TRASHFUTURE - Twelve Angry Apes Feat. Zeke Faux

Episode Date: November 7, 2023

The gang are joined by Zeke Faux (@zekefaux) to talk about his book "Number Go Up" and the Sam Bankman-Fried trial... If you want access to our Patreon bonus episodes, early releases of free episodes, and powerful Discord server, sign up here: https://www.patreon.com/trashfuture   *STREAM ALERT* Check out our Twitch stream, which airs 9-11 pm UK time every Monday and Thursday, at the following link: https://www.twitch.tv/trashfuturepodcast *MILO ALERT* Check out Milo’s upcoming live shows here: https://www.miloedwards.co.uk/live-shows *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind our website). If you need web design help, reach out to him here:  https://www.tomallen.media/ Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

Hello everyone and welcome to this free episode of TF. It is a free one. Right, I love that. That's back. It never went away. Psychological talk to the. Yeah, that's back. It never went away, Ronald. Psychological tool to that. Yeah, that's my curse. However, I also am very pleased to introduce today's episode. It is Milo Alice and Riley. And we are joined by Bloomberg's Zeke Fox, the author of the new Number Go Up,

Inside Story of the Rise and Fall of crypto, where shocking for most people who write crypto books Zeke you were not taken in by any charlatans were writing this book well maybe one or two yeah i mean you're on this public if you like opened up the doors of the snake oil wagon and use like how to look around and you didn't buy any snake or yes i mean i really wish i was coming here though as

the reporter who you know took down sandbake Freed and exposed the greatest fraud of all time. Unfortunately, even though I got to spend days sitting right next to him, I did not uncover the scam. However, I can say that your book does have now one honor attached to it, which is for those of you who've been watching the Sam Bankman Fried trial where the world's most self-incriminating man decides to say that a bunch of stuff that was written down and recorded never was. Wow, Dave Courtney is buried. And you're saying there's a more self-incriminating man.

Is Zeke, your book was actually used as evidence by the prosecution. Yeah, it was wild. The prosecutor was interviewing Sam and said, you know, haven't you ever said that Alameda research your hedge fund didn't play by the rules on FTX? And he was like, I don't remember saying that. And then she whipped out a copy of Number Go Up.

And it was actually very dramatic. The defense said objection. They had a little conference. And the judge rule was won. Yeah, the judge ruled that that number go up would be admissible. And then she started reading things that he said to me, I interviewed him in right after after he said X failed,

but before he got arrested. And he admitted some stuff to me. And I had wondered, like, isn't this, this seems pretty bad. Like he said to, so he said to me, I said, listen, Alameda didn't play by the rules, right? And he said, there was more leeway. And like those four words right there,

like that's fraud. Like you could get convicted for that. So the prosecutor brought this up and some also some other things that he admitted. And amazingly, the defense tried to counter by introducing the Michael Lewis book, the his biography of San Benjamin Fried going infinite. And they had a little conference.

And the judge actually ruled that the part that the defense wanted to bring up sounded like it was made up and that they would not be allowed to introduce it. So that put it out. I just I just really like that like for a second as he was incriminating himself, you're like, are you sure? Like you're wearing like a t-shirt with like journalist on it, like big font, right? Like even labeled. and he's like, yeah, no, 100% I was doing fraud. The defense called Martin Lewis by mistake and he give everyone advice on rewards. So I would say like if you're going to read one book about the rise and fall of

crypto, read the one that is that at judges hail as a miss. Yeah, they're calling it the most admissible book of the year. So look, Michael Lewis's book. It's one that gets talked about a lot as a guy who wanted to root for an underdog, finding it in Sam and Sam and then sort of writing the story about how traditional finance was overly powerful, overly clubby, sort of too self-prepared. He tried to write the big short again. Too regularly. But realized basically that he got sort of taken in,

and your book is frequently compared to that book as someone who sort of saw Sam Bankman Fried instead of seeing him as what character he wanted to play. You kind of saw him as an odd and off-putting man. Well, yeah, I think I came into this very skeptical of crypto and I thought that, all right, here's this guy. He's running super bowl ads that are saying, hey, we should go, everyone should go gamble on crypto.

And if you're a loser and don't, you're a loser. And I thought that was the bad thing that he was doing, that he was running like this casino and telling everyone to go gamble on these silly coins, whether they're going to lose their money. I did not suspect that he was stealing all the money out of the back of the casino. But yeah, so I think like my low opinion of him to begin with, blinded me to the even larger fraud that was going on. But I mean, the thing is with these books, when I went to go write the book, or also when Michael Lewis went to go write his, FTX had collapsed. The truth was obvious. So I don't think I can take too much credit for

going to write a book after an obvious fraud has been revealed and saying that it's an obvious fraud. One for the obvious road. Indeed. So I want to talk like the book is framed largely actually not as a about Sam Bankman-free. He's big character, but is largely an investigation of tether. That's like the main thing driving it. And I want to get into this parish. I want to get into the book, but first, I mean, when the world's most self-incriminating man testifies in his own defense,

you gotta talk about the trial. If I want to start, he says, the thing that struck me most recently was when he took the stand in his own defense. He said, I made large mistakes and small mistakes, which sort of covers a lot of ground. And I asked him what his large mistakes might have been. He said, oh, not hiring like a regulatory department, a reccompliance department at all. I'm not sure what the small mistakes are. That was a small one.

Yeah, I've been down at the courthouse for the trial and it's been amazing. He really did, like, purse, I feel like he should make up some sort of possible story that the jury could agree with. Instead, he's just sort of been. I have to win. Yeah.

