Speaker 1: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenebeck on Bloomberg Radio.
Speaker 2: Well, Tim, as you know. In twenty twenty one, crypto
Speaker 2: went mainstream, with the likes of celebrities from Tom Brady
Speaker 2: to Matt Damon endorsing it. Investment funds were buying it.
Speaker 2: TV ads hailed it as the future of money, and
Speaker 2: retail traders were making fortune off of dogecoin, which was
Speaker 2: originally created as a joke in twenty thirteen. So was
Speaker 2: it all just a game of epic proportions? While a
Speaker 2: new book by Bloomberg's own Zeke Fox dives deep into this,
Speaker 2: it's called Number Go Up. Inside Crypto's wild rise and
Speaker 2: staggering Fall. He went on a quest spanning across the
Speaker 2: world to understand what's behind the crypto bubble. He brings
Speaker 2: readers inside Sam Bankman Freed's penthouse as the fallen Crypto
Speaker 2: King faced imminent arrest, but he also discovered the crypto
Speaker 2: hell on the other side of his spam text, where
Speaker 2: he uncovers a crypto powered human trafficking ring in camb Bodia.
Speaker 2: It's really fascinating. Zeke's I were very plas pleased to
Speaker 2: have Zeke Fox here Financial Investigations and reporter here at
Speaker 2: Bloomberg News. He's here with us in the Bloomberg Interactive
Speaker 2: Broker Studio. So it's hard to figure out where exactly
Speaker 2: to start off. But what was the motivation obviously of
Speaker 2: going into this and how long it took you to
Speaker 2: sort of span across the world to write this book.
Speaker 3: So Ever, since I was like a kid, I wanted
Speaker 3: to write like a crazy nonfiction story like I loved
Speaker 3: like John Krackauers Into Thin Air or Ben Mezrich's Bringing
Speaker 3: down the House about the Mt. Blackjack kids. But I
Speaker 3: never found a story crazy enough to turn into a
Speaker 3: whole book, because the last thing I want to do
Speaker 3: is bore anyone. And I got once. I was kind
Speaker 3: of resistant to crypto, but as once I jumped in,
Speaker 3: I started meeting all these like wild billionaires and hustlers
Speaker 3: and con men and scammers and like at some point
Speaker 3: maybe when I found myself on one crypto crazy crypto
Speaker 3: billionaire's yacht off the Bahamas, I was like, wait, this
Speaker 3: is the adventure, Like you're on it right now, this
Speaker 3: is what you got to write about. And I've ended
Speaker 3: up spending two years going down this rabbit hole. And yeah,
Speaker 3: I don't know that the world will ever see a
Speaker 3: financial mania like this like ever again.
Speaker 1: And we're still in the midst of it too. I mean,
Speaker 1: we see big moves in crypto, not like we saw
Speaker 1: a couple of years ago, zeeke. But you know we're
Speaker 1: not We're not done talking about crypto at this point.
Speaker 1: There's a lot that that sticks out to me from
Speaker 1: the book, but there's this one quote that I want
Speaker 1: to read to our audience. From the beginning, I had
Speaker 1: thought that crypto was pretty dumb, and it turned out
Speaker 1: to be even dumber than I imagined. So even after spending
Speaker 1: years working on this book, talking to crypto billionaires, diving
Speaker 1: into these cryptocurrencies, you still think crypto's dumb.
Speaker 3: I think that if you anyone who's lived through like
Speaker 3: these last couple of years, I don't think we can
Speaker 3: just like memory hole that like all. I went to
Speaker 3: the one of the first places I went was Bitcoin twenty,
Speaker 3: this big conference in me at Miami, right after COVID restrictions.
Speaker 1: When where everybody got COVID.
