November 8, 2023 • 47 mins
Aside from the fact that cryptocurrency has lost its luster in recent years, it also has a host of other problems. First of all there’s the climate issue since crypto requires a ton of energy. Then there’s the trust issue because without trust you don’t have widespread adoption and what good is crypto if there isn’t a critical mass of users? And then on top of that you add the recent developments of Sam Bankman-Fried’s conviction of stealing billions of dollars from customers at FTX. Knowing that money laundering and wire fraud were being committed… that doesn’t build trust! Every transaction seems like a scam waiting to happen, and few folks know this better than our guest Zeke Faux. We’re lucky to be joined by Zeke as he has documented the rise and fall of crypto over the past few years in his new book Number Go Up, which took him everywhere from El Salvador, to Cambodia, and ultimately SBF’s penthouse in the Bahamas.
Want more How To Money in your life? Here are some additional ways to get ahead with your personal finances:
- Knowing your ‘money gear’ is a crucial part of your personal finance journey. Start here.
- Sign up for the weekly HTM newsletter. It’s fun, free, & practical.
- Join a thriving community of fellow money in the HTM Facebook group.
- Find the best credit card for you with our new credit card tool!
- Massively reduce your cell phone bill each month by switching to a discount provider like Mint Mobile.
During this episode we enjoyed a Desert Fog by Marble Brewery- a big thanks to Bob for donating this one to the pod! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
Best friends out!
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to had a Money.
Speaker 2 (00:01):
I'm Joel and I am Matt, and today we're talking
crypto's wild rise and staggering fall with Zeke Fox.
Speaker 1 (00:27):
Yeah. So cryptocurrency has a lot of problems. There's a
climate issue. Crypto requires a ton of energy. There's the
trust issue, because what good is it if there isn't
a critical mass of users, a network of folks. And
then on top of that you have the recent developments
of Sam BigMan Freed's conviction of stealing billions of dollars
from customers at FTX, knowing that money laundering and wirefraud
(00:50):
were being committed. That does not build trust. So that's
a problem. Every transaction seems like a scam waiting to happen,
and a few folks know this better than our guest, Zeke.
We are lucky to be joined by Zeke as he
has documented the rise in the fall of crypto over
the past few years in his new book, Number Go Up,
which took him everywhere from El Salvador to Cambodia and
(01:13):
ultimately to a penthouse in the Bahamas. Zeke is an
investigative journalist and he did not hold back in his book,
and Zeke We've got a lot of questions for you.
Thank you for joining us today on the podcast.
Speaker 3 (01:25):
Thank you for having me on Zeke.
Speaker 2 (01:27):
I hope your diamond hands are feeling good. We've got
a lot to get to in this one. But the
first question that we ask everybody who comes on the
show is Matt and I. We're all about saving and
investing wisely for the future, but we like to spend
money in here now. We like to enjoy life along
the way, and so craft beer is something we splurge on.
What's your craft beer equivalent? What are you splurging on
while you're also trying to handle your money?
Speaker 4 (01:46):
Well, so I'm definitely very thrifty. But there's one thing
that I love. It's like my most prized possession. And
you're gonna laugh, like typical, I'm in Brooklyn, Typical Brooklyn Dad.
It's my espresso machine. I have this fancy espressional machine.
(02:06):
And like, I mean, me and my wife joke that
like if we ever got divorced, she can have everything.
Speaker 3 (02:12):
But I'm taking that and I think it's it's pretty.
It costs.
Speaker 4 (02:18):
It probably costs like a thousand dollars, okay, which is
which is ridiculous, but it is. It's not one of
the crazy manual ones with the handle.
Speaker 1 (02:30):
Like a style.
Speaker 4 (02:31):
You're like, yeah, pulling your own shots. Yeah, so I
do press a button to make the shots. But like,
if this broke tomorrow, I would buy another one. Like
I would not live without this machine. When I go
on vacation, I come home and I'm like, uh, I'm
back to the espressial machine thing.
Speaker 1 (02:47):
Yes, well, I've gotten to where I'm traveling with my
own grinder in my own beans so that I can
do at least do some chemics while we're on the road. Yeah,
that's impressive.
Speaker 2 (02:54):
I will say it's interesting that the custody battle would
be over the espresso machine, not the children, zeek. But
you've got your in the place where you want them.
It sounds like, right, yes, I've revealed my priorities.
Speaker 1 (03:06):
Oops, we'll just make sure this episode one along. But
I also love even though that's your splurge, it is
also a way for you to save money, because what
that means is that you're not going down to the
corner to the local awesome coffee shop there and dropping
four or five bucks, you know, with tip on an
espresso right there. So even though this is your splurge,
(03:28):
I still love there's this undercurrents of diy, thriftiness and
frugalness that we can totally get behind.
Speaker 4 (03:34):
I mean, I will say it, like in New York,
I think the easiest way to save money is to
make stuff at home because if you order like even
pretty regular takeout, especially for the kids, you could easily
hit one hundred bucks, you know, just from like the
corner you know, sushi slash thie restaurant. So if you
make like anything at home, even going to like the
(03:56):
fancy grocery store, I think it's still a big savings.
Speaker 1 (04:00):
I love it. Yeah, it makes a ton of sense.
All right, let's let's dive into it, Zeke. We're not
gonna spend our entire conversation, our entire time here talking
about SBF. But his conviction last week, it certainly has
the attention of anyone involved with crypto. So what kind
of effect will the downfall FTX and animated Research and
now this ruling, What kind of impact do you think
(04:22):
this is going to have on just the crypto industry
as a whole.
Speaker 4 (04:25):
So the crypto industry would like to say that Sam
Bankman Freed was just a bad apple, and it's true
like his fraud, I mean, he was a very bad apple,
and his fraud is different from other crypto companies, but
he's far from the only fraud in crypto. Like I
(04:46):
spent two years, as you were saying, like, investigating this
whole thing, and wherever I turned, I would see empty promises,
hype that nobody lived up to, total scams, dumb schemes,
and a lot of the stuff that I investigated has
now resulted in lawsuits in court, kate government charges. So
(05:11):
even if people, even if you just set Sam Bankman
free aside, I think that just the wave of bad
publicity is going to result in investors being a bit
more skeptical. That's why I just can't see a bubble
like the one we just lived through happening again.
Speaker 3 (05:28):
It's just like you know, you asked.
Speaker 4 (05:31):
I mean, I'm curious if you agree with this, but
I feel like if you, you know, even six months
from now, a year from now, a regular person, if
they hear crypto, what's gonna pop in their head? They're
gonna think like, isn't that the thing that the curly
haired guy used to like.
Speaker 3 (05:46):
Steal everybody's money.
Speaker 2 (05:49):
Yeah, you know, it's it's it's definitely his face, his
hair is synonymous. It's completely branded alongside crypto in general.
And by the way, my mom taught me growing up
that a bad apple ruins the whole bunch, right, and
so it really can have that sort of cascading effect,
just a massive overarching impact. And Zeke curious what it
(06:10):
was like for you. Your book was actually used on the
stand in the trial. And didn't Sam Bankofrid have to
read quotes from the book? I mean, were you expecting that?
Speaker 1 (06:20):
What was that?
Speaker 4 (06:20):
Like him so big surprise? It was totally wild. I mean,
the prosecutor practically was like, I'll tell you this story.
She I started talking with Sam. He made the strange
decision to testify himself, which opens him up to cross examination,
and she can bring up anything he's ever said to before.
(06:41):
And just before he got arrested, I'd spent a whole
day and night with him at his thirty million dollar
pet house in the Bahamas talking about what happened at FTX,
and so he told me a lot of stuff then,
and he'd even admitted some stuff to me that I
thought was, you know, pretty and I had asked him. So,
(07:03):
at the center of this fraud is the relationship between
his exchange FTX and his hedge fund, Alometera Research. And
so what happened was that let's say you sent a
thousand bucks to FTX and you bought some doge coin.
You'd look in the app and you'd think, oh, look
I got a thousand doge coin. Now pretty cool. But
(07:23):
in reality, you didn't have that thousand doge coin. You'd
send in that thousand bucks and Sam bankmin Freed had
just funneled it to his hedge fund where he could
go gamble on other.
Speaker 2 (07:33):
Stuff, and so it was just a number on a
screen that didn't have any basis in reality.
Speaker 4 (07:38):
Yeah, I mean when everyone went to withdraw their money,
they realized that and they couldn't get their money, and
it was all gone. So he was trying to claim
to me that it was okay. It was allowed for
Alameda to borrow money, for the hedge fund to borrow money,
and he said all the traders on the exchange could
borrow money. But when I said, but did Alameda follow
(08:01):
the same rules as other traders on the exchange, and
he said to me there was more leeway like that's bad.
And the prosecutor asked him and she was like, have
you ever talked about the relationship between Alameda and FTX?
Did you ever say that they didn't follow the same rules?
And he was like, I don't know about that, and
(08:23):
she literally whipped out a hard copy of my book
walked it over to the stand. The defense was like objection, objection.
The judge said no, I'll allow it, and yeah, he
had to go over that, and then also some other
comments he made about his involvement with the decision to
allow Alameda to borrow even more money. So it was
(08:47):
shocking for me and a little uncomfortable, because you know,
when I do these interviews, I like to just think
like I'm just a guy who's you know, trying to
find out the truth about what's going on, trying to
write about what's going on. I don't like to think
that I'm part of some sort of like criminal prosecution
and I'll leave that to the cops, right, you know.
Speaker 1 (09:06):
It was like you're in the story now, which is weird. Yeah,
you are a part of it. And of course SBF
he claimed, I don't recall saying that. Yes is all
he could say, I guess you have tapes too.
Speaker 4 (09:18):
Yes, luckily nobody asked for them. And making this even
more amazing, you probably know that Michael Lewis, the famous author,
also wrote a book about SBF that's more.
Speaker 2 (09:32):
Favorable them, and so we wanted to ask you about
that because that seems crazy, and he also kind of
made some snide remarks about your book.
