Scamfluencers - Ben McKenzie Hates Crypto, Too

Episode Date: July 24, 2023

When the actor Ben McKenzie started hearing about Bitcoin, he was immediately skeptical. While his friends were investing, he started investigating. In this special episode of Scamfluencers, Scaachi Koul talks with Ben McKenzie – best known for starring in TV shows like The O.C., Southland, and Gotham – about his journey into the world of crypto, celebrities, and “casino capitalism,” as chronicled in his new book. Plus, Ben explains why he thinks crypto is one of the biggest Ponzi schemes of all time.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hey, Prime members, you can listen to scam influencers ad-free on Amazon music. Download the app today. [♪ Music playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background, playing in background had to live in her world, okay? You didn't, okay, fair enough. Well, it's been kind of tough to cover crypto scams because the whole thing feels like a scam, right? I mean, you and I think like even real money is a con. So I don't know why we would trust these worthless pieces of code mass grading as currency.

I mean, I 100% agree, even after doing RazzleCon as a crypto episode, I don't think I'm any closer to understanding it. Okay, well, I found someone who agrees with us and is also happy to unpack the shared hallucination slash Ponzi scheme that is crypto. And now he's gonna spill the beans on why crypto is a con and how celebrities

are at least partly to blame. is a con and how celebrities are at least partly to blame. In June 2021, Kim Kardashian posed a couple of stories to Instagram. The first is a video of her promising a big announcement. She's just signed on for a multi-year contract with Disney, including a new reality show on Hulu, and her shaper brand Schemes has recently been valued at more than a billion dollars. So her fans are probably anticipating a new show or a product line, but that is not what this Instagram story is about. Sarah, can you describe it?

Yes, and I do actually remember this. So it's, you know, definitely not something she put together. It's like a blue and red kind of background. It looks really futuristic. And it says, are you guys into crypto? This is not financial advice, but sharing what my friends just told me about the Ethereum Max token. A few minutes ago, Ethereum Max burned 400 trillion tokens, literally 50% of their admin wallet, giving back to the entire EMAX community. What does that mean? These aren't words. And then there's a bunch of hashtags. Hashtag EMAX, hashtag Disrupt History. She's acting like people who follow her will be like,

oh my god, Ethereum Max, bring 400 trillion tokens. Get out. Listen, you're asking all the right questions, including what the fuck is Ethereum Max? Well, Sarah, it's a cryptocurrency token that launched on May 14th, 2021, less than a month before Kim's post. And for a pretty obscure cryptocurrency coin, that's less than a month old, it has been getting hype.

Boxer Floyd Mayweather and B.A. Star Paul Pierce and NFL wide receiver Antonio Brown all promoted it on social media. Oh, and of course, Tom Brady got in on the action too. But probably no one's post had as much impact as Kim's. According to a morning consult poll that came out later, around one in five American adults heard about Kim's Ethereum Max Instagram story.

A Forbes investigation found that two crypto promoters, and Brothers-in-Law, were among the people behind Ethereum Max. They promoted it to their hardcore crypto followers and paid several celebrities to boost it to a wider audience. And then, when Max was at its peak, they sold their shares from secret accounts, pocketing tens of millions and crashing the coins value into virtually nothing.

It's a modern diversion of the classic pump and dump scheme. More than a year later in October 2022, the Securities and Exchange Commission charged Kim with illegally promoting a security without disclosing that she was being paid to do it and how much she received. That's when we learned that Kim made $250,000 posting about Ethereum X. She agreed to pay almost $1.3 million to settle the lawsuit with the SEC. Kim Kardashian is just fine.

After that post, she went on to host SNL and get a new boyfriend, and she and her family returned to TV on their new Hulu series, The Kardashians. But regular investors who put real money into Ethereum acts were left holding the bag. For something that calls itself the future of money, crypto seems to be pulling out some age-old tricks. In fact, our guest today, Ben McKenzie, claims that all amounts to the biggest Ponzi scheme in human history. Black perspectives haven't always been centered in the telling of America's story. Now, we're taking center stage.

Introducing NPR's Black Stories, Black Truths, a collection of Black-led stories from NPR's podcasts. Search NPR Black Stories, Black Truths, wherever you get your podcasts. Every big moment starts out with a big dream, but what happens when that big dream turns out to be an even bigger failure? Each week on Wundery's new podcast, The Big Flop, post Misha Brown is joined by comedians to chronicle some of the biggest Blunders in pop culture history. Listen to The Big Flop on the Wundery app or wherever you get your podcasts. From Wundery, I'm Sachi Cole, and this is Scam Fluncers. Today, I'm chatting with Ben McKenzie, a face you may recognize from shows like The

O.C., Southland, and Gotham. I, for one, used to have a poster of him that hung above my bed as I do most of the people I interview. But that's not the reason I'm talking to him today. He actually just wrote a book, the journalist Jacob Silverman, called Easy Money, and it's all about the international Ponzi scheme that is crypto. I'm one of those, can't they just print more money, kinds of people, so crypto has always been a mystery to me.

