The Chaser Report - Chaser Coin: Cryptocurrency You Know You Can't Trust

Episode Date: August 11, 2024

Dom and Charles blow the lid on the fact that crypto is a massive Ponzi scheme... juuuust after the rest of the world realised it. Hosted on Acast. See acast.com/privacy for more information.

The Chaser Report is recorded on Gadigal Land. Striving for mediocrity in a world of excellence, this is The Chaser Report. Hello and welcome to The Chaser Report. Dom here. As we speak, Charles, I think, has landed in the UK. He's performing his show Wankanomics over there. If you know anyone in the UK who might want to see it, by all means check it out. I think they've got wankanomics.com or something like that. So it's another archival episode for me this week.

I'll try and get some more out throughout the course of the week. But this is a really fun one. This is looking back at, I guess, the absolute nadir of crypto, which always seemed a little bit scammy, but Sam Bankman-Fried and FTX took it to a completely different level. A billion-dollar, multi-billion-dollar global, bizarre fraud that was tragic on one level, but absolutely hilarious on another. That is the kind of bizarmos we live for here at the Chaser Report.

So without any further ado, let's look back on some of the scammiest moments in the giant, well, I mean, say Ponzi scheme that is crypto. Here we go. We're going to talk about cryptocurrency, because there's been a series of arrests and actually court cases and jailings over the last six months. So if you're a fan of the podcast, you will have heard us talking about FTX before, Sam Bankman-Fried and the Bahamas and the communal living apartment and the dodgy arrangements with the Alameda research.

Oh, yeah, with his girlfriend. It's a great story, but we're not talking about this today. Today we're going to talk about the company that swooped in when FTX was in difficulty and offered to buy out their assets. The world's largest crypto platform. Binance. Binance. And one of the best parts about this story is that it involves billionaires being held accountable for their actions and actually ending up in jail. It's a happy story, in other words.

We'll hear it after this. I hope that wasn't an ad for crypto, Charles. It would be quite ironic. I think we, haven't we, I think we blocked crypto. We block crypto. Why do we? I know, we're idiots. Because, because, I'll tell you why, because it's become incredibly clear what crypto is,

which is just a massive Ponzi scheme, right? Do you want to buy my crypto? I've still got a little bit. I must say, I had a tiny amount of crypto with Binance, and the moment that FTX thing went, I was like, fuck this, I'm selling. I don't care how much I've lost. I'm just liquidating it all now. At least, I think I made, I don't know, five bucks or something out of doing it,

But at least if finance goes down, they won't take me with them. Yeah, well, I think they probably are going down. Because the thing about, like, what is becoming clear is we've sort of had this 10-year delusion that Bitcoin and Ethereum and all these things could be something other than a Ponzi scheme. Oh, it's a new form of money. Oh, wow, it's going to supercharge financial markets. It's global currency. It's the internet currency.

You know, old rules don't apply. The problem is Charles. you can't unilaterally decide, can you, that old rules don't apply? You can't unilaterally say, this thing is not able to be regulated by the banking regulators in, for instance, the United States. Yes, that's right. That's exactly right. And so just this year, there've been a couple of really good books come out about cryptocurrency.

Easy money is one of them. Money go up is another one. And they are absolutely fascinating because what people have done is sort of unpicked the language that, especially in the book Money Go Up, they've sort of unpicked all the language that's been used over the last, you know, 10, 14 years, you know, since about 2010, about cryptocurrency and pointed out the parallels between that and just a straight up fraud-based Ponzi scheme and sort of gone, they actually have all the hallmarks of just being a complete scam from start to finish.

Amazing thing about it is that, and we discussed this on the podcast before Charles, but because Crypto is not linked to anything. It has no meaning other than what you give it. Yes. It can be worth anything from a trillion dollars for a coin to zero. Yes. And it's entirely, it is only based on the consensus that people buying and selling it what it's worth. But if you buy and sell crypto, one of the most popular ways, probably I think the most popular way in the world until recently anyway has been with Binance. It's a massive company. They have very sophisticated platforms. They market a lot. Basically, it's one of the first companies you'll come across if you try and buy and sell

crypto and they've got a lot of Australian customers. Yes, that's right. Even though, well, actually, they've just had all their licenses revoked anyway in Australia. But even before they had licenses to operate in Australia, what they did is in an open secret, they taught you, there was videos online teaching you how to get around the geo-locking that they had as a fig leaf to pretend that they weren't operating in Australia, in America, in a whole lot of different jurisdictions. Where there are strict rules about running a basically a bank.