Yeah, he just, when he's just sort of been, yeah, he just, when he's just been for his defense, he just sort of retold the very familiar story of his rise. And when the prosecution went to cross examine him, he immediately started forgetting everything and just went with, I don't recall, I don't recall, I don't recall.

And the prosecutor was pretty clever. Now, he's deleted all of his signal messages. And he was pretty proud of this. He, he was profiled that his family was written about in the New Yorker before the trial. And Sam said, well, those prosecutors, they'll never find the signal messages that say, go steal this money because there are no signal messages like that. And that's true because they've all been deleted. The company ran on auto delete. But what the prosecutors do have is all of his top lieutenants, one after another coming

up and taking the stand and basically saying, we committed fraud. We're really sorry. We did it with that guy over there with the curly hair. And the jury has been, a lot of them have been falling asleep. So I don't think they're paying, they're following maybe some of the like detailed stuff about margin trading and how crypto exchanges work. But if they like the message they're getting, it's just like a lot of fraud was committed. My favorite element of a Sam Bankman Freed's defense is basically that he was held hostage by like Nisha Ad Singh and Gary Wang,

who were like committing fraud. And then he was like, Hey, are you guys committing fraud? And they responded, no, go over to your corner. Yeah. It's also amazing that like the preeminent like financial fraud trial of the last few years is a guy whose name is basically scam banking fraud.

I wonder. It's a bit of a delkajima name, you know? Sam, it's banked and freed. Yeah, so what I, but speaking of him, of his parents, you mentioned this, there are a number of suits, other cases, including a lawsuit involving his parents. And I've been following this as well from Molly White's fabulous sub-stack, which I always

recommend. And what she wrote, you know, in one example, they detailed how the purchase of a Bahame in property for Sam Bankman-Freed's parents came directly out of investor funds. The defense's rebuttal to this line of testimony was that because dollars are fungible, it's impossible to know where a given dollar pulled among other dollars in a bank account went to the end. That's why it's called money laundering against clean.

Yeah, it's just like the what is money anyway? Defensive, it seems like it's gonna be, like life offered him so many off-ramps, include up to an including A plea deal. It is baffling to me that his defense was, I was great, everyone around me tricked me. I was a genius who created a whole industry and I was gonna be US president, 5%.

I knew it, but also everyone around me tricked me into doing fraud and I just wanted to be in my polycule. My polycule tricked me basically. The worst polycule in the polycule tricked me. Basic. The worst polycule in the world. And that's saying something. Yeah. What I also really enjoy as well is the suit says

that he requested and got to appear is that his dad, Dan Magnetrein's dad, got to appear in the Larry David Super Bowl commercial. And this lawsuit mentions an email where he says he's not a starfucker and doesn't care about meeting Tom Brady but he really cares about meeting Larry David to which to which I might have to say how much of this was engineered so that Sam Beckman Fried's dad could have a awkward and tourist conversation with Larry David. I mean I would run a big fraud just to meet Larry David.

You're a good man, back when free, keep it up. Did you see the part where Sam's dad told Sam he was unhappy to be receiving a salary of only $200,000 and that if Sam didn't raise it to a million dollars, he might have to go talk with Sam's mom about this. Maybe he was getting extorted by your dad is like all-time business techniques. You know? Well, because he couldn't be spending all down the naughty step.

He had a company to run. And also the back to the main trial, this is out of the parents now. Daniel Sissou in the prosecutor also noted, a bankman freed's overly cozy relationship with Bahamian regulators, noting that the prime minister, it is tickets, his wife, excuse me, received tickets to a game at the FTX Arena in Miami. Bankman freed said he recalled visiting the game, but was not sure how they got tickets or where they sat. Then a number of text messages that were revealed.

Say you asked directly. Did you get the seats for the Bahamanyan Prime Minister? Yes, the Bahamanyan Prime Minister and his wife were in their seats now. Thank you for securing the seats for the Bahamanyan Prime Minister and his wife. Did you remember to give them their bribes? Love Sam Bankman freed. Yeah. Um, there was a similar moment where she was saying to Sam, uh, did you fly on private jets?

And he was like, define private, define jet. And then she was like, look at this picture. Yeah. And she pulled out a picture of him asleep showing off his thighs. Uh, and it clearly in a private jet. Um, of all of the lieutenant testimonies, I got to ask, which was your favorite? Was it Singh, Ellison, Wang? Oh, I really liked Adam Yidditya.

He was Sam's friend from MIT. I actually met him in the Bahamas when I was down there to profile, Sam. I was really impressed by him because we did the interview around 4pm, so several hours after lunch. But his pants were just absolutely covered with soy sauce. Like he had just like poured his lunch all over his pants, and he had knock on home to change He just kept working and doing an interview with a visiting journalist

So he I was happy to see him again. He's become a math teacher And he seemed like a really really harmless nice guy. So I'm glad he's turned over a new leaf And he told a very dramatic story that took place on the I may be saying this wrong, but they were playing paddle tennis as they like to do. I think it's paddle yet. It's paddle. It's not paddle.

It's paddle. And he said to Sam, is everything okay? And Sam said, we're not bulletproof. And this, it was like a, this was a really dramatic moment when he knew things weren't cool. But he stuck with Sam. He even sent Sam an email saying, I love you a few days after things collapsed, but then, I love you learn that too. Yeah, and so the defense really badgered this very sweet cement guy about why he quit, why he stuck

around, why didn't you quit? How did you decide did you, why did you decide to quit when you did? And finally, he just blurred it out. I quit because we stole everybody's money. It was a giant scam. And then the judge was like, I don't know why, but the judge was like, strike that, strike that. But the jury heard it, you know, they probably woke up when he's blurred it out.