So I figured Ben was the perfect person to help us understand how we got to this moment and what it all means. I'm calling this episode, Ben McKenzie hates Crypto too. Gotcha. Ben McKenzie! Thanks for coming on, scamfluencers. Yeah, excited to be here. Okay, let's start from the beginning.

It's 2021, Hollywood is at a standstill. You're a New York with your family. How do you first hear about crypto? Sue, my buddy Dave, he's one of my dearest friends. And in my 20s, he gave me the worst financial advice of my life, and he encouraged me to buy stock in the obscure company. And basically we lost almost all of our investment.

So Dave gave me this terrible financial bias when I was in my 20s. And in 2021, the markets were going nuts. And I saw everyone getting rich and I was like, well, I should invest or something. I should do something with the little extra money that I had. And Dave came to me and he said, you've got to buy Bitcoin. And I was like, oh man, I will buy some, but then I literally just couldn't understand it. I come back to him and I like, dude, it's a scam.

Like, I don't know what to tell you, but I feel like it's a scam. And he's like, no, no, no. What if there was like a 1% chance that this is the future of money, right, or whatever? And I was like, okay, fair. I said, I'll take the under. Like, I think it's gonna crash.

Now, what's funny about it is the bet was, this is 2021, crypto is going crazy. So I lost miserably, miserably lost the bet. Okay, so we're starting this from a real point of authority. Yeah, exactly. Well, what made you think, you know, you're talking to Dave, what makes you think, hey, I think this is a scam. Like, what made you think, you know, you're talking to Dave, what makes you think, hey, I think this is a scam, like what is the red flag

or the red flags that stick out to you? The big tell for me was I have this degree in economics and so these things are our currencies. Like, it's weird to call something, something that it doesn't do. Like, it can't be a unit of account or store value because the price jumps around like a rabbit on Amphatomines. Like, it's just like a unit of account or a store of value because the price jumps around like a rabbit on Amphatamine.

Like it's just like all over the fucking place. And it's not used like a currency, right? Like people don't buy stuff with crypto, they invest in crypto. And so, you know, it's basically a security. And one obvious way to look at this is security and exchange commission has a page on their website, divided to Ponzi schemes. And seven red flags for Ponzi schemes. Crypto checks off five arguably six of the seven.

I don't know if I can list them all right up top, but like, but like obvious ones are selling unregistered license securities, which is like what I think cryptos are. There's like things that promise you a steady above market return, right? Like we'll give you 10% on your money guaranteed. Like, that's a scam.

So best case, they're lying to you about how safe it is. Worst case, they're just freaking running a Ponzi scheme, right? Yeah. So in the book, you define fraud, and we love fraud here. But we, I don't think we've ever actually defined it. Can you define fraud for our audience? Disception for personal, often financial gain is, I believe, one of the dictionary definitions. So you can't accidentally commit fraud. It's a crime of intention or whatever. I'm not a lawyer,

but I assume that's the phrase. You have to intend to do it. You're lying for money. And I kept reading books. One of the best parts of writing this book was reading other people's books. And I read this book called, Lying for Money, which is a great book on fraud, on Dan Davies. And it's like how do frauds run? What are tells of frauds? Because I love True Crime, and my favorite sub-jron of True Crime is Stupid Crime. That's what it's called. You know what we specialize in Stupid Crime a lot. Yeah, right?

Yeah. People that are not that smart, pretty much obviously committing crimes, getting caught, turning on each other. Space goes happening now. Right. And what were people speculating about crypto at the time? Like this is early days, so what were you seeing? People have been predicting that crypto is going to crash ever since there's no crypto,

and it hadn't at that point. It kept getting bigger and bigger and bigger and bigger. So I think that sort of like snowballs into a belief system that becomes kind of codified where crypto gets viewed as a legitimate asset. And so media publications have crypto desks, right? They have a whole crypto section of their media. Well, guess who pays for the advertising for that crypto desk, right? Crypto companies. So there's great reporters out there, some of whom are doing great work, but there was also just a lot of bullshit. And I mean, I was genuinely just trying to figure out what it was.