Speaker 4 (09:39):
Well, in court, the defense was like, all right, prosecution's
got a book. We'd like to introduce our own book,
Going Infinite by Michael Lewis. And this happened. It was
in a little sidebar, like the jury couldn't hear it.
They just did it in a meeting with the judge.
But the judge said that the part of Michael Lewis's
(09:59):
book they wanted to introduce sounded like it was just
Sam making up stuff and that it would not be permissible.
Speaker 2 (10:07):
So yours was I've actually written and reported, and Michael's
was a puff piece basically well, and that's certainly how
it's been reviewed, at least by folks who have looked
at both books.
Speaker 4 (10:18):
I mean, it's really crazy to me because I like,
this is my first book, and okay, so I was
down in the Bahamas right around the time of the
Super Bowl in twenty twenty two. This is I went
to go profile Sam bankmont Freed when things were going great,
and he was very unusual for a CEO. He was
just like the understand but he was just like, pull
(10:40):
up a chair, sit next to me, let me. I'll
just do all my business while you observe me. And
this was weird before I knew that he was like
running a massive scam. Nobody lets you do that. But
I saw on his calendar like the day before was
blocked off and it was like, go to the super
Bowl with Michael Lewis. And I was just at this
point when I was already working on a book too,
(11:02):
and I was just like, oh, no, Michael Lewis has
a crypto book.
Speaker 1 (11:05):
Yeah. You're like, oh, you know, that's going to.
Speaker 4 (11:07):
Be a number one bestseller. Who's going to want to
read my book? When you have the Michael Lewis option.
Speaker 1 (11:13):
They're like, who's this Zeke Foe guy.
Speaker 3 (11:16):
Yeah.
Speaker 4 (11:17):
So when I'm writing the book, I was telling myself,
all right, you'd better go all out and do a
good job because you're up against Michael Lewis. But I
just thought that was like something I was using to
motivate myself. I did not think that actually the books
would be you know, compared when they came out, and
I never would have imagined that, you know, like reviews
(11:38):
in major newspapers would say, like Zeke's book is more entertaining, amazing. Yeah,
so pretty cool.
Speaker 1 (11:44):
Yeah, not only compared, but also contrasted, as it seems
like you've you've done an excellent job just kind of
being a little more nuanced and diving actually getting into
the truth.
Speaker 2 (11:53):
Telling a better story because and maybe not better more accurate.
Speaker 1 (11:57):
Well yeah, well not too much about the other book,
but life. I think that's the criticism, right, is like
there once you kind of decide on a narrative and
this is kind of goes back to like just storytelling.
It's hard to step off of that treadmill with the change,
with the fact change, and you have kind of decided
that the hero becomes the villain, that you want to
go a certain direction. Yeah, but Zee, let's uh, it's
(12:20):
kinda step out of this a little bit. I want
to kind of wind the clock back a little bit.
What made you go down the crypto rabbit hole in
the first place.
Speaker 4 (12:27):
Yeah, as an investigative reporter who writes about finance. People
are always telling me I should write about crypto, but
I just I didn't want to do it. I didn't
like it. I just didn't feel like there was anything
to investigate. I felt like, admittedly this was like a mistake,
but I felt like so many crypto schemes are just
like a guy says, buy my coin. It's really great,
(12:48):
everyone buys it, the coin goes up, then later it
goes down. I just didn't think it was like an
interesting story. But yeah, it was fomo that that changed
my mind. Because I'm on this group text with my
friends from high school. We call it Dan's Basement because
that's where we used to hang out, you know, twenty
years ago, and I love it. One of my friends, Jay,
(13:13):
a very funny guy. We used to write a humor
column together in high school and he's gone on to
he has like a successful career, you know, someone who
I really think highly of. He starts telling me that
we should buy is the middle of the pandemic. We're
all pretty bored, we're stuck at home. Group text is
very active, but he starts talking about something he calls
doggy coin and He's like, I don't. He's like, I
(13:36):
don't know what it's good for. I don't know what
it is, but like it's funny and you should all
buy it. And I fancy myself, you know, the financial
expert of the group being the investigative reporter. And so
I'm like, well, it's dogecoin, first of all. Yeah, and
that went viral like three years ago, is never going
(13:58):
to happen again. It's it's not even funny. Let's move on.
But the price of dogecoin starts creeping up, and Jake
keep's texting us all updates, and he eventually makes enough
money to fund a trip to Disney, and he texts
us all, I am freaking nostra damis.
Speaker 3 (14:20):
You know, if you'd all listen to me, you could
be a Disney too.
Speaker 2 (14:24):
And you're sitting in there at home, hugging your coffee maker,
just like weeping.
Speaker 4 (14:28):
Yeah, it got a little heated, like this was like
some we were a serious disagreement between us.
Speaker 3 (14:35):
Then it wasn't so.
Speaker 4 (14:36):
Much that he was teasing me, or that he had
made this money or that he'd gone to Disney. It
was more just like I really wanted to be right
in this argument. This is this is what you do
argue with Yeah, this is what you do. You know
how this works, you know how this ends as well.
But yeah, like you said, a lot of folks were
making a lot of money, and yeah, he wasn't the
(14:57):
only one, you know. I had neighbors who'd made big money,
other friends who are making tons of money on it,
and I just felt like, Okay, maybe there is real
money being made here, and I want to win this
argument with Jay. So even though there's really no winning
the argument since he did make the money and I didn't,
I was like, I'm going to get to the bottom
(15:18):
of this now. I want to know what's up with
this whole crypto thing. What's behind it all? Why are
all these coins going up and up and up?
Speaker 1 (15:24):
Did your friend cash out? Did he actually make the
money or or.
Speaker 2 (15:28):
Did it so he made them like it Disney, But
sometimes people do that because they're like, it's kind of
like home equity.
Speaker 1 (15:34):
Double down, double down to put it on a credit card.
Yeah exactly.
Speaker 2 (15:36):
You're like, I mean, I got the money, it's in
there in the bank. I'm not going to tap it
necessarily because it's just going to keep going up. So Okay,
So I'm glad to know he got out at the
right time because there's a whole lot of other people
that were left holding the bag later on, right.
Speaker 4 (15:46):
I mean, it is like a zero sum game, like
somebody's got to lose money for someone else to make
it because there's no real, like economic value being generated.
And I later met a nice woman from New Jersey
who worked in a school there who so it had
sort of a similar start to her story where she
made some money on doagecoin, but then got like real
into crypto and started sending more money to one of
(16:09):
these crypto yield platforms and ended up losing like a
big chunk of savings that she had been counting on.
Speaker 3 (16:17):
You know.
Speaker 4 (16:17):
So Jay was able to resist the temptation, I guess,
But other people you make a little bit and then
you end up making some bigger bet and losing.
Speaker 3 (16:27):
Yeah.
Speaker 2 (16:27):
No, And that's I mean, we've heard from listeners to
this show because we've been tepid at best towards cryptocurrency
the whole way through.
Speaker 1 (16:35):
And.
Speaker 2 (16:37):
There we've had listeners who have lost ten thousand dollars,
twenty thousand dollars something like that. And that's I think
that that's kind of what's happened in so many ways.
It's a bunch of people losing bits and pieces of
money that would have been better put in a roth
irate in an index fund or something like that. But
talk to us about like use cases for crypto. You
basically just kind of mentioned that it's not really generating
(16:59):
any ecomic value. But there have been all these kind
of pitches for what crypto is going to do, the
solutions it's going to provide, But those use cases don't
seem very helpful. Is it just as completely unnecessary a
solution in search of a problem. That's what it feels like.
Speaker 4 (17:18):
You can talk yourself into some of these use cases, like,
for example, you know, when you swipe your credit card
at a store in the US, the store is taking
paying like a three percent fee a process of that transaction,
or two percent something like that, So like, wouldn't it
be cool if there was some way to avoid those fees?
Or like Western Union, when you send money to another
(17:39):
country there's a fee. You know, wouldn't it be great
you had a quicker way with no fees. But I
decided to judge crypto not based on the claims of
its promoters, but to like look into how it was
actually being used and to see if it was working
for anybody. And I can't claim that I looked into
(17:59):
every but what I can say is that the things
that I did look into, Like I went to El Salvador. Yeah,
it's the first country to adopt bitcoin as a legal currency.
And bitcoin promoters were like, this was working great. Everyone
in El Salvador loves bitcoin. It's making life easier for
the poor. What happened when I got there?
Speaker 3 (18:18):
I mean.
Speaker 4 (18:20):
The first store I went into in Bitcoin Beach, the
town that the where the bitcoiners say the bitcoin revolution started.
Speaker 3 (18:29):
I went to like.
Speaker 4 (18:29):
A roadside stand and I asked for water. Everything was
sort of behind the counter. So the guy brought out
a water and he was handing it to me, and
I said, I'm in my gringo Spanish pueto pagar coin
bitcoin And the guy took the water from me and
(18:52):
said bassura, which is trash, and he just yeah, he
walked away. He was just like, get out of here. Yeah,
I'm not selling you any water. And there were stores
that had signs that said we don't accept bitcoin. Basically
just like leave us alone, Taurus, it's so annoying to
use bitcoin that we don't want your money, because in reality,
(19:13):
they could like it's not that hard to use the
bitcoin app, but they're just like I can't be bothered. Yeah,
just go to the ATM and get some regular money
for me, right. And another one that I heard a
lot about was Axi Infinity. This was like a crypto
game and you you would buy it's sort of like Pokemon,
(19:34):
and you'd buy this team of monsters of game on
your phone, but you had to assemble a team of
monsters and like battle other monsters. And what made it
crypto is that you had to pay crypto to buy
your monsters, and if you won the battles, or even
if you lost them, you earned a different cryptocurrency called
smooth Love potionit and.
Speaker 1 (19:57):
You can't make these names up? No, I mean somebody did. Yeah.
Speaker 3 (20:01):
Yeah, they clearly needed like a name consultant. They've terrible.
Speaker 1 (20:05):
This is where reality is stranger than fiction.
Speaker 3 (20:07):
Yeah.
