60 Minutes - Sunday, May 19, 2019

Episode Date: May 20, 2019

Steve Kroft shares the story of Howard Wilkinson -- a banker who uncovered a 230-billion-dollar money-laundering scheme. Jon Wertheim tells us about "Rainbow Railroad" -- an organization dedicated to helping LGBT individuals escape persecution, violence and sometimes death in their home countries. Anderson Cooper introduces us to the man who spent millions of dollars in Bitcoin -- on PIZZA. Those stories on this week's "60 Minutes." Learn more about your ad choices. Visit megaphone.fm/adchoices To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

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It was turned into untraceable American dollars. 230 billion dollars. One bank. One bank. One branch. One branch. And this is the whistleblower who found one loose thread and decided to pull on it. A lot of this money came into the bank and was out the door the next day, right?

The next day. Or you think it was that slow? In more than 70 countries worldwide, lesbian, gay, bisexual and transgender, or LGBT citizens, live in fear for their freedom, their safety, and in some cases, their lives. Their governments not only sanction brutality against them, but often carry it out. There is no obvious or easy escape path,

but for those lucky enough to hitch a ride, there is something called the Rainbow Railroad. You've probably heard of Bitcoin, but do you understand how the electronic currency works or why its value has fluctuated so dramatically? Tonight, we'll introduce you to some central characters from the cryptocurrency revolution and tell you the unlikely story of the first ever Bitcoin transaction. Okay, sorry, let me just get this straight.

You spend about $800 million on pizzas. I'm Steve Croft. I'm Leslie Stahl. I'm Scott Pelley. I'm Anderson Cooper. I'm John Wertheim. I'm Bill Whitaker. Those stories tonight on 60 Minutes.

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dependable and experienced insurers in the industry and has been named one of the 2019 world's most ethical companies by the Ethisphere Institute. The freedom to go after whatever is next for you, that's the power of Pacific. Ask a financial professional about how Pacific Life can help give you the freedom to do what you love, or visit www.pacificlife.com. Money laundering is the way clever crooks hide and eventually spend all of the money they've stolen, and this is a tale about what's believed to be the biggest money laundering scheme in history. It involves nearly a quarter of a trillion dollars of very suspicious money from Russia and the former Soviet Union that was

funneled into the Western banking system right under the noses of major banks and regulators in the United States and Europe, who either facilitated it or turned a blind eye. At the heart of it is a whistleblower who found one loose thread and decided to pull on it. Howard Wilkinson is an Oxford man, cautious, prudent, and a bit of a stickler. After his cover was blown last fall in a newspaper article as the person who uncovered the scandal, he has spent much of his time wandering the British countryside trying not to be found.

Being named as a whistleblower in a case involving dirty Russian money, it's not a good place to be. You're still concerned? You've got to be, haven't you? The very nature of the people who want to launder money probably means that they're not the sort that you want to go down the pub and have a pint with. But he did sit down with us and told his tale about a financial crime so big it's hard to fathom. The end number that's reported for the whole thing over the six or seven years

is $230 billion of suspicious money. One bank? One bank, $2 230 billion. One branch? One branch. Wilkinson had worked there as a mid-level executive for Danske Bank, the biggest financial institution in Denmark and one of the most respectable banks in Europe. As head of markets for the Baltics, he worked out of a branch in Tallinn, Estonia, a former Soviet republic, now a NATO member, right next door to the Russian bear. There were tensions, but also business opportunities, and Wilkinson eventually discovered his branch's biggest business was converting Russian rubles of highly questionable origin into crisp, clean, untraceable American dollars.

Customers would be calling up every morning, please, I want to sell 20 million rubles and buy dollars. We would quote them the price for that. They would get the dollars. Basically, that was the large part of what we did. And there was nothing illegal about that. The banks are supposed to check the money coming in. Is it clean? And the banks are supposed to check the money coming in. Is it clean? And the

banks are supposed to check where does the money go in the end. And you're saying it wasn't being done. Evidently, it wasn't being done. That's an example of British understatement. International money laundering laws require that banks know their customers and report suspicious transactions to authorities. Yet suspicious transactions would turn out to be the vast majority of the business in the bank's non-resident portfolio, which was made up of clients from Russia, Azerbaijan, and other former Soviet states. A lot of this money came into the bank and was out the door the next day, right? The next day? Well, you think it was that slow?