Every line before that was just, I must be loyal to my cafe. Yeah. I think one of my, some of my favorites were Caroline Ellison's testimonies about Sam's inner life, and how this is a guy who has just been, like this is not an actual person. This is a less wrong blog comment section, right?

How he, you know, he used it, but he used sort of colossal arrogance disguised as detached probable calculus to say that he had a quote, this is sort of this is the direct quote from Caroline Ellison talking about him. He was very impitious. He wanted, he talked about wanting Alameda and eventually FTX to be successful and end up being huge companies that did a wide variety of things, like some kind of Bahamas Zaybatsu. He was also very interested in politics and talked about wanting to use his money to

have influence on politics. And by the way, again, all of his elect Democrats packs were also just paid for directly out of customer funds. Listen, Caroline, it doesn't just stop at finance. We're going to make tuning forks, but not just that. We're going to make scooters, motorbikes, outboard motors, symbols for drum kits. That's right. He said at one point, there was a 5% chance he'd become president someday.

The question then came, when you say president, what are you referring to? Answer of the United States. No, at least he stopped there. You know, could have been of us. You know? of the United States. No, at least you stopped there. Could have been of us. You ever had a president that you could buy a speedboat off before didn't think so? You could buy a speedboat from Trump.

I believe that. I've made a beautiful deal. Ellison also said that Sam once claimed that he would be happy to flip a coin and if it came up tails and the world was destroyed, that would be fine. As long as if it came up heads, the world was destroyed, that'd be fine. As long as if it came up heads, the world would be like more than twice as good.

But my friend wandering through soaked with soy sauce, and I'm like, yeah, I'd probably destroy that entire world. More than twice as good. I don't want to, what an imprecise wish. Like the world, I want the world to be twice as good. Like, what the fuck does that mean? This is just like, this guy has to I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm like this close to figuring it out because we had this conversation. I guys saw implications of this philosophy and I was one of our first conversations.

I was like, Sam, okay, I get this effect of altruism thing but by this logic, shouldn't you run like a giant scam right now? You could probably still billions of dollars. You have so many people's trust in the crypto world and you could give that all to like poor people in Africa. And he was like, no, no, like the charities don't want your dirty money.

But I've tried. Yeah, meanwhile, he actually was doing it. But for his parents, mostly. Yeah, he's got Nepo parents. I mean, charity stuff's on. This is, I guess this is the way we talk about him. It's like a, a someone whose mind has been replaced by a less wrong comment section.

I mean, it's not entirely inaccurate. Like, this is, when you have that kind of extremely sort of strange and off-putting either effective altruist or like ultra rationalist or whatever philosophy, then you trick yourself into thinking you're smart by making what you might call big probabilistic bets. Like, actually, I, because it's a 51% chance of being twice as good to pay off matrix

or flipping a coin in the world is destroyed if it's, if it's tails, but it's more than like twice as good if it's heads. You, that, that basic roulette wheel math, you, you use that to trick yourself into thinking that you're some kind of a mega genius and that nobody else really can be trusted with power other than you because they're going to be emotional because they're going to be like loss

of us for example, right? And you're not and you and this is an example of like when you give someone like that actual power not only are they a malign influence on the world they are monumentally categorically stupid and blinded by self regard. Yes, I mean, I think you should have figured in his calculations. Like, could I make some mistakes because I'm staying up for 23 hours a day doing Adderall? Like might this be screwing up my probabilities? Awesome.

Yeah, no, no. Trying to juggle an entire molecule and all of my dirtbag friends. I've got a himbo to it. The himbo is kind of like the court unit of the group. Wait, the soy sauce guy? Just as privilege. Yeah, so, so, any case,

I now wish to talk about the book because a lot of this stuff is sort of leading into the book. Before we talk about any of the crypto stuff though, I wanted to bring up something very, very important that I read. This was a side note in the book, but it's, I think we had to talk about it, which is that the exeo of tether, Jean-Louis Vanderveld quote, okay. Twoncocaps, a whole jack of dandeclicks, former associates. No, no, no. The guy who keeps trying to bother Arthur Morgan for money.

Jean-Louis Vanderveld, more of a Twinkle capital than a jerk Vander clerk guy. Quote, worked for his salesman for a Hong Kong company that sold a product it claimed could make smoking cigarettes good for you. Saying, yes, finally, yes. If you dip the butt of a cigarette into a bit of cool when you smoke, surprisingly, 80% of the nicotine will be transformed into vitamins

So I have to ask how come you wasted your time writing a book about crypto and not the cigarette that's good for you I Mean I wish I got to try one of these He could he claimed not to know anything about it when we when we met. He's keeping the secret for himself That's what he's going to do in the cigarette. Impressive. On the cigarette that was good for you. Exactly.