Speaker 4 (20:08):
So, well it gets weirder because this game took off
in the Philippines. It went viral. There were like more
than a million people there playing it. Whole families were
like playing this game all day instead of working and
for a while, you could earn, you know, a better
than average Filipino salary, just by playing this game on
(20:28):
your phone, earning Smooth Love potions and selling them. And
while this was going on, crypto people were like, this
is amazing. It's Web three. You know, people finally can
own their assets on the Internet. It's going to solve poverty.
It's going to be a new way of life for
the world's poor. But meanwhile, it's like, wait, why does
Smooth Love potions have any value? And it's like, well,
(20:51):
you need them to buy the monsters. It's like, well,
why do the monsters have any value?
Speaker 3 (20:57):
Well, you need them to earn the Smooth Love potions circular.
Speaker 4 (21:00):
Yeah, this is like I've been instructed not to say
the word Ponzi scheme because I think it implies like
criminal intent. But this is you know, this is an
unsustainable bubble. This doesn't make any sense, you know, And
it didn't make any sense, and it collapsed and people
in the Philippines lost real money.
Speaker 3 (21:22):
And I went there and it was surreal.
Speaker 4 (21:23):
I mean I went to the town where this first
went viral, and the town had literally been transformed by
this Smooth Love potion money, like people gave me a tour.
They're like, that guy put a second floor in his
house because of his smooth love potions. That guy, you know,
bought a new car with his axie money. I went
to a guy who's who'd moved out of town and
(21:44):
built this house in the country with his axie money. Yet,
but when it all collapsed, people had even borrowed money
and invested in And I've met people who were like,
really in the hole.
Speaker 3 (21:54):
My driver.
Speaker 4 (21:57):
Had lost like a thousand bucks to buy a team
of monsters. He borrowed it from his in laws, I believe,
and you know, he felt like really ashamed that he'd
lost this money and it was a big setback in
his life.
Speaker 3 (22:09):
So I can't exaggerate how much this was.
Speaker 4 (22:14):
This AXI was like their big example of like Web
three is awesome, and then once it collapsed, you just
didn't hear about it anymore onto the next one.
Speaker 2 (22:23):
Yeah, I feel like that's the case, Like the reporting
on the back end has been has missed some of
those stories. For every one story of success, right the
bitcoin or the dochecoin millionaire, there's one hundred or at
least ten stories of someone losing quite a bit and
so we want to talk more about crypto's failings kind
(22:44):
of some of the crypto scammed attempts that were there
were often just hoodwinking people into losing thousands of dollars
or more. And we've got just more questions with Zeke
that we'll get to right after this.
Speaker 4 (23:05):
Light.
Speaker 1 (23:05):
We are back from the break talking with Zeke Fox
and z You were detailing some of the impacts of
crypto h some of the impacts on other countries, but
let's kind of bring it more state side. Do we
have any numbers about how much money, just millions of
normal folks lost during the crypto craze, because you know,
(23:26):
like like at its core, the crypto debacle of the
last few years, like it feels just like a massive
wealth transfer from normal folks to those who are out
there promoting crypto. But I'm curious if you had any
stats there.
Speaker 3 (23:37):
You know, it's hard to say.
Speaker 4 (23:41):
The market if you look at the market cap of crypto,
it got up to like three trillion, and now it's
down below one trillion. There's a two trillion dollar decline,
but that really overstates the amount of real money that's
lost because a lot of these coins they'll essentially they'll
be like billions of these coins that exist, but nobody
(24:03):
ever trades more than you know, a million of them.
So a lot of these coin there's people who are
sitting on like a lot of value on paper, but
if they ever went to like sell their three trillion
zeke coins, they would find out that nobody really wanted them.
But in terms of real money, there's quite a few
scams where you know, at least a billion dollars was lost. Like,
(24:28):
definitely people lost billions and billions of dollars of real money.
There's a huge range. I mean, it's definitely billions of dollars,
but it's not somewhere between like ten billion and one
hundred billion, it would be my estimately.
Speaker 2 (24:41):
Yeah, And it's not just you know, trading crappy coins
the tank to zero. Talk to us about scams, because
it's not just like dummies, right, sitting in their mom's
basement sort of thing, like Mark Cuban lost money into
a crypto scam, right, And it's not even just scams.
Talk to me about crypto passwords. I mean, there were
those articles being re about people who had bitcoin locked
(25:02):
away and they forget their password and guess what they're
kind of sol in terms of in terms of cashing
out on the bitcoin that they own.
Speaker 4 (25:09):
Yeah, so Mark Cuban amazingly. He appeared in a pro
Axie Infinity documentary and gave a great quote where he said,
the numbers make perfect sense, like talking about this smooth
love potion thing. I'm like, I'm sorry they don't, Mark Cuban. Yeah,
and yeah, he also invested in some other I believe
(25:34):
he lost out on some sort of stable coin that
fell apart, maybe titan.
Speaker 3 (25:39):
Coin or something. So he was really in the mix.
Speaker 2 (25:42):
And well, the Sharks and Shark Tank, you know, like
mister Wonderful was all about FTX as well, so.
Speaker 4 (25:47):
He played it the safer way, mister Wonderful. He got
paid fifteen million dollars to endorse FTX, and I think
he was paid an FTX stock so he would have
lost a fifteen million. But at least he's, you know,
no worse off than he started.
Speaker 1 (26:03):
Except for his reputation.
Speaker 4 (26:04):
I will say, true, true, but his dome is so
shiny we can't resist. I saw him at at Crypto
Bahamas in April twenty twenty two, the big FTX coming
out party, like the big celebration of Sam Bankman freed,
and he was preparing to do like a remote TV hit,
(26:25):
and he in the press room and he whipped out
one of those like a portable shaver and was just
like shaving his dome. So it's extra shiny. I was like,
that guy is dedicated. But okay, you asked about the
password thing, and yeah, I think banks are pretty annoying, right,
(26:45):
Like they charge you fees, they you gotta wait in line.
I mean, you got lots of I got lots of
complaints about banks. But the nice thing is is like
there is someone who answers the phone, and if you
get ripped off, you can call them, and often you
can reverse the charges. So I went to go for
(27:05):
part of the book, I had to use like a
real crypto wallet called meta Mask. And this isn't like
if you use coinbase, you're not really doing crypto. You know,
you're just sort of like sending your money to coinbase
and they're handling all the crypto stuff for you on
the back ending. So meta mask to right, right, So
most people, even people who like crypto, don't really have
(27:27):
anything to do with it. But meta mask is like
a decentralized wallet, and when you install it, you have
to watch this video and they tell you that. They
literally suggest because if you lose the password, it's over.
You lost all your money.
Speaker 1 (27:42):
There is no recourse, there's nobody who's going to hold
your hand, there is no authority beyond you and your
ability to get into your own wallet.
Speaker 4 (27:50):
Yeah, so they recommend that you engrave the password on
a metal plate and then bury it in your backyard.
Like the video is playing like happy music while it
shows this, but I'm just like, no, I'm not doing that.
And then the funny thing about it to me is
that I knew this crypto wallet thing would be kind
(28:12):
of a hassle. I heard it was hard and confusing,
but I just still was not prepared for how annoying
it would be and also for just like how terrible
it would feel. Because the crypto wallet is just an icon.
It's a browser extension. So you've got like the little
box we write in that you type in the URL,
and then next to it maybe you have like I
(28:34):
have a stop sign that's my ad block extension. And
then if you install this crypto wallet, you get this
little foxhead and basically your money is going to live
in that Foxhead now, and you hopefully you engrave the
password on the metal disc and put it in the yard,
because like if something gets like if you ever had
(28:55):
like something go wrong with your browser and you have
to like reinstall or something like that, like that could
mean all your money's gone. Yeah, there's like no friendly
agent to call. And when I was this was for
an experiment for the book. I had my reasons, but
I was trying to send twenty thousand dollars to the
fox Head and like a friendly representative from Bank of
(29:17):
America called me and he was like, hey, are you
sure you want to do this, Like are you being scammed.
We've heard of a lot of like crypto scams. And
I was like, no, no, I'm doing it on purpose.
I want to send my money to the fox Head.
And he was like, that's what they all say, like
you should think this through, and I was like, no,
put it through.
Speaker 3 (29:37):
I want to get scammed. I need to do it
for the book.
Speaker 4 (29:40):
But I mean, pretty cool of the bank to have
some whole team of people that like try to help
you out if you are getting ripped off.
Speaker 1 (29:48):
They're not all bad.
Speaker 3 (29:48):
You got to say that for them.
Speaker 1 (29:49):
Well yeah, and I think folks who are true believers
in crypto, they would say, well that that's not a bug,
that's not a problem. That's actually what we want. And
there are a lot of folks that are looking to
it for that decentralized that DeFi aspect of it. So
like we wanted to be like an outback steakhouse, no
rules just right now.
Speaker 4 (30:06):
Yeah, I will say, like if I thought this gave
me special access to like get rich quick schemes which
I couldn't get to otherwise, maybe I'd like it. Or
like if I didn't want to pay my taxes and
I thought I could hide my money this way, then
maybe I would try it. But the crypto people are
trying to say it's not about that. They're saying like,
this is a great app and that mainstream people might
(30:28):
use this for, you know, to maybe one day your
tailor swift tickets would live on the blockchain and somehow
be better. And they got a long way to go,
is all I'm saying. Like this app they have now,
no regular person would ever want to use that if
they didn't think it was going to make them rich.
Speaker 1 (30:45):
Sure, and so much of it, I mean so many
of the scams do have to do with scammers out
there fishing for that information. And this is you also
trying to get more content and experience for the book.
But someone who texts you out of the blue and
starts chatting you up and it's like, oh yeah, this
is somebody that knows something. Eventually you kind of trace
(31:06):
that back to Cambodia. So, given all the scams that
folks have experienced, how come the bottom hasn't fallen out altogether?
Because I mean, certainly some cryptos like bitcoin ethereum, they
seem to still have an air of legitimacy around them.
Is that how they should actually be viewed or do
you think that they're all going to meet the same
fate as some of these illegitimate.
Speaker 2 (31:28):
You know, like the real weird ones. I mean it
should Bitcoin and ethereum be kind of different.