One of the things that Crypto does is it has this whole other language. Like a good rule of thumb in Crypto is whatever it says it is, it's off on the opposite. So like decentralization means centralization. Currency is not a currency. Stable coins are not stable. And so you have to ask, why? It's either well intended, but wrong, or they're lying to you.

And so why are they lying to you? For what purpose? And that's where I started. So then what kind of research do you do? How do you know who to trust? Well, good rule of thumb and crap those. Don't trust anyone. Great. I'm so glad you're here. I feel so safe. Yeah, exactly.

You can trust me though. Listen, this podcast notoriously trusts white men. So I think you're starting on a great foot. Good rule of thumb as well. Don't trust white men. Although, crepto is an equal opportunity, you know, a format for anyone who wants to run any kind of scam. Was there a particular flashpoint moment when you started to feel really skeptical? Like your stomach turns and you're like,

I don't know about this one, guys. Yeah, I started hearing about this company, Tether. So there's this thing called stable coins in crypto, which are like the poker chips in the casino. When you buy crypto and you wanna trade it and like go in and out of it, you don't wanna go in and out of real money because you've got to go through a bank account and that's going to trigger a taxable event on.

So you hold on to Tethers or at least that's the idea. But it's this very strange company. It's run by a very, very small number of people. There's supposedly 80 billion Tethers out there. So we're supposed to believe that someone gave them 80 billion real-dwest dollars. That's a lot of billions. To four guys. Like, there's fewer people to work at Tether than at my neighborhood, Dali. Yeah. Would Tether be an example of that casino capitalism that you're talking about, the gambling metaphor? Does that feel like the best analogy for crypto?

Yeah. Crypto is kind of like online poker 2.0, right? In many, many ways, some of them literal. But economically, it's gambling because, because they're not currencies instead, really more like securities and investments. They're strange investments because, what are you investing in? There's no product, there's no good, there's no serve, what do cryptos do? Nothing, it's like poker.

You and I sit at a poker table in Vegas, you might win a hand, I might win a hand, but we didn't put capital to productive use, like we're just moving money back and forth between us. And by the way, for playing in Vegas, you might win a hand, I might win a hand, but we didn't put capital to productive views. We're just moving money back and forth between us. And by the way, for playing in Vegas, the house takes a little cut. Every hand, can you win in Vegas? Yeah, sure.

But if you play longer now, if you're losing, obviously, they keep the lights on in the casino, right? And so crypto is like Vegas, except it's unregulated. So it's not like you're playing in Vegas now. It's like you're playing in Vegas in the 50s when the mafia ran it. And in Vegas, there's arguably entertainment value in the experience. They'll comp you some drinks, you can have a nice dinner, you can say. Yeah, it's an experience.

You can see a show and you can make some bad life decisions one night and regret it the next day. Crepto's like Vegas without the drinks, the dinner or the show. Okay, so I'm just going to be hung over and sad. Yep. Great. Well, let's talk about the book, Easy Money. How did that idea start to take shape?

Yeah, yeah, so I was like, you know, I made this about Dave and I had this pandemic hobby of looking at frauds. And the difference between crypto and other frauds that I was looking at is that crypto was everywhere. This was the height of it. So celebrities were chilling it and $100 million marketing campaigns and sports stadium naming rights and like it was just everywhere. Bitcoin breaking out to an all-time high on Tuesday as the red hot acid gains momentum with

more investors buying into the rally. After 22 years staples centering downtown Los Angeles is getting a new name and it's a real sign of the times. Beginning Christmas Day, the home of the Lakers, Clippers, and Kings, will be known as crypto.com arena. Everyone gets to name a dad, everyone. Everyone gets to name a teacher. Huh?

That's come on. I think that's the first name a teacher in the way. And it's over, so this is, we love you. I promise. Mar or something. Well, that's it. At the time, I was like, well, obviously, I could be wrong, but I think it's Marissa was a real a ponzi scheme, a certain version of it. Did you feel a responsibility like, oh, I can see that this is bullshit and I have to tell

people? So I know these sounds made up, but it really happened. I read my daughter with six. I read her the Emperor's New Clothes one night. And I remember this story, but I'd forgotten a couple of things. I had forgotten the way the Taylor's trick people is by appealing to status and ego worship. Only the smartest, the people of highest status, can see these beautiful clothes that we've woven for the Emperor. And so person after person is tricked into not believing their own eyes because they're afraid of feeling foolish, which is an ingenious con. And I think the reason

by that story so powerful, because we know that it's true on some level. The second thing that I've forgotten is that at the end of the story, as the emperor galloping us through town naked, it's a child who says the emperor is naked. The only person brave enough to call truth is someone who doesn't know he's being brave. He's just speaking the simple truth. It was hard for me not to put myself in the role of a child. Like, what did I know? Right? Like, I'm just an actor. I have an undergraduate of your economics that's 20 years old.