You know, doing this whole sham fraud trial, what they're actually trying to do. It's like big oil, you know, destroying the electric car all over again, but it's trying to get the cigarette that's good for you off the streets. You know. Yeah. No, I want to talk about the book,

starting from the sort of the general, right? You were initially looked into this to say, okay, tether. Tether is very odd because it appears to operate kind of sort of as a bank, but a bank that refuses to be audited and does no identity checks on any of its clients ever. And appears to be increasingly the more you look at the center of more or less everything in crypto. And I'll start with generally, right? What was the shape of the world you saw when you started pulling on the thread of tether

and then ended up at ape fest and ended up in the Celsius office and ended up in Heather Morgan's house and ended up in all these places. Ape fest sounds like a new metal concert. They got canceled due to a color or outright. Yeah. Tell me about the shape of the world that you saw because you met these people up close in person. So I was very skeptical of crypto,

but I also, it's hard to avoid like this drumbeat of crypto PR that suggests that this mainstream adoption is just around the corner and that there's all these legitimate use cases and these big financial firms are interested in crypto. And I went to go look into Tether, which I saw sort of like the central bank of crypto, maybe the central mystery of crypto. I get to my first crypto conference Bitcoin Miami 2021. And these guys are just like total clowns. Like I don't see, instead of hearing about like faster remittances, I'm hearing about

how Bitcoin is going to make us rich forever. And I'm hearing about like fiat food and the nutrients being robbed from our soil. And like, there's like this, we're at the connection between Bitcoin and meat. Both are like good for you. Um, oh, so like Bitcoin was like paleo, but for currency then. Yeah. Yeah. A lot of the Bitcoin guys are paleo. Like anti-cobbs and as US dollars.

So I, one of the first tether guys that I was looking into was Brock Pierce. He was like one of the founders of tether. He's a former child actor. And he, if you've seen the mighty ducks, the hockey movie, he plays Gordon Bombay in the flashback of the beginning. He misses the penalty shot. It haunts his alcoholic future self. And this guy, he'd had a career, really weird career, worked out for this extremely creepy comm startup. When it's founder, fled

to Spain to avoid sex abuse charges, Brock Fred fled with him. Brock never implicated in the sex abuse charges, I should say. But this guy had, he just liked fleeing. This tether coin that was so important in the crypto world was apparently dreamed up by this total weirdo. And, but meanwhile, I also had sort of resisted crypto for being too silly to investigate, but when I'm looking into it, I also had sort of resisted crypto for being too silly to investigate, but when I'm looking into it, I'm like, okay, this coin is like, they're supposedly have $60 billion.

Nobody knows where it is. Everyone involved with it is totally bizarre. But meanwhile, Treasury Secretary Janet Yellen around that time called a meeting of all the top financial regulators and the topic was like, tether, like the coin dreamed up by this mighty duck sky. And they're like, what if they don't have the money? Could it take down crypto? Could it take down the whole financial world? And that, like, the juxtaposition of, like,

huge amounts of money, but totally bizarre characters. That's when I realized, like, oh, this is something that, there's something for me here. Like, this is a topic I should really dive into. And I ended up getting, yeah, totally sucked in. We're in Flimflam Country, boy. Mm-hmm. And I think when we talk about stuff like the Bitcoin Miami

conference, right, what comes through in the book is that it really does have the feeling of a sort of religious revival. That religion is a kind of syncretic blend of, as you say, the paleo diet, libertarianism, get rich quicks, hoxsterism. And cap stuff. Yeah, well that's why with Bitcoin you talk about taking the orange pill. And actually, I think one of the best simple vignettes to summarize the crypto world that you were in

comes towards the end of the book. You're in Lugano in Switzerland and you've tracked one of the founders of Tether to Lugano, a city that claimed Al Salvador that it would use Bitcoin as legal tender, even though in Lugano, you found nobody except the mayor and other crypto weirdos were even aware that this was a proposal.

Oh, they've got like a Swiss Eric Adams. This is them, man. And that's awesome. And what I liked is that you just become your waces at the fun do of success. Is that the partner of one of the, I believe this Vanderveld's partner Valentina Picotsi, an Italian artist, was exhibiting the paper and its mirror NFT, a series of artworks, not actually NFTs, but just about cryptocurrency. And you write, as I waited, the art critics and I respectfully contemplated the work. A blister pack of large orange pills with the Bitcoin logo on them,

which is a reference to the meme taking the orange pill for Bitcoin. And a piece of white paper embossed with the phrase, son of a bit. There was also a Venezuelan bill, but with a black eye and seam on Bolivar and a dollar bill with George Washington holding his head in his hands. And what I think is so telling about that is that is that when you're making Bitcoin art, right, you cannot separate it from the feeling of smug superiority over everybody else, but also the feeling that everybody is going to follow you into this thing and naturally become your servants. What about this? George Washington, but he's an ape.

But you, you get what I mean, right? Yeah. I mean, the, I actually would talk about that with crypto people, because I would be like, let's say we follow your plan through to like, it's logical conclusion, will the Winklevoss twins be the richest people in the world? Will we all, will we all be their servants? Like are we just going to bow down before the people who happened to like buy some bitcoins right now? I mean, it didn't really make much sense. I should also say a Valentina understandable confusion. Valentina was the partner of Jean-Carlo Diva Sini, the former plastic surgeon who was the boss of Tether.

So many weird guys. Bitcoin art is literally the worst. And every conference is full of these like paintings of like Pepe the Frog or Michael Sailor the really popular like Bitcoin guy on Twitter him as like a God Bitcoin as like a God like stabbing Janet Yellen like wow there's nobody can come up with anything clever for this this Bitcoin art But I think it does, there's like this desire to create some meaning behind what's just like make it something more than like a pyramid scheme. Got a backfill, some philosophy, some culture behind it. Yeah, there's, there is a kind of a cultural void at the heart of all crypto guys, isn't that you see any, any kind of cultural product that comes out of the blockchain crypto space

or now kind of the AI space, which is populated by very similar types of guys. It's just so meaningless. It's perfectly smooth. You could have- It's that and the combination of them trying to do it in the first place. I don't need a lot of dollar-themed art

from my dollar guys, right? But those people are sort of stereotypically quite boring. I don't need a lot of dollar-themed art from my dollar guys, right? But those people are stereotypically quite boring, but these guys all felt the need to have some art or enable some art of this revolutionary new project they were trying, right? The way I see it is that the history of, I think they say capitalist economies is the history of, I think they sort of, let's say, capitalists, economies

is the history of creating justifications for their existence or ideology among many other things, right? It's just that this happens with the invention of the computer and then with the invention of things like crypto, this has to, the cycles happen much faster. And so the cultural justifications are much more improvised and hasty. And so instead of, you know, I don't know, European opera or what have you peaking around, like the age of sale or things of that nature. Instead, it's like, okay, well, we've invented a new economy. I guess we need to slap some culture on this.