Speaker 4 (31:35):
I will say, like, like this book it's like an
adventure story. It's a chronicle of like a crazy period
of history and have all these like weirdos and how
they became billionaires and then lost at all.
Speaker 3 (31:46):
And it's not.
Speaker 4 (31:48):
Like investment advice is not my specialty. I'm a prefacer.
I am going to say though, that, having spent two
years looking into crypto, looking into its use, is my
conclusion is that if this stuff is going to be
successful long term, it has to have some purpose and
(32:09):
it doesn't. And so maybe they'll come up with the
purpose in the future and maybe it'll be successful, But personally,
I'm I have no more fomo. They can go do
their crypto thing. I'm gonna there's a lot of things
that you can you could invest in, and I would
(32:29):
compare it to.
Speaker 3 (32:31):
AI.
Speaker 4 (32:32):
When chap GPT was introduced, people started using it immediately.
It was like an incredibly popular app, and so like AI,
there might be a lot of hype and scams there too,
but at its core, there's something that people want to
use and if people want to do it, then you
can make money from it. With crypto, they have yet
(32:53):
to produce this app that people want to use, and
so I think that is a big problem. And maybe
all these smart people working on crypto will come up
with that app in the future, but maybe they won't,
you know, and I'm not I don't buy this like
digital gold argument that the bitcoin people have kind of
pivoted to where they argue that bitcoin will become some
(33:16):
sort of like observe assets.
Speaker 1 (33:19):
It's hard for a currency that's that volatile. I mean,
that's another one of the problems of crypto is its volatility.
And when folks, yeah, when they do start pivoting to
that store of value argument, it as of yet, it
doesn't seem to hold a hole much water. But we've
got a few more questions to get to with you, Zeke,
perhaps some personal takeaways. We'll get to those right after this.
Speaker 2 (33:47):
We're back to the break, still talking with Zeke Fox
about crypto's wild rise and staggering fall and who is
at the center of it all.
Speaker 3 (33:55):
Zeke was.
Speaker 1 (33:57):
Of a lot of this, and so Zeke thought he
was gonna no it was Zeke.
Speaker 2 (34:01):
I just I mean, honestly, I feel like we could
just hang out, Zeke, drink beers or espresso, whatever your
preference is, and talk about all the stories you've got
from just your your investigative reporting. Fascinating stuff. And I
know you're not giving financial advice unless you're in your
text chain with your friends. But like as individuals, like
(34:23):
a lot of people listening to this show all about
getting their personal finances in order right. They want to
save more paydown debt invest in the future, Like, what
are the major lessons and takeaways that we can all
extrapolate from this rise and fall of cryptocurrency? How can
we be wiser and more vigilant in the present and
in the future, Because I mean, you said you don't
(34:43):
believe you'll see a bubble like this ever again. But
the truth is, like, bubbles have happened in history, and
I think we'll see more bubbles, maybe not quite to
this extent, maybe not quite this staggering in proportion and
in monetary value, but there will be things like this
that happen again in the future. So yeah, how can
we be wise given and and what can we learn
from this?
Speaker 4 (35:04):
I think a lot about this conversation I had with
a salesman at Akia in the closet section at some
point during my research. Yeah, well, he told me that
he'd lost a lot of money on crypto and also spacks,
like you know, speculative stocks, And I asked him why
(35:25):
he had why he had done it, and he had
said something along the lines of like, look, I make
like twenty bucks an hour here at Aikia, I can't
really say very much, and like maybe i'd even said
to him, have you considered, you know, like more normal
investments and maybe getting slow and steady returns And he
was like, those slow and steady returns aren't going to
(35:47):
do anything for me, because if I ever want to
achieve my financial goals, I basically need to like win
the investing lottery.
Speaker 1 (35:55):
Yeah, and so say you got to have the lottery
ticket mentality.
Speaker 3 (35:58):
Yeah.
Speaker 4 (35:58):
So I'm like that makes sense to me, and I'm
sympathetic to him, And just the problem is it doesn't
work like you. I mean, maybe you'll get lucky, but
like you probably won't. And a lot of these investment
opportunities that you get pitched are set up to benefit
you know, the person who created them, and they're the
ones who are gonna benefit. And by the time I
(36:18):
don't know, like my friend Jay, he heard about dotgecoin early,
he did make money, but I think in general, by
the time you hear about some sort of like next
big thing, I mean, ask yourself, like, am I a
Ball Street insider? Am I really did I? You know,
do I personally know the people who invented this thing?
(36:39):
Am I getting like a special deal from them? And
if not, you're what they call the exit liquidity. Yes,
you're like they're dumping on you by the time the
Super Bowl ads roll around. You're the easy money.
Speaker 3 (36:51):
Yeah.
Speaker 4 (36:52):
And I think just this idea of maybe trying to
strike it rich, even though it's understandable why people might
want to do that, it leads them to bad places.
And I don't know, but I don't know what my
advice would be to that guy at a Kia. It
might be to because I also don't really like, I
(37:14):
don't know how you where you guys stand on the
avocado toast. I don't think you're gonna like find financial
freedom just by not buying that's craft beer.
Speaker 1 (37:22):
I'm not going to get you a down payment. That's
why we wanted to hear about your expensive espresso machine,
because there's you got to find that balance, and so
it's a difficult line to walk, right, but you do
have to be wise. You have to look to I think,
some of the more proven methods. And even though it's
going to take a little bit longer than you might think,
I think once you can understand the actual power of compounding,
(37:43):
there is a path forward, even with small amounts of money.
But it might take some sacrifice. Though in some other
areas in life that don't matter to you as much.
Speaker 2 (37:51):
But nobody, nobody wants to like build wealth over thirty years.
They want to get rich in five. But the truth
is getting rich in five is almost impossible to pull off,
and building wealth over thirty even a janitor can do it.
Speaker 4 (38:01):
So and I'll say, like, also, I believe in like
investing in yourself. Yeah, absolutely, learning new skills. Even with
this book, like, I put a lot of effort into it.
And I also the way nonfiction books work, you get
paid some money in advance to write the book, and
I like spent that money traveling in the world to
(38:21):
investigate this stuff to do because I wanted to, first
of all, because I thought it'd be fun and I
get good stories, but also because I wanted to make
like a killer book and hopefully that's going to be
good for my career in the future.
Speaker 2 (38:34):
Well, it is a killer book, and we'll tell our
audience you should buy it.
Speaker 1 (38:38):
And she read it for sure.
Speaker 2 (38:39):
Two more questions before we let you go, Zeke, I
mean one of the other takeaways, I think you said,
if you don't understand something, maybe it just doesn't make sense.
Is that another important takeaway that like, Hey, if you
can't explain it to yourself, much less to your eight
year old child or something like that, then you are
investing in something that doesn't really have It doesn't make
sense really and you should avoid it.
Speaker 4 (39:00):
Yeah, I mean, I kept I don't like to think
of myself as like I see these other people, I'm like,
they're really smart. They must know something that I don't.
And the lesson I learned was like, no, they don't.
Like they either like it's just fomo for them too,
or they're running a scam, or they aren't as smart
as I thought. So I personally, I'm gonna trust my
(39:22):
instincts a little more in the future.
Speaker 1 (39:24):
Or they're lying. I mean, time after time you write
about folks who were speaking to you as if you
were dumb, and they oftentimes will say, uh, I'm telling
you the truth here, or either we're telling you the
truth or we're lying, and it turns out time after
time that they were in fact lying, that they were
in fact prosecuted. So again, given all of the scams
(39:45):
and the volatility that we see with crypto, I'm curious
as to what you think the future might be. Because
whether investors wanted or not. It looks like crypto is
continuing to gain momentum as opposed to losing momentum. Yeah,
the bitcoin it's doubled in this year, and it seems
like major players like black Rock, they are on the
cusp of getting a Bitcoin ETF approved by the SEC
(40:07):
Gray scale. Yeah, they're working towards converting their trusts. But like,
do you like, with all that in mind, do you
think that they're still hope for crypto given the fact
that they're seeing there seems to be maybe a more
healthy march forward.
Speaker 4 (40:20):
I'm a pessimist and I'm gonna I'm gonna give you
a lesson that I learned from Jay on the doge coin.
Speaker 3 (40:25):
He said that.
Speaker 4 (40:28):
Elon Musk was gonna appear on Saturday Night Live, and
there was a lot of chat about what Elon Musk
mentioned doge coin on Saturday Night Live. Yeah, and I
think Jay was like, this is a by the rumor,
sell the news thing. It's gonna dump after he goes
on SNL. There's no way it can live up to
the hype and so and it did. So I think
that similarly, there's there's a lot of excitement about this
(40:50):
Bitcoin ETF, but maybe once it comes out, we'll realize that, Hey,
the people who wanted bitcoin, they already have it. They
bought it on robin hood or coinbase or whatever. Yeah,
and maybe this quenty TF isn't actually such a big
deal of it interesting.
Speaker 2 (41:02):
Hey, thank you so much for taking the time today,
sharing the stories and kind of informing us about what's
going on behind the scenes, especially giving what happened at
the end of last week. Having you being able to
speak to that today on our show just means a
whole lot.
Speaker 3 (41:15):
So we really appreciate you.
Speaker 2 (41:16):
And where can our listeners find out more about you
and your book, which is awesomely titled Number Go Up.
Speaker 4 (41:23):
Yeah, Number Go upbook dot com or you know, at
your support your local bookstore check it out.
Speaker 1 (41:30):
Awesome. Thank you so much for your time, Zeke.
Speaker 4 (41:32):
Thanks for having me on. Wish I was down there
drinking craft beers with you guys.
Speaker 2 (41:36):
Next time, dude, we'll do it in person. Beers on
us sounds good?
Speaker 1 (41:39):
All right, madam.
Speaker 2 (41:40):
I'm looking forward to getting beers with Zeke in person because,
like I said.
Speaker 1 (41:43):
Espresso specifically, I want to want a shot out of
his one thousand dollars machine.
Speaker 2 (41:47):
Me too, can you imagine, and does anybody have better
stories than Zeke right now? I mean, given kind of
what's going on the cultural zeitgeist, sure it like Zeke's
the man that be hanging with wet.