But then again, I was a am, a middle-aged mildly depressed, you know, very happily married father of three loved love my life. But I needed an adventure. I wanted an adventure. I was like, I should write a book and I woke up the next morning. I was like, I don't know how to write a book. And so I was reading this article that this journalist chick, Silverman, had written, even Donald Trump, plus Bitcoin to scam.

And I followed him on Twitter. He followed me back. I DMed him, took him to drinks at our local Brook and Bar and then said, hey, do you want to write a book? I don't know how to write about things that haven't happened yet. And I love affair began. Did you feel equipped to step into a journalistic role? I was so intimidated and then Jacob was good about that because he is an actual journalist. I mean, so many things about this have been super fun, but more of the more rewarding things is just trying all these things I've never done before, you know, which is scary, of course,

but also rewarding, because like I now could write an article, right? Like I am developing these skills and learning things. Did you think that being a person with a name that was recognizable, a face that's recognizable? Did you think it would help in the reporting, or did you think it would have a negative impact? Well, it was funny because I was self-conscious about it, but I kept noticing that people like Jacob and others were like, you don't understand the power that being a person from television house. Right? It took this to learn the power of celebrity? Well, yeah, yeah. I don't know. I didn't think of it as a way to investigate CREPTOS using my celebrity,

but genuinely a lot of people I think talked to me because they're like, he's on TV. How did you start when you realized you wanted to write a book, what's the first step then? Yeah, that's what I asked Jacob. So we needed to come up with a book proposal, but we quickly realized that if we just went straight into the book proposal, the publishers would be like,

what? What? You were like, you know, you're famous, I guess, but probably not. So, I mean, quite frankly, that's why we started writing articles. We wanted to investigate and we figured we could build our case as we went along, and that's what we did. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm.

Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm.

Mm-hmm. Okay. Ben, your first late piece ran October 2021. Celebrity Crypto Shilling is a moral disaster. It's a subtle headline. It's a gentle breeze of a headline. Yeah. But you started with a celebrity angle.

Was that intentional? Does that allow you to hide in the work later a little bit more if you kind of get out ahead of it first? Yeah, and that was to his credit. That was mainly Jacob's idea. My pitch to Jacob was, I'm worried about this and I want to do something about it. And I said, this is one thing I know I can do in the sense that my fame will help me, I think, on some level.

So he's like, well, if your superpower is being on TV, we should start by using it to talk about celebrities. Well, let's talk about celebrities and sponsorships. How are celebrities getting approached to Shell crypto? Like, what is in it for these companies? And then what is in it for them? Yes, it's so interesting. They're being paid in real money to convince you

to take your real money and put it into something else. I don't want to talk smack about these people that I don't know. But I don't think celebrities know that much about blockchain. Like, I don't think they love. I think that's a fair assessment. You know what I mean? Like, they got a lot of money to like do very little work who doesn't like that job.

So a company comes up with a marketing plan and they have X budget. They reach out to the talent agencies. If you have a ton of money, you're just gonna go to the agency and be like, we've got this budget and like, we'll give this amount of money for the celebrity or whatever. And you work your way down the list, right? Like, the more money you have, the more famous person you can get.

And obviously, the celebrities are allowed to say no, and they do sometimes, but obviously a lot of celebrities did not say no to crypto. I needed to call them out, and I tried not to make it personal. I mean, I had to focus on Kardashian because her thing was so egregious. Like, obviously, she had to, you know, a year later, she would pay $1.26 million. Okay. And remind us, what happened to Ethereum Max about a week after Kim promoted it on Instagram? Well, this will shock you, but the price that had been going up before her Instagram

post, then suddenly crashed. What a shocker. They did a poll on it and they found that supposedly like 21% of the American public had seen or heard of it, which if it's even partially true, that's a huge percentage of people. It's a lot. She had 251 million Instagram followers at that point.

Yeah. So she's real famous. I mean, I'm famous, but she's like real famous. Let's talk about Matt Damon's crypto.com ad from late 2021. Can you describe when you saw the ad for the first time? What did you think? What did you feel? So Jacob and I are both fans of the Los Angeles Tigers. The Dodgers were in the playoffs and we went to a bar to watch the game.