How about we have, you know, our least favorite government official being struck by a falling Bitcoin meteor. Right? It's just, it's not, there's nothing at the core of it except just it and more and bigger and everyone else is gonna be beaten and we're smart and they're stupid. And so it's art about how great we are, but without the benefit of like,

getting a Renaissance painter to portray the Pope, he doesn't like as a demon. I think conventional banks should do their own art that you can buy. I think we should have Banksy of America. I want to see that. You think David Sullivan should put down his DJ decks and start being like a conceptual artist? Yeah, that would be cool.

Imagine like a graffiti on the outside of Goldman Sachs, like a naked guy holding a briefcase full of money. Whoa, crazy. I mean, literally all they have is the big bull, you know? Could do better than that, you know? I got the big bull. Well, that's because of that cock fetish. Let's talk a little more about Tether specifically, right? You said we say this book started up by pulling on the thread of Tether.

It's when we've been interested in for a while as well. We've talked a lot about Tether. And it's run by this blend of yet, former child stars, ambitious plastic surgeons, Luce Euro finance guys, and it's this, oh, the same guy actually. And it's this one company that underpins the whole entire house of cards of crypto that we've described as working basically as a thing where there would be a huge

Tether print and then all of it will be used to buy Bitcoin the Bitcoin price would go up and then Tether would say trust us We have Everything that you could possibly want Yeah, all right about it. Yeah. Yeah. Oh, you can totally retain redeem your dollars for Tether of No one has ever asked to ever or your dether for dollars. Yeah, we got a whole room full of dollars You can't sayether, no one has ever asked to ever, or your Dether for dollars. We got a whole room for the dollars. You can't say that. No.

So, Tether, as I understand it, as you talk about, it has two use cases, which is number one being the central bank of crypto, I creating money where there was none, but based on a shared interest by insiders and close up people and keeping up appearances, and also a kind of Western Union for what's called pig butchering scams. So I want to talk first about the company itself and then its various uses. Tell me a little bit about actually meeting some of the tetherers.

So it's a real small operation and the Jean-Carlo and this boss and Jean Louis Venderveld, the his like lieutenant, they don't come to these crypto conferences. Venderveld has actually seen so rarely that some people had told me they thought he didn't really exist. It's a Toshi situation. This is all Venderveld. But at Crypto Pahamas, the big conference put on by Sam Bankman Fried, the crypto world basically revolves around conferences.

Like some of these people just don't work. They just go from conference to conference. But I did, I got introduced to Van Devel at this conference. He did exist. And some of these guys, I feel like they know they're playing a role and they do it well in a way that I have to appreciate as a writer. I met him. I was like, great to meet and he's like, the man who doesn't exist. And I was like, oh, good. Good line, Mr. Vanderbilt.

But when we sat that we talked for hours and he just seemed like totally out of his depth, he seemed like he didn't really like know much about what was going on. He claimed he didn't care about money. I'm like, isn't your whole business creating this new form of money? And just like didn't have much interesting to say about crypto at all. And I finally caught up with Devacini, who's like the power behind Tether in Lugano at yet another conference. This one put on by Tether.

And what I found, it was a conference where they just talked about Bitcoin all day. I mean, it's one of these terrible, do you know Max Kaiser, the Bitcoin podcaster? Like, I, one of the most bombastic of these crazy Bitcoiners talking about how Bitcoin fixes everything. He's a semi-official part of the Bukheli administration. Now he's moved on to El Salvador.

So the tether guys through this conference, and it was just like hour after hour of this really boring, contentless Bitcoin talk. And they all sat there on the front row the whole day. I think these guys really like Bitcoin, which is weird because they've created this dollar coin, which is a little like anti Bitcoin. But yeah, I felt like they,

well, this is consistent across crypto. They have all these ideas, which are kind of, maybe they're smart, maybe they're dumb, maybe they're boring, maybe they're interesting, but they don't really pay any attention to what's really happening with their coin. Like, there was no real talk of like what was actually going on with Tether, like they've created this powerful company. How are people actually using this, yeah, this new way of moving dollars around the world. Finding that out is a lot of work. And my keyboard is stuck together with soy sauce. So

yeah. But yeah, I kept hearing about, I didn't learn much from their, you know, from their conference. But I kept hearing about how tethers used in illicit activities. And it came up a Russian money laundering was doing some sort of Venezuelan oil deal. The FBI intercepted his texts. And one of them, he's selling tether to his co-conspirator and he's like, yo, you gotta get tether. Everybody's doing it. It's so fast, you don't have to put your name down.

And recently it's come up and it was used by Chinese fentanyl traffickers who were sanctioned. There's some evidence that has been used by Hamas for fundraising. But the use case that I really looked into were these pig butchering scams. So these are like the text, you know, these are the text,

you ever get the text messages, the wrong number text messages that are just like. I've received one of those before. Yeah, it's basically someone like a lady contacts you and sends, you know, oh, are you, you know, such and such. Like no, no wrong number. And then yeah, it tries to get, say, oh well, I guess we can become friends anyway. No wrong number. And then, um, yeah, it tries to get,

say, oh, well, I guess we can become friends anyway. How are you? And it's like, all right, talking to a wrong number. I'm very intrigued by Russian scammer, man. I love that guy. Just being like, by the way, that quick and easy. And may I say now, I will never be killed with crossbow and so on. Sorry, but we, I want to talk a little more about the industrial levels of scamming, like kind of like an Nigerian print scam, but sort of a new flavor of it, and it will literally pig butchering. Okay. Yeah.