You know, the customers would call every day, they would sell their rubles for dollars, and that would be what we'd see. We didn't, you know, we didn't see where the money went. So your business is really to execute the trades? Yeah, basically. Not vet the clients? Absolutely not to vet the clients.

That job, Wilkinson was assured, was being done by a special committee that carefully screened all international customers before they were allowed to open an account. He discovered otherwise almost by accident when a colleague asked him to help with some paperwork on one of the bank's big customers, a British company called Lantana Trade LLP. To me, being British, the obvious place to look for financial information about a company is the public register. This is public. But apparently this was rocket science.

Apparently this was rocket science and no one had ever thought about it. Wilkinson consulted a British government website known as Companies House. I paid £1, $1. thirty, and I got the company's financial statements. And it was a bit strange because it said that the company was dormant. Now dormant means the company hasn't done a single transaction. He knew that couldn't have been right having looked at Lantana's bank statement. How much Lantana money was passing through the bank? It's up to 20 million a day. 20 million a day?

Yeah, some days. Not exactly dormant. It's not dormant at all. The public documents raised other suspicions. Lantana seemed to be a British company in name only, with a postal address in an unremarkable office building in North London that it shared with at least 64 other shell companies with accounts at Danske Bank Estonia

in connections to remote exotic places known for banking secrecy and money laundering. So we've got a UK company with a registered office in North London with an account in an Estonian bank that's actually run by Russians and the partners, the owners, are from the Seychelles and the Marshall Islands. To Wilkinson, it screamed money laundering. He explained what he found to people at the bank who handled the Russian accounts and was told that it was a simple paperwork screw-up that would be fixed. Thirteen months later, he heard that Lantana had been told to take its banking business elsewhere. Among the concerns was money laundering by a member of the Putin family.

It seemed to be Mr. Igor Putin, who is, I think, the cousin of the Russian president. There were links to the FSB. The FSB is, I think, the successor to the KGB, so some sort of secret police. The people running the company have been associated with several banks that had gone bust in Russia in bad circumstances. Igor Putin, the president's first cousin, has been associated with other Russian money laundering schemes, but has always professed his innocence. To Howard Wilkinson, hearing the Putin name was further confirmation that something was wrong. Why did you do that? This needed to go to Copenhagen.

This needed to go to the head office. So I made a whistleblowing report to four very senior executives, including one of the executive board, a whistleblowing report about what had happened and what seemed to be wrong. Concerned that others at the bank might be involved in a cover-up, Wilkinson decided to look into three more of the bank's customers that were registered in Britain. I paid three pounds and I took the accounts for these next three and they were all false. You're four for four. I'm batting

four for four. Is it possible that people just could have missed this? Well, I then went 16 for 16 by looking at another 12, of which 15 were the same address. So, yeah, at some point, it stops being possible to be a coincidence. Not just were the accounts all false, the accounts all basically looked the same. I mean, basically just change a couple of numbers, but they all basically looked the same. When you started doing all this,

what did people say to you at the bank? Nothing. Nothing? Exactly. Nothing. People stopped calling around to say hello. Is it true that a high-ranking executive at the bank told you, quote, this bank is not the police?

The bank has no obligation to report false clients' accounts to the authorities? Perfectly true. Frustrated with the lack of action, Wilkinson resigned and took his family back to Britain. It would take nearly five years for Donska Bank to come up with answers after prodding from the Scandinavian and European press. After reviewing more than 6,000 non-resident accounts, it acknowledged at a news conference last fall that its tiny Estonian branch was the gateway for what may be the largest money laundering case in history. I'd only scratched the surface. However huge the number seemed to me back in 2013, back in 2014,

unbelievably I'd only just scratched the surface of what was actually going on in the bank. Do you have any idea what percentage of that money was dirty? They said that almost all the customers were suspicious. So far, at least 18 former Donska Bank employees are facing charges in the case, including former CEO Thomas Borgen and his chief financial officer. The bank itself faces four counts of violating the Danish Anti-Money Laundering Act. Donsky Bank itself admits to a complete breakdown of every single internal control. This isn't one or two mistakes.