It's like you got beer and you got some pretty bad nachos, but like you got your team and it cut to commercial and Matt frickin' Damon walked on screen. Fortune favors the brave. And I was like, look, fuck, man. Yeah. Like seriously? Yeah.

You don't have to do this. Damon's out was basically like, hey dude, don't be pussy. Like, can Bastion Crypto? Yeah, you wrote that in your book that he was effectively shaming dudes for being whims if they weren't man enough to gamble on crypto. Yeah.

It's so tied with like a very Western traditional concept of masculinity. Like he's saying the quiet parts so loud. I mean, I think it's Western, but I think it's also universal in a way, right? I mean, guys are just like dumb about that. For sure, but there is like a very American culture. Oh, like the like don't be a bitch. Give me your money so I can put it in this fake thing. No, absolutely.

I mean, America is both like, you know, the land of innovation and all that, but it's also the land of fraud, right? I mean, we love a good scam here in America. That's true. That's true. It's built on it. But you're right. Yeah, there's a lot of toxic masculinity in the space, obviously.

Do you think that worked as a marketing tool? I don't know. My guess is that adds more effective than like, I thought the weirdest ad was the Larry David ad actually. That one hurt my feelings because, see, Larry David in a crypto ad was like cognitive dissonance. What was that ad? So it plays on Larry David's public persona.

It's like this cranky guy who doesn't believe in anything. And so it's like David travels throughout time like doubting things like the wheel and you know electricity and democracy and then cuts to him in the present and you know there's a guy who's like F.T. Axe is the safe and easy way to buy a crypto or whatever and David's like, I don't think so. And I'm never wrong about this stuff, never. And everyone's like, well technically he didn't encourage you to buy so. And I'm never wrong about this stuff. Never. And everyone's like, well, technically, he didn't encourage you to buy a crypto. I'm like, oh, fuck off. That was the whole thing,

but I don't know that that campaign is super effective. I think the Damon ads are probably more effective, simpler. Well, these celebrities, you know, they are responsible for bringing crypto to a much larger audience. What do you think it is that makes us trust them, even though they often don't really have any connection to finance stuff at all?

I think the reason that we trust celebrities is they're in our homes, they're in our TVs, we feel like we know them. And so, you know, there's a trust that's built up, that's why the companies go there. The difference is that celebrities usually are hawking like products, right? It's like, you know? Like cars or whatever.

But a car is a car. It might not be good, but it's not going to like, you're not going to lose all your money. That's why this celebrity stuff was so alarming. I was freaking out because of the Super Bowl that year where it was all crypto companies. And I was there. I was at the game, which was actually great because the ads obviously don't play in the game. So I actually didn't see them until afterwards, but watching them was really depressing.

Ponzi's obviously notoriously, they have to keep getting a new people in order to make the thing go, right? So it makes sense that at the height of the Ponzi, with the biggest place, you need the biggest celebrity because the suburbs are just a megaphone. But that's the end. Like at a certain point, you run out of people that are more famous, right? You can't get more famous than LeBron James and Ronaldo and Camarotash and whatever. And at some point, all ponces fall apart because they can't get new people in the door and

or the original investors wise up to the scheme and ask for their real money back only to find that it isn't there. Yeah. You were writing that you decided to kind of get into this space as a celebrity so you can offer a different narrative that, you know, crypto's bullshit, is the only way to combat a bad celebrity with a good celebrity.

Well, yeah, I mean, in a way, like, the person that's probably influenced me the most is a guy named Robert Schiller, who's a Nobel Prize-winning economist, and he's written about how economic narratives form and their response to real events. So like the Bitcoin white paper was the thing that started this whole nonsense and that was October of 2008. So subprime was like in full effect and people were pissed and understandably, you know,

not trusting banks and legacy financial institutions. And so this idea that you could create this currency was very appealing. And these narratives die hard because like, you can just project onto it whatever you want, right? It's going to bank the unbanked. It's going to democratize and decentralize. It's the future of money. And so those are hard narratives to combat. And you have to create a compelling counter narrative to cut through it And you have to meet them where they're at like crypto bros are not reading the Washington Post. No, they're not so you also have to mock them on Twitter Yeah, that feels like an effective counter attack. Well because I don't have a hundred million dollars to spend on my own commercial Right well in you're reporting you're talking to a lot of like average people

Well, in your reporting, you're talking to a lot of like average people about this. And they have, I think, lots of reasonable reasons for wanting to invest in it. I'm curious about your experience with them. If there was emotional heartache in that and kind of hearing their stories and what that felt like. Yeah, I mean, that's how I end the book. I don't know. I'm going to get all weep or whatever. But like I genuinely have a lot of empathy for the folks of lost money, like real money. Most people didn't put in too much. So thank God, they're all right. But there are people that lost everything.

I was joking about being depressed during the pandemic because so many of us were. But the last four years have been hard, really hard in a lot of different ways. So I want to summon, I want us to build the trust back, right? I mean, crypto says it wants to create a trust less money, which is bullshit because money is trust. Saying you want to create trust as money is like, saying you want to create a governmentless government or a religionless religion.

The words you're searching for are anarchy and cult. We need more trust, but you have to earn trust. And so the way we have to do that is by speaking truth to power, standing up, I think that's our power, right? As like storytellers and entertainers, it's like, do it well. You know, like try to do it in a way that people actually want to pay attention to it, because that's the only way you're going to cut through the, the morearchy. You wrote in your book that many had been excluded from the mainstream financial system, and

they saw crypto as a way of creating generational wealth So I'm curious in your research. Did you find that these crypto scams were or are disproportionately affecting people who were poor or people of color? Like what were you finding in that space? Yeah, yeah, sadly that's true. I mean They're overrepresented and they and they came in Most of them came in at the height of the bubble. You know, the book is like, it's about crypto, but I purposely wanted to make it broader than that because I want to talk about casino capitalism. We should not encourage people to gamble. Like, it's not good. You're going to lose most of the time, right? Like, how's always wins? Yeah, how's always wins. And also, you know, what's

interesting is that like it's men, it's mainly men. And there is this thing where men are ashamed of it, you know, because guys hide it and then like, you know, their wife finds out about it, their partner or whatever, and it's like, you lost how much? And that makes me feel like, well, we need to have more of a, you know, like a real conversation about this, right? You've said a lot of the people you talk to, they kind of viewed being scammed as like a right of passage in this way.

And they're, it's just like an accepted part of doing business. Is there someone or like a group of someone so you feel like you're pushing that like, hey, being scammed is normal narrative? So what that is, is that's a con man tactic. It's called dylr in aor and crypto, do your own research, and it's used as, you know, you'll ask me, like, what about the people that have gotten like scam and fraud and they're like,

that's so sad, but, you know, you gotta do your own research, you know what I mean? And I would always say this, I'd be like, so it's their fault. Yeah. And they'd be like, no, no, no, no, no, you misunderstand, it's an education prod, blah, blah, blah, blah, blah,

it's a way of like indoctrinating you, right. It's a way of indoctrinating you, right? It's a way of being like, no, no, no, we didn't defraud you. You defrauded yourself. You made a mistake. You didn't understand. I mean, people lose their, you know, you have to have these keys in order to access your crypto, base your password. People lose it all the time.

Like an enormous percentage of people, I just literally can't access their crypto. So, you know, people lose money in crypto. In many, many, many different ways, but the trick of making them blame themselves is pretty brilliant. That's so interesting. I do a lot of reporting on the diet industry. It's kind of the one product where it's a faulty product, and the consumer will blame themselves

when it doesn't work. And they'll come back again and again, hoping to find one that works, and this feels so similar in that way. Yeah, some of the best businesses are like that. I mean, it turns you profitably. Well, how else will you get people to keep giving you money? Right. Yeah. Well, I'm Canadian. My co-host Sarah is also Canadian. And we've talked about how crypto feels particularly pernicious in the US because there's such a clear gap between

income brackets in the States. There are also a lot of people who become crazy rich in these really weird ways. And it's hard to tell people who become crazy rich in these really weird ways. And it's hard to tell people who are broke. Don't try this thing to make more money and pull your family out of poverty. Because they're seeing rich people get even richer, or at least that's the perception. Totally.

So what do you say to that person? Yeah, that's why I'm talking about casino capitalism. Like we're creating this mess, because, first of all, we're marketing it super hard at them. We could control that. There's certain kinds of advertising that are banned or restricted, but also I get it. You know, why not gamble on something, even if it's like, impentessively a small chance you're going to win. The marketing pitch is really compelling, but it doesn't mean it's true. But we've created that problem, right? I mean, that's why

it's sort of the lack of regulation and the kind of story, the American dream, if you want to call it or whatever, of getting rich, crypto is amazing for that. So, you know, it's a product that sells itself in that respect. We made all this stuff up, right? We made up money, we made a government, we made a religion, like we can control these things. We can. It takes political will and you have to actually fight those battles, and it's not pretty, but we can do it. And I feel like a... Okay, Ben.