Speaker 3: Yes not me. I became convinced after that that I
Speaker 3: was immune to COVID and I would never get COVID,
Speaker 3: but pretty soon after that I did get COVID. But
Speaker 3: like I'm meeting, some of these guys were really legit
Speaker 3: at the time. Like I met Celsius's Alex Mathschinski. He
Speaker 3: was like talking to everybody and he was promising eighteen
Speaker 3: percent yields if you deposited your savings with his company.
Speaker 3: And he told me when we met, somebody's lying. Either
Speaker 3: the banks are lying that they can only pay zero
Speaker 3: percent or Celsius is lying that we can safely deliver
Speaker 3: eighteen percent. And like a couple of weeks ago, he
Speaker 3: got arrested. Just like a huge number of the founders
Speaker 3: that I met have are now facing lawsuits or bankruptcy
Speaker 3: or criminal charges. So well, I do think they're probably
Speaker 3: is some good cryptocurrency company out there. I'm not going
Speaker 3: to be the one to spend the effort to sift
Speaker 3: through like another giant pile of scammers to find it.
Speaker 2: Something that struck me too, because you did travel to
Speaker 2: all these different hotspots, from you're in Manhattan to Miami,
Speaker 2: you're in Bahamas, like you mentioned earlier, El Salvador, to
Speaker 2: the Philippines, and so you were talking about how that
Speaker 2: you did see a lot of empty hype and a
Speaker 2: lot of scams. And what struck me was this new
Speaker 2: kind of investment fraud that you found where it often
Speaker 2: started with a text, and it was a scam called
Speaker 2: pig butchering. Explain what that is and how that actually
Speaker 2: ended up happening to you.
Speaker 3: So, pig butchering is when someone approaches you with the
Speaker 3: spam text, like we all get them, and it's like, hey, Dave,
Speaker 3: did you get the milk for the cat on your
Speaker 3: way home? Like they don't, they're like a little off right,
Speaker 3: but if you write back, they'll try to make friends
Speaker 3: with you, and they'll often the person at the other
Speaker 3: end will pretend to be like an attractive young Asian
Speaker 3: woman and they'll start dropping hints about they didn't have
Speaker 3: a rich uncle who's able to make these really profitable
Speaker 3: crypto trades. And I started I got one of these
Speaker 3: texts and started playing along and developed a penpal friendship
Speaker 3: with this person who was saying their name was Vicky
Speaker 3: Ho And she eventually told me, hey, by one hundred tethers,
Speaker 3: which are like a mainstream stable coin you can get
Speaker 3: on coinbase or crypto dot com or any of the
Speaker 3: like normal crypto apps and send them to this other
Speaker 3: crypto app called zbxs, And Vicky promised me that if
Speaker 3: I did that, she was going to introduce me to
Speaker 3: profitable short term node trades that would generate reliable thirty
Speaker 3: percent returns. And like, we all know this is nonsense,
Speaker 3: but in this like crypto world, like where for a
Speaker 3: couple years it seemed like anything was possible. A lot
Speaker 3: of people were falling for this. People sent in hundreds
Speaker 3: of thousands, millions of dollars. One expert that I spoke
Speaker 3: to estimated that ten billion dollars have been lost to
Speaker 3: these crypto romance scams. And the crypto plays two roles
Speaker 3: in it. One is it's like it's the story that
Speaker 3: gets people to send their money. And the other thing
Speaker 3: is that you can go on crypto exchanges, acquire these
Speaker 3: tether tokens very easily, and then zap them over and
Speaker 3: you'll never get them back. It's anonymous, there's no way
Speaker 3: for the authorities to trace them.
Speaker 1: This portion of the book that Jessica it just is
Speaker 1: referring to is from was in the book, but we
Speaker 1: also were able to get you to talk to us
Speaker 1: about it. A couple of weeks ago, Zeke was featured
Speaker 1: in the August twenty first issue of Bloomberg Business Week.
Speaker 1: Excerpted in there you also you know, I got to
Speaker 1: tell you. After our conversation and reading that excerpt, Zeke
Speaker 1: I stopped. I started thinking about those spam texts in
Speaker 1: a completely different way because it's really ugly the truth there.
Speaker 1: I mean, you spoke to somebody who had escaped from
Speaker 1: essentially prison or slavery indentured servitude by cobbling together an iPhone,
Speaker 1: making an iPhone work by essentially hot wiring it.
Speaker 3: Yeah, so that is the really dark part is that
Speaker 3: the people on the other end of these texts are often.
Speaker 1: It's not VICKI.
Speaker 3: Yeah, they're like Vicky disappeared, never never found out who
Speaker 3: she was. But what I did find out is that
Speaker 3: a lot of the people sending these messages there are
Speaker 3: people from Southeast Asia who've been tricked into traveling to
Speaker 3: Cambodia and then trapped and like, legitimately sounds like a
Speaker 3: conspiracy theory, but I've seen it with my own eyes,
Speaker 3: huge like office towers filled with floor after a floor
Speaker 3: of people who are sending these spam text messages around
Speaker 3: the clock. So that the person that sent you that
Speaker 3: kind of nonsense text, like it's not a bot, it
Speaker 3: could be someone who is being threatened with beatings of
Speaker 3: the torture, who would have who can't leave this job
Speaker 3: without paying a ransom, And like you said, yeah, well,
Speaker 3: I spoke to Twee, who was victimized in this way
Speaker 3: and had raised money for the ransom from a YouTuber.
Speaker 3: And when I spoke to him, he returned to Ho
Speaker 3: Chi Minh City and Vietnam, and he told this crazy
Speaker 3: yeah mcguy verage story about how he was able to
Speaker 3: get an iPhone and charge it using no tools and
Speaker 3: a fluorescent.
Speaker 1: Lamp, and he had to smuggle the iPhone in.
Speaker 3: So his story was that he had stolen it from
Speaker 3: the guards, but not the charger. He had secreted it
Speaker 3: inside himself, a trick that he learned in prison, and
Speaker 3: that he when he was alone, he took this iPhone
Speaker 3: apart and peeled out the battery and then hot wired
Speaker 3: it to a fluorescent lamp. And so very respectfully, when
Speaker 3: we were together in Vietnam, I was like, tweet, I
Speaker 3: don't think you can do that. Like you're like, I'm
Speaker 3: very sorry for what you went through, but like are
Speaker 3: you shit, is that really true? And he was like,
Speaker 3: I'll show you right now. We bought an iPhone. He
Speaker 3: took it apart with no tools, took apart a led
Speaker 3: lamp in my hotel room, wired the battery to this lamp,
Speaker 3: charged it and turned it right on. Uh yeah, I was.
Speaker 3: I was floored.
Speaker 2: Wow.
Speaker 1: We're very pleased to continue our conversation right now with
Speaker 1: Zeke Fox. He's financial investigation reporter for Bloomberg News. He's
Speaker 1: with us in the Bloomberg Interactive at Broker's studio. He's
Speaker 1: got a brand new book out. It's out today. You've
Speaker 1: seen the excerpts everywhere, including in Bloomberg BusinessWeek magazine. It's
Speaker 1: called Number Go Up. Inside Crypto's Wild Rise and Staggering Falls.
Speaker 1: Zeke's right here with us in the Bloomberg Interactive Broker's studio.
Speaker 1: Zeke the board Ape yacht club. Everybody was doing this
Speaker 1: a few years ago. And by everybody, I mean if
Speaker 1: you had like tens of millions or hundreds of millions
Speaker 1: of dollars, you were a celebrity. Maybe you went on
Speaker 1: Jimmy Fallon and talked about a board ape, what are
Speaker 1: these things? And you actually bought.
Speaker 3: One yeah, I mean so much of this crypto boom
Speaker 3: was just like pretty silly. And one of the silliest
Speaker 3: parts that I really liked was the board Ape Yacht Club.
Speaker 3: And these are like cartoon images of monkeys, and it's
Speaker 3: like a jpeg. You can see it, you can you
Speaker 3: can download it, you can have it on your computer.
Speaker 3: But if you want to have the right to say
Speaker 3: that you own this particular cartoon image of a monkey
Speaker 3: on the blockchain, you got to pay five hundred thousand
Speaker 3: dollars something like that. And for a while a lot
Speaker 3: of celebrities were doing it like great question. Well, basically
Speaker 3: if you were a celebrity. First of all, there's some
Speaker 3: accusations that celebrities may not have paid. I think they
Speaker 3: mostly deny it, but there's some accusations that there were
Speaker 3: discounts to be had, but set that aside. Basically for
Speaker 3: a while, it's hard to imagine now this was only
Speaker 3: like a year ago. It was cool to be like
Speaker 3: with it and to change your name to like like
Speaker 3: Jimmy Fallon on Twitter became Jimmy maybe like Jimmy Fallon
Speaker 3: dot ether and then he picked yes to show that
Speaker 3: you're like, you're with it. You know about the future
Speaker 3: of finance, and you make your profile picture one of
Speaker 3: these monkeys, and like I I yeah, we all laugh at.
Speaker 1: It and see a lot of those these days. I'll
Speaker 1: tell you that that's true.
Speaker 3: Yeah, a lot the celebrities have mostly taken them off.
Speaker 3: But I got a lot of people were giving me
Speaker 3: a lot of a hard time in crypto world. I
Speaker 3: go to these conferences and a lot of people would
Speaker 3: ask me, what do you got? What's in your portfolio?
Speaker 3: And you know, at first I tried to explain, like, hey,
Speaker 3: the you know, presidential biographers, they're never the president. Sports
Speaker 3: writers can't hit a fastball. But they didn't like this answer,
Speaker 3: and I was like, you know what, maybe there's something
Speaker 3: I am missing. I gotta try this out for myself.
Speaker 3: And if I'm going to try it, I want to
Speaker 3: go straight for the top. I want to join the
Speaker 3: bard Ape Yacht Club. And luckily, even though the good
Speaker 3: ones cost five hundred grand, there was sort of a
Speaker 3: bored ape derivative called a mutant ape. Now these were
Speaker 3: same idea little jpeg picture of a monkey, but sort
Speaker 3: of melted because it had drunk some sort of vile
Speaker 3: potion or something. Yeah, so it's like an even uglier picture,
Speaker 3: and I was able. I sat down with my wife
Speaker 3: and I was like, Nikki, for the book, is there
Speaker 3: something important I got to talk with you about? Like
Speaker 3: my research has taken me to a weird place. And
Speaker 3: it turns out that in order to go to this
Speaker 3: party is a week long party headlined by Snoop and
Speaker 3: Eminem where I would get to meet elite crypto traders,
Speaker 3: join letter like Inner Synctum and see what's really going on.
Speaker 3: You had to have a board, ay to go to
Speaker 3: the party, and I'd really like to buy one. And
Speaker 3: then like, okay, I'm like, so how much do you
Speaker 3: how much do you think I'm about to ask you for?
Speaker 3: Because I kind of was curious. She's like, well, like
Speaker 3: you sat me down, it's probably like at least five grand,
Speaker 3: and I'm like it's forty thousand dollars and I was
Speaker 3: just trying not to laugh. And the way book publishing works,
Speaker 3: you get paid in advance, so I had this money,
Speaker 3: but like, like, we this is a lot of money.
Speaker 3: Just pay for a year of college. Now couple of
Speaker 3: weeks like college you so like Nikki's face contorted into
Speaker 3: this look of horror, but she's really supported of the project.