Speaker 1 (41:58):
We got lucky with us when Yeah, it was well time.
Worre made it a lot of fun. And seriously, we
would recommend for folks to check out Number Go Up
as he documents all. I mean, he literally chronicles his
travels and he's seen the negative side, he's seen all
the different scams and how that has plagued so many folks.
Speaker 2 (42:14):
And if you couldn't tell just from hearing him talk,
he's massively entertaining. And the book is too. And so
if you want like a good book to tell like
as opposed to a puff piece, like Michael Lewis wrote,
if you want a good book to kind of tell
you the ins and outs of what was happening with crypto,
not just SBF, but but cryptocurrency in general, this book
is the one to get. Yeah, but Matt, what was
your big takeaway from this?
Speaker 1 (42:33):
Condon? I was going to ask you forcause a lot.
It was certainly a lot of narrative and a lot
of story, but so I will. My big takeaway isn't
something that he specifically said, but it is something that
he documented in his book, and that is the fact
that scams and the attention of fraudsters go to where
the money is and when you had this period in time,
(42:55):
and I mean, he says for different reasons that he
doesn't think that this bubble is ever gonna happen and again,
but for various reasons, we had a ton of money
on hand. We had a lot of folks even like himself,
like he said that, who were bored, and with the
combination of those two things, you got money and you've
got time. It was a perfect storm. It was a
perfect storm. And stay at home orders sort going after
(43:16):
all this crypto, and of course scammers and frosters they
wanted a piece of that. And I think that is
also one of the reasons we have seen so much
fraudulent activity surrounding crypto. It gets funny because he said
he's a he's he's pessimistic when it comes to the
future of crypto. Personally, I'm still keeping up a pretty
open mind as to what it could hold. I'm not
(43:37):
certainly we don't recommend for folks to go out there
and buy some. But if you are interested in it,
and if you are a little more skeptically optimistic, perhaps
then scratching that itch with no more than five percent
of your your overall portfolio is something that we are
very comfortable with folks doing. Yeah, it's what I've done
personally as well.
Speaker 2 (43:56):
You have to be dotting your eyes and crossing your
te's and even five percent we say that in alternative
investments in general. Right, So so having five percent of
your exposure in crypto might be too much anyway, if you.
Speaker 1 (44:07):
Already have single some single stocks that you're a fan of,
will count that towards the five percent.
Speaker 2 (44:12):
If you're investing in art and whiskey and stuff like that,
which we don't love anyway, Like, well, you got to
keep it small and crypto can a portion of that
five percent can maybe be allocated towards crypto, but you
gotta be you gotta be really careful, and it's if
you're banking. I think a lot of my big takeaway
was the lottery ticket mentality that a lot of people
go into this with. That's what kind of Zeke was
talking about towards the end with the IKEA, Yeah, and
(44:33):
that's a great story. The thing is, of course, this
is why, this is why people in the people buy
in poverty by lottery tickets, because they're hoping. They believe
that the only way for them to actually accrue any
sort of meaningful financial status in this life is to
do it overnight. And people discount, and I get it,
I understand why that mentality exists, but they discount what
(44:56):
would happen if they stuck those dollars five dollars, ten
dollars of that time into index funds and that can
mean for them over the course of thirty years, And
they're like, if it doesn't happen two to three years
or overnight like tomorrow, then what's the point. So, yeah,
that lottery ticke a mentality. A lot of people go
into investing with that sort of idea in mind. We're
totally against that. We want people to think about their
(45:17):
timeline in decades, not even years, not months, not weeks,
And so I think that's just like an important thing
to recognize. In this whole crypto kerfuffle was a lot
of people hoping, hoping against hope, hoping against better facts
and knowledge that this would win out and make them
a bookoo of bucks, and in most people's cases, except
(45:40):
for Zeke's friend, it sounds like most people ended up
getting screwed. Yeah, for most folks, it did not panic,
even without there being outright theft, like in the case
of SBF that was like.
Speaker 1 (45:49):
Literally just stealing money.
Speaker 2 (45:50):
Sure, there were a lot of other ways where you
just lost it or you just lost some.
Speaker 1 (45:55):
Of it or whatever. Yeah, a lot of people. Or
you lost your password and that's what you lost. And
just just promises. There were a whole lot of promises
that were given and they just haven't delivered right, And
so folks were just even if there wasn't outright fraud,
folks were just led astray. I think the Winklevoss twins
recently Winklebi they there's a suit filed against them because
(46:16):
of how it is. They talked about promises basically that
they were going to deliver that they didn't end up
delivering on. So it's uh, it's the wild, wild West still,
and we want everyone out there to be incredibly careful
if you are interested in crypto. But Joel our beer,
you and I today we enjoyed a desert fog by
Marble Brewery. This is another beer that was donated to
(46:38):
us by Bob. What were your thoughts on this one?
Speaker 2 (46:41):
I really like this one. This one had like some
nice grapefruit notes in it, a bit more pithy. It
was just a bit bitter but also juicy at the
same time, So I kind of like that comments it.
Speaker 1 (46:49):
Was very juicy. Yeah, I was a fan of the
juice in it. You could taste the dry the dry hotness,
so it kind of had that that sharpness that almost
comes across as tartness that you get with a dry beers,
and sometimes that can be a bit muted, but it
was not in this one, and so it leads to
a very interesting beer when you're able to taste those notes.
So yeah, I really like to certainly enjoyed this one.
(47:12):
But you can find our show notes up on the
website at howdomoney dot com. We'll make sure to link
to Zeke's book his website and where it is. You
can check the book out if you are so interested.
Speaker 2 (47:23):
And also Matt's going to link to his bitcoin wallet
so you can go grab whatever you want, just empty
it just for kicks, all right, that's gonna do it
for this episode, Matt. Until next time, best friends out,
best friends out
Welcome to had a Money.
Speaker 2 (00:01):
I'm Joel and I am Matt, and today we're talking
crypto's wild rise and staggering fall with Zeke Fox.
Speaker 1 (00:27):
Yeah. So cryptocurrency has a lot of problems. There's a
climate issue. Crypto requires a ton of energy. There's the
trust issue, because what good is it if there isn't
a critical mass of users, a network of folks. And
then on top of that you have the recent developments
of Sam BigMan Freed's conviction of stealing billions of dollars
from customers at FTX, knowing that money laundering and wirefraud
(00:50):
were being committed. That does not build trust. So that's
a problem. Every transaction seems like a scam waiting to happen,
and a few folks know this better than our guest, Zeke.
We are lucky to be joined by Zeke as he
has documented the rise in the fall of crypto over
the past few years in his new book, Number Go Up,
which took him everywhere from El Salvador to Cambodia and
(01:13):
ultimately to a penthouse in the Bahamas. Zeke is an
investigative journalist and he did not hold back in his book,
and Zeke We've got a lot of questions for you.
Thank you for joining us today on the podcast.
Speaker 3 (01:25):
Thank you for having me on Zeke.
Speaker 2 (01:27):
I hope your diamond hands are feeling good. We've got
a lot to get to in this one. But the
first question that we ask everybody who comes on the
show is Matt and I. We're all about saving and
investing wisely for the future, but we like to spend
money in here now. We like to enjoy life along
the way, and so craft beer is something we splurge on.
What's your craft beer equivalent? What are you splurging on
while you're also trying to handle your money?
Speaker 4 (01:46):
Well, so I'm definitely very thrifty. But there's one thing
that I love. It's like my most prized possession. And
you're gonna laugh, like typical, I'm in Brooklyn, Typical Brooklyn Dad.
It's my espresso machine. I have this fancy espressional machine.
(02:06):
And like, I mean, me and my wife joke that
like if we ever got divorced, she can have everything.
Speaker 3 (02:12):
But I'm taking that and I think it's it's pretty.
It costs.
Speaker 4 (02:18):
It probably costs like a thousand dollars, okay, which is
which is ridiculous, but it is. It's not one of
the crazy manual ones with the handle.
Speaker 1 (02:30):
Like a style.
Speaker 4 (02:31):
You're like, yeah, pulling your own shots. Yeah, so I
do press a button to make the shots. But like,
if this broke tomorrow, I would buy another one. Like
I would not live without this machine. When I go
on vacation, I come home and I'm like, uh, I'm
back to the espressial machine thing.
Speaker 1 (02:47):
Yes, well, I've gotten to where I'm traveling with my
own grinder in my own beans so that I can
do at least do some chemics while we're on the road. Yeah,
that's impressive.
Speaker 2 (02:54):
I will say it's interesting that the custody battle would
be over the espresso machine, not the children, zeek. But
you've got your in the place where you want them.
It sounds like, right, yes, I've revealed my priorities.
Speaker 1 (03:06):
Oops, we'll just make sure this episode one along. But
I also love even though that's your splurge, it is
also a way for you to save money, because what
that means is that you're not going down to the
corner to the local awesome coffee shop there and dropping
four or five bucks, you know, with tip on an
espresso right there. So even though this is your splurge,
(03:28):
I still love there's this undercurrents of diy, thriftiness and
frugalness that we can totally get behind.
Speaker 4 (03:34):
I mean, I will say it, like in New York,
I think the easiest way to save money is to
make stuff at home because if you order like even
pretty regular takeout, especially for the kids, you could easily
hit one hundred bucks, you know, just from like the
corner you know, sushi slash thie restaurant. So if you
make like anything at home, even going to like the
(03:56):
fancy grocery store, I think it's still a big savings.
Speaker 1 (04:00):
I love it. Yeah, it makes a ton of sense.
All right, let's let's dive into it, Zeke. We're not
gonna spend our entire conversation, our entire time here talking
about SBF. But his conviction last week, it certainly has
the attention of anyone involved with crypto. So what kind
of effect will the downfall FTX and animated Research and
now this ruling, What kind of impact do you think
(04:22):
this is going to have on just the crypto industry
as a whole.