So it's a phrase that would, that means the idea is that the victim is the pig. You fatten them up with your fake friendship, maybe some text based romance. You convince them, this is how this game works. Eventually this woman will start dropping hints about how rich she is, doesn't have to work, plays golf a day, look at my Ferrari. Oh yes, I've made a lot of profits on my Bitcoin trades.

And eventually, they're very patient lot of profits on my Bitcoin trades. And eventually, and they're very patient about this, it'll be days. Eventually, she'll say, hey, if you want to try out my trading strategies, download Coinbase or one of those other legit crypto apps, buy some tether and send them to this address, which is where we can do the special trades. And people will legitimately send hundreds of thousands, millions of dollars. Like people get seriously tricked by this. But the, yeah, the really dark part is that these messages mostly originate in Cambodia and Myanmar.

And there's like office towers full of thousands of people who are just trapped there and forced to send these spam text messages all day long. They're tortured, they're beaten, they're not allowed to leave unless they pay ransom. It sounded like when I heard about this, it sounded like a conspiracy theory, but I've spoken to people who've escaped from these places. I went to go visit them myself. Truly, truly evil. And all fueled by tether. And the crypto guys would say to me, Hey, like this isn't, you know, there've been scams before. Is it your out your, is this really tether's fault? You know, tether doesn't, they probably don't

know anything about this. And I'm like, no, they probably don't, but they've set up the system. That's perfect for old people in the US zapping hundreds of thousands of dollars to Chinese gangsters in Cambodia. So by the time I'm in Cambodia, I've been looking into this for like two years. And I started out like thinking crypto is pretty silly. This was a surprise twist. And every place I go, basically I was finding nobody's using crypto in the real world.

It's all just like hype and empty promises. But I get to Cambodia, I get to Chinatown where one of the headquarters of these scam compounds and like this doesn't prove anything but right at the entrance to this evil office park There's a closed currency exchange and I can still see on its like sign USDT with the symbol for tether like we will trade your tether for cash here once you've you know scam them off The Canadian with the bad taste in movies or whatever. Yeah, and this is, this is like what,

one of the things that they do, this is one of the real actual use cases. Weird, like, like anytime we speak with like, you know, serious journalists who like go and investigate the things at the end of this, it's like on the one hand like sheer misery and on the other like fast and those things existing at the same time, you know. Like you're either butchering a pig or you're shaving a poodle. Those are the two kinds of. I was about to say yeah, you've seen the poodle being shaved in the sort of like wire card

analogy here where they had the building that was supposedly you know this huge international trading hub and you know, you know, the FT knock on the door and it's four guys shaving a poodle. Well, this is like a worse version of this, you know? But the difference, I think, in both cases, right, there was, if you think what I think about wirecard and crypto is basically the same thing, which is a large confidence trick, you know, that they also go around the world projecting that swav image, that sort of excitable image. They also are able to tell people that want to be scammed, in this case, the German government, that they have the answer to all their woes and it won't

cost them a thing. Just don't look too hard at what we're doing. That's just mind was by convincing. He had a poodle. Yeah. Shame. Um, and yeah, but in the other, uh, the other parallel here too, is that if wire card had a legitimate business, it was payment processing for sketchy things like, like porn, or actually, they did a lot of payment processing for scams too. And, and gambling as well, I believe, you know, that Wirecard, their bread and butter was offshore gambling. And it's the, it is ultimately, right? It is that the other, the big, let's say,

inflate the value of the thing and pass it off to a sucker use case, in the case of Wirecard and also crypto was essentially an image one, but where that image is always saying two things, right? They're always speaking out of that would have different sides of their mouths. On the one side, they're saying, we are going to change the way

normal people's lives are experienced, right? And on the other side, they're going to say, this thing is going to be so valuable to own that the main thing you do with it is sell it to someone else. And, you know, I note, the only people who really still believe, there are people who still believe at least that first narrative about crypto. And I was just looking into this the other day, which is the UK. There is only that the UK is going for brick coin is from. Yeah.

Yeah. Which is that the UK has decided, this is the treasury saying this, stable coins have the potential to become a widespread means of retail payment driving consumer choices and efficiencies. And I just, I don't understand how now, having experienced the last several years

of the crypto crash, having seen Brian Armstrong spending 10 minutes trying to buy a donut with Bitcoin with the fastest way to do that possible. And then understanding that the actual use case, actually for most of it, other than just inflate it and sell it to a sucker, is scams. Like other scams. The treasury has a serious like pie gal problem, you know,

all of that money that you pay in taxes that's going straight to Macao. I mean, I could, you could sort of talk yourself into it if you wanted to advocate the crypto side. I mean, I don't know what your fees are in the UK, but in the US, when you swipe your card, if it's a credit card, you're paying something like two, three percent in fees. I mean, it's actually amazing how much the credit card monopoly is able to rake off all these transactions.

So the idea that there could be some sort of alternative, I can see why it's appealing. It's just like, all right, crypto guys, like you had your chance, like all the one, I met all the biggest guys in crypto. They all got like arrested or sued or like, now they're in jail. It's like, you know what? Maybe we should try something else now.