Because these things are basically banks, right? Except that instead of dealing with actual proper fiat currencies, you're dealing with a made-up widget thing or whatever it might be. And not only are you dealing with a made-up thing, you're dealing with a made-up thing that requires an enormous amount of energy to keep going, right? And that's why it's not just a currency, it is a Ponzi scheme. Because the definition of a currency is, you know,

In a currency can be anything. It could be a coin. It could be an avocado pool toy. Yeah, it could be an avocado pull toy. But the point is, it's just a non-fungible token. It's just like something that you transfer and the full value of that then goes to the next person. Yes. The problem with Bitcoin and all the cryptocurrencies is you transfer that thing,

but it also costs like billions of dollars worth of energy to keep that whole system going each year. That's a very good point. It is necessarily costing money just to keep the tokens going, right? So they should, by all accounts, be worth less and less each year. Like you're actually, like a Ponzi scheme, you're putting money into this pit that is actually just not going to have enough money to then, you know, give you the money if everyone tries to catch it in at the same time. But also, I'm using more and more energy each time because the blockchain gets more

and more complicated. So basically the blockchain is, think of it as a sort of public data. database of every transaction that's ever happened with Bitcoin. And you can imagine by this point how massive that database is going to be. And whenever anyone does any transaction, it has to be encoded and entered into the database. And database then gets replicated and copied all over the world, kind of in public view. That's the kind of virtue of it is it's totally open in that sense. But as you say, Charles, doing any transaction with Bitcoin uses a shit ton of money.

And in particular, mining, the idea of making more of them, which happens, uses a vast amount of energy. and it is basically really terrible for the environment. So it's basically, crypto is essentially a way of wasting energy which also defrauds people. Yes, that's right. But the virtue and the reason why it's so good is for criminals, right?

So what happened was after 9-11, the US put in some pretty strict anti-money laundering rules because, I mean, now, Qaeda didn't need a huge amount of money to do 9-11, but the money that they needed was in the, you know, hundreds of thousands, possibly like a million dollars or something like that. And if there had been stricter anti-money laundering laws in Malaysia and Germany and all the places that they hung out, there is every possibility that they would have known what was going on

sooner, right? So America used that sort of opportunity in a way to completely crack down on the global system of international finance and brought in, in Australia and in America, it's called know your customer legislation. So, essentially, you can't just walk into a bank and set up a bank account without, yeah, everyone knows is you need 100 points of ID. They need to know who you are, right? It's the opposite of the Swiss banks. Yeah, basically every transaction has to be accountable,

which is why a couple of months ago, this bank that the chaser banked with from about 1999 to about 2003, kept hassling me to provide ID, even though I was a customer of that bank in my kind of personal capacity, and the chaser hadn't done any business with them for 15, years or something. They were so thorough. They wanted to know who the chaser was all these years later. So, of course, I just said it

was Julian. And it is totally funny. It is totally funny how because I set up a bank account the other day and I was chatting to the bank manager and he was going, oh, mate, I'll tell you what, they know your customer regulations. They're actually enforcing them now. Ever since Labor

got in federally, we're having to go through, do all the paperwork properly. Oh, God, what a pain. It was like, I think that that's not necessarily a bad thing. Because it's not just like terrorists who use money laundering. It's scam artists. And one of the fascinating stories in this Money Go Up book is the way Cambodia,

they go to Cambodia and it's like it's almost like a sort of movie the way these people get sort of tempted to go to Cambodia thinking that they're going to take up middle management jobs, you know, paper shuffling. And instead, they're essentially enslaved in these workshops where they have to ring up Westerners and text Westerners and try and entrap them into these fraud operations where they just get defrauded. All the text messages and calls we get. And the only way that they can do this without any consequence is by eventually getting them to put it into,

even if it's using iTunes gift cards along the way, it's to get it into cryptocurrency. because then it's very easy to transfer it. And what happens is they ended up always putting it into tether coin, which is a type of coin that tracks the US dollar. And then they go along to Binance or FTCS and they cash it out. It turned into real dollars. And the great part of that story is, so they're turning over millions of dollars a year.