Speaker 3: She saw that this was important and that it would
Speaker 3: be the reader would want me to do it, And
Speaker 3: so I bought this uh mute and ape and it
Speaker 3: was it was actually I named him doctor Scum. He
Speaker 3: had a sweater made of maggots. And there's a lot
Speaker 3: of in this NFT world. There's a lot of like
Speaker 3: talk of community, and so I was all, I'm like,
Speaker 3: I'm gonna go for it. I'm joining the community. I
Speaker 3: came up with it. I named him doctor Scum, and
Speaker 3: I said that he would get superpowers by smoking weed.
Speaker 3: But there were a lot of problems with this plan
Speaker 3: which I learned, which first of all, you have to
Speaker 3: to buy the n f T. You have to use
Speaker 3: like you have to actually do crypto. This means like
Speaker 3: when you go on coin base or Robinhood that's not
Speaker 3: really doing crypto. You need to like buy these coins
Speaker 3: and send them to meta mask like a crypto wallet.
Speaker 3: And I like, it's a owunce real legit right now,
Speaker 3: maybe you've heard about it. What this means in practice
Speaker 3: is that your money lives Like in Google Chrome, there's
Speaker 3: like a red icon where you have the ad block
Speaker 3: near the URL. Then that you install another icon that's
Speaker 3: a picture of a fox and when you install this icon,
Speaker 3: it makes you watch a video they say this this
Speaker 3: I'm not making this up. They they're like, if you
Speaker 3: lose this password, your money will be gone, and they
Speaker 3: make it in the video. They're like, engrave this password
Speaker 3: on a metal disk and bury it in your backyard.
Speaker 3: And I'm like, okay, I'm not.
Speaker 1: Doing that New York's backyard.
Speaker 3: Yeah sure, but like it was so terrifying to send
Speaker 3: my By the time I bought it, the price had
Speaker 3: crashed to twenty thousand, which was kind of good but
Speaker 3: also scary. So I had to send my twenty thousand
Speaker 3: from Bank of America to the Foxhead icon and like
Speaker 3: Bank of America called me. They're like, we think you're
Speaker 3: being scammed. Are you sure you want to do this?
Speaker 3: And I was like, I've never appreciated the banking system more. Yes,
Speaker 3: I am being scammed and I want to do it.
Speaker 3: So when I when I got to the to the
Speaker 3: eight Fest, it was a bunch of drunk dudes. There
Speaker 3: were it was I mean, it's a good party. Snoop
Speaker 3: and Eminem were really there, but like everyone's wasted. Everybody stoned.
Speaker 3: Nobody wants to hear about doctor Scum.
Speaker 2: Uh.
Speaker 3: People act like I'm not cool because my ape sucks.
Speaker 3: It's the cheapest one, even like pimply teenagers have way
Speaker 3: better apes, like million dollar apes. And I did. But
Speaker 3: I did see Jimmy fallon there, and since the prices
Speaker 3: had crashed recently, I wanted to talk with him, so
Speaker 3: I went he went behind like the velvet rope and
Speaker 3: was like, hey, Jimmy, check out doctor Scum. He was like,
Speaker 3: gave me like a pretend interested look, and then I
Speaker 3: was like, hey, man, like you had a whole segment
Speaker 3: on your show promoting these with like Paris Hiltan. You know,
Speaker 3: now everyone's lost, like real money. And he was, what
Speaker 3: do you say? He was just like, oh, I did
Speaker 3: it for the community.
Speaker 1: I was like, all right, all right, and you know, no,
Speaker 1: you don't have doctor Scum anymore.
Speaker 3: Zeke unloaded him at a two thousand dollars loss. Never
Speaker 3: been so happy.
Speaker 1: All right, Hey, this and more in Zeke's brand new book,
Speaker 1: Number Go Up. Inside Crypto's Wild Rise and Stagger and Fall.
Speaker 1: Zeke Fox's financial investigations reporter for Bloomberg News. His new
Speaker 1: book Number Go Up It is out today. You can
Speaker 1: buy it anywhere you get your books. You're listening and
Speaker 1: watching Bloomberg BusinessWeek