Recently, the crypto community hype and speculation have crashed against good, old-fashioned financial regulation. So, let's start with the man who arguably became the face of crypto, San Bankman-Freeed, the founder of cryptocurrency exchange FTX. Just over a month ago, he was riding high a billionaire many times over. Well, tonight he's in jail in the Bahamas, facing US charges and what a federal prosecutor calls one of the biggest financial frauds in American history.

How would you describe Sam Bankman-Freed, like both physically and as a figure in the crypto community? So Sam's got curly hair. He's a sort of guy kind of California Bob and his parents are professors of law Stanford. He was known as like he would always

wear the same FTX t-shirt and shorts and not in like a, you know, cool way. And so he would always wear the same FTX T-shirt and shorts and not in like a, you know, cool way. And so he's an interesting, like just actually just like kind of looking at him and talking him, just kind of an interesting physical presence because he just cut against like the billionaire thing. He was supposedly worth like $20 billion in a month. Yeah, he's going to get a lot of attention.

Yeah. And so to that point, if you want to know what I think of Sam, I don't mean to just respect, but like the title of the chapter devoted to the interview that I did with him is called The Emperor Is But Asnake It. Did you feel that way as soon as you met him? Like he sits down here like this guy is full of shit. At the time, I was just confused. You know, he's everywhere.

He was on those billboards. Everyone thought he was the genius. Like, he's probably making money hand over first because he's the kid that went to MIT. He's the kid that was at Jane Street, this Wall Street firm. Like he's brilliant. So at the time, I think I attributed more to him than I would know. A lot of people had heard about FTX, but I'm curious how you would explain their role in the crypto landscape.

How would you place it? How do you describe what they were to that industry? Well, there were in exchange where you would buy and sell crypto. So you could give them real money and you could buy all these different coins. Just had this company called Alameda Research, which was supposedly a market making firm, which basically creates a market. People can buy and sell this stuff. Now, normally in a regulated market, those two companies

can't be owned by the same person. Yeah. Because that's a conflict of interest. But in crypto, you know, you can do anything. It seems like it. It also seemed like Sam was interested in some political influence. He was the second largest donor to the Biden campaign. Is that common that these crypto guys are looking to have political influence? They want that's way. At the time, yeah, for sure. Because they needed regulators to not come down. They needed, they were hoping to get legislation through Congress. There was a bill that was nicknamed Sam's Bill and the Ag Committee.

It's pretty dark. Sam gave 40 million to the Democrats. His colleague gave 23 million to the Democrats, his colleague gave 23 million to the Republicans. He calls himself an effective altruist, which means theoretically he's going to make as much money as he can to give it away. And one of the weirdest moments of our interview is when I was like, how much did you give to politicians? And what was weird is I expected him to answer because that stuff's public, right? But he'd refuse to answer that. He'd like, he got nervous. At the time, I couldn't figure out what that was.

But now he's alleged to have run a straw donor scheme. Like he allegedly was basically giving money to his colleagues to give on his behalf, which is obviously legal. And so now it makes sense, but the time I really couldn't figure it out. I mean, one of the weird things to me was like, if he's this brilliant business person,

like, why is he spending an hour and 17 minutes with a freaking actor writing a book about about crypto and fraud? Like, it was very weird. I was like why is he spending an hour and 17 minutes with a frickin' actor writing a book about crypto and fraud? Like it was very weird. I was like when does he go to his job? When does he, like he's always doing interviews on these magazines, I get the billionaires don't actually work as hard as the financial press wants to like make, you know?

But he spent a lot of money and he spent a lot of money making celebrity friends, right? Like Tom Brady and Jisal. Yeah, Sam even appeared in Tom Brady's TikToks, like this one. What's up guys, I'm here with my voice Sam from FTX. We're at Crypto Bahamas Conference. We're gonna start the day. We're gonna do some TikToks for you guys.

And it's gonna be an amazing day. Let's talk a little bit about some of the other recent crypto fallout. The SEC went after some of the other major crypto exchanges, Binance and Coinbase. The allegation is that the head of Binance who goes by CZ, Shining Peng Zhao, allegedly took the money that people put on his exchange and transferred its different accounts that he controlled without their knowledge. You know, Ponzi asked, obviously, Coinbase, they are alleging that they're not licensed as

an exchange, they're not licensed as a broker, and they're not licensed as a clearinghouse, which are, you know, three different market functions that are separated on purpose in a regulated market. So there are conflicts of interest. Yeah. And crypto.com just shut down its US exchange. So what does that mean? It means that fortune favors the compliance.