Speaker 4 (04:25):
So the crypto industry would like to say that Sam
Bankman Freed was just a bad apple, and it's true
like his fraud, I mean, he was a very bad apple,
and his fraud is different from other crypto companies, but
he's far from the only fraud in crypto. Like I
(04:46):
spent two years, as you were saying, like, investigating this
whole thing, and wherever I turned, I would see empty promises,
hype that nobody lived up to, total scams, dumb schemes,
and a lot of the stuff that I investigated has
now resulted in lawsuits in court, kate government charges. So
(05:11):
even if people, even if you just set Sam Bankman
free aside, I think that just the wave of bad
publicity is going to result in investors being a bit
more skeptical. That's why I just can't see a bubble
like the one we just lived through happening again.
Speaker 3 (05:28):
It's just like you know, you asked.
Speaker 4 (05:31):
I mean, I'm curious if you agree with this, but
I feel like if you, you know, even six months
from now, a year from now, a regular person, if
they hear crypto, what's gonna pop in their head? They're
gonna think like, isn't that the thing that the curly
haired guy used to like.
Speaker 3 (05:46):
Steal everybody's money.
Speaker 2 (05:49):
Yeah, you know, it's it's it's definitely his face, his
hair is synonymous. It's completely branded alongside crypto in general.
And by the way, my mom taught me growing up
that a bad apple ruins the whole bunch, right, and
so it really can have that sort of cascading effect,
just a massive overarching impact. And Zeke curious what it
(06:10):
was like for you. Your book was actually used on the
stand in the trial. And didn't Sam Bankofrid have to
read quotes from the book? I mean, were you expecting that?
Speaker 1 (06:20):
What was that?
Speaker 4 (06:20):
Like him so big surprise? It was totally wild. I mean,
the prosecutor practically was like, I'll tell you this story.
She I started talking with Sam. He made the strange
decision to testify himself, which opens him up to cross examination,
and she can bring up anything he's ever said to before.
(06:41):
And just before he got arrested, I'd spent a whole
day and night with him at his thirty million dollar
pet house in the Bahamas talking about what happened at FTX,
and so he told me a lot of stuff then,
and he'd even admitted some stuff to me that I
thought was, you know, pretty and I had asked him. So,
(07:03):
at the center of this fraud is the relationship between
his exchange FTX and his hedge fund, Alometera Research. And
so what happened was that let's say you sent a
thousand bucks to FTX and you bought some doge coin.
You'd look in the app and you'd think, oh, look
I got a thousand doge coin. Now pretty cool. But
(07:23):
in reality, you didn't have that thousand doge coin. You'd
send in that thousand bucks and Sam bankmin Freed had
just funneled it to his hedge fund where he could
go gamble on other.
Speaker 2 (07:33):
Stuff, and so it was just a number on a
screen that didn't have any basis in reality.
Speaker 4 (07:38):
Yeah, I mean when everyone went to withdraw their money,
they realized that and they couldn't get their money, and
it was all gone. So he was trying to claim
to me that it was okay. It was allowed for
Alameda to borrow money, for the hedge fund to borrow money,
and he said all the traders on the exchange could
borrow money. But when I said, but did Alameda follow
(08:01):
the same rules as other traders on the exchange, and
he said to me there was more leeway like that's bad.
And the prosecutor asked him and she was like, have
you ever talked about the relationship between Alameda and FTX?
Did you ever say that they didn't follow the same rules?
And he was like, I don't know about that, and
(08:23):
she literally whipped out a hard copy of my book
walked it over to the stand. The defense was like objection, objection.
The judge said no, I'll allow it, and yeah, he
had to go over that, and then also some other
comments he made about his involvement with the decision to
allow Alameda to borrow even more money. So it was
(08:47):
shocking for me and a little uncomfortable, because you know,
when I do these interviews, I like to just think
like I'm just a guy who's you know, trying to
find out the truth about what's going on, trying to
write about what's going on. I don't like to think
that I'm part of some sort of like criminal prosecution
and I'll leave that to the cops, right, you know.
Speaker 1 (09:06):
It was like you're in the story now, which is weird. Yeah,
you are a part of it. And of course SBF
he claimed, I don't recall saying that. Yes is all
he could say, I guess you have tapes too.
Speaker 4 (09:18):
Yes, luckily nobody asked for them. And making this even
more amazing, you probably know that Michael Lewis, the famous author,
also wrote a book about SBF that's more.
Speaker 2 (09:32):
Favorable them, and so we wanted to ask you about
that because that seems crazy, and he also kind of
made some snide remarks about your book.
Speaker 4 (09:39):
Well, in court, the defense was like, all right, prosecution's
got a book. We'd like to introduce our own book,
Going Infinite by Michael Lewis. And this happened. It was
in a little sidebar, like the jury couldn't hear it.
They just did it in a meeting with the judge.
But the judge said that the part of Michael Lewis's
(09:59):
book they wanted to introduce sounded like it was just
Sam making up stuff and that it would not be permissible.
Speaker 2 (10:07):
So yours was I've actually written and reported, and Michael's
was a puff piece basically well, and that's certainly how
it's been reviewed, at least by folks who have looked
at both books.
Speaker 4 (10:18):
I mean, it's really crazy to me because I like,
this is my first book, and okay, so I was
down in the Bahamas right around the time of the
Super Bowl in twenty twenty two. This is I went
to go profile Sam bankmont Freed when things were going great,
and he was very unusual for a CEO. He was
just like the understand but he was just like, pull
(10:40):
up a chair, sit next to me, let me. I'll
just do all my business while you observe me. And
this was weird before I knew that he was like
running a massive scam. Nobody lets you do that. But
I saw on his calendar like the day before was
blocked off and it was like, go to the super
Bowl with Michael Lewis. And I was just at this
point when I was already working on a book too,
(11:02):
and I was just like, oh, no, Michael Lewis has
a crypto book.
Speaker 1 (11:05):
Yeah. You're like, oh, you know, that's going to.
Speaker 4 (11:07):
Be a number one bestseller. Who's going to want to
read my book? When you have the Michael Lewis option.
Speaker 1 (11:13):
They're like, who's this Zeke Foe guy.
Speaker 3 (11:16):
Yeah.
Speaker 4 (11:17):
So when I'm writing the book, I was telling myself,
all right, you'd better go all out and do a
good job because you're up against Michael Lewis. But I
just thought that was like something I was using to
motivate myself. I did not think that actually the books
would be you know, compared when they came out, and
I never would have imagined that, you know, like reviews
(11:38):
in major newspapers would say, like Zeke's book is more entertaining, amazing. Yeah,
so pretty cool.
Speaker 1 (11:44):
Yeah, not only compared, but also contrasted, as it seems
like you've you've done an excellent job just kind of
being a little more nuanced and diving actually getting into
the truth.
Speaker 2 (11:53):
Telling a better story because and maybe not better more accurate.
Speaker 1 (11:57):
Well yeah, well not too much about the other book,
but life. I think that's the criticism, right, is like
there once you kind of decide on a narrative and
this is kind of goes back to like just storytelling.
It's hard to step off of that treadmill with the change,
with the fact change, and you have kind of decided
that the hero becomes the villain, that you want to
go a certain direction. Yeah, but Zee, let's uh, it's
(12:20):
kinda step out of this a little bit. I want
to kind of wind the clock back a little bit.
What made you go down the crypto rabbit hole in
the first place.
Speaker 4 (12:27):
Yeah, as an investigative reporter who writes about finance. People
are always telling me I should write about crypto, but
I just I didn't want to do it. I didn't
like it. I just didn't feel like there was anything
to investigate. I felt like, admittedly this was like a mistake,
but I felt like so many crypto schemes are just
like a guy says, buy my coin. It's really great,
(12:48):
everyone buys it, the coin goes up, then later it
goes down. I just didn't think it was like an
interesting story. But yeah, it was fomo that that changed
my mind. Because I'm on this group text with my
friends from high school. We call it Dan's Basement because
that's where we used to hang out, you know, twenty
years ago, and I love it. One of my friends, Jay,
(13:13):
a very funny guy. We used to write a humor
column together in high school and he's gone on to
he has like a successful career, you know, someone who
I really think highly of. He starts telling me that
we should buy is the middle of the pandemic. We're
all pretty bored, we're stuck at home. Group text is
very active, but he starts talking about something he calls
doggy coin and He's like, I don't. He's like, I
(13:36):
don't know what it's good for. I don't know what
it is, but like it's funny and you should all
buy it. And I fancy myself, you know, the financial
expert of the group being the investigative reporter. And so
I'm like, well, it's dogecoin, first of all. Yeah, and
that went viral like three years ago, is never going
(13:58):
to happen again. It's it's not even funny. Let's move on.
But the price of dogecoin starts creeping up, and Jake
keep's texting us all updates, and he eventually makes enough
money to fund a trip to Disney, and he texts
us all, I am freaking nostra damis.
Speaker 3 (14:20):
You know, if you'd all listen to me, you could
be a Disney too.
Speaker 2 (14:24):
And you're sitting in there at home, hugging your coffee maker,
just like weeping.
Speaker 4 (14:28):
Yeah, it got a little heated, like this was like
some we were a serious disagreement between us.
Speaker 3 (14:35):
Then it wasn't so.
Speaker 4 (14:36):
Much that he was teasing me, or that he had
made this money or that he'd gone to Disney. It
was more just like I really wanted to be right
in this argument. This is this is what you do
argue with Yeah, this is what you do. You know
how this works, you know how this ends as well.
But yeah, like you said, a lot of folks were
making a lot of money, and yeah, he wasn't the
(14:57):
only one, you know. I had neighbors who'd made big money,
other friends who are making tons of money on it,
and I just felt like, Okay, maybe there is real
money being made here, and I want to win this
argument with Jay. So even though there's really no winning
the argument since he did make the money and I didn't,
I was like, I'm going to get to the bottom
(15:18):
of this now. I want to know what's up with
this whole crypto thing. What's behind it all? Why are
all these coins going up and up and up?
Speaker 1 (15:24):
Did your friend cash out? Did he actually make the
money or or.
Speaker 2 (15:28):
Did it so he made them like it Disney, But
sometimes people do that because they're like, it's kind of
like home equity.