This is a mistake of their entire system over years, of which they profited immensely. Attorney Stephen Cohn, who has been representing whistleblowers for more than 30 years and is Howard Wilkinson's lawyer, says Donska Bank is not the only one that profited from the scheme. Most of the $230 billion passed through big New York banks undetected for years. What does that sheer number, $230 billion, tell you? Well, first off, it's almost impossible to put your hands around. You're dealing with major financial institutions worldwide who are complicit. When you say complicit, what do you mean? The moment you're doing money laundering and large amounts of money, billions, hundreds of millions, you need the big banks.

And the big banks are under strict regulations. From the Patriot Act, anti-terrorist financing, very strict rules to stop money laundering. You're saying that they should have known? Oh, they absolutely should have known. J.P. Morgan was the first to suspect that Danske Bank was laundering large amounts of Russian money through its Estonian branch, and it broke off its banking relationship in 2013. Deutsche Bank USA and Bank of America carried on into 2015. The banks are talking to us, but I would assume that they'll say, look, it's Danske Bank's job to know who its customers are. Our customer is Danske Bank. We have no reason to know all this money is flowing in to Estonia from Russia.

Sure. Of course. Let's just put it this way. You have to have due diligence. And you have this little bank out there in Estonia pumping in billions of dollars to you. Do you think you should ask? But the proof of the pudding is that JP Morgan figured it out. Were they geniuses? And who did they tell? And why didn't they expose the full scheme to the

United States? Why was it up to one guy in a bank in Estonia to figure it out and turn it in, risking everything? Why is it always up to the whistleblower? What's the answer to that question? The banks have to do their job. And the only way they will be held fully accountable is when the United States and other governments hold them accountable and force them to implement the rules that exist to protect all of us. All of that is being weighed right now by the U.S. Justice Department

and other federal agencies which are investigating Donska Bank. It's cooperating with the investigation, SRJP Morgan, Bank of America, and Deutsche Bank USA. None of the banks accepted our request for interviews. The case could end up with hundreds of millions of dollars in fines, and under U.S. whistleblower laws, Howard Wilkinson could potentially share in the proceeds. I mean, you were the whistleblower in this case, correct? I guess so. Under U.S. law, you could end up being rewarded with a substantial amount of money. Back in December 13,

the idea that this would be a case that the U that the US Department of Justice and SEC would ever have any interest in would never even cross my mind. The bank should have investigated it, sorted it out. What happened? Basically nothing. It's shocking. It's impossible to say exactly where the 230 billion dollars of dirty money originated beyond the banks of moscow it's been estimated that about a third of the russian economy is off the books awash in cash much of it is from corruption bribes and tax evasion by oligarchs plutocrats and mafios. And it's impossible to tell exactly where it's hidden now,

beyond the shell companies, tax havens and expensive real estate in New York and London. Do you think that there's any chance that we'll ever find out whose money it was and where it ended up? It's going to be difficult. And the fact that it's so difficult is fully the responsibility of Danske Bank. Think about it, walking in the snow. The snow keeps falling and the footprints are covered up. And that's where we are now in 2019. It's certainly not impossible, but it's many, many times harder.

A lot of snow has fallen over the footprints. Stories of exodus mark a central theme in human history. War, famine, crippling poverty, all have forced people to flee one country for another. But there's a growing reason for leaving home and homeland. In more than 70 countries worldwide, lesbian, gay, bisexual, and transgender, or LGBT citizens, live in fear for their freedom, their safety, and in some cases, their lives. Their governments not only sanction brutality against them,

but often carry it out. There is no obvious or easy escape path, but for those lucky enough to hitch a ride, there is something called the Rainbow Railroad. Like the Underground Railroad, the Rainbow Railroad helps those fleeing danger get across borders to safety. And like its historical namesake, this network shrouds its operations in secrecy.

But over a recent six-month period, we got a look at how the Rainbow Railroad works. We met escapees from three continents and were on hand for a series of departures and arrivals. Last June, on the first day of summer, Abanub Elias left his old life in Egypt and arrived a refugee at Toronto's Pearson International Airport. You made it. How are you feeling? Yeah, nice. Rainbow Railroad staff was there to greet him. And on the ride into town, Abinub took it all in. New country, new landmarks.

First stop, a familiar face. This reunion was nine met in Cairo. On September 22nd, 2017. The occasion, a concert by Mashroua Leila, a Lebanese band popular throughout the Middle East, whose lead singer is openly gay. Caught up in the music and the moment, Abanoub did the unthinkable for a gay Egyptian.

He raised the rainbow flag, a symbol of gay pride. Ahmed spotted this bold stranger in the crowd of 35,000 and says he was inspired. He can do it, so I can do it too. This was unthinkable to you before the concert. So when I saw Abanob, okay, I can do it. The two waved the flag together. You said it was the best five minutes of your life.

Yeah, it was the best five minutes of my life. In a bad situation in Egypt, you can't talk about anything. Now you are raising the flag. You are talking about LGBT rights. Oh my God, you can't talk about that in Egypt, in the public area? In Egypt, just being openly gay can bring trouble. Human Rights Watch says 300 LGBT citizens have been detained under the country's debauchery laws in the last five years.

Hours after the concert, Egyptian media denounced the flag raising and security forces took the opportunity to crack down on Cairo's LGBT community, arresting dozens. Panicked, Ahmed posted this video to social media to get his story on the record. It's clear to me that I am wanted by the police, he said. He was arrested days later for, quote, promoting immorality. Police also questioned him about a woman named Farida. They're interrogating you, and they know about Farida. Yeah. The first name, asked me the first name, was Farida.

Farida Abaouf, a trans woman and well-known LGBT rights worker in Cairo, got word police were asking about her and knew she had to leave Egypt. She took this video the night she escaped. She says she couldn't risk being recognized along the way, so she cut her hair and took shots of testosterone to look more masculine again. Farida told us she almost didn't make it past Cairo's airport officials, who pulled her aside for questioning. He looked to me like he knows something, but he didn't tell me. You think the guard knew something was up?

Yeah, he looked to my eyes, eye contact, big eye contact. It's like I know everything. Farida made it to Canada, where Rainbow Railroad staff was waiting for her, having learned about her situation from their network in Egypt. They got her settled in Toronto, where she told them about Abanub, who'd gone into hiding outside Cairo, and Ahmed, who was serving three months

in solitary confinement. I was crying a lot. I told them, please help my friends. Please, they are in jail. Can you please help them? But you're connecting your friends in Egypt with Rainbow Railroad once you're here? Yeah. Founded in 2006 and based in Toronto, Rainbow Railroad has evacuated more than 600 LGBT individuals from 22 hostile countries.

The small, unassuming operation fielded more than 1,000 requests for help last year and says that number will increase this year. Yeah, I would need from Cairo to Toronto. Referrals come from an international network of LGBT groups and safe houses. Then Rainbow Railroad secures visas and pays for flights to safety. All of it funded not by any government,

but with private donations of cash and also airline miles. Executive Director Kamali Powell reviews each case. What do they all have in common? The majority of people that we help have told harrowing stories of being hunted down, of being excommunicated by their churches, their families, their communities. And so they've come to us really desperate. This isn't cultural homophobia. This is police, courts, legislators. We've heard stories of an individual who had a mob go to their house, burn it down, and when they flee to go see the police, the police say that we cannot help you because you are gay. The police sanctions the mob. The police sanctions the mob. Sometimes the police are active

perpetrators of this violence. He's talking about an incident that took place in Jamaica, one of 70 countries worldwide where same-sex relations are a crime. In seven of these countries, punishable by death. The United Nations says global gains in LGBT rights, including marriage equality, have been met with backlash in many parts of the world, perhaps most brutally in the Russian Republic of Chechnya. Its leader has publicly denied the very existence of gay citizens. In April 2017, reports surfaced of authorities there rounding up, torturing, and killing queer Chechens. Usman, not his real name, survived this purge. He asked us to conceal his identity, fearing for the safety of his family back home. He

recalls the day men in military uniform came for him at his work, took him to an abandoned warehouse and tortured him with electric shocks. They tied my hands behind my back and they beat me. They kept asking me for names and phone numbers. Names and numbers of whom? Gay men I knew, but I didn't give them anybody's name. Even under torture? Yes, I'm very proud of that.

After two weeks, Usman was released, and a friend helped get him to a safe house in Russia. There, he heard about a means to escape. Rainbow Railroad. That's how you heard it the first time? In their largest operation to date, Rainbow Railroad worked with Canada's foreign ministry to evacuate 42 Chechens,

including Usman, and find them asylum in Canada. A few months later, Powell and Usman went to the U.S. State Department to plead for visas for LGBT Chechens still trying to get out. But this is a tough time to be seeking asylum in America, no longer a busy stop on the Rainbow Railroad. Spain, the Netherlands, and Canada are among the most popular destinations. The Chechen operation put Rainbow Railroad on the map. Donations more than tripled, making it possible for staff to venture to half a dozen LGBT hostile countries and assess the need in person. We went with Kamali Powell to Jamaica, well-known for its beaches, less so for its homophobia.

Let me tell you what we can do. Rainbow Railroad gets more requests for safe passage from here than from anywhere else. This is a gully. Unfortunately, it's like a sewage drain area where members of the LGBTQI community sleep. It smells like a sewer system. Under the streets of Kingston, Powell took us to see a potential Rainbow Railroad client named Blue. His fear of being attacked because he is gay is so intense, Blue goes underground, quite literally, for refuge overnight. You have this place to yourself? This is my house.

This is your house? He told us he sleeps on cardboard boxes, and when the rain comes through the storm drain, he moves to higher ground. If I was not gay, I wouldn't be here because I'd be at home. But because of my lifestyle and they found out about me, that's why I'm here, right? Even Powell was taken aback by these conditions. Have you seen this in other countries? Nothing quite like this.

Once you're labeled LGBT, it's almost like a scarlet letter. You walk around and someone can attack you at any moment. The threat of attack drives some gay Jamaicans to this remote hillside town where our cameras were allowed into this safe house. Many of its residents will be referred to Powell, who went over the most urgent cases with House staff. The problem is getting to the hospital, right, as well? One resident told us he was stabbed 15 times. Another said she was doused with acid in an anti-gay attack.

This is where they wait for wounds to heal and visas to come through. Across the island, the wait is over for Elton McDuffus, whose work with the local LGBT rights group made him a target. He told us he survived a knife attack and an attempted break into his apartment as assailants shouted anti-gay slurs. After that, you said, I gotta get out. Yeah, I gotta leave, yeah. He installed extra locks on the door and contacted Rainbow Railroad.

He didn't tell his mother he was about to leave for good. I don't want my mommy to worry. I don't want my family to worry. So I try to keep them out of this process. So what have you told them? I'll see you when I see you? Yeah. Well, I told her, you're not going to see me for a long time. Nervous? Very.

Why? Because I'm stepping into the unknown. The only thing I can say is I'm told that I'll be okay. I'll be in a better place, yeah. You've called the worldwide exile of the LGBT community the civil rights issue of our era. What do you mean by that? What I mean by that is that we spent many years in North America saying that marriage equality was the most important marker for the advancement of LGBT people. What we haven't done is talk about thousands of thousands of displaced people who are victims of state-sponsored violence only because of who they love. This is your new town.

Yeah. Four weeks after we watched him leave Jamaica, Elton McDuffus had found a taste of home in Toronto and told us he was no longer living in fear. A whole neighborhood with pride flags and gay bookstores. What's it like when you walk around there? Like I said to my friend, we were walking on Church Street and there were a lot of

gay couples walking and holding hands and I said, I think we should hold hands. You said we should hold hands. Yeah, and we did and nobody cared and nobody looked and you know, that was beautiful. The Egyptians too are making the most of their newfound freedom. Toronto's Pride Parade last summer was a highlight. Rainbow Railroad helped cover living expenses until the asylum claims were decided. Ahmed got his papers in March. Aba Noobs came through last month. On this night in September, they were reminded of how far they've come.

Mashroua Laila, the band whose concert sparked the LGBT crackdown in Cairo, was in Toronto to play a show and wanted to meet the Egyptian exiles. And when the music played, Abanub and Ahmed stood together, just as they had in Cairo a year before. When I was in the jail, I knew that I would be able to hear this music again. I raised the flag again with Abanub. It was an amazing moment for me. I can do what I want now.

I'm safe. You're safe. Yeah, I'm safe. Ten years ago, a mysterious computer programmer invented a new type of money that wasn't backed by any government or kept in any bank. There were no coins or bills, just long strings of letters and numbers stored inside a network of computers

that anybody could be a part of by downloading some free software over the Internet. Today, that computerized currency, Bitcoin, is well known, though little understood. And Bitcoin's popularity has inspired the creation of thousands of other types of digital money known as cryptocurrency. Over the last decade, you could have made a 5 million percent profit by investing in cryptocurrency, or you could have lost everything. It has been a wild ride, and few people have experienced the highs and lows more than a 29-year-old named Charlie Schramm.

It felt like I was riding a rocket ship that had no mission control. You were going up very quickly, but we were not thinking about what would happen when eventually we have to go back down. And for me, I dealt with the ultimate going back down. You crashed hard. Crashed really hard. Charlie Schramm was once described as the last kid who'd be picked for a game of dodgeball, but he always felt comfortable around computers. He grew up in a Syrian Jewish community in Brooklyn, New York, and was a senior at Brooklyn College when in 2011 he started a business in his parents' basement. He called it BitInstant because it enabled people to buy Bitcoin quickly using dollars at a time when interest in the computerized currency was just

starting. When did you first notice the business taking off? Almost instantly. Really? That fast? I had $1,000 that I threw into it. That was my own money. And then within days, it was getting crazy, and I had my bar mitzvah money that I wanted to use. Within a year, Tyler and Cameron Winklevoss of Facebook fame

became major investors in Charlie's company. By 2013, he was pronounced one of Bitcoin's first millionaires. Estimates of his net worth range from a few million dollars to 45 million. I went from being a kid who had no self-confidence to the complete opposite, with a crazy ego. And I was doing media interviews every day. And I was the evangelizer of the industry, the Bitcoin Moses, as they would call me. You go from being the last kid picked at dodgeball to, you know, running the team. How did Charlie and other 20-somethings become kings of a new industry that deals in money you can't deposit in the bank? To understand that, you have to go

back to a time when confidence in banks had plummeted. The Dow tumbled more than 500 points. Shortly after the collapse of Lehman Brothers during the financial crisis of 2008, this paper started circulating on the Internet. It proposed creating an electronic cash system that would allow people to pay one another online without going through a financial institution. To this day, no one has the faintest idea who the paper's author, Satoshi Nakamoto, is. But he or she or they created ingenious software that anyone in the world could download onto their computer for free.

The computers running the Bitcoin software were then able to work together over the internet and perform functions normally handled by banks, like keeping accurate records and guarding against fraud. The computers maintain a constantly updated record of transactions involving Bitcoin. The record is called the blockchain, and it's how the network keeps track of who owns what. One of the most innovative features of the system is that every computer on the network can keep a copy of this record showing every transaction ever recorded. The blockchain is stored on thousands of computers around the world. Neha Narula is the director of the Digital Currency Initiative at the MIT Media Lab. The idea behind the blockchain is that it's everywhere

and everyone can look at it and verify it for themselves. And so what this means is that you get this sense of trust, you get this sense of security because everyone's watching. If you're wondering what there is to watch, here it is. Bitcoin's not much to look at, just letters and numbers. Why would people have trust in something that is just numbers and letters? It doesn't have anything backing it up. I think to answer that question, you really have to go back to sort of the roots of money and what is money. The reason that the $5 bill in my wallet has value is because I know you'll take it from me for something. I can buy a sandwich from you with that $5 bill.

So it has value because people believe in it. Exactly. And that's it. That's really it. At first, Bitcoin was just an interesting experiment conducted at home by computer programmers like Laszlo Hunyatz. Because his computer was one of the computers helping to maintain the Bitcoin network,

Satoshi Nakamoto's software rewarded Hanyats with some Bitcoin. But there wasn't much he could do with it back in 2010. So he went on an internet chat forum and asked whether anyone would be willing to buy him some pizza in exchange for 10,000 Bitcoin. And somebody said, hey, I'll take you up on that offer. Here you can see the original pizzas. And that's my daughter's hand. She was a year old. That pizza obtained with Bitcoin by

Laszlo Honyac and enjoyed by his daughter nine years ago is believed to be the first real world transaction involving cryptocurrency. Do you feel like after that, that that changed people's perception of it in a way? I think it made it real for some people. I mean, it certainly did for me. In the years that followed, Bitcoin caught on. Some merchants started accepting it. And it became possible to buy and sell Bitcoin for dollars through businesses called exchanges. As the market price of one Bitcoin rose from zero to a dollar to a hundred dollars and more, an esoteric experiment grew into a global industry. On a windswept plain in Iceland, these warehouses are closely guarded at all times. We were asked not to disclose their exact location.

This is one of the places where the records, the blockchains of cryptocurrencies, are now kept. State-of-the-art computers work 24-7, performing calculations that safeguard the records. In industry lingo, this is called a mine. This does not look like any mine I've ever been in. Yes. Now this is a mine of the new world. This is the new gold mine. Marco String is the CEO of a company called Genesis Mining. So there's tens of thousands of processing units in here. If you add all the computing power of all the processing units together,

you have more than the world's number one supercomputer. Back in New York, by 2013, Charlie Schrem had finally moved his company's computers out of his parents' basement. He was spending a lot of time traveling to industry conferences and talking up Bitcoin. Charlie was charismatic. Charlie was funny. But could Charlie be trusted to run a business? In a new book, Bitcoin Billionaires, Ben Mesrick describes how BitInstance's biggest investors, the Winklevoss twins, grew concerned that their young CEO was spending too much time traveling and partying and not paying enough attention to the details of running his company. For example, Charlie knew the U.S. government was concerned about how cyber thieves and money launderers were using Bitcoin. His company was required to monitor its customers and report any suspicious activity.

Banks have whole departments that are supposed to do this. The person at BitInstant who Charlie put in charge of it was Charlie. So you were in charge of making sure that you complied with rules and regulations regarding financial transactions. Was that a good idea? No, very bad idea. In 2013, Charlie had other problems too. A documentary called The Rise and Rise of Bitcoin showed what happened when the price of Bitcoin rapidly rose and fell. Charlie's company and an exchange it did business with couldn't keep up with customers' orders. People can't buy and sell, and they can't withdraw, and they can't deposit. The whole thing is just a fritz.

BitInstant went out of business in July 2013, a victim of Bitcoin's volatile landscape and Charlie's many mistakes. I look back at myself and I say, I don't even know if I would do business with myself. victim of Bitcoin's volatile landscape and Charlie's many mistakes. I look back at myself and I say, I don't even know if I would do business with myself. Essentially, you're saying you couldn't be trusted then? A hundred percent. Six months later, in January 2014, he was returning from a trip abroad when he got stopped at passport control in Kennedy Airport. I got surrounded by a whole poo-poo platter of federal agents.