Oh my God, that's disturbing. Mm-hmm. I know, that sounds wrong. Fortune favors the law abiding. It's getting worse. That's like a Hunger Games slogan. Well, it's like not sexy, right? Yeah.

Like, it's not mad to him and a black t-shirt, like gesturing randomly to fake stuff. Yeah. Well, in December of 2022, you appeared before the Senate Banking Subcommittee to discuss the collapse of FTX and Sam Bankman freeds arrest. So let's listen to a clip from your testimony. Chairman Brown, ranking member to me, members of the committee. In my opinion, the cryptocurrency industry represents the largest Ponzi scheme in history. In fact, by the time the dust settles, crypto may well represent a fraud, at least 10 times bigger than made off.

How did you find out that they wanted to hear from you? Did you feel like really cool when they called you or are you terrified? Oh, I mean, I was definitely terrified. But yeah, it was rewarding. I mean, I've been pushing since the summer to do a hearing because the hearings at that point were really built by the industry. We needed to counteract that, right, which are my narratives. Like we needed to have a different narrative out there.

We need to show, speak truth, the power. You know, we all try to do our part. And one day I'll be able to show my kids, which sort of make him emotional now. But like, and we're also pissed off about, I think a lot of us anyway, but like, where things are going and how much fraud's out there and how it's just like nastiness. I can't say that I've always been like above that fray, but I can speak truth in the way that I see it. Well, it feels like you kind of went out on a limb to be professionally anti-crypto, like right when it was peaking. So how did you feel about that choice back then? Do you feel vindicated? Fuck yeah, I do.

I love that question. But the weird thing about thinking that something's gonna crash is like, if you're right, it means a lot of people have lost money, which is a bummer, right? So it's vindicating, but also depressing. Yeah, it's just complicated. It's a lot of complicated emotions,

you kind of vacillate between things. But yeah, it does, it does feel good. At the time I was nervous, I was nervous. Well, it took a lot of edibles in order to, some of theillate between things. But yeah, it does, it does to a good, at the time I was nervous, I was nervous. Well, it took a lot of edibles in order to, in some of the courage to keep going. Maybe your SponCon will be with like a nice weed company. Oh, dude, that'd be so awesome. That would be good.

Well, I mean, ultimately the truth is that people can do what they want with their money. But what do you hope to do with your advocacy? What do you want the book to do? Actually, I wrote the book for the people that got to fraud. Like I put it in the author's note, if you lost money, it's okay. You are the majority of the people that are in Western crypto. It's all right. You're not the exception. You are actually the rule. If you want to know how you might have gotten scammed, may I suggest you read this book.

I wrote it for you whether you like it or not. You can choose to listen to me, you can not. You can burn the book. I actually would love it if you someone burned the book to be hilarious. You should hope somebody bands it. Exactly. But, you know, in terms of like who I want to read it,

everyone in Silicon Valley and TAC, they have this term, TAM, total addressable market, which is actually bullshit number. Like, DoorDash, our TAM is every meal that anyone ever eats could be, we could theoretically, you know, service that person. So our tam is four quadrillion dollars or whatever. So my tam is everyone. Okay.

It's a good marketing plan. Right? And I saw like five copies, but whatever. Worth a shot. If they can lie, I can like to. Ha ha ha. I can lie, I can lie too. Hey, prime members, you can listen to ScanFluencers, add free on Amazon Music. Download the Amazon Music app today, or you can listen ad free with Wondery Plus and Apple podcasts.

Before you go, tell us about yourself by completing a short survey at Wundery.com slash survey. This is Ben McKenzie hates crypto too. I'm Sachi Colt. Huge thanks to my guest Ben McKenzie, the only white man brave enough to come on scamful answers. Ben's book with Jacob Silverman, easy money, cryptocurrency, casino capitalism, and the golden age of fraud is out July 18th. We'll pick it up. It's excellent. Our senior producer is Jen Swan. Our producer is John Reed. Our associate producers are Charlotte Miller and Lexi Peary. Our story editor and producer is Sarah Enne.

Eric Thurms is our story editor. Sound design is by James Morgan. Audio assistance provided by Adrian Tapia. Our music supervisor is Scott Velasquez for Freezonsing. Our senior managing producer is Ryan Lourg. Our managing producer is Matt Gantt. Our coordinating producer is Desi Glalock. Kate Young and Olivia Rashard are a series producers.

Our senior story editor is Rachel B. Doyle. Our senior producer is Ginny Bloom. Our executive producers are Janine Cornelow, Stephanie Jenns, Jenny Lourd Beckman, and Marsha Louis. For Wondering.