Like you've blown it. That really shaved the poodle on that one. I mean, this is going beyond just like, like, tether, this, and by the way, tether, in all of the collapsing dominoes of crypto, tether is one of the last ones still standing it's it's amazing they have only grown they now have eighty five billion dollars and they still aren't saying exactly where they are but because interest rates have gone up now if they have those eighty five billion dollars they could invest them in u.s. treasuries and simply collect pure profit of like a billion dollars or more

a quarter. That's what they say they're doing. And it's kind of plausible. I mean, I feel like even if they had a whole, if they even if they were short money in the past, they could earn their way out of it. Now they interest rates are higher because the people who used Heather do not collect any interest. It's like an amazing business to run a bank now that doesn't have to pay interest. Well, effectively, right. If you think about the wirecard comparisons, I think, are now running thick and fast, which is that wirecard, they were, they tried to get big enough as a scam that they could pump the value of the company so much that they could then buy Deutie Bank and then all of their scams become a rounding error

on Deuteron Bank's balance sheet and they get away with it. That was their exit strategy. Tether, as you say, even if they were shady at some point. That's Van der Linde being like, we're gonna go to Tahiti, even some Tahiti's tea son, or whatever. Yeah. Does that tether, maybe at some point, was, you might say, I don't know, like shady or

did, let's say, didn't have cash or cash like assets enough to back up every tether in circulation. But now the US government and other governments around the world have basically forcibly closed all of its competitors, like Celsius or Gemini or like all these other, or FTX as well or Bitfinex all of it. He's sound like garage. Nearly for being involved in a series of alleged crimes. Yeah. Right. That's all now happened. The US government's closed its competitors and

is also like it's and it's main asset which it never has to pay out any spread on is now just extremely valuable. It may have actually gotten away with it if there was indeed anything to get away with. You got my meaning. Definitely. I mean, it's amazing that it didn't, that it lasted so long or that it's gotten to where it is because in the traditional finance world, some of these red flags that were clear all the way along would have been enough to set off like a run on the bank. Like if you had a hedge fund and it was revealed that, oh, actually the founder was a child actor

with this crazy story and that he's the guy who thought up this whole idea, that might be enough to like discredit it. Or Tether, I mean years ago they were sued by the New York attorney general for fraud. It was shown that they lied about their assets in the past. Like that in the traditional world, that would discredit you and make it hard for you to keep growing and accumulating billions and billions of dollars. But in the crypto world tether's just like, I don't they shrug it off.

It's amazing. And they shrug it off presumably just because they got too big to, essentially got too big to fail. They were involved in far too much of the rest of the crypto world. They're everything else sort of ran on them. Yeah, because the whole point of the crypto world was to essentially, like I've said this many times before, it was to inflate the value of Bitcoin. Like the whole point of the real estate market in the US from 2001 to 2008 was to inflate the value of property outside Orlando. Bitcoin was Florida condos. But all of the engine of the actual exchanges, the pipes were basically tethers, moving back and forth, right?

And it's been, it's been even proven like they've admitted that, for example, Celsius, Alex Meschinsky would send bitcoins to Tether as collateral for giant loans of Tether coins. So that like, that's essentially like what the conspiracy theorists were alleging, like we know it was happening. But amazingly, they were able to, even when Celsius collapsed and was revealed

to be a big fraud itself, Tether apparently was able to unwind those loans without taking a big loss. Like again, that's so well, how? But also, if you are that well collateralized as a bank, how come you're the only bank that has never been like, they're so resistant to being audited by anyone other than Hollywood upstairs financial auditing

company, right? And I had a funny conversation with Vanderveld about this part. And he said, I said, like, listen, I was just with San Bingham and Freed. He let me look over his shoulder all day while he you know did his business He doesn't seem like he's got anything to hide and Vanderbilt seem like he knows he has anything to

Vanderbilt was like oh yes, it must be so easy to for Sam Bankman freed You know he didn't have to deal with the early days. He didn't have to deal with the early days. He didn't have to take on the risks that we did. We can't open our books now. It seemed like he was saying, maybe we're clean now, but there's stuff in our past that we can't talk about. That's why we have to be secretive. You mentioned Celsius as well.

Before we sort of get into the final discussion of the ape meetup, I do want to talk a little bit about Celsius, something I didn't know, which is that Celsius, just to remind listeners, we have talked about it before, was a kind of, like, would sell something like a bit of a crypto version of a treasury bond to like a retail depositor. version of a Treasury bond to a retail

depositor. It's like, yeah, you deposit some money, then we all get a 5% guaranteed return, which is great, not great for crypto, but great for anything in traditional finance. But it's guaranteed, because it's in like money market funds or whatever. And then it turns out that Celsius just deposited a huge amount of money in three arrows capital, which collapsed when Tereraluna collapsed, and a few funny things here actually, just that on May 11th,

one of the lenders to three arrows capital, message an executive asking the fund for repayment, to which a three arrows, it's capital executive wrote back, yo. Um. Hmm. Before not repaying the loan. Hmm.

Hmm. Hmm. Hmm. Um. I love these three hours, capitals guy. They've been on like a press tour since their fun collapsed. One of them did just get arrested, but the other one did a whole profile in the New York Times where he was like, yeah, I've just been like doing a lot of mushroom surfing, finding myself, no, like sorry for losing $10 billion or whatever it was.