Speaker 1 (15:34):
Double down, double down to put it on a credit card.
Yeah exactly.
Speaker 2 (15:36):
You're like, I mean, I got the money, it's in
there in the bank. I'm not going to tap it
necessarily because it's just going to keep going up. So Okay,
So I'm glad to know he got out at the
right time because there's a whole lot of other people
that were left holding the bag later on, right.
Speaker 4 (15:46):
I mean, it is like a zero sum game, like
somebody's got to lose money for someone else to make
it because there's no real, like economic value being generated.
And I later met a nice woman from New Jersey
who worked in a school there who so it had
sort of a similar start to her story where she
made some money on doagecoin, but then got like real
into crypto and started sending more money to one of
(16:09):
these crypto yield platforms and ended up losing like a
big chunk of savings that she had been counting on.
Speaker 3 (16:17):
You know.
Speaker 4 (16:17):
So Jay was able to resist the temptation, I guess,
But other people you make a little bit and then
you end up making some bigger bet and losing.
Speaker 3 (16:27):
Yeah.
Speaker 2 (16:27):
No, And that's I mean, we've heard from listeners to
this show because we've been tepid at best towards cryptocurrency
the whole way through.
Speaker 1 (16:35):
And.
Speaker 2 (16:37):
There we've had listeners who have lost ten thousand dollars,
twenty thousand dollars something like that. And that's I think
that that's kind of what's happened in so many ways.
It's a bunch of people losing bits and pieces of
money that would have been better put in a roth
irate in an index fund or something like that. But
talk to us about like use cases for crypto. You
basically just kind of mentioned that it's not really generating
(16:59):
any ecomic value. But there have been all these kind
of pitches for what crypto is going to do, the
solutions it's going to provide, But those use cases don't
seem very helpful. Is it just as completely unnecessary a
solution in search of a problem. That's what it feels like.
Speaker 4 (17:18):
You can talk yourself into some of these use cases, like,
for example, you know, when you swipe your credit card
at a store in the US, the store is taking
paying like a three percent fee a process of that transaction,
or two percent something like that, So like, wouldn't it
be cool if there was some way to avoid those fees?
Or like Western Union, when you send money to another
(17:39):
country there's a fee. You know, wouldn't it be great
you had a quicker way with no fees. But I
decided to judge crypto not based on the claims of
its promoters, but to like look into how it was
actually being used and to see if it was working
for anybody. And I can't claim that I looked into
(17:59):
every but what I can say is that the things
that I did look into, Like I went to El Salvador. Yeah,
it's the first country to adopt bitcoin as a legal currency.
And bitcoin promoters were like, this was working great. Everyone
in El Salvador loves bitcoin. It's making life easier for
the poor. What happened when I got there?
Speaker 3 (18:18):
I mean.
Speaker 4 (18:20):
The first store I went into in Bitcoin Beach, the
town that the where the bitcoiners say the bitcoin revolution started.
Speaker 3 (18:29):
I went to like.
Speaker 4 (18:29):
A roadside stand and I asked for water. Everything was
sort of behind the counter. So the guy brought out
a water and he was handing it to me, and
I said, I'm in my gringo Spanish pueto pagar coin
bitcoin And the guy took the water from me and
(18:52):
said bassura, which is trash, and he just yeah, he
walked away. He was just like, get out of here. Yeah,
I'm not selling you any water. And there were stores
that had signs that said we don't accept bitcoin. Basically
just like leave us alone, Taurus, it's so annoying to
use bitcoin that we don't want your money, because in reality,
(19:13):
they could like it's not that hard to use the
bitcoin app, but they're just like I can't be bothered. Yeah,
just go to the ATM and get some regular money
for me, right. And another one that I heard a
lot about was Axi Infinity. This was like a crypto
game and you you would buy it's sort of like Pokemon,
(19:34):
and you'd buy this team of monsters of game on
your phone, but you had to assemble a team of
monsters and like battle other monsters. And what made it
crypto is that you had to pay crypto to buy
your monsters, and if you won the battles, or even
if you lost them, you earned a different cryptocurrency called
smooth Love potionit and.
Speaker 1 (19:57):
You can't make these names up? No, I mean somebody did. Yeah.
Speaker 3 (20:01):
Yeah, they clearly needed like a name consultant. They've terrible.
Speaker 1 (20:05):
This is where reality is stranger than fiction.
Speaker 3 (20:07):
Yeah.
Speaker 4 (20:08):
So, well it gets weirder because this game took off
in the Philippines. It went viral. There were like more
than a million people there playing it. Whole families were
like playing this game all day instead of working and
for a while, you could earn, you know, a better
than average Filipino salary, just by playing this game on
(20:28):
your phone, earning Smooth Love potions and selling them. And
while this was going on, crypto people were like, this
is amazing. It's Web three. You know, people finally can
own their assets on the Internet. It's going to solve poverty.
It's going to be a new way of life for
the world's poor. But meanwhile, it's like, wait, why does
Smooth Love potions have any value? And it's like, well,
(20:51):
you need them to buy the monsters. It's like, well,
why do the monsters have any value?
Speaker 3 (20:57):
Well, you need them to earn the Smooth Love potions circular.
Speaker 4 (21:00):
Yeah, this is like I've been instructed not to say
the word Ponzi scheme because I think it implies like
criminal intent. But this is you know, this is an
unsustainable bubble. This doesn't make any sense, you know, And
it didn't make any sense, and it collapsed and people
in the Philippines lost real money.
Speaker 3 (21:22):
And I went there and it was surreal.
Speaker 4 (21:23):
I mean I went to the town where this first
went viral, and the town had literally been transformed by
this Smooth Love potion money, like people gave me a tour.
They're like, that guy put a second floor in his
house because of his smooth love potions. That guy, you know,
bought a new car with his axie money. I went
to a guy who's who'd moved out of town and
(21:44):
built this house in the country with his axie money. Yet,
but when it all collapsed, people had even borrowed money
and invested in And I've met people who were like,
really in the hole.
Speaker 3 (21:54):
My driver.
Speaker 4 (21:57):
Had lost like a thousand bucks to buy a team
of monsters. He borrowed it from his in laws, I believe,
and you know, he felt like really ashamed that he'd
lost this money and it was a big setback in
his life.
Speaker 3 (22:09):
So I can't exaggerate how much this was.
Speaker 4 (22:14):
This AXI was like their big example of like Web
three is awesome, and then once it collapsed, you just
didn't hear about it anymore onto the next one.
Speaker 2 (22:23):
Yeah, I feel like that's the case, Like the reporting
on the back end has been has missed some of
those stories. For every one story of success, right the
bitcoin or the dochecoin millionaire, there's one hundred or at
least ten stories of someone losing quite a bit and
so we want to talk more about crypto's failings kind
(22:44):
of some of the crypto scammed attempts that were there
were often just hoodwinking people into losing thousands of dollars
or more. And we've got just more questions with Zeke
that we'll get to right after this.
Speaker 4 (23:05):
Light.
Speaker 1 (23:05):
We are back from the break talking with Zeke Fox
and z You were detailing some of the impacts of
crypto h some of the impacts on other countries, but
let's kind of bring it more state side. Do we
have any numbers about how much money, just millions of
normal folks lost during the crypto craze, because you know,
(23:26):
like like at its core, the crypto debacle of the
last few years, like it feels just like a massive
wealth transfer from normal folks to those who are out
there promoting crypto. But I'm curious if you had any
stats there.
Speaker 3 (23:37):
You know, it's hard to say.
Speaker 4 (23:41):
The market if you look at the market cap of crypto,
it got up to like three trillion, and now it's
down below one trillion. There's a two trillion dollar decline,
but that really overstates the amount of real money that's
lost because a lot of these coins they'll essentially they'll
be like billions of these coins that exist, but nobody
(24:03):
ever trades more than you know, a million of them.
So a lot of these coin there's people who are
sitting on like a lot of value on paper, but
if they ever went to like sell their three trillion
zeke coins, they would find out that nobody really wanted them.
But in terms of real money, there's quite a few
scams where you know, at least a billion dollars was lost. Like,
(24:28):
definitely people lost billions and billions of dollars of real money.
There's a huge range. I mean, it's definitely billions of dollars,
but it's not somewhere between like ten billion and one
hundred billion, it would be my estimately.
Speaker 2 (24:41):
Yeah, And it's not just you know, trading crappy coins
the tank to zero. Talk to us about scams, because
it's not just like dummies, right, sitting in their mom's
basement sort of thing, like Mark Cuban lost money into
a crypto scam, right, And it's not even just scams.
Talk to me about crypto passwords. I mean, there were
those articles being re about people who had bitcoin locked
(25:02):
away and they forget their password and guess what they're
kind of sol in terms of in terms of cashing
out on the bitcoin that they own.
Speaker 4 (25:09):
Yeah, so Mark Cuban amazingly. He appeared in a pro
Axie Infinity documentary and gave a great quote where he said,
the numbers make perfect sense, like talking about this smooth
love potion thing. I'm like, I'm sorry they don't, Mark Cuban. Yeah,
and yeah, he also invested in some other I believe
(25:34):
he lost out on some sort of stable coin that
fell apart, maybe titan.
Speaker 3 (25:39):
Coin or something. So he was really in the mix.
Speaker 2 (25:42):
And well, the Sharks and Shark Tank, you know, like
mister Wonderful was all about FTX as well, so.
Speaker 4 (25:47):
He played it the safer way, mister Wonderful. He got
paid fifteen million dollars to endorse FTX, and I think
he was paid an FTX stock so he would have
lost a fifteen million. But at least he's, you know,
no worse off than he started.
Speaker 1 (26:03):
Except for his reputation.
Speaker 4 (26:04):
I will say, true, true, but his dome is so
shiny we can't resist. I saw him at at Crypto
Bahamas in April twenty twenty two, the big FTX coming
out party, like the big celebration of Sam Bankman freed,
and he was preparing to do like a remote TV hit,
(26:25):
and he in the press room and he whipped out
one of those like a portable shaver and was just
like shaving his dome. So it's extra shiny. I was like,
that guy is dedicated. But okay, you asked about the
password thing, and yeah, I think banks are pretty annoying, right,
(26:45):
Like they charge you fees, they you gotta wait in line.
