 --> 00:00:34,880 Speaker 1: latest news. And I thought, oh, wow, the biggest hack yet. 11 00:00:35,320 --> 00:00:38,800 Speaker 1: All right, that's a pretty big deal. An exchange in 12 00:00:38,920 --> 00:00:41,520 Speaker 1: Japan that fell prey to what could be a record 13 00:00:41,560 --> 00:00:45,080 Speaker 1: heist is now under government scrutiny. Coin check says five 14 00:00:45,560 --> 00:00:49,519 Speaker 1: thirty million dollars worth of cryptocurrency was stolen by hackers. 15 00:00:50,080 --> 00:00:53,000 Speaker 1: That would be the biggest ever theft of digital currency. 16 00:00:53,200 --> 00:00:56,040 Speaker 1: Roger himself didn't have any money at coin check, the 17 00:00:56,080 --> 00:00:58,880 Speaker 1: exchange of the hackers targeted, but his friend did and 18 00:00:58,960 --> 00:01:01,960 Speaker 1: called Roger in a path and he called me, and 19 00:01:02,000 --> 00:01:04,160 Speaker 1: you know, he doesn't speak in English. She's like, you know, yeah, 20 00:01:04,160 --> 00:01:06,679 Speaker 1: by yah bay, which means like this is this is crazy? 21 00:01:06,720 --> 00:01:08,040 Speaker 1: What am I gonna do? What? Am I gonna do? 22 00:01:09,360 --> 00:01:12,759 Speaker 1: A huge hack of a Japanese crypto exchange. It sounded 23 00:01:12,800 --> 00:01:15,960 Speaker 1: eerily similar to another disaster in Tokyo that went down 24 00:01:16,000 --> 00:01:21,880 Speaker 1: four years ago. Four hundred million dollars worth of another cryptocurrency, 25 00:01:21,959 --> 00:01:26,000 Speaker 1: Bitcoin was stolen from an exchange, also in Tokyo. This 26 00:01:26,080 --> 00:01:29,640 Speaker 1: exchange went by the name of Mount Cox. Are those 27 00:01:29,680 --> 00:01:32,959 Speaker 1: two major hackings? But maybe within you know, this eight 28 00:01:32,959 --> 00:01:35,960 Speaker 1: minute walk of each other, you know, probably more bitcoins 29 00:01:35,959 --> 00:01:38,800 Speaker 1: have been exchanged than any other place on the planet. 30 00:01:38,959 --> 00:01:41,600 Speaker 1: So they've had the biggest hacks, but they've had the biggest, 31 00:01:42,080 --> 00:01:45,240 Speaker 1: most successful amount of bitcoin trades taking place. So maybe 32 00:01:45,280 --> 00:01:48,080 Speaker 1: this is a a bit of an epicenter four bitcoin 33 00:01:48,120 --> 00:01:50,400 Speaker 1: trades happening around the world here right here in Hilia. 34 00:01:52,160 --> 00:01:54,640 Speaker 1: The hack this time, the one of Queen Check, was 35 00:01:54,880 --> 00:01:59,600 Speaker 1: particularly embarrassing for Japan because lawmakers there had just implemented 36 00:01:59,640 --> 00:02:03,880 Speaker 1: some of the world's most cryptocurrency friendly regulations. These were 37 00:02:03,880 --> 00:02:07,920 Speaker 1: specifically designed to prevent a repeat of the Mount Cox fiasco. 38 00:02:08,320 --> 00:02:10,240 Speaker 1: I've talked to a lot of Japanese lawmakers over the 39 00:02:10,240 --> 00:02:13,079 Speaker 1: past year, and from many of them, these laws were 40 00:02:13,080 --> 00:02:16,480 Speaker 1: a source of pride. They hope that Japan would serve 41 00:02:16,520 --> 00:02:18,400 Speaker 1: as a template for the rest of the world in 42 00:02:18,480 --> 00:02:21,519 Speaker 1: terms of crypto regulation, even as many countries cracked down 43 00:02:21,560 --> 00:02:25,400 Speaker 1: on it. Now, with half a billion dollars missing, these 44 00:02:25,440 --> 00:02:42,160 Speaker 1: new cryptocurrency laws are facing their first major test. Hi, 45 00:02:42,520 --> 00:02:46,600 Speaker 1: I'm Akio and I'm not coming up. And this week Undecrypted, 46 00:02:46,760 --> 00:02:49,400 Speaker 1: we're taking you to Japan, which has become the world's 47 00:02:49,440 --> 00:02:53,160 Speaker 1: premier hub or bitcoin. We'll be tracing the volatile rise 48 00:02:53,200 --> 00:02:55,839 Speaker 1: of bitcoin here through the eyes of the people who 49 00:02:55,840 --> 00:02:59,040 Speaker 1: were there from the very start, people like Roger has 50 00:02:59,080 --> 00:03:02,000 Speaker 1: become known as bit in Jesus for his evangelism or 51 00:03:02,080 --> 00:03:05,560 Speaker 1: bitcoin right now. There are plenty of critics who say 52 00:03:05,600 --> 00:03:10,320 Speaker 1: the recent crashing crypto crisis vindicates their cynicism, but supporters 53 00:03:10,360 --> 00:03:13,359 Speaker 1: are just as bullish as ever. They say the Queen 54 00:03:13,480 --> 00:03:17,280 Speaker 1: check heist is just a temporary setback. So will Japan 55 00:03:17,360 --> 00:03:20,200 Speaker 1: continue to embrace this new world or will it turn 56 00:03:20,240 --> 00:03:32,600 Speaker 1: its back stay with us. Back in two thousand six, 57 00:03:32,880 --> 00:03:35,280 Speaker 1: Roger was in his mid twenties and he was both 58 00:03:35,320 --> 00:03:39,120 Speaker 1: a millionaire and a convicted felon. He was a millionaire 59 00:03:39,160 --> 00:03:42,760 Speaker 1: from the online business he started that sold old computer parts, 60 00:03:43,120 --> 00:03:46,600 Speaker 1: and he was an expelling because he sold explosives online 61 00:03:46,680 --> 00:03:50,240 Speaker 1: through that business without a license. When Roger got out 62 00:03:50,240 --> 00:03:53,080 Speaker 1: of prison, he decided to leave the US. He had 63 00:03:53,120 --> 00:03:57,280 Speaker 1: had a Japanese girlfriend once, and I figured since the 64 00:03:57,280 --> 00:03:59,360 Speaker 1: one Japanese girlfriend was a good experience, I figured the 65 00:03:59,400 --> 00:04:02,120 Speaker 1: next one probably would be too. So when I arrived 66 00:04:02,320 --> 00:04:04,480 Speaker 1: in Japan, actually I was kind of basically retired at 67 00:04:04,480 --> 00:04:06,320 Speaker 1: that point. I had enough money where I could do 68 00:04:06,400 --> 00:04:10,160 Speaker 1: what I wanted. And first, first, I don't know, a 69 00:04:10,160 --> 00:04:12,800 Speaker 1: couple of years, was hanging out and puny and chasing 70 00:04:12,840 --> 00:04:15,760 Speaker 1: girls and doing that sort of thing. That went on 71 00:04:15,920 --> 00:04:19,880 Speaker 1: for a while, learning martial arts by day, partying at night. 72 00:04:20,960 --> 00:04:25,040 Speaker 1: Then in two thousand ten, Rogers stumbled upon bitcoin, back 73 00:04:25,120 --> 00:04:28,080 Speaker 1: during its super early days. I heard about this on 74 00:04:28,160 --> 00:04:30,560 Speaker 1: a show called Free Talk Live, which is a libertarian 75 00:04:30,880 --> 00:04:33,960 Speaker 1: oriented radio program on in the US, and Roger spent 76 00:04:34,000 --> 00:04:36,080 Speaker 1: a couple of minutes googling, but then forgot about it. 77 00:04:36,120 --> 00:04:37,960 Speaker 1: A couple of months later, the same show brought it 78 00:04:38,080 --> 00:04:40,320 Speaker 1: up again, and then I googled it again, and that's 79 00:04:40,360 --> 00:04:42,160 Speaker 1: when I put all the pieces together in my mind, 80 00:04:42,160 --> 00:04:44,000 Speaker 1: and I knew people were going to start using it 81 00:04:44,040 --> 00:04:47,000 Speaker 1: his money. Roger wanted to invest and he discovered a 82 00:04:47,040 --> 00:04:50,360 Speaker 1: company called mount Cox. Mount Cox was a bitcoin exchange. 83 00:04:50,440 --> 00:04:55,240 Speaker 1: He'd let you buy and sell bitcoin. In early two 84 00:04:55,279 --> 00:04:58,680 Speaker 1: thousand eleven, moult Cox was the biggest bitcoin exchange in 85 00:04:58,720 --> 00:05:02,279 Speaker 1: the world, which really saying a lot because at the 86 00:05:02,320 --> 00:05:05,160 Speaker 1: time there were just barely a handful of other scrappy 87 00:05:05,240 --> 00:05:08,680 Speaker 1: operations out there. Back then, mount Cox was still run 88 00:05:08,680 --> 00:05:11,679 Speaker 1: out of San Francisco by an American programmer called Jet 89 00:05:11,720 --> 00:05:15,000 Speaker 1: the Caleb. It was a tiny operation and bitcoin was 90 00:05:15,040 --> 00:05:18,839 Speaker 1: still trading at around eighty cents each, which, fun fact, 91 00:05:19,040 --> 00:05:22,520 Speaker 1: as of taping, has increased by about one million percent. 92 00:05:23,640 --> 00:05:26,320 Speaker 1: At around this time, mount Cox also caught the eye 93 00:05:26,400 --> 00:05:29,960 Speaker 1: of another bitcoin enthusiast living in Tokyo, a man named 94 00:05:29,960 --> 00:05:33,440 Speaker 1: Mark Carpelez. He's French and he came to Japan around 95 00:05:33,440 --> 00:05:35,880 Speaker 1: the same time Roger did. According to one of Mark's 96 00:05:35,920 --> 00:05:39,760 Speaker 1: former employees, you'll meet this person in a second. Mark 97 00:05:39,880 --> 00:05:42,640 Speaker 1: was drawn here by his love of Japanese anime, manga, 98 00:05:42,760 --> 00:05:46,520 Speaker 1: and culture. Mark bought mount Cox from its American founder. 99 00:05:46,839 --> 00:05:49,720 Speaker 1: He then moved the business to Tokyo. In the meantime, 100 00:05:49,960 --> 00:05:52,360 Speaker 1: Roger was pouring a significant chunk of his wealth into 101 00:05:52,360 --> 00:05:55,360 Speaker 1: mount Cox. The first wire sent to Mount Cox was 102 00:05:55,400 --> 00:05:58,080 Speaker 1: for U S dollars. It was a risk. And then 103 00:05:58,480 --> 00:06:00,800 Speaker 1: maybe just a couple of weeks later, talking to another 104 00:06:00,920 --> 00:06:03,559 Speaker 1: friend of mine and he told me sarcastically on the phone, 105 00:06:03,560 --> 00:06:05,880 Speaker 1: he said, Roger, if you think bitcoin is such a 106 00:06:05,880 --> 00:06:09,360 Speaker 1: good idea, why don't you buy more of them? You're right? 107 00:06:09,760 --> 00:06:11,880 Speaker 1: So the next day I sent another wired amount Cox 108 00:06:11,920 --> 00:06:15,240 Speaker 1: somebody even more. Roger was all in and his next 109 00:06:15,240 --> 00:06:17,599 Speaker 1: step was to spread the good word. So one of 110 00:06:17,600 --> 00:06:19,839 Speaker 1: the things I did was set up the Tokyo Bitcoin 111 00:06:19,880 --> 00:06:22,600 Speaker 1: meet up group. This was the world's second bitcoin meet 112 00:06:22,680 --> 00:06:25,400 Speaker 1: up group, after the one in San Francisco. He became 113 00:06:25,440 --> 00:06:28,960 Speaker 1: an important fixture in the bitcoin community in Tokyo and 114 00:06:29,000 --> 00:06:31,840 Speaker 1: we had it in shibullet or fruit parlor. So I 115 00:06:31,880 --> 00:06:34,200 Speaker 1: contacted them and said, hey, is it okay if we 116 00:06:34,240 --> 00:06:36,080 Speaker 1: have like a social meet up and we'll we'll buy 117 00:06:36,120 --> 00:06:42,120 Speaker 1: fruit from you guys, and they said, yeah, sure, no problem. 118 00:06:42,120 --> 00:06:44,960 Speaker 1: A fruit parlor is one of these places you only 119 00:06:45,000 --> 00:06:48,320 Speaker 1: see in Japan. It's like a fancy cafe, but instead 120 00:06:48,320 --> 00:06:52,279 Speaker 1: of pastries or something, you order really expensive fruit. He 121 00:06:52,320 --> 00:06:54,560 Speaker 1: was about two years later that I first heard about Roger. 122 00:06:54,839 --> 00:06:56,480 Speaker 1: One of my friends met him at a house party 123 00:06:56,520 --> 00:07:00,240 Speaker 1: in Tokyo, and he said, there's this crazy American guy 124 00:07:00,279 --> 00:07:03,520 Speaker 1: who wouldn't stop talking about some digital currency called bitcoin, 125 00:07:04,000 --> 00:07:06,680 Speaker 1: and he gave me one whole bitcoin. But I have 126 00:07:06,720 --> 00:07:09,680 Speaker 1: no idea what that even means. This was something that 127 00:07:09,800 --> 00:07:13,280 Speaker 1: Razer did a lot. Giving away bitcoin was his way 128 00:07:13,320 --> 00:07:18,160 Speaker 1: of spreading the word. How much bitcoin do you estimate 129 00:07:18,240 --> 00:07:20,760 Speaker 1: you gave away during that period? Thousands and thousands of 130 00:07:21,040 --> 00:07:23,760 Speaker 1: bitcoins of full bitcoins, Yeah, thousands of thousands, more than 131 00:07:23,760 --> 00:07:27,760 Speaker 1: ten thousand, Yes, ten thousand bitcoins would be worth what 132 00:07:28,840 --> 00:07:32,320 Speaker 1: five sillion dollars? Right? No? Oh, non, worth fifty million dollars? 133 00:07:34,160 --> 00:07:36,920 Speaker 1: So used to me give me ten thousand bitcoin? I'd 134 00:07:36,920 --> 00:07:40,360 Speaker 1: say at least ten thousand. In those early days, the 135 00:07:40,440 --> 00:07:44,480 Speaker 1: meetups were attended by mostly non Japanese enthusiasts, Lots of 136 00:07:44,480 --> 00:07:47,720 Speaker 1: people who are libertarians, a bit of like a hacker 137 00:07:47,760 --> 00:07:54,000 Speaker 1: anarchist vibe. There's people who are very much dedicated to 138 00:07:52,600 --> 00:07:57,920 Speaker 1: to building a kind of solid community. This is Thomas Gluxman, 139 00:07:58,120 --> 00:08:01,000 Speaker 1: who used to work from outdogs. He attended the meet 140 00:08:01,040 --> 00:08:05,920 Speaker 1: ups occasionally, not just about like oh, I'm curious about 141 00:08:05,920 --> 00:08:08,120 Speaker 1: how I can make money from this thing. That was 142 00:08:08,320 --> 00:08:11,800 Speaker 1: not really the the goal or the focus of bitcoin 143 00:08:11,880 --> 00:08:15,200 Speaker 1: back then. Then in bitcoin's first boom in late two 144 00:08:15,200 --> 00:08:19,280 Speaker 1: thousand thirteen, it hit one thousand dollars. The digital currency 145 00:08:19,560 --> 00:08:22,320 Speaker 1: has hit a record high morning. The question really is 146 00:08:22,360 --> 00:08:25,800 Speaker 1: why why has bitcoins served so much? It's not just 147 00:08:25,960 --> 00:08:28,840 Speaker 1: that prices are going up, it's usage is going up. 148 00:08:28,840 --> 00:08:31,360 Speaker 1: There are more and more bitcoins. After that, all kinds 149 00:08:31,360 --> 00:08:33,880 Speaker 1: of folks started coming. They meet up outgrew the fruit 150 00:08:33,920 --> 00:08:36,400 Speaker 1: Spoiler and moved to a bar in ro Pungy that's 151 00:08:36,440 --> 00:08:39,760 Speaker 1: one of Tokyo's nightlife areas. Yeah, and the craziest thing 152 00:08:39,800 --> 00:08:43,280 Speaker 1: that I remember were the burlesque dancers. These were basically 153 00:08:43,440 --> 00:08:47,560 Speaker 1: uh well era strippers. They didn't take all their clothes off, 154 00:08:47,920 --> 00:08:50,760 Speaker 1: but they had QR code stickers on their bodies and 155 00:08:50,800 --> 00:08:54,640 Speaker 1: he was their bitcoin wallet address. So people if they 156 00:08:54,679 --> 00:08:57,360 Speaker 1: liked their dancing, they would scan the QR code on 157 00:08:57,600 --> 00:09:01,559 Speaker 1: their bodies and send them bitcoin with their phone. It's 158 00:09:01,600 --> 00:09:07,920 Speaker 1: amazing anyway, the burlesque side. For years, this meet up 159 00:09:07,920 --> 00:09:10,280 Speaker 1: created a forum for people in Japan to learn about 160 00:09:10,320 --> 00:09:14,160 Speaker 1: bitcoin and balance around ideas. He even convinced quite a 161 00:09:14,240 --> 00:09:16,600 Speaker 1: number of people to quit their day jobs and embark 162 00:09:16,679 --> 00:09:21,000 Speaker 1: on various crypto related ventures. Roger did other things to 163 00:09:21,080 --> 00:09:25,440 Speaker 1: popularize bitcoin too. Bitcoin got started by a person or 164 00:09:25,440 --> 00:09:27,199 Speaker 1: a group of people who went by the name of 165 00:09:27,280 --> 00:09:31,360 Speaker 1: Satoshi Nakamoto with a manifesto that laid out the whole 166 00:09:31,440 --> 00:09:34,800 Speaker 1: vision for it. That document was written in English, so 167 00:09:35,000 --> 00:09:39,600 Speaker 1: Roster paid to get it translated into Japanese. Roger also 168 00:09:39,720 --> 00:09:44,040 Speaker 1: created YouTube videos explaining bitcoin in Japanese and translated other 169 00:09:44,080 --> 00:09:48,440 Speaker 1: promotional material like the bitcoin dot org website, and he 170 00:09:48,480 --> 00:09:51,200 Speaker 1: also invested a lot of his own money and bitcoin 171 00:09:51,280 --> 00:09:55,600 Speaker 1: startups like Cracking, bit pay and blockchain dot Info. He 172 00:09:55,720 --> 00:09:58,120 Speaker 1: was one of the two people who initially funded the 173 00:09:58,160 --> 00:10:02,679 Speaker 1: Bitcoin Foundation, which is an organization that promotes bitcoin adoption, 174 00:10:02,920 --> 00:10:07,360 Speaker 1: with five thousand bitcoin. Meanwhile, Roger's meet up continued growing. 175 00:10:08,120 --> 00:10:10,560 Speaker 1: Soon he was attracting people who would later go on 176 00:10:10,600 --> 00:10:14,240 Speaker 1: to play key roles in Japan's bitcoin community, people like 177 00:10:14,400 --> 00:10:18,920 Speaker 1: use O'Connell, a former Goldman sex retistrator. You so now 178 00:10:19,040 --> 00:10:23,360 Speaker 1: runs the company bit Flyer, which is Japan's largest bitcoin exchange. 179 00:10:24,400 --> 00:10:26,000 Speaker 1: Do you remember some of the conversations you had with 180 00:10:26,040 --> 00:10:28,440 Speaker 1: him back then? Was it? Yeah, we both talked about 181 00:10:28,440 --> 00:10:30,640 Speaker 1: who you're interested in bitcoin? So, I mean again in 182 00:10:30,679 --> 00:10:34,160 Speaker 1: that way the meetups that you organized were a lot 183 00:10:34,200 --> 00:10:36,280 Speaker 1: of you know, and the things that you translated were 184 00:10:36,920 --> 00:10:41,360 Speaker 1: the first interactions Japanese people have with bitcoin, right thanks 185 00:10:41,360 --> 00:10:46,760 Speaker 1: to me as the foreigner, I guess. Meanwhile, as more 186 00:10:46,840 --> 00:10:51,760 Speaker 1: people poured into bitcoin, milkox grew, the company began attracting 187 00:10:51,840 --> 00:10:55,240 Speaker 1: interest from the Japanese media. This is Thomas, the former 188 00:10:55,280 --> 00:10:59,080 Speaker 1: mountdos employee. I remember we would have goals to the 189 00:10:59,120 --> 00:11:03,400 Speaker 1: office from like the various different TV companies and newspapers 190 00:11:03,440 --> 00:11:06,439 Speaker 1: asking us like what is bitcoin? How does it work? 191 00:11:06,880 --> 00:11:10,360 Speaker 1: They thought mount box was bitcoin. You know. Mark was 192 00:11:10,400 --> 00:11:15,120 Speaker 1: often quoted in the Japanese media as the CEO of bitcoin, 193 00:11:15,760 --> 00:11:18,800 Speaker 1: So there wasn't that mature level of understanding that you 194 00:11:18,920 --> 00:11:23,160 Speaker 1: see now in the Japanese media about cryptocurrency and bitcoin 195 00:11:23,240 --> 00:11:26,440 Speaker 1: and the difference between the exchanges and the cryptocurrency itself. 196 00:11:26,800 --> 00:11:29,720 Speaker 1: As mount Dox's influence grew both in Japan and abroad, 197 00:11:30,240 --> 00:11:33,800 Speaker 1: for some time it handled more than gluevable bitcoin trading, 198 00:11:34,480 --> 00:11:36,840 Speaker 1: which by the end of thousand thirteen and early two 199 00:11:37,120 --> 00:11:41,200 Speaker 1: fourteen became a pretty big deal until it all came 200 00:11:41,280 --> 00:11:50,479 Speaker 1: crashing down in early January. Milk box users started complaining 201 00:11:50,720 --> 00:11:54,480 Speaker 1: that they weren't able to withdraw their money. The exchange 202 00:11:54,480 --> 00:11:58,320 Speaker 1: officially announced it was stopping withdrawals in early February and 203 00:11:58,360 --> 00:12:01,960 Speaker 1: stopped trading in mid fib You worry. The news set 204 00:12:02,040 --> 00:12:11,240 Speaker 1: shock waves through the bitcoin community worldwide. In Tokyo, Nolan. 205 00:12:16,120 --> 00:12:19,400 Speaker 1: It's still not totally clear what happened, but someone, either 206 00:12:19,400 --> 00:12:22,920 Speaker 1: an inside job or external hackers ended up stealing most 207 00:12:22,960 --> 00:12:26,880 Speaker 1: of the customers bitcoin deposits at Mount Cox, and those 208 00:12:26,960 --> 00:12:29,640 Speaker 1: were worth about four dred million dollars at two thousand 209 00:12:29,720 --> 00:12:34,840 Speaker 1: fourteen prices. Yeah, I was in Japan, and I think 210 00:12:34,840 --> 00:12:38,960 Speaker 1: people were just stunned more than anything else. Moult Cox 211 00:12:39,080 --> 00:12:42,640 Speaker 1: was unable to find these deposits and filed for bankruptcy 212 00:12:42,679 --> 00:12:47,240 Speaker 1: protection in Tokyo. I remember visiting a police station in Shibia, 213 00:12:47,440 --> 00:12:49,959 Speaker 1: which is about a five minute walk from Mount Cox headquarters, 214 00:12:50,200 --> 00:12:53,280 Speaker 1: and sitting down with a man from their cyber crimes division, 215 00:12:53,360 --> 00:12:54,960 Speaker 1: and it was so clear to me that he was 216 00:12:55,120 --> 00:12:58,760 Speaker 1: totally clueless about what was going on bitcoin, digital currency, 217 00:12:58,880 --> 00:13:02,040 Speaker 1: Mount Cox. It was it was all completely new to him. 218 00:13:02,040 --> 00:13:05,480 Speaker 1: But of course that experience forced Japan to learn and 219 00:13:05,559 --> 00:13:08,080 Speaker 1: unleash this frenzy to figure out how to never let 220 00:13:08,120 --> 00:13:22,280 Speaker 1: something like this happen again. Welcome back. At this point, 221 00:13:22,320 --> 00:13:26,040 Speaker 1: it's March and Japan is reeling from the hack in 222 00:13:26,120 --> 00:13:30,520 Speaker 1: subsequent bankruptcy of the Mount Cox Bitcoin Exchange, the authorities 223 00:13:30,640 --> 00:13:33,080 Speaker 1: knew they had to act to stop something like this 224 00:13:33,200 --> 00:13:36,839 Speaker 1: from happening ever again, so Japan's Prime Minister signed the 225 00:13:36,920 --> 00:13:39,200 Speaker 1: job of sorting the sell out to someone in his 226 00:13:39,360 --> 00:13:50,680 Speaker 1: ruling party. A lawmaker by the name of mine said, 227 00:13:50,679 --> 00:13:53,200 Speaker 1: this is when he first learned about bitcoin. If it 228 00:13:53,240 --> 00:13:55,400 Speaker 1: wasn't from Montgos, he wouldn't have been involved with the 229 00:13:55,440 --> 00:13:58,920 Speaker 1: bitcoin regulation at all. He was a pure coincidence. He 230 00:13:58,960 --> 00:14:02,720 Speaker 1: didn't know a thing about bitcoin. With pretty much everyone 231 00:14:02,840 --> 00:14:05,280 Speaker 1: in the country clueless about what to do, from the 232 00:14:05,440 --> 00:14:09,760 Speaker 1: police to the banks to establish tech companies, if Gouda 233 00:14:10,000 --> 00:14:12,440 Speaker 1: did the only thing you could do back then, he 234 00:14:12,480 --> 00:14:16,840 Speaker 1: went to go meet Roger told you, sure, we know, Yeah, 235 00:14:21,800 --> 00:14:24,000 Speaker 1: he told me, of course. The first thing I did 236 00:14:24,160 --> 00:14:27,640 Speaker 1: was going to Roger's meetups. Instead of searching for experts 237 00:14:27,640 --> 00:14:30,000 Speaker 1: at all kinds of places, he was faster to just 238 00:14:30,040 --> 00:14:32,720 Speaker 1: go to the meet up and ask questions there directly 239 00:14:33,080 --> 00:14:35,320 Speaker 1: with the people who were buying it and using it. 240 00:14:35,880 --> 00:14:39,280 Speaker 1: That's where he met others like the former Goldman trader 241 00:14:39,440 --> 00:14:42,320 Speaker 1: used o'conno at this point, I mean, Yuki didn't really 242 00:14:42,320 --> 00:14:45,040 Speaker 1: have another country's laws he could turn to, for example, 243 00:14:45,880 --> 00:14:48,640 Speaker 1: since no other developed economy had really waited into this. 244 00:14:49,120 --> 00:14:51,440 Speaker 1: He was coming up with a new framework from scratch 245 00:14:51,520 --> 00:14:56,600 Speaker 1: for bitcoin regulation. He came to believe that he needed 246 00:14:56,640 --> 00:15:00,240 Speaker 1: to prevent the government from suffocating this Nissan industry to 247 00:15:00,320 --> 00:15:02,960 Speaker 1: its death, that the industry would more or less be 248 00:15:03,040 --> 00:15:06,880 Speaker 1: able to regulate itself. Of course, that's exactly what the 249 00:15:06,880 --> 00:15:10,720 Speaker 1: industry power players like use O'Connell wanted to hear. While 250 00:15:10,800 --> 00:15:14,280 Speaker 1: Japan has fewer libertarians, in the US, I've met my 251 00:15:14,360 --> 00:15:17,120 Speaker 1: fair share of gold bugs and government haters at Roger's 252 00:15:17,160 --> 00:15:21,240 Speaker 1: meetups that I attended. Here's Thomas, the former Mountcox employee. Again. 253 00:15:22,680 --> 00:15:26,520 Speaker 1: I think it's really fascinating because um persent. I was 254 00:15:26,600 --> 00:15:30,640 Speaker 1: just thinking that, Okay, they're probably going to, um, you know, 255 00:15:30,720 --> 00:15:33,360 Speaker 1: take the Chinese approach of just like okay, which is 256 00:15:33,360 --> 00:15:36,160 Speaker 1: gonna ban this thing, and you nobody's gonna be able 257 00:15:36,200 --> 00:15:38,280 Speaker 1: to do this again. We're never gonna hear this again. 258 00:15:38,600 --> 00:15:40,880 Speaker 1: That's it. But they kind of win the opposite way 259 00:15:40,920 --> 00:15:44,320 Speaker 1: of Okay. We think if Gooda ended up proposing legislation 260 00:15:44,400 --> 00:15:49,520 Speaker 1: that would embrace cryptocurrencies, effectively turning bitcoin into legal tender 261 00:15:49,560 --> 00:15:53,160 Speaker 1: in Japan alongside with the traditional currency, the Japanese yen. 262 00:16:00,040 --> 00:16:03,800 Speaker 1: More about in the next day, Miniyuki told me there 263 00:16:03,880 --> 00:16:07,280 Speaker 1: wasn't much pushback. It wasn't even about pushback or not, 264 00:16:07,520 --> 00:16:10,640 Speaker 1: because no one even understood bitcoin. No one in the 265 00:16:10,680 --> 00:16:14,400 Speaker 1: government knew what's good and bad about it. They really 266 00:16:14,440 --> 00:16:17,560 Speaker 1: just left it to his team, the technology experts. It 267 00:16:17,680 --> 00:16:21,160 Speaker 1: was just two people who knew anything, Miniyuki and his boss. 268 00:16:21,600 --> 00:16:24,600 Speaker 1: The new law was passed in sixteen and went into 269 00:16:24,640 --> 00:16:28,720 Speaker 1: effect in April. It goes against what governments have done 270 00:16:28,800 --> 00:16:32,320 Speaker 1: in many other major economies. In the US and Europe, 271 00:16:32,360 --> 00:16:36,120 Speaker 1: regulators and politicians have been cautious. You see headlines every 272 00:16:36,200 --> 00:16:39,920 Speaker 1: day with people giving all kinds of warnings. China has 273 00:16:40,000 --> 00:16:44,520 Speaker 1: outright band trading and initial coin offerings. South Korea also 274 00:16:44,600 --> 00:16:49,880 Speaker 1: banned initial coin offerings and cracked down on exchanges. Experson 275 00:16:50,000 --> 00:16:53,120 Speaker 1: was coming alright, so so she's like, oh, yeah, you 276 00:16:53,120 --> 00:16:57,080 Speaker 1: can play with bitcoin here, no problem. A couple of 277 00:16:57,080 --> 00:16:59,480 Speaker 1: months ago, Roger and I went to an electronics store 278 00:16:59,520 --> 00:17:02,920 Speaker 1: called Comment Up to buy a USB stick with bitcoin. 279 00:17:03,120 --> 00:17:04,520 Speaker 1: That's the kind of thing you can do now with 280 00:17:04,560 --> 00:17:08,600 Speaker 1: this new legislation, which made bitcoin illegally recognized form of payment, 281 00:17:09,280 --> 00:17:13,720 Speaker 1: Japan is the first major economy to do so. Okay, 282 00:17:13,760 --> 00:17:16,640 Speaker 1: And now she's pointed at QR code, which roger scanning, 283 00:17:17,480 --> 00:17:22,000 Speaker 1: and what does it say? Sixty one since it's non cling, 284 00:17:22,119 --> 00:17:24,959 Speaker 1: send and screen the transaction. The benefit of these new 285 00:17:25,000 --> 00:17:28,080 Speaker 1: laws is that they give this clarity, this certainty to 286 00:17:28,240 --> 00:17:31,520 Speaker 1: companies in Japan that want to try out a cryptocurrencies. 287 00:17:32,200 --> 00:17:34,600 Speaker 1: They don't have to worry about getting punished by regulators 288 00:17:34,640 --> 00:17:39,000 Speaker 1: for experimenting with something that's legally dubious. Not my phone 289 00:17:39,040 --> 00:17:41,520 Speaker 1: sent it, he said, His phone is sent it. Her 290 00:17:41,600 --> 00:17:46,280 Speaker 1: should pop up with me in the second just okay, okay. 291 00:17:47,600 --> 00:17:50,879 Speaker 1: The new law also gives the main financial regulator the 292 00:17:51,000 --> 00:17:55,000 Speaker 1: right to audit and give licenses to cryptocurrency exchanges. This 293 00:17:55,080 --> 00:17:58,680 Speaker 1: is supposed to protect against hackers and prevent money laundering. 294 00:18:02,400 --> 00:18:04,800 Speaker 1: For a time, things seem to be going really well 295 00:18:04,840 --> 00:18:08,680 Speaker 1: for cryptocurrencies in Japan. In April seventeen, when the new 296 00:18:08,760 --> 00:18:12,200 Speaker 1: law took effect in Japan, one bitcoin was worth about 297 00:18:12,240 --> 00:18:16,600 Speaker 1: twelve hundred dollars That rose dramatically over the next few months. 298 00:18:17,760 --> 00:18:20,920 Speaker 1: It actually crossed over into record territory last night, moving 299 00:18:20,960 --> 00:18:24,480 Speaker 1: closer to that eight thousand dollar mark, Bitcoin soars past 300 00:18:24,560 --> 00:18:27,760 Speaker 1: thirteen thousand dollars for the first time the largest, and 301 00:18:27,800 --> 00:18:31,720 Speaker 1: by December bitcoin prices were closing in a nineteen thousand 302 00:18:31,760 --> 00:18:36,760 Speaker 1: dollars Roger has almost certainly gotten rich with his bitcoin investments, 303 00:18:37,080 --> 00:18:39,159 Speaker 1: although he doesn't want to say exactly how much he owns, 304 00:18:39,720 --> 00:18:42,680 Speaker 1: and he's becoming a celebrity in his own right. Towards 305 00:18:42,720 --> 00:18:44,919 Speaker 1: the end of last year, right around the peak of 306 00:18:44,920 --> 00:18:47,800 Speaker 1: the hype for crypto, I went to the Tokyo Bitcoin 307 00:18:47,840 --> 00:18:50,080 Speaker 1: meet up with him, the very one he started just 308 00:18:50,119 --> 00:18:53,119 Speaker 1: a couple years back. It was nothing like the quiet, 309 00:18:53,160 --> 00:18:55,960 Speaker 1: intellectual discussions of the food parlor that I was used to. 310 00:18:57,560 --> 00:18:59,879 Speaker 1: There must have been at least a hundred people packed 311 00:18:59,880 --> 00:19:02,440 Speaker 1: to this bar in Tokyo. As soon as you walked 312 00:19:02,440 --> 00:19:05,800 Speaker 1: into the door together, Roger got mobbed by everyone there. 313 00:19:06,240 --> 00:19:07,679 Speaker 1: I didn't even get a chance to talk to him 314 00:19:07,720 --> 00:19:12,640 Speaker 1: for the rest of the night. But a few days 315 00:19:12,680 --> 00:19:15,480 Speaker 1: before the end of the year, prices started to fall, 316 00:19:15,920 --> 00:19:18,679 Speaker 1: and by the end of January, several people watching the 317 00:19:18,720 --> 00:19:22,200 Speaker 1: markets were talking about how the bitcoin bubble might be bursting. 318 00:19:23,200 --> 00:19:27,640 Speaker 1: Then on January, just when prices were dipping towards ten 319 00:19:27,720 --> 00:19:32,520 Speaker 1: thousand dollars. The Japanese cryptocurrency exchange coin check announced that 320 00:19:32,560 --> 00:19:42,800 Speaker 1: it was stopping withdrawals. We were rushing to understand exactly 321 00:19:42,840 --> 00:19:45,880 Speaker 1: what happened in coin check. Soon we learned that half 322 00:19:45,880 --> 00:19:49,520 Speaker 1: a billion dollars of this new currency was missing and 323 00:19:49,520 --> 00:19:53,640 Speaker 1: that about two sixty customers were affected. In the days 324 00:19:53,720 --> 00:19:57,320 Speaker 1: after the heights became public, investors got worried that regulators 325 00:19:57,359 --> 00:20:00,800 Speaker 1: would take action to protect consumers. A threat of more 326 00:20:00,840 --> 00:20:03,920 Speaker 1: regulation pushed the price of bitcoin all the way down 327 00:20:03,920 --> 00:20:07,639 Speaker 1: to six thousand. Ironically, the heist, like the one that 328 00:20:07,680 --> 00:20:11,000 Speaker 1: had happened at coin check, was exactly the kind of 329 00:20:11,040 --> 00:20:13,680 Speaker 1: thing that the new Japanese law was supposed to prevent, 330 00:20:13,960 --> 00:20:16,560 Speaker 1: but its focus on self regulation meant that it was 331 00:20:16,680 --> 00:20:19,880 Speaker 1: mostly up to each exchange to ensure that it was secure. 332 00:20:20,280 --> 00:20:28,280 Speaker 1: Here's the lawmaker, Menayuki Good again told me that the 333 00:20:28,359 --> 00:20:31,800 Speaker 1: law already requires companies to be secure, and how how 334 00:20:31,960 --> 00:20:34,720 Speaker 1: you take that is up to each individual company to decide. 335 00:20:35,320 --> 00:20:37,520 Speaker 1: So he doesn't think it's anything that the government should 336 00:20:37,520 --> 00:20:40,240 Speaker 1: get involved in. It's up to each individual company and 337 00:20:40,280 --> 00:20:44,280 Speaker 1: their management. But amid all this finger pointing public outrage 338 00:20:44,320 --> 00:20:49,280 Speaker 1: and media scrutiny. Something unexpected happened. You think a little 339 00:20:49,320 --> 00:20:52,200 Speaker 1: known exchange like coin check losing half a billion dollars 340 00:20:52,200 --> 00:20:54,879 Speaker 1: would doom it, But it turns out coin check was 341 00:20:54,920 --> 00:20:58,200 Speaker 1: making so much money he was able to use company 342 00:20:58,240 --> 00:21:02,280 Speaker 1: funds to plug their giant whole. By mid March, less 343 00:21:02,280 --> 00:21:05,000 Speaker 1: than two months after the hack, coin check had paid 344 00:21:05,000 --> 00:21:08,280 Speaker 1: back everyone using its own money, which is just such 345 00:21:08,320 --> 00:21:12,199 Speaker 1: a different story from what happened with mount Cox. To 346 00:21:12,400 --> 00:21:16,320 Speaker 1: this day, four years later, Mount Cox's customers are still 347 00:21:16,400 --> 00:21:19,520 Speaker 1: waiting to get their deposits back. I asked Roger if 348 00:21:19,520 --> 00:21:21,879 Speaker 1: you thought the industry was getting better at responding to 349 00:21:21,920 --> 00:21:24,399 Speaker 1: these big hacks, But so, yeah, I guess I do 350 00:21:24,560 --> 00:21:27,959 Speaker 1: think that things are getting better. Um, but that doesn't 351 00:21:28,240 --> 00:21:30,280 Speaker 1: mean that there aren't going to be more horrible experiences 352 00:21:30,280 --> 00:21:33,400 Speaker 1: in the future. But if you look at the horrible 353 00:21:33,400 --> 00:21:36,200 Speaker 1: things that central banking have enabled across the world, it's 354 00:21:36,240 --> 00:21:38,040 Speaker 1: it's certainly not going to be worse than that. So 355 00:21:38,119 --> 00:21:42,800 Speaker 1: it's a the problems enabled or problems caused by cryptocurrency 356 00:21:43,000 --> 00:21:47,119 Speaker 1: hackings or pale in comparison to the you know, destruction 357 00:21:47,160 --> 00:21:49,640 Speaker 1: caused by central banking. For the last couple hundred years. 358 00:21:50,560 --> 00:21:54,560 Speaker 1: It's spoken like a true libertarian for sure, although actually 359 00:21:54,640 --> 00:21:57,160 Speaker 1: coin checks Recovery is quiet at calls for a crypto 360 00:21:57,160 --> 00:22:00,119 Speaker 1: crack down in Japan. While reporting on the hack, we 361 00:22:00,200 --> 00:22:03,480 Speaker 1: reached out to dozens of lawmakers and regulators. Not even 362 00:22:03,560 --> 00:22:06,760 Speaker 1: lawmakers an opposition party thought the laws should be rolled back. 363 00:22:07,400 --> 00:22:10,320 Speaker 1: Japan is taking to its guns. Here's Thomas, the former 364 00:22:10,320 --> 00:22:14,320 Speaker 1: Mountgos employee. The fact that now we've gone from Japan 365 00:22:14,480 --> 00:22:20,880 Speaker 1: is just so inconspicuous. Crypto hub which happened organically because 366 00:22:20,880 --> 00:22:23,200 Speaker 1: of the presence of malt Cox and because of the 367 00:22:23,280 --> 00:22:27,280 Speaker 1: kind of the handful or dozen or so very crypto 368 00:22:29,240 --> 00:22:32,120 Speaker 1: like crypto evangelists like Roger Vert and a few others 369 00:22:32,119 --> 00:22:35,000 Speaker 1: for example, who just happened to be based here to 370 00:22:35,200 --> 00:22:40,639 Speaker 1: this now very much top down driven. Welcome to the Japan. 371 00:22:41,240 --> 00:22:43,200 Speaker 1: We want to be the crypto hub of Asia, if 372 00:22:43,240 --> 00:22:45,400 Speaker 1: not the world. And this is what I'm hearing now 373 00:22:45,440 --> 00:22:48,360 Speaker 1: directly from the dog Yo government. Um, that's what they 374 00:22:48,400 --> 00:22:52,119 Speaker 1: want Japan to be seen as. In the meantime, emboldened 375 00:22:52,119 --> 00:22:55,080 Speaker 1: by the regulatory clarity that the new laws have brought, 376 00:22:55,320 --> 00:22:59,399 Speaker 1: Japanese companies are continuing to jump into krypto rucked in, 377 00:22:59,640 --> 00:23:02,879 Speaker 1: which is like Japan's Amazon, set in February that it 378 00:23:02,880 --> 00:23:06,400 Speaker 1: will launch its own token. Coin check itself was also 379 00:23:06,480 --> 00:23:09,920 Speaker 1: sold last week to Monic's, a well known online retail 380 00:23:09,960 --> 00:23:12,600 Speaker 1: broker in Japan, a little bit like e Trade in 381 00:23:12,600 --> 00:23:17,040 Speaker 1: the US. What's more, a government back study group this 382 00:23:17,119 --> 00:23:21,560 Speaker 1: month announced a basic regulatory framework for initial coin offerings, 383 00:23:21,600 --> 00:23:24,240 Speaker 1: the first of its kind in the world. If Japan 384 00:23:24,400 --> 00:23:28,160 Speaker 1: and next clear guidelines for icos, it could attract blockchain 385 00:23:28,200 --> 00:23:30,800 Speaker 1: startups and become a hub for more than just crypto trading. 386 00:23:34,240 --> 00:23:37,760 Speaker 1: As for Roger these days, well, he's still just as 387 00:23:37,800 --> 00:23:41,400 Speaker 1: bullish about cryptocurrencies as he's always been. Every day there 388 00:23:41,440 --> 00:23:44,160 Speaker 1: seems to be someone new that declares the end of bitcoin, 389 00:23:44,520 --> 00:23:46,440 Speaker 1: and it seemed like there's this general sense that the 390 00:23:46,440 --> 00:23:49,520 Speaker 1: bitcoin bubble has popped, but like a true believer, Roger 391 00:23:49,600 --> 00:23:52,760 Speaker 1: isn't phazed by any of that. So somehow I wound 392 00:23:52,800 --> 00:23:55,439 Speaker 1: up with the nickname Bitcoin Jesus. I think a more 393 00:23:55,520 --> 00:23:58,560 Speaker 1: accurate nickname probably would have been a Bitcoin Johnny Appleseed, 394 00:23:59,520 --> 00:24:01,240 Speaker 1: because I do feel like I planned a lot of 395 00:24:01,280 --> 00:24:05,480 Speaker 1: the seeds around the world to help get cryptocurrency started. 396 00:24:05,760 --> 00:24:08,720 Speaker 1: And uh, it's been a fun ride Um, there's not 397 00:24:08,800 --> 00:24:11,240 Speaker 1: really anything more fulfilling to work on something that literally 398 00:24:11,240 --> 00:24:13,600 Speaker 1: can improve the lives of every human being on the planet. 399 00:24:14,359 --> 00:24:16,520 Speaker 1: Things like that don't come along every day, and here 400 00:24:16,520 --> 00:24:19,399 Speaker 1: we are right still at the early stages of that. 401 00:24:19,520 --> 00:24:22,360 Speaker 1: So it's it's been incredibly fun and I still wake 402 00:24:22,440 --> 00:24:25,720 Speaker 1: up excited about it every day and hope to continue 403 00:24:25,720 --> 00:24:39,159 Speaker 1: planning those seeds around the world. And that's it for 404 00:24:39,240 --> 00:24:42,600 Speaker 1: this week's episode of decryptid. Thanks for listening. Do you 405 00:24:42,680 --> 00:24:45,520 Speaker 1: have a story about cryptic currencies? You can email us 406 00:24:45,560 --> 00:24:48,600 Speaker 1: at decrypted at Bloomberg dot net, or you can reach 407 00:24:48,600 --> 00:24:52,600 Speaker 1: me on Twitter at y Nakamura five six and I'm 408 00:24:52,640 --> 00:24:55,520 Speaker 1: at A seven. If this is the first time you 409 00:24:55,600 --> 00:24:58,560 Speaker 1: stumbled upon our show, welcome. We hope you'll subscribe to 410 00:24:58,640 --> 00:25:01,920 Speaker 1: Decrypted wherever you get your podcasts. We have at least 411 00:25:01,920 --> 00:25:04,600 Speaker 1: one more crypto episode coming up in the next few months. 412 00:25:05,080 --> 00:25:08,359 Speaker 1: This episode was produced by Pia god Cary, Liz Smith, 413 00:25:08,720 --> 00:25:12,159 Speaker 1: Magnus Hendrickson, and Francesca Levi is the head of the 414 00:25:12,280 --> 00:25:14,440 Speaker 1: Bird podcast. We'll see you next week.