A poo-poo platter of federal agents? You know, like all mixture. You have DEA, IRS, NYPD, JFK security, all of them. Federal agents had evidence that Charlie knew one of his customers was buying Bitcoin and then reselling it on a website where it was used to buy illegal drugs. When I got arrested, the first thing I told my lawyer is, I'm guilty. Let's make a deal. Because I knew immediately that I had done what they said I did. One of Bitcoin's first millionaires was now one of its first felons. But that didn't stop the market price of Bitcoin from rising from about $250

when Charlie went to prison in 2015 to nearly $20,000 at the end of 2017. It then plunged 84% before climbing back to more than $8,000 this past week. Remember, a Bitcoin was worth less than a penny when Laszlo Hunyatz first traded Bitcoin for pizza nine years ago. We calculated that if Hunyatz had held on to all the Bitcoin he used back then to get various items, much of it pizza, by the time of our interview, those Bitcoins would have been worth... $800 million. Yeah.

So, okay, sorry, let me just get this straight. You spend about $800 million on pizzas? Well, if you look at today's exchange rate... Are there nights you wake up, like, in a cold sweat, where you think, I could have had $800 million if I hadn't bought those pizzas? I think thinking like that is not really good for me. There's a long list of financial leaders who think Bitcoin's not good for anyone. Lael Brainard, one of the governors of the Federal Reserve,

agreed to speak with us because she wanted to make sure ordinary investors understand the risks of cryptocurrency. There are people who say that cryptocurrency, it's better than real currency because it's not controlled by any government and it means it's not subject to manipulation by central bankers like you. No offense.

The U.S. currency has a whole set of legal protections around it. The Federal Reserve and ultimately the U.S. Treasury stand behind it. And when you hold your dollars in a bank account, you have deposit insurance. And that doesn't exist with cryptocurrencies. None of those accountability mechanisms exist for Bitcoin. Charlie Schramm spent a year in prison. When he got out, the man once described as Bitcoin Moses worked in a restaurant parting seas of dirty dishes for $8 an hour. But like Bitcoin, Charlie Schramm bounced back.

Three years after getting out of prison, he's living very comfortably in Florida. He told us he's made money blogging, consulting, and investing in cryptocurrency, and is now captain of his own destiny. He's even got a boat named Satoshi, after Bitcoin's mysterious creator. After watching this, you may be wondering why the world needs cryptocurrencies. Neha Narula of MIT's Digital Currency Initiative argues they can make a difference. The thing that excites me about cryptocurrencies is that we can experiment with the transfer of value. We can put new features into money. We can change the way money works.

She says cryptocurrency has already helped people in countries like Venezuela, where the monetary system is in crisis. And in the future, it may be able to do things like speed up and lower the cost of worldwide money transfers. People used to say, why do we need email? I can just call someone on the phone. And now we can't live without it. So this is one of those conversations that 20 years from now, someone could replay and have a good laugh because I'm asking such moronic questions that will be so obvious to everybody. Or they'll be laughing at me because I said cryptocurrencies were going to be a thing and they totally flamed out and died.

It still could go either way. It could really go either way. That's what makes it so exciting and interesting. We end tonight's broadcast on a personal note. After 50 years in journalism, 40 years at CBS News, and 30 years at 60 Minutes, it doesn't seem possible. I've decided to retire. It's been a difficult decision, one that

I've considered at the end of each of the past four seasons. Now feels like the right time. As my good friend and colleague Morley Safer advised me a few days before he passed away, don't stay too long. There are still some things I'd like to do that I haven't done. I'm not getting any younger. I want to leave while I still have all of my marbles, the energy to enjoy life, and the curiosity to pursue some different things. I've done nearly 500 stories for this broadcast, and that has taken up most of the past 30 years of my life. It's been a tremendously rewarding experience, and I want to thank you for watching what is still the best news program on television.

I also want to thank everyone here at 60 Minutes, past and present, and especially the producers, cameramen, and video editors that I've collaborated with over the years. They never get enough credit. I'm not going away just yet. I'll be around this summer, and there will be a special in September featuring some of my favorite stories. I'm Steve Croft. We'll be back next week with another edition of 60 Minutes.