I mean, you got lots of I got lots of
complaints about banks. But the nice thing is is like
there is someone who answers the phone, and if you
get ripped off, you can call them, and often you
can reverse the charges. So I went to go for
(27:05):
part of the book, I had to use like a
real crypto wallet called meta Mask. And this isn't like
if you use coinbase, you're not really doing crypto. You know,
you're just sort of like sending your money to coinbase
and they're handling all the crypto stuff for you on
the back ending. So meta mask to right, right, So
most people, even people who like crypto, don't really have
(27:27):
anything to do with it. But meta mask is like
a decentralized wallet, and when you install it, you have
to watch this video and they tell you that. They
literally suggest because if you lose the password, it's over.
You lost all your money.
Speaker 1 (27:42):
There is no recourse, there's nobody who's going to hold
your hand, there is no authority beyond you and your
ability to get into your own wallet.
Speaker 4 (27:50):
Yeah, so they recommend that you engrave the password on
a metal plate and then bury it in your backyard.
Like the video is playing like happy music while it
shows this, but I'm just like, no, I'm not doing that.
And then the funny thing about it to me is
that I knew this crypto wallet thing would be kind
(28:12):
of a hassle. I heard it was hard and confusing,
but I just still was not prepared for how annoying
it would be and also for just like how terrible
it would feel. Because the crypto wallet is just an icon.
It's a browser extension. So you've got like the little
box we write in that you type in the URL,
and then next to it maybe you have like I
(28:34):
have a stop sign that's my ad block extension. And
then if you install this crypto wallet, you get this
little foxhead and basically your money is going to live
in that Foxhead now, and you hopefully you engrave the
password on the metal disc and put it in the yard,
because like if something gets like if you ever had
(28:55):
like something go wrong with your browser and you have
to like reinstall or something like that, like that could
mean all your money's gone. Yeah, there's like no friendly
agent to call. And when I was this was for
an experiment for the book. I had my reasons, but
I was trying to send twenty thousand dollars to the
fox Head and like a friendly representative from Bank of
(29:17):
America called me and he was like, hey, are you
sure you want to do this, Like are you being scammed.
We've heard of a lot of like crypto scams. And
I was like, no, no, I'm doing it on purpose.
I want to send my money to the fox Head.
And he was like, that's what they all say, like
you should think this through, and I was like, no,
put it through.
Speaker 3 (29:37):
I want to get scammed. I need to do it
for the book.
Speaker 4 (29:40):
But I mean, pretty cool of the bank to have
some whole team of people that like try to help
you out if you are getting ripped off.
Speaker 1 (29:48):
They're not all bad.
Speaker 3 (29:48):
You got to say that for them.
Speaker 1 (29:49):
Well yeah, and I think folks who are true believers
in crypto, they would say, well that that's not a bug,
that's not a problem. That's actually what we want. And
there are a lot of folks that are looking to
it for that decentralized that DeFi aspect of it. So
like we wanted to be like an outback steakhouse, no
rules just right now.
Speaker 4 (30:06):
Yeah, I will say, like if I thought this gave
me special access to like get rich quick schemes which
I couldn't get to otherwise, maybe I'd like it. Or
like if I didn't want to pay my taxes and
I thought I could hide my money this way, then
maybe I would try it. But the crypto people are
trying to say it's not about that. They're saying like,
this is a great app and that mainstream people might
(30:28):
use this for, you know, to maybe one day your
tailor swift tickets would live on the blockchain and somehow
be better. And they got a long way to go,
is all I'm saying. Like this app they have now,
no regular person would ever want to use that if
they didn't think it was going to make them rich.
Speaker 1 (30:45):
Sure, and so much of it, I mean so many
of the scams do have to do with scammers out
there fishing for that information. And this is you also
trying to get more content and experience for the book.
But someone who texts you out of the blue and
starts chatting you up and it's like, oh yeah, this
is somebody that knows something. Eventually you kind of trace
(31:06):
that back to Cambodia. So, given all the scams that
folks have experienced, how come the bottom hasn't fallen out altogether?
Because I mean, certainly some cryptos like bitcoin ethereum, they
seem to still have an air of legitimacy around them.
Is that how they should actually be viewed or do
you think that they're all going to meet the same
fate as some of these illegitimate.
Speaker 2 (31:28):
You know, like the real weird ones. I mean it
should Bitcoin and ethereum be kind of different.
Speaker 4 (31:35):
I will say, like, like this book it's like an
adventure story. It's a chronicle of like a crazy period
of history and have all these like weirdos and how
they became billionaires and then lost at all.
Speaker 3 (31:46):
And it's not.
Speaker 4 (31:48):
Like investment advice is not my specialty. I'm a prefacer.
I am going to say though, that, having spent two
years looking into crypto, looking into its use, is my
conclusion is that if this stuff is going to be
successful long term, it has to have some purpose and
(32:09):
it doesn't. And so maybe they'll come up with the
purpose in the future and maybe it'll be successful, But personally,
I'm I have no more fomo. They can go do
their crypto thing. I'm gonna there's a lot of things
that you can you could invest in, and I would
(32:29):
compare it to.
Speaker 3 (32:31):
AI.
Speaker 4 (32:32):
When chap GPT was introduced, people started using it immediately.
It was like an incredibly popular app, and so like AI,
there might be a lot of hype and scams there too,
but at its core, there's something that people want to
use and if people want to do it, then you
can make money from it. With crypto, they have yet
(32:53):
to produce this app that people want to use, and
so I think that is a big problem. And maybe
all these smart people working on crypto will come up
with that app in the future, but maybe they won't,
you know, and I'm not I don't buy this like
digital gold argument that the bitcoin people have kind of
pivoted to where they argue that bitcoin will become some
(33:16):
sort of like observe assets.
Speaker 1 (33:19):
It's hard for a currency that's that volatile. I mean,
that's another one of the problems of crypto is its volatility.
And when folks, yeah, when they do start pivoting to
that store of value argument, it as of yet, it
doesn't seem to hold a hole much water. But we've
got a few more questions to get to with you, Zeke,
perhaps some personal takeaways. We'll get to those right after this.
Speaker 2 (33:47):
We're back to the break, still talking with Zeke Fox
about crypto's wild rise and staggering fall and who is
at the center of it all.
Speaker 3 (33:55):
Zeke was.
Speaker 1 (33:57):
Of a lot of this, and so Zeke thought he
was gonna no it was Zeke.
Speaker 2 (34:01):
I just I mean, honestly, I feel like we could
just hang out, Zeke, drink beers or espresso, whatever your
preference is, and talk about all the stories you've got
from just your your investigative reporting. Fascinating stuff. And I
know you're not giving financial advice unless you're in your
text chain with your friends. But like as individuals, like
(34:23):
a lot of people listening to this show all about
getting their personal finances in order right. They want to
save more paydown debt invest in the future, Like, what
are the major lessons and takeaways that we can all
extrapolate from this rise and fall of cryptocurrency? How can
we be wiser and more vigilant in the present and
in the future, Because I mean, you said you don't
(34:43):
believe you'll see a bubble like this ever again. But
the truth is, like, bubbles have happened in history, and
I think we'll see more bubbles, maybe not quite to
this extent, maybe not quite this staggering in proportion and
in monetary value, but there will be things like this
that happen again in the future. So yeah, how can
we be wise given and and what can we learn
from this?
Speaker 4 (35:04):
I think a lot about this conversation I had with
a salesman at Akia in the closet section at some
point during my research. Yeah, well, he told me that
he'd lost a lot of money on crypto and also spacks,
like you know, speculative stocks, And I asked him why
(35:25):
he had why he had done it, and he had
said something along the lines of like, look, I make
like twenty bucks an hour here at Aikia, I can't
really say very much, and like maybe i'd even said
to him, have you considered, you know, like more normal
investments and maybe getting slow and steady returns And he
was like, those slow and steady returns aren't going to
(35:47):
do anything for me, because if I ever want to
achieve my financial goals, I basically need to like win
the investing lottery.
Speaker 1 (35:55):
Yeah, and so say you got to have the lottery
ticket mentality.
Speaker 3 (35:58):
Yeah.
Speaker 4 (35:58):
So I'm like that makes sense to me, and I'm
sympathetic to him, And just the problem is it doesn't
work like you. I mean, maybe you'll get lucky, but
like you probably won't. And a lot of these investment
opportunities that you get pitched are set up to benefit
you know, the person who created them, and they're the
ones who are gonna benefit. And by the time I
(36:18):
don't know, like my friend Jay, he heard about dotgecoin early,
he did make money, but I think in general, by
the time you hear about some sort of like next
big thing, I mean, ask yourself, like, am I a
Ball Street insider? Am I really did I? You know,
do I personally know the people who invented this thing?
(36:39):
Am I getting like a special deal from them? And
if not, you're what they call the exit liquidity. Yes,
you're like they're dumping on you by the time the
Super Bowl ads roll around. You're the easy money.
Speaker 3 (36:51):
Yeah.
Speaker 4 (36:52):
And I think just this idea of maybe trying to
strike it rich, even though it's understandable why people might
want to do that, it leads them to bad places.
And I don't know, but I don't know what my
advice would be to that guy at a Kia. It
might be to because I also don't really like, I
(37:14):
don't know how you where you guys stand on the
avocado toast. I don't think you're gonna like find financial
freedom just by not buying that's craft beer.
Speaker 1 (37:22):
I'm not going to get you a down payment. That's
why we wanted to hear about your expensive espresso machine,
because there's you got to find that balance, and so
it's a difficult line to walk, right, but you do
have to be wise. You have to look to I think,
some of the more proven methods. And even though it's
going to take a little bit longer than you might think,
I think once you can understand the actual power of compounding,
(37:43):
there is a path forward, even with small amounts of money.
But it might take some sacrifice. Though in some other
areas in life that don't matter to you as much.
Speaker 2 (37:51):
But nobody, nobody wants to like build wealth over thirty years.
They want to get rich in five. