Fighting The Crypto Cult with Ben McKenzie

(soft piano music) - Lemonade. - Thanks for listening to Hussam Minhaj Doesn't Know. Listen to and follow Hussam Minhaj Doesn't Know add free on Amazon Music or just ask Alexa. Alexa, play the podcast, Hussam Minhaj Doesn't Know on Amazon Music. Also, with Amazon Music Unlimited, you can now listen to your favorite music, podcasts, and audio books, all in the Amazon Music app. Listen to Hussam Minhaj Doesn't Know on Amazon Music. - People hold you small. - It's such an advantage to be underestimated. - Seriously. - I think it's regular on a Fox sitcom from 2003. - Is your sitcom, sorry, sorry. One hour drama. - It was a scripted drama. - Scripted one hour drama. - Not at all. - Capital D drama. - Capital D dramas. - Nominated for 16 Choice Awards. - I am, I am never one. I am the Susan Lucci of the Teen Choice Awards. I'm sorry. - I'm sorry that you're that. - Oh, you're just sorry. - Yeah. - Okay. - I thought you couldn't understand what I meant. - No, you're just sorry. - Well, for both, the fact that you didn't win and then also, I don't know who Susan Lucci is. - I've been putting this off, but it's finally time for me to step up and face the fiercest keyboard warriors on the internet. I'm talking about the male swifties, the blockchain brotherhood, the Bitcoin bros. They have been coming at me for years. Ever since I made a single joke on Patriot Act. - The only thing that should double that quickly is the value of Bitcoin, just kidding. That was a garbage investment and you're an idiot. - Bitcoin is just beanie babies for tech bros. - And to this day, every time the price of Bitcoin pops, some Twitter shit poster dunks on me about it. But nobody hates crypto as much as my next guest, Ben McKenzie. You might know Ben from his acting career, playing Ryan on the OC or Commissioner Gordon on Gotham. But for the past four years, Ben has been going hard in the paint and has been partnering with journalist Jacob Silverman to investigate and document fraud in the crypto market, writing articles publishing a book and now, releasing a new documentary called "Everyone Is Lying To You For Money." So I sat down with Ben to talk about how the main use case for crypto is still basically crime. - The next time you see an article about cryptocurrency, exchange the word "crypto" for money laundering and just see if the article makes sense. Our fellow celebrities who have endorsed it, - No offense to my damon, but he doesn't know shit about blockchain. - And how the most important load bearing wall of this, let's call it a pyramid is now the president of the United States. - If you're putting money into something that Trump is backing 'cause you think you're gonna make money out of it, just know that he's a convicted fraudster. - Comment section. - Brace yourself. ♪ Hurry right away ♪ ♪ No delay stops me ♪ ♪ Make your daddy pass ♪ ♪ You have hands on your hands ♪ - Every heterosexual man has a group thread called "The Boys." - Yeah. - And during the pandemic, "The Boys" thread was popping. - Right. - There was a lot of crypto talk. - A lot of BTC, a lot of Ethereum. - Yeah, yeah, yeah. - A lot of cryptocurrency talk. But what I was interested in talking to you about is what got its hooks and fangs into even me during that period of time was this sense of not even necessarily greed, but am I missing out on something? - Totally. - Is there something I don't get? Money has always been this elusive weird thing to me. This kind of makes sense. Do I need to look into this? Am I dumb if I don't look into this? - Totally. - What was it titillating within you? - Yeah, it was beyond boredom. - It was absolutely that aspect. I've always been fascinated by money. I was never good at math, so I was never going to be, like very good, so I was never going to be an economist. But I love the behavioral side of economics. There's this guy, Robert Schiller, who's a Nobel Prize-winning economist, who's very much influenced my work. And he talks about these things called naturally occurring Ponzi schemes. And it's basically the price of a speculative asset goes up, like way beyond what it could possibly be worth in terms of its utility. And people see that, the price going up, and they're like, oh, it's going up, I should buy in. They buy in, which is a surprise. So further and then more people. And then these things can go on for a very, very long time. And as I looked at crypto, because crypto doesn't do any of the three things that money is supposed to do, money, medium exchange, you know, account store value, it can't be a medium exchange because the technology sucks. It can only process five to seven transactions a second. Visa and MasterCard can do 24,000. So it just can't process transactions fast enough. You can't serve as a unit account or store of value because the price goes up and down. - The volatility. - Like a, yeah, yeah. So if it's not money, what is it? It's an investment, right? You put money into it, hope to make money off of it through no work of your own. That's literally an investment, like the definition of an investment under American law. - Sitting, holdling. - Holdling, exactly. It's called the Howie Test. And it's got four prongs. It's an investment of money in a common enterprise with the expectation of profit to be derived from the efforts of others. And it's like super broadly defined, because people have had schemes to make money for you since Ponzi schemes are as old as, I mean, there's literally a hundred years old. - Sure. - Ponzi. - They actually predated Ponzi. But whatever. So when celebrities are out there selling this loosely regulated financial product with no, I know offense to Matt Damon, but he doesn't know shit about blockchain. - History is filled with almost, with those who almost invented, who almost achieved, but ultimately, for them it proved to be too much. - But you wanna be watching the commercial? We gotta play the footage. - For them it proved to be too much. - Fortune favors the brave. - I mean, what the fuck? - What the fuck does Matt Damon know about cryptocurrency? Nothing. - He mad at him for this, or 'cause he's more famous than you are. He might be taller too. - He's not taller. - All right, so it says he's five, 10, but not sure. - I also say up five, 10. - You've called celebrities shilling Bitcoin a quote moral disaster, but you've been to Hollywood. You're looking for salvation and morality? - No, no, no. - Deadline.com. - I'm sorry, I should have implemented it. - You feel IMDB.com will be your salvation. - It's just that I know the standards are low, but if you're hawking a financial product, and by the way, you're not disclosing how much you've been paid for it. - Right. - This is one of the problems, right? And then people lose money on that investment, which a lot of people did-- - A lot of people. - A lot of different people to let back things. Like Kim Kardashian did one and had a settle with the SEC, and there's all these different people. Like, it's just wrong, you know? It's wrong, it's gross. You also have a lot of money, so why do you need to sell other people on this thing that you haven't really done your homework on in this treaty? And yeah, it's do better. - You have a pretty brilliant montage that you show in the documentary, and I want us to go to it. You're seeing a level of celebrity that backs essentially blue chip companies. In the feeling that I got when I was watching those commercials in that moment is, oh, this is too big to fail. This is here. - Yeah. - Like, if Tom Brady, Shaquille O'Neal, Steph Curry, and Matt Damon are talking about Toyota, it's here to stay, right? Like, this thing as an idea, as an entity, how do you reconcile the feeling that people feel watching that, and then how you felt watching it on the couch? - I think it's really important to understand what's happening. Why are celebrities hired to hawk products? Because people trust them. They have a relationship with them, through the TV, through the movie screen. And so, there's a trust that they have that they're then imputing into the thing that they're selling. And it's a very deliberate play by the cryptocurrency industry. Crypto is notorious. Bitcoin people are notorious for saying Bitcoin has no marketing department, right? Like, there's no one, there's no central person in charge of it, right? It's the decentralized ledger. But, crypto is really just a story. It's just a story that you're gonna make money on it that whatever like Ails U is gonna be fixed by crypto if you invest in it. Well, what's their core story? You've said, quote, Bitcoin is a story that will last as long as people believe in it. So, what's the story and what's their core pitch? - The story can be anything that anyone wants it to be. Like, at the end, it's sort of a projection of the hopes and dreams of the investors, I would say. Sorry, there's two groups. There's the normal investors, whether they have a ton of money or not, whether they're institutional or not, and then there's the criminals. So, cryptocurrency has incredible utility for criminals, and we can talk about that. But for the regular people that are buying it, I interviewed many of them for the doc for this particular scheme called Celsius, which ultimately went bankrupt, and a lot of people lost a lot of money. Regular people. And so, I post on a Reddit and met these guys. They were all guys, literally, every single one of them. And you know, you would ask them questions like, what did you, why'd you invest? And this one guy, just absolutely heartbreaking. A fellow Texan, if he were construction or something, really, like, salt to the earth, dude. And he had a bunch of money in it, and he lost it. And he was saying all he wanted was to be able to take more time off of work, and spend more time with another daughter. It was heartbreaking. Yeah, it was super heartbreaking. You know, I have kids, and you're just like, your heart breaks from. Mostly just a shot at freedom. You know, a shot at a little bit more claiming of my time back, and that time I can't get with my daughter back. Why does that so many plans, you know? I'm sorry. I feel like I let her do big time. The thing that's really hard-- one of the things that's really hard about crypto is that there's only maybe, like, 5% of the popularity-- 5% or 6% of the population is really into it. And then there's maybe another 10% that's like kind of playing around with it, because I've ever bought it. So you're talking about, like, one in six Americans. like. really one in 20 that are like a really into it. The thing is you're never gonna be able to convince them that it's not a good investment. I asked all of the victims of Celsius like the same question, do you still believe in cryptocurrency? Some of these people have lost their life savings. Every single one of them said yes. - Wow. - Yeah, like they didn't have to edit it. I mean, we did edit it for time, but like every single one said yes. And they would have different reasons. They would say well, that one was a scam, a Bitcoin I believe in, which is a big sort of theme. But like when I say it's a projection of their hopes and dreams, I really mean that. I really think that people are, and we should talk about like why people get into crypto and gambling and prediction markets. It's like we financialized everything. And we're pushing it so hard at dudes, really specifically at young men. There's two things that pull you in on the internet if you're a straight dude. Money shit or pervy shit. Now, let's not focus on the latter. Let's talk about the former. And I think at the core of the money shit, yes, one component of it is greed. But there's this other component, which comes from a very real place of, I have to have agency over my life. - Yeah. - And I am responsible for the circumstances in my life. And society may be cold to me. Nobody is gonna come to save me. - Right. - I feel like the institutions that are in place, my employer, the government, the state, these institutions have failed me. There has to be a better way. In what spoke to me about cryptocurrency and got me to waste endless hours during the pandemic and not be with my loved ones, was that idea that there has to be a better way. And I'm a fool if I don't take the agency to explore and to start to study this. - Yeah. - It was really simple. The system as it exists now, the regulated financial system, our global financial system, sucks. It's like deeply unfair, it's hard to navigate. You don't have agency over your own life. And they say that statement and who agrees with that? - Everyone. - Sure. - Literally everyone agrees with that, except for maybe some billionaires, right? - They'll have their different reasons as to why it sucks. But like they're gonna agree with the first thing. - Yeah, yeah, everybody but six people. - Right. And then the second thing is get coin fixes this, which is literally like a meme at this point. It's one of the things people say. So it's a really simple argument and I understand it's appeal. I do because I agree with the first one. The system sucks and we should hate the banks. - There's been so many different ways in which the big banks and the federal government have basically run a muck and screwed over. Let's not Wall Street but Main Street. But the caveat you give though is, and it's really interesting. I don't have the answer here, but you go, it's built on trust and it's backed by the government. And we all trust the government. - But how do you reconcile? - We don't that now though, right? - Exactly. - That's one of the things that gave cryptocurrency so much currency is that there's such deep trust distrust of the government. And I think one maybe simpler way of looking at it is, it's not that I'm pro-government. It's that I'm pro-democracy working to actually, you know, effectuate change through our government. But the problems with our government are really based on the problems with our supposed democracy, where the will of the people isn't expressed. Like the Supreme Court is not expressing the majority's opinion on whole host of issues because the Republicans rigged it. The Senate, because of the way the Constitution is set up, doesn't represent the majority of the population. The majority of senators don't represent the majority of the population. But the only way to really change that, in my opinion, is to strengthen the democracy so that it actually represents the will of the people. So it sounds like the cell of Bitcoin fundamentally was an anti-government, anti-big-bank position. So you got super into Bitcoin 2020. You and I, we were both super online, and we got into Bitcoin. Then in 2022, we had crypto winter. Bitcoin went from $69,000 in 2021 to under $16,000 in 2022. Your book comes out in 2023. You go on the, I told you so.com book tour. - Yes. - Okay, yes, happily. - SPF goes to prison. Head of Binance goes to prison. - The other guy. - The whole thing was blowing up. Let's fucking go. - Yes. - Then in 2024, after Donald Trump was elected, Bitcoin shoots up to over a hundred K. What happened to make the price go up? - So remember the Robert Schiller thing, the naturally occurring Ponzi schemes? - So because Bitcoin doesn't do anything, in the sense that like it's not a currency that you can actually like, I can't go to my neighbor daily and buy a bagel with Bitcoin. They're gonna look at me like I'm crazy. Because you can't actually buy anything, it has to have some other utility, but mainly it's just a speculative instrument. It's just something people gamble on, betting the price is gonna go up or down. So Trump embraced crypto. So Trump, as recently as 2019, called Bitcoin a scam. - Bitcoin, I just seems like a scam. - My personal theory is that, that's because he was cutting in on his core business. Trump is a real estate guy. And there's a lot of money laundering in real estate. And I think he was kind of jealous that crypto, you know, he wasn't getting his cut. - He wasn't getting his action. - Yeah, he wasn't getting his cut. Yeah, I was getting his action. And then in 2024, in the summer, he really embraced it fully. There were rumors before, but he like spoke at the Bitcoin conference to show a clip of in the movie. - Have a good time with your Bitcoin and your crypto and everything else that you're playing with. - And he obviously doesn't know what you think about it, but like he knows it's gonna, he can figure out a way to make money off of this. And the price starts going up. It had been like in the toilet, as you said, and it starts going up. And then yeah, I just surged. And so by the time he's in office, it's like, or somewhere around there, it's like 120,000 or something like that. How is Donald Trump and his family making money off of crypto? 'Cause I've seen the dollar sign Trump, me and coin, but what else is there? - Sure, yeah. So there's the main coins that he did and Melania did. Those, think of those as Ponzi games, but effectively, right? Like you're gonna try to like, release the coin, you own 99% of it or some huge percentage of it. If people put money into it, then the price goes up. And at a certain point, just like sell all of it and you take whatever money you can get. So those are actually smaller schemes. The bigger scheme was this stablecoin company. So stablecoins are this crypto that's really important for me to understand. It's basically a cryptocurrency that can only, it's pegged one-to-one with a real currency, like the US dollar. It's like a poker chip in the casino. It's like something you could gamble with. But it's also, if you're the president, if you're the president of the United States, it's the most powerful person in the world. - Yes. - And you're selling the people on this product and they're buying it. Why are they buying it? Well, one reason they're buying it is for access. So Trump threw a dinner with like the top 25 investors in his coin or something and they like went to like a, one of his country clubs and had a fancy dinner. So he's literally paid to play, like paying for access to the most powerful man in the world. Well, it's not only that, but the stablecoin got a $500 million investment from this chic in Abu Dhabi. And so what did the chic get out of it? Well, they got AI chips. They got NVIDIA chips through this, you know, Circus deo with Trump and his family and they got a pardon for the guy from Binance actually, the guy that ran Binance, CZ, Shang Peng Zhao, pled guilty to money laundering during the last administration and had done four months in prison and Trump gave him a pardon, CZ's now in the UA. So that's corruption, you know what I mean? - Sure. - That's a crime, classic. - Should be a crime. I mean, it's so big that it's so hard to fathom 'cause it just blows at any other person out there. - Yeah, it's so like cartoonish. - Yeah, and I mean, I really think it's worth like for crypto people that are still out there believing in it. If you're putting money into something that Trump is backing 'cause you think you're gonna make money out of it, just know that he's a convicted fraudster. He's been convicted of 34 counts, 34 felonies in the state of New York by a jury. So, you know, just bear that in mind. - Just be aware of that. - Be aware. - Okay, we've been talking a big picture, but let's get specific. Let's do some crypto 101, shall we? - Love it. - All right, what is the white paper by Satoshi Nakamoto and why does it sound like a racist manual written by a Japanese dude? - That's a great question and a great way of, I mean, it's a wild thing to be like, read the white paper. - Yeah, yeah. So a couple things about the, so white paper's like the first where Bitcoin originated. It was like a paper that was dropped on a, like basically a chat group, a chat board in 2008, written by Satoshi Nakamoto, who's Satoshi Nakamoto? We don't know. - We don't know. - So much speculation, so many bad documentaries about who was Satoshi Nakamoto. - Yeah. - So it was likely the person that was Satoshi's dead, in my opinion, 'cause it was two cryptographers that, not in any like malicious, like not in a way that's like a conspiracy theory. - Oh, just saying, it's probably one of these two guys, but anyway, whoever it is, we don't know who made it. They had all these nice things that they said about how it was gonna change everything, but very quickly, like within two years, like it really comes out in 2009. But two years later, it finds a use case through criminal activity on the Silk Road, the dark web drug marketplace that I mentioned. So like whatever the intentions of Satoshi, which could be a person, could be multiple people, we don't know, it was really quickly co-opted by criminals, including Jeffrey Epstein, which we could talk about if you want. - You drew this very helpful triangular shaped diagram [BLANK_AUDIO] explain how cryptocurrency works. What's going on here? - Okay, so new investors are putting money into a scheme but they're not the first, the ones on the bottom. There were people that got in before them, people that got in before them. And at the top, there's the promoter, the person that's like selling. This is called a pyramid scheme, which is kind of different from a Ponzi scheme. It's more like a multi-level marketing scheme, right? Where like, I heard crypto described as Mary K for men. It's like a way of. - That joke will kill. - Yeah, even for dinner, like 50 years old, probably not people that are younger who don't know what Mary K is. But anyway, you know, somebody's selling you on this thing. They own an enormous amount of it. They basically say they deputize all these other people and say, hey, you know, if you help me sell this, you'll get a cut of it. Then they sell it. Then they, those people sell it. And so it funnels out in a sort of a pyramidal shape. Celcius, the Ponzi scheme type thing that I document in the documentaries is a form of a multi-level marketing scheme, I would say. So what they're really relying on is like every individual person seeing the people before them, the smaller group of people having made money on the thing and then thinking they can make money on it. And you know, that can work for a while, but MLMs, multi-level marketing schemes, ultimately usually fail. Although some of them don't. Some of them have to go on for a long time. I mean, is this how every company kind of works, too, as well? I mean, no. It looks like the promoter at the top looks like the CEO. Those look like employees. Like, isn't this the way money funnels out in every corporation anyways? Yeah, I mean, or you know, planet fitness or gym memberships. Right, right. Well, but you're getting something out of it, right? I mean, in a regular company, like Apple, they're selling you products that you're buying that actually work that are good. But like, it's all predicated on not so much the product, but the selling of the product. So, you know, one person, the top is your upstream and the bottom is your downstream. You're making the people that get into it make money on the people they recruit to buy it. Why is crypto used so much for crime and money laundering? Because of the pseudonymity of the blockchain. Because you can't tell who is sending what where and you're avoiding banks, right? It's really, really helpful for criminals. The next time you see an article about cryptocurrency, try this exercise, exchange the word crypto for money laundering. And just see if the article makes sense the same way. Because I would say money laundering is probably at the top of its sort of use cases. Crypto is really only good for gambling and crime. The gambling is just betting the price is gonna go up or down. That's a zero-sum game, much like playing poker at a casino, except you're playing at an unregulated casino. So, you know, you might win and then go to the teller to get the money and you don't get the money because I shot it. But for the crime, it's good for money laundering, sanctions evasion, tax evasion, human child and human trafficking. The Jeffrey Epstein was a big fan of Bitcoin and invested early on in Bitcoin. What is Jeffrey Epstein's connection to Bitcoin? - Absolutely, so, just did a video on this. Epstein apparently heard about Bitcoin really early on in 2011 through this guy called Brock Pierce. It seems like Brock is a character that I is in the book and got caught from the movie. Sorry, Brock. But gray character. So here's about it super early in 2011. So only two years after it came into existence. So the number of people that were aware of Bitcoin at that point had to be tiny, hundreds of thousands of people, maybe, maybe a few million. Jeffrey Epstein was into Bitcoin before 90% of the people who are now supporters of it even knew it existed. I will stand by that fact forever. So you just have to kind of like accept that. Not only did he find it, he said the idea is brilliant. Not only that, he actively supported the industry. So at one point in 2015, there's this group of developers that maintain Bitcoin's operating system. It's called Bitcoin Core Development. And there are people behind Bitcoin. Like that's one of the myths that like there isn't anyone. No, it's software. People have to make sure it works. So there's a group of programmers. There's this division within Bitcoin. There's factions arguing with each other. And these guys weren't getting paid. So Epstein funded the developers, the people running the operating system secretly through the MIT Media Lab, which is its own amazing story of criminal activity effectively. The MIT Media Lab. Oh, yeah. Oh, wow. Oh, yeah. There was a big article on this in 2019 in the New Yorker and then with the most recent emails, we have confirmation that yes, Epstein paid secretly for these. He had already-- by the way, in 2008, he had pled guilty to solicitation of an underage person. Yes. So he was a registered sex offender, before he ever heard about Bitcoin, before he made these investments. They knew he was a sex offender, obviously. And then he also did other things. He invested in Coinbase. He put $3 million into Coinbase. It appears that executives knew that the money was coming from Epstein. Because Brock asks, as Epstein, is it OK if I may tell them who you are? He invests in his other company. So why? Why would Jeffrey Epstein be end to crypto? Well, what's your theory? Well, if your core businesses are money laundering and human sex trafficking, a dark money that's hard to trace would be pretty handy. And the crypto advocates want to say they'll use this argument. They're like, well, people use dollars for crime. Yeah. So let's make the crypto follow the same rule as the US dollar, then. Let's regulate these crypto exchanges as banks and see if they can pass muster. They can't. And they don't want it. They would be terrified of that, because they can't do it. The way that crypto-- so our banking system has rules. The two most important ones are KYC and AML. They know your customer and anti-money laundering. Banks, when you get an account, you have to fill out all this paperwork. And they really need to know who it is that they're loaning the money to-- Right. --for facilitating opening the account for. Criminals don't like that, right? They don't really want to put their name and their address and like all their personal information on this database that the government is going to have some. So the advocates will say, yeah, it's about freedom and censorship resistance. And I'm like, it's a lot of criminal activity. How is Bitcoin, both a fake asset that has no fundamental value? But it's also an evil asset that al Qaeda and evil terror or drug organizations use to get paid. So does it have an inherent value or not? Yeah, it's values crime. Yeah, the value is sort of speculation, I guess you could say, but you can-- You can get one anytime. Isn't that a use-- but isn't that a use case? It is. Hey, send me the-- It is. And we have to ask ourselves as a society, is that what we want? Like do we want-- I know the regulated system sucks. I get it. And we can talk about ways to fix that. And I'm all for it. But like, if 90% of the-- So there's a gambling element, which is just like retail traders buying and selling it. Yes. Not necessarily the worst thing in the world, although maybe it should be marketed more explicitly as gambling and not push dudes all the fricking time. You watch sports these days. And now it's not crypto companies as much. And it's all sports gambling. And prediction markets, which are a similar thing. But we should ask like, if outside of the gambling, it's 90% crime and 10% positive social purpose. And that 10% might be generous. Should it be exist? Is this a good thing for the world? What are NFTs and what's the dumbest one you've seen? Oh, man, I don't know. The dumbest one? The dumbest seems hard. I mean, not that it was Borde. That was pretty-- Borde was dumbest in the sense that it was like-- That was what people hated the most for, right? Yes. One of the most. And they had these hilarious videos of like, they tried to, like, concerts and stuff. So NFTs is basically like nothing. It's like a non-fungible token. Yeah, but what does that get lost in that nothing? It's a link to a receipt for a JPEG. It's like, oh, hey, I-- 'cause like, how do you-- Oh, it's got to be more than that. Really? Promise you. Promise you. What are they worth now? Nothing. I don't want to look into it. Literally nothing. Like, I don't know, but it for real is just a link to a receipt for a JPEG. I mean, I'm exaggerating that it could be a link to a receipt for anything. But like, how do you create scarcity in a world of digital assets? You kind of can't. I mean, to some degree, like, someone bought an NFT, I'll just like, you know, click screen share of that and just like post that on my account instead. You know what I mean? Like, and maybe they could sue me, I guess possible. But like, it's-- But isn't like a legitimate ticketmaster.com ticket? That's a non-fungible token, right? You can't. You have to transfer it. If you're doing it legit, if you transfer it for person to person, it has and retains its value. Well, it's an actual thing because you're going to see a concert. You're getting something out of it. Whereas an NFT is like, you're buying shitty art, I guess, for a lot of money. Like, really shitty art. I mean, I would say board apes is pretty bad. There was a celebrity one. Reese Witherspoon did a women of NFTs. And I was like, it was a similar feeling of like Reese. Don't. Wow, man. And I know that there don't-- I know they were just told by their reps is an easy way to make money. But you do have a responsibility. Because who are you ripping off? You're ripping off your fans, man. Well, let me push back. Do it. Because I'm a Reese Witherspoon stan. I love her. I fuck with Reese. Sweet home. Well, let me ask you this, Ben McKenzie, why all this pearl clutching about cryptocurrency being a speculative asset that is extremely volatile? That's unregulated. Why don't you keep that same energy for draft kinks? price picks. All sorts of sports gambling that's gone amuck. That's now legal. Subpar lays within quarters. Yeah. Why don't you share that same anger and vitriol and concern with that? A son. I'm one man. I'm one former teen idol. Like putting up my hand saying, this is bullshit. This is stupid. What do you think? I just like have all the time in the world. I'm going to go on. I need you to signal chat for any prince junior and you guys need to get after it. But what's the difference? Why? What I'm trying at. What I'm basically saying is like this is happening in many different domains. So why the anger here? I would say they're very similar in many ways, but the difference with cryptos you can commit crimes. Like you can you can you can get paid for your criminal activity via crypto in a way that you can't do as a sports gambling. But they do all share a similar trait, which is that, you know, at best, these are zero sum games. At best, you're like playing poker, you know, via a website. But, you know, if you and because you went in Vegas, sure. But if you play long enough, you're losing because how else do they keep the lights on in the casino? Right? And by the way, as the game's going around, the house has taken the rake. There's a little bit of money to play the game. Cryptos like Vegas without the drinks, the dinner, or the show, and it's unregulated or unregulated. So you're not even playing a fair game with these gambling things. I just wish they weren't I wish there can be should be laws about the marketing of it. Like it shouldn't it shouldn't just be allowed to be every single. But the leagues are now in on it, right? Now they have official gambling. Absolutely. Gambling is bad. This is one thing that I've changed. This is the Ben McKenzie hot tick. Well, I was much more like, no, I'm an agreement. I've well like I so I play poker when I was in my 20s. I loved it with my but I wouldn't play on online. I would do it. But I was like, you know, I had a I had a literal poker table on the house. I love it. It's fun. It's had a social value too. Okay. A few beers like, you know, talk some shit and gamble. So you're on the OC and you have this kind of gambling den and apartment. Yeah, sick. And yeah, it was fun. I mean, you're 20s and I like what could be better. But, um, you know, I did a bunch of research on gambling and interviewed a bunch of people and, you know, crypto addiction is is gambling addiction. And it's some it's kind of a gambling on steroids because, um, you can bet literally at any point, right? The markets are open 24/7. Um, you, you just have to have access to your phone. It's marketed to dudes as a, um, you know, as a way of making money. And guys are young guys are particularly susceptible to it. And it can ruin not just their lives, but the lives of their families too. I mean, that you can gamble like the stats on gambling are insane. I don't remember them. But it's that an enormous amount of the money that the gambling industry makes the online and others is made from a very small percentage of people, um, who are, you know, in crypto they're called degenerate gamblers. But like, those people losing so much money and hiding it from their families often because of the shame, it can destroy entire families. In the book, I interviewed this guy who's a son of a, the father of pastor, uh, who got sucked into a crypto scam and just kept doubling down and doubling down and doubling down, um, because he was probably too deep in. And he ended up taking his own life. And, you know, at a minimum, the gambling and the prediction markets need a lot of rules that they don't have. Do you think there's any amount of evidence that you're talking about? You've made two very compelling points. You're like, look, Donald Trump is a convicted criminal, uh, outright fraudster. That's a data point, right? Jeffrey Epstein. We've clearly seen through the Epstein files. Obviously was using cryptocurrency and money for money laundering and sex trafficking. Do you think there's anything in these huge cases that perhaps gets people to go, all right, I'm opting out. This is too shady. I don't know. I mean, my, my mission at this point is, to inform the 80 plus percent of the country that, uh, hasn't invested in crypto. Okay. Uh, as best I can and arm them with facts so that when people come at them, which they inevitably do, everyone has had someone usually do try to convince you of buying crypto, um, they have the facts to their, they're not sucked into it. Um, I would love to convince people who are already into it that they should rethink their positions, but my experience has been that, um, that is often not successful. If they're really hardcore, uh, there's a, a bunch of people who don't really care about it, who just kind of like gambling on it. And I think we'll accept some of these points, many of these points. Um, but my mission is not to try to preach to the faithful. Um, it's a little bit like the hardcore. It's a little like a cult. And there's a great, uh, paper, uh, uh, sociological paper, uh, called win prophecy fails. I think it's from like the 50s. And it's like, what happens to cults when the thing that they predicted what happened doesn't happen, right? The world's going to end in 2020 and it doesn't. Do they like abandon the cult leader and renounce their faith? No, they believe more. Oh, they double down. They double down. And that's what I experience while interviewing the victims of Celsius is like, do you still believe in cryptocurrency? They also, yes. The more you invest it and lost the more you believe in the documentary in 2022, you go to the Bitcoin conference, you, you head to Miami. Right. If you've been to reddit.com, backslash or backslash Wall Street bets, pop in pop in. How big is this community? Is it a real community? Give me a sense of scale. I mean, I hate to be such a, so negative here, but like, I think you have to be very suspicious of communities that only exist online, right? I mean, I think that they do have these shows that they come together for the conventions. They're kind of like trade shows. Like everyone's got their company booth and they're like trying to sell you on this or that and the other. There is like, I mean, it's trade shows. So like guys are just getting fucked up and, you know, partying and like, you know, that kind of a thing. So there is like some sense of community to some degree, but essentially they all just want to make money off of the enterprise. So online, the ability to lie is just, you know, it's so easy. Right. You're not using your real name. Right. Most of these accounts don't use their real name. You know, they're, they're terrified. They're being doxed, which is hilarious because like if you're offering people financial advice, like I'm pretty sure we should know who the fuck you are. But I'm Ben McKenzie out here just saying that I know I'm sorry. I'm just dropping. You really are going hard at people with just Twitter things. You're basically saying I need you to be outside. Don't start on the NFTs. No, I mean, I, you asked earlier, like, do I feel sympathy and I do? I do. It's, it's easier to feel sympathy with people you meet in real life. I got to know it's cliche at this point, but the internet really is not real life. Like I can't express how strongly I feel about that with my crypto stuff. I've had so few really negative conversations in person with people, like even interviews that were like somewhat hostile, yeah, with Sandbagman Freed. We didn't yell and scream at each other. So in the documentary, can we talk about that? Please. You were able to score an interview with Sandbagman Freed, but he knew you were doing a documentary that's skeptical of cryptocurrency. Yes. Why? We had sold the book, and it said it was about crypto and fraud. It was like in our Twitter byline. Okay. And he was like, yeah, sure, I wouldn't be interviewed. So he doesn't interview with you for an hour alone with you. Yeah. Why? So I couldn't figure that out. I couldn't figure that out. He's a fan of the OC. That's probably it. Probably more of a Seth guy than a Ryan guy, but you know, do which camp. Okay. I know his assistant was a big fan of the OC. I talk about that in the book. He only had one handler. He's like this supposed billionaire with only like one person, which is very weird. Young woman, very nice. And the first thing she's done to me when I met her, like before I even met Sam, was like, oh my god, I'm such a big fan of the OC. I was like, this is all going to work out perfectly. So I think that was your secret superpower in the documentary and in the book. Totally. People hold you small. It's such an advantage to be underestimated. A series regular on a Fox sitcom from 2003. Is your sitcom? Sorry, sorry. One hour drama is a scripted drama scripted one hour drama. Not at all. Capital D drama. Capital D drama for Steve's drama. Yeah. Yeah. I mean, to be underestimated to be thought of as like some lightweight is such a gift. It's such a gift. So I think so. I didn't know why Sam want to give you your flowers nominated for 16 choice awards. I am. I am, I never won. I am the Susan Lucey of the Teen Choice Awards. I'm sorry. I'm the Susan Lucey of the Teen Choice Awards. I'm sorry. I'm just I'm sorry that you're that. Oh, you're just sorry. Yeah. Okay. I thought you couldn't understand what I meant. Yeah. No, you're just sorry. Yeah. Well, for both the fact that you didn't win and then also I don't know who Susan Lucey is. Hey, it's Julia Louis-Dreyfus from The Wiser than Meat Podcast among other things. And I've got a little holiday wisdom for you. Hosting during the holidays means lots of cooking and that means your trash is going to be full of smelly, rotting food yuck. So here's the wisdom. Get a mill food recycler. I did. We've had ours for years and it has totally transformed our kitchen. It's unbelievable how much cleaner everything is now. Plus, it's so easy to use. You toss in basically any food you don't eat. Peels, pits, meat, dairy bones. Last year we put in a whole turkey carcass, really. While you sleep, mill automatically dries and grinds all your food waste down to about a fifth of its size. That means at night you can fill it after a big elaborate dinner and by morning, they'll be room for breakfast. Nothing rots, nothing stinks, no fruit flies. And my favorite part, no more of those gross, dripping mid-dinner garbage runs. If you want a cleaner, calmer kitchen this holiday season, go to mill.com/wizer for an exclusive offer. That's mill.com. com slash wiser, happy hosting. - So SPF, so, in the film I interview this expert on fraud, he wrote a great book, "Lying for Money." And he talks about the psychology of fraudsters, which I find fascinating, which is fraudsters are not like other criminals, like they're not deviant members of society that commit violent crimes usually. They think of themselves as legitimate businessmen. They have to because to acknowledge to themselves that they're actually running a fraud, like most people aren't actual sociopaths who are like, okay with that. So instead they rationalize and justify their behavior. And Sam's a great example, Sam, still, well, in prison, having been convicted of all the crimes he was charged with in like four hours by a jury, still thinks he's innocent. I guarantee you, he thinks he's still posting about on Twitter. He's like, "We weren't actually insolvent." You're like, "Well, they were, they have to believe in that." Did you feel that when you were with him? You were like, "This guy is an absolute fraud." I felt he could not answer any of my questions as factarily. Like I had listened to interviews. I had done my preparation. I knew kind of, you know, effectively what he was gonna say or the arguments he was gonna make. I had answers for all of them. And some of these questions are very simple. What does Crypto do? Give me one thing that it does. And he said, he said remittances. He said it could be used to send money overseas. I had just come from El Salvador, which the economy is built off remittances. 25% of the GDP is people of Salvadoran descent sitting money home. So if it were to work, they illegalized Bitcoin made it a form of legal tender. If it was gonna work, people could have used the government system instead of paid as a way to transfer. Money gram or whatever, you save the fee, nobody used it. Nobody used it. Less than 2%, it's now less than 1%. Like effectively nobody used it. Because they don't have money to gamble with. You know, they're getting three or four hundred dollars a month in cash. You know, if they lose the money, they'd rather pay the percent and actually get the money to the person that they love. So the argument was bullshit. I just come from it. The only country in the world trying to use Bitcoin as money. The country built on remittances and it didn't work. And I said bullshit. And he didn't have a response to that really. What ended up making the documentary? What was an interesting thing that did not make the documentary? 'Cause it's a small part of the documentary. Yeah, totally. You got a sit down with SPF for an hour. Yeah, yeah, yeah. There's some funny bits in him. There's a one point where I think we sort of captured it on the doc, but like I bought that mug off Etsy. It's like fraud investigator. Yeah. And totally to fuck with them. And I'm super proud of that purchase. That's like $12. And he sits down with me. Like signs of the paperwork to appear. And they're like, we're not a midtown hotel room that I'd run it out for it. And he, there's a loud noise out in the hallway. So I go out to do what that. And he's just like, he does like a quadruple take, I think. It's like at least a triple where he sees the mug and is like, can't, what have I signed up for? What's fascinating is he then proceeded to talk to me for a whole hour. Yes. Like he wasn't like, I could actually just leave right now. Do you think he believed he was a true evangelist? Meaning, he's sitting there in his swim trunks looking like he was electrocuted. And he goes, I can convince Ben McKenzie to actually understand what my guess is. Yeah. And my guess is he felt he had nothing to hide. I mean, this guy was on top of the world. He was on the cover of magazines. The reporter that was in there before I showed up. I don't know if they were paying for the space, but I was. But anyway, the guy there was doing the profile and saying it would lead to a cover on a Fortune magazine. The next Warren Buffett question mark. Sam was on top of the world. Crypto is crashing, but he was going to bail it out. He was called the JP Morgan of crypto. He was going to like bail out all the failing crypto companies and like own the entire thing. He was supposedly one of the hundred richest people in the world. It's like 29 years old or 30 years old. Did you feel in that moment? As Ben McKenzie, were you like, am I the idiot? No. You see him getting all that positive press coverage. He's friends with some of the most esteemed members of the Democratic Party, all these celebrities. Did you feel you're like, maybe I don't get it? I mean, I definitely felt that at some points or I'm constantly checking myself, you know, am I describing this correctly? Am I giving enough credit to the other side? Am I sort of being, I really do try to be as honest as I can with myself. Well, at the same time, given my experience at how it's been affirmed, countless times at this point that this thing is bad, I don't pull any punches 'cause like the only way I'm gonna fight this supposedly trillion dollar industry, is by getting to people like through your podcast or whatever, is like getting to the regular people, so I have to be pretty outspoken and blunt when I can. But when I sat in the room with Sam, I did not, there was no moment of, I'm the fool. It was the title of the chapter that, as a Sam in our view, is the emperor is butt ass naked. I was the kid looking at this naked emperor going, he doesn't have any clothes on, what's going on here? I mean, did he do the interview barefoot? No, he had his sneakers on. Oh, he did a lot of barefoot. He was the cargo shorts t-shirt, yeah, like electrocuted hair. Yeah, yeah, yeah. Did you believe in the interview that he was gonna go to prison? No, I couldn't quite understand. I couldn't, yes, that's one way he kind of got over me. I gave him more credit than the retrospect I should have because I assumed, so Sam owned an exchange and a trading company, right? And which would never be allowed in a regulated market 'cause like you're trading on your own exchange that are literally like in the same office in the Bahamas, like his ex-girlfriend runs the trading company. So I figured he was making a ton of money because if you're trading on your own exchange, you don't have to be that good a trader to like, trader to make a ton of money. But what actually happened came out in court cases, they were terrible trading. They had lost so much money, it was called Alameda Research. They were called, they lost so much money that they had to steal the money from their customers in order to bail themselves out. Do you think that the dream of Bitcoin will ever be possible, meaning a trusted peer to peer digital ledger that's on the blockchain, almost like Wikipedia for money? Hey, we see every transaction that's going in and out and this is the new future of the way. People get money and send people money and it becomes an actual currency. That in that way, no. I mean, it can't work that way. Bitcoin can only do five to seven transactions a second. So it's Sam admitted this when I interviewed him. I said, you know, how is this gonna work? Visa can do 24,000. You can't do a global monetary system on five to seven transactions a second. And he was like, yeah, that's a problem. We'll fix it, but you know, it's not going to be Bitcoin. It's going to be any, he referred me to another coin that he owned a lot of trying to sell me on that. He whispered that to you. He's like, he wasn't whispering. He was, he told you he was telling me. Now I wrote my salana, I was supposed to buy salana, which has the unfortunate salana is a coin that, no, I had a lot of homies that went nuts. Yeah, yeah, it has the unfortunate characteristic of shutting down, because it just sometimes doesn't work at all. Which, you know, if you're using a global monetary system, probably not the best thing, not great. How do you wrap your head around the idea that you're looking at all the big banks are now having crypto divisions? JP Morgan, Blackstone, BlackRock, Morgan Stanley. I mean, clearly they have huge buildings here in New York City. They're doing big money stuff. Explain that to me. Clearly, they wouldn't just throw their money away. I mean, these big private equity firms, they're getting into the Blackstones, the Black Rocks, they're getting into the housing market, nursing homes, real homes. They clearly wouldn't get into fake money, right, right, right. Not if they can make money on it. The democratized decentralized future of money brought to you by BlackRock. Yeah, Wall Street is really good at making money by facilitating trades without taking up position one way or the other. So the ETFs are a perfect example. The biggest one is issued by BlackRock. They, you buy the share of the thing called the BlackRock ETF or whatever. They go to Coinbase and they say, hey, we got this money. This amount of money, this many shares, give us the Bitcoin. You just actually, they actually hold the Bitcoin, I believe. And then when people sell the shares, then they sell the Bitcoin. So BlackRock is making, and it's taking a percentage, taking a fee on that facility and that transaction. The fee might be really small. It might be a quarter of a percent or something, but it's on billions of dollars. So they're making it fortune. And all they're doing is helping you trade. I don't give a shit if the price goes up or down. I mean, they like the price to keep going because I would make more people do it. But like at the end of the day, they're not holding the bag, you are. And good luck. Like at some point, it's just so hard to point to exchanges that haven't collapsed. So I don't wish this on the future, but like it's just if history is any precedent, like the exchange as well at some point shut down effectively because there aren't enough buyers when the price crashes. - Well listen, man, I encourage everybody to read the book. It's very funny, watch the movie. He's very funny in it. Ladies and gentlemen, Ben McKenzie, thank you so much, Ben. Thank you so much. (clapping) ♪ Hurry right away, lonely days don't seem ♪ ♪ Make your daddy grab you, have hands on your hands ♪ - Have you subscribed to Lemon Out of Premium yet? You can listen completely ad-free and get access to exclusive bonus content you won't hear anywhere else. Like my discussion with Malala on how therapy changed her life or my convo with Mel Robbins on how her let them theory applies to parenting. Tap subscribe on Apple Podcasts or head to lemonautopremium.com to sign up on any app that's lemonautopremium.com.