Money Rehab with Nicole Lapin - Bitcoin Thieves Part 1: The Origin Story of Crypto

Episode Date: February 21, 2022

You probably saw the headlines that a married couple was arrested for a money-laundering scheme involving billions of dollars of cryptocurrency. To really understand the full cuckoo-bananas-nature of this story, we’re going to need to go back to the beginning— the very beginning; the origin story of crypto itself. In each episode this week, Nicole is going to take us through the money trail, leading us to Friday’s episode, where we get to these Bitcoin bozos once and for all. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. Hey guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player, GameStop. And should I have a 401k? You don't do it? No, I never will. You think the whole world revolves around you and your money.

Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Last week, you probably saw the headlines that a married couple was arrested for a money laundering scheme involving billions of dollars of cryptocurrency.

Well, I definitely want to unpack that and follow the money trail. But in order to actually stay on the money trail through the twists and turns, we need to go down a cryptocurrency rabbit hole. To really understand the full cuckoo bananas nature of this story, we're going to need to go way back to the beginning. The very, very beginning. Like the origin story of crypto itself. And each episode this week is going to be another step along that money trail, leading us to Friday's episode where we get to these Bitcoin bozos once

and for all. But wait, before you decide you just don't like crypto enough to listen to five days days worth of episodes, this crypto story isn't just about crypto. This epic tale has everything. Undercover tech geniuses, the 2008 crash, billions of dollars, romance, an FBI investigation. Oh my! It has it all. So let's rewind to the BC era. Of course, that's BC as in before crypto. At its core, cryptocurrency wasn't created because some finance bros were dying to name a currency after a dog. No, no, cryptocurrency really rose from the desire to create a new currency system that addressed issues with the current financial system. In the United States specifically, there are three main complaints with the financial system. First, government's management of monetary policy.

Second, security. And third, distrust of big banks. Let's dig into it. Number one, monetary policy. In theory, the advantage to a money supply that's controlled by the government is exactly that. The currency is controlled. In a perfect world, the government will respond to the needs of the people and economy by printing more money or pressing pause. The issue of printing too much money causes inflation, which is a topic that we'll dig into in another episode because it is extremely relevant

today. But let's put a pin in that for now. For the time being, all you need to know that inflation is the name given to the situation of rising costs across the board. Inflation explains why movie tickets were five bucks back in the day, and now they're 15 or maybe even more, and not even including popcorn. Inflation isn't always bad, though. Sometimes inflation doesn't make that big of a difference in our financial lives. But it's gotten a bad rap in recent years, mostly because of the things that do not keep pace with inflation. For example, minimum wage rates and salary ranges in general. In the United States, when an employee lands a raise, they normally experience a 3% increase of their salary.

Guess how much inflation historically rises year over year? Yeah, 3%. The reality is the salary increase you'll see at most jobs is not enough to keep pace with inflation, especially if you're working a job at the federal minimum wage, which has not kept pace with inflation since the 1960s. But if we move past the research and get to the heart of it, inflation just doesn't feel good. It makes us stressed and anxious to look at the way prices have crept up and up since our childhood. We think to ourselves, how can that not be a bad thing? Number two, security. A study conducted by the Harris Poll found that in 2019, $10.5 billion was lost because of scams orchestrated over the phone in the U.S. alone.

Wild, right? I personally had not expected that number to be in the billions with a B. But get this, in 2020, this number nearly doubled. In 2020, a total of $19.7 billion was lost through phone scams. For starters, that is a ginormous number. But it's also a scary indication of just how scammers are getting increasingly more effective. And scams aren't just taking place over the phone. With the advent of the interwebs, scammers have gained yet another frontier to swindle folks out of money. Yes, everyone is getting better at technology. Kiddos, grandmas, cyber criminals. And what do cyber attackers want more than anything?

More Instagram followers? No, they want your bank account information. The number of ransomware attacks in the United States went up 158% between 2019 and 2020. And according to Trend Micro, the banking industry experienced a 1,318% increase in ransomware attacks in the first half of 2021 alone. Ransomware is a particularly nasty form of cyber attack. It's when a hacker finds personal information online and threatens to publish it unless a ransom is paid. Cyber criminals find this information by hacking into your computer and observing your activity and waiting for something worth stealing. This digital stakeout is called dwelling. And frankly, it makes my skin crawl. Many people, whether they've been burned by a scam or not, want to feel like their personal information is more protected. And the current monetary system

isn't foolproof when it comes to hackers. Number three, distrust of big banks. Many people feel unsettled by how tight, and we're talking BFF status here, the government is with big banks. The concern is that a close relationship between the government and big banks can hurt us, the consumers, the citizens, the people who rely on unbiased representation from elected government officials. The subprime mortgage crash of 2008 is often the go-to example of the problems that arise when big banks and the government are too buddy-buddy. The government has institutions in place to protect consumers, the Federal Trade Commission, and investors, the Securities and Exchange Commission. But these institutions did not diligently oversee

big banks during the events leading up to the subprime mortgage crisis. Following the crash of 2008, the economy went into a tailspin. For many Americans that suffered during the collapse and the years that followed, the whole mess felt extremely preventable. And yet, they suffered at the hand of an inattentive government that left an extremely fragile and consequential system unchecked. What made people's frustration and anger worse was that the government passed the Troubled Assets Relief Program, or TARP, more commonly known as the bank bailout. This legislation gave out $700 billion in loans to prop up banks from utter collapse. It is indisputable that the crashing American economy would have been even further devastated if huge financial institutions went under. But try telling that to a family who just

lost everything at the hands of an irresponsible bank and is now watching that bank get financial aid from the government. It is a hard pill to swallow. Even all these years later, some people are anxious that they're not on an even playing field with these big banks. I mean, it's hard to argue that the field is even when the big bank's name is splashed all over it. Citi Field, anyone? These three things, monetary policy, security threats, and distrust of big banks have made some people feel discontented with the current financial system. I'll pause here to ask the obvious question. Does the current financial system really suck that bad? Crypto fans may feel that inflation equals bad or government regulation equals bad. But those perspectives don't capture the full picture of our financial world. Monetary policy is really

freaking complex and difficult to correct. The fact of the matter is there's no one answer that's going to help 100% of people. But it's undeniable that there is room for improvement. Some people believe that our current systems can be made better. Others think we need a complete overhaul. Enter cryptocurrency. But that's for tomorrow's episode. Yes, I'm going to leave you with that cliffhanger.

If you want to know what happens next, join us back here tomorrow. We spend our money, money, money. I'm going to leave you with that cliffhanger. If you want to know what happens next, join us back here tomorrow. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy.

Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.