Well, it's because he lost a fun game essentially because one of the other things about crypto, and this is when we get back to looking at Celsius, Terrell Luna, Bitfinex, all of these companies, Gemini as well, they created this fake economy by loaning each other a bunch of tokens. There was actually an incredibly small amount of real money in that whole system

compared to how much economic activity there was and certainly compared to the overall quote unquote market capitalizations of any of the tokens. Yeah, I mean, when I started out with crypto, I was like, the story starts where I'm annoyed with my friend for telling me to go by Dogecoin. And when I'm meeting all these crypto guys, I'm like, you weren't all just going and

banging the money on Dogecoin, are you? And then basically they are. Like they're either doing it themselves or they're lending the money to three hours capital which is doing it. Like, there's no actual economic activity going on. And you know, this is why one of the reasons I think you can do that, you can lose, quote, unquote, $10 billion. And then just be like, oh, yeah, I'm doing mushrooms and surfing,

and I'm ready to try again soon. But before we go, right, I want to talk about your trip to ApeFest. And this was like the saddest Ape Fest because it was the Ape Fest. It was the Ape Fest when the price has started collapsing. The day the music dies. Yeah, what was it like the day that the Ape died?

You know, I've realized that if you're at Ape Fest, I mean, you're committed to the bit. Like, basically once you buy a board Ape, you now must laugh at like you must now love board apes. And because we're basically like an NFT, the idea is that like if we all just agree that we're going to laugh at this meme, then we'll all get rich. And we just have to like laugh really hard on Twitter like every day.

And so the people who are at ape fest, they're still they're still trying. They're still they're still trying they're still they're still committed to it, but But yeah, it was just it was sad to see I I came with my own mutant ape I named him dr. Scum. He cost okay $20,000 And I realized like a horrible flaw in this ape system, which was that People who don't have apes hate apes and will just laugh at you for having one.

But the people who have the apes don't care because we all have apes. They all look the same. Nobody wants to look at anyone else's ape. So what happened was it was just like a bunch of dudes standing around all drunk and stoned and like handing each other stickers with their apes printed on them. Awesome. And honestly, it was the best crypto conference I've ever been to.

It was much better than like the Bitcoin ones. I was truly shocked that there's actually was nothing to do with your ape at ape fest. It was just like, yeah, have a ape drink and like stand here. Listen to Amy Schumer make fun of you. She had some good jokes. I like that. But AP Schumer.

Yeah. That's like what I call high war smoke, Amy Schumer being the normal one in the room. That's gone. But like the what really strikes me about about ape fest, especially as you write about it, is that it was just as the crypto economy was a simulation of an economy with very little actual bearing on the real world. ApeFest is a simulation of culture and community, but where no one actually has anything in common,

other than a desire to have something in common with each one another and celebrities. It's a like space that just happens to be filled with an ape. This was revealed when I, I did get my money's worth. I was able to confront Jimmy Fallon there, celebrity ape promoter. And he's like, he's, I showed him my ape. He pretended to be interested. And then I'm like, Jimmy Fallon,

glad you tell everyone to get these apes. Like the prices crashed. They lost lots of money. And he was like, oh, it's the community, man. And I'm like, community, like, look at what kind of, look around you. They made Jeff Allen go to this, you know? Like, yeah.

Yeah. Well, he was in the VIP in the back. Yeah. He wasn't hanging out with the other apes. He was a VIA. So even in ape paradise, there remains a VIP section. Yeah, yeah, yeah. They got the simian in there.

Yeah. Anyway, anyway, the last thing we'll talk about before we leave is also on NFTs. This was years later after Brock Pierce had founded Tether. He invented a new business, which is a yacht that he owns, but that you are allowed to go on if you own an NFT and explaining what it was like, he said, we're the Avengers, it's the Avengers, shit. Okay, great, thanks. Another guy who just like is always playing a part,

and as a journalist, you have to appreciate someone who generates such good content. He's like, because you go to the most guys I go to describe him and it's like, oh, another guy. He's got like a funny fedora with a feather in it. He's wearing an ankle length leather vest, even though he's like five foot five. He's shirtless. He's got tattoos. I mean, he's got so many, uh, he's a pick up artist.

He speaks in riddles. It is sort of a pickup artist look. Yeah And he sent a speedboat to take me to his yacht. So thank you. We're money duck sky Yeah, and one day you'll be able to buy one of those from Alabama made a capital. Yeah, that's right. Anyway So I think we're now all the Avengers not of the NFT world, but of being done with this podcast. We're the Diana Riga event. So not the podcast in general, just this episode. Yeah, please, please do not answer. So I wanna say, Zeeck, author of Number Go Up,

I'll play a book you can buy from wherever you buy books. Thank you so much for coming and talking to us today. Thanks for having me on. I'll pleasure. And thank you, the listener, for listening, and don't forget, there is a second episode every week. That is a premium one. Fuckin' is.

You can get it for $5 cash American per month. We do not accept tether at this time. Yeah. We can also sell you trash-each-a-tuning forks, outboard moaners, mo-pads, speedboats. And also don't forget, of course, the link for medical aid for power studies is going to be in the description of the episodes

who donate to that first. Yeah. We're gonna be sending them some tubers. And otherwise, I think, Milo, you have dates? Yeah, 11th of November, Bristol, 12th of November, Birmingham 14th of November, Oxford, 22th of November, Birmingham, 14th of November, Oxford. 22nd of November, London is already sold out. Lovely.

Oh, also, yeah. 24th of November, Barcelona. Does anyone listen to this in Barcelona? I guess you'll find out. That's on my website. If you listen to this and you're in Barcelona, come up and talk to Milo after the show. Talk to him for a while, actually, I think. Show me right.

How about that? Yeah. Yes, show me your ape, literally, not figuratively. Yeah. Anyway, anyway, all the end matter being done. Zeke, once again, thank you. Listeners, thank you for listening, and we'll see you in a few short days on the next episode.

Bye. Bye.