Binance, like the Cambodian scam artists will pay essentially patsies in the US 20 bucks to use their identity to set up a Binance wallet. And that's how they do it. So the fall guy becomes this person who, this poor, you know, probably homeless person who's set up an account for 20 bucks. And then, and so the author goes, I wonder whether I could set up an account with Binance for 20 bucks. Like, you know, without, you know, proper know, know,

proper know your customer things. And so he sets up an account in the name of Taylor Swift and dresses up as Taylor Swift. And they accept it. He's got a finance account under the name Tyler Sweet. So is that where all the money from her era's tour is going. Anyway, so the point is, it's just terrible. It's terrible on every level. Like, it's just, it's basically supercharging, money laundering, and therefore, you know, you know how every day I get messages on my phone from scammers and you're going, how is this possible at such scale?

It's because you read out your phone number. Because you read out your phone number of Studio 10. They all watched. That's why I had to get axed. And they went. That's right. The Chaser Report, news you can't trust. But no, it is fascinating because if you think about it, right, one of the ways, let's say

you are some sort of monster, right, and you're wanting to pay an assassin to kill, I don't know, your spouse or your business partner or, let's say you're just hypothetically, you wanted to get rid of Charles, right? Hypothetically speaking, one of the best ways of tracing any sort of crime like that, as we know, follow. follow the money. Look at the transactions. Someone receives an odd payment in their account. And crypto makes all of that completely impossible because all the payments happen in a completely

anonymous way. So if you wanted to fund a terrible regime or hire an assassin or just do anything, buy drugs, buy whatever, buy weapons. Founder to buy nuclear missiles right now, I would have to pay in crypto because it's essentially untraceable. So it's kind of wonderful. The value of crypto has been spiraling so dramatically. Yeah.

Because if it all goes down, then the whole of that system of money laundering and crime will kind of have to shut down, you'd hope. Well, won't they just find a different way? iTunes vatches. But it's the fact that you can become a legitimate billionaire by doing something so brazenly illegal is where I... Yeah, the founder of finance is absolutely a billionaire. So overnight, so Sam Bankman Fried, we all know, he was the FTX guy. He's now in jail and he's going to jail for a very long. He'll probably die in jail, right?

There's this other guy, Changpeng Xia, right, CEO until a few days ago of Binance, he is also going to go to jail, right? So they arrested him in the US and he, I mean, he's the CEO, he's worth $15 billion, right? In real money. In real money. And it, he sort of, Binance makes itself out to be as legitimate as the Commonwealth Bank, right? Like, it, like, it's sort of, it sponsors sports events. Yeah.

It's sort of this weird thing. Well, FTCS sponsored the Ashton. What does Binance sponsor? But imagine if, you know, they arrested Alan Joyce for, oh, wait a minute, that would be good. But, you know, it's that level of, like, he's a CEO of a, you know, big company. Anyway, so, and what, the deal he's trying to strike with US government is he's going to pay them $4 billion in return for only getting 18 months in jail.

And the terms of the agreement are if he gets, if the judge goes against that agreement and, and makes his sentence longer than he has to pay less money. Hang on, is he paying it in crypto? Because they really want to check that out. Well, the thing is, so the US government is one of the biggest holders of crypto because they've seized so much from money launderers over the years. That's very funny. And, but they don't accept payment in crypto.

So he'll have to cash out to do the $4 billion fine. But this brings me to this wonderful analogy that this guy has written about, who's on this blog called Bits About Money. And it's the theory that this whole crypto scheme is actually a James Bond villain scheme. And I just want to quickly share with you this idea, which is that essentially the most interesting part of every Bond villain is not what you see on screen, but the 20 years leading up to that point. Oh, yes, that's what you want to see the documentary about how Oric Goldfinger. I mean, like the guys, both of his names involved gold. Like, was that nominative determinants?

Was this, did his career advisors say, well, but was it named like Orick Goldfinger? He'd really better become obsessed with gold and try and steal all the gold in Fort Knox. So, because the point is, like, by the time you meet a Bond villain, they've spent at least a couple of decades working their way up. Through the sister. And very successfully.

Being a henchman for a while. You've got to do your tie with the hedgeman trenches, don't you? And then, you know, presumably being a deputy, then knocking off the... You have to knock off the loss, yeah. You know, to pave your own way. But also, just completely existing outside of the law. Like, all the schemes that they've invented sort of just ignore the laws. They can go anywhere in the world.

They can be at any point, you know, somewhere else in the world. Well, it's usually a private island, isn't it somewhere? Yeah. Yeah. Or a pipeline in Central Asia. Or the moon. Yeah. Yeah.

The moon. And that that is exactly what these, like, CZ, who's Changping Cheshaw, is like, they have spent at least a decade, like running an operation that, you know, not notionally based nowhere, but actually, you know, has an office in the Bahamas. Oh, they always claim that it's not, oh, we could, we don't exist in any territory. We're a sort of new money business. And just looking at this here, Charles, the Treasury Secretary in the US, Janet Yellen, said that finance process transactions by illicit actors, support.

child sexual abuse, illegal narcotics, terrorism. There are 100,000 transactions that they've traced. They're just the ones that they've traced. Guess how many suspicious activity reports they filed for those transactions? 12. Zero. Zero. That's it, though.

That's how they became the leading cryptocurrency exchange in the world. Yes, by just turning a blind eye to the law. I mean, they had Hamas and Al-Qaeda on their books. Oh, see, that's what you want. You want, you know, because they're repeat customers. I presume if I looked at the Binance website somewhere, I'd find, you know, a great glowing declaration by Bin Laden about how fantastic their services are. It is as simple as that. They are just people who, and I think you can understand why, because actually over the last 20 years, the success of American capitalism has been, well, let's just break the law and then we'll change the law to make it not be broken.

That's what Uber did. Uber did that. Airbnb did that. They would just break the law. They'd just say, oh, we'll just pay the fine. lines, you know, breaking down taxi cartels. I mean, I remember saying to the people from Uber Australia, I was talking to them on the day when Uber's became legal.

And so I said, haven't you basically just done, you're basically being rewarded for months of breaking the law and operating outside the law? And they're like, well, we see ourselves as disruptors coming in and changing things for the better. But, yeah, they had operated illegally until basically they were popular enough. There was consumer pressure to make it legal. So we need to find an illegal activity charge that we can. can do. It gets popular. I don't think that's the lesson. That's not the lesson. Oh, what's the lesson?

The lesson is that I think finally the law is catching up with these sort of fuckweds who keep on trying to corrode standards. And crypto is one of them, like 10 years too late, but at least they're actually now starting to jail everyone. But the next great frontier in this activity is AI, right? Like, if you go to chat GPT and say, write me a Chaser article about whatever, cryptocurrency, say, it will say, it will say, here is an article in the style of the chaser. And it has ingested all the work that you and I have done, Dom, and it just passes off

the stuff that it's learnt from us as its own. They're making billions of dollars out of, well, not out of Chaser content, but out of doing that. And they're pretending that the law, the copyright law, doesn't exist. Well, it actually does. That's one way of interpreting what's happening. To look at AI as the next big, big kind of card to fall. But the other way of looking at it is there is a vacancy for the world's most popular

crypto exchange. Hello. Let's get on that. Oh, okay. Yes, I think this might be a more profitable angle. So what money laundering coin? Chase a coin. Chase a coin.

Yeah. Launder coin. Launder coin. Laund a coin. Yes. And it should be a physical coin and you can use it for your laundry. Yes, or bleach point. Bleach coin, yeah. I like it. It'll be live by the time you hear this, whatever we end up doing.

Buy a crypto from us, at least we're going to tell you it's a Ponzi scheme. So you won't in any way. Ponzi coin. Ponzi coin! Actually, can we genuinely start that? Because actually, with a Ponzi scheme, it is rational to join a Ponzi scheme early on. Sure. Because you're just stealing from future investors.

Okay, I'll figure out how to start a crypto. It'll be called Ponzi coin. Yeah. And then they'll be the only people in the history of crypto to have been foreworn. Our gears from rugby are part of the Aconicalist Network. Catch you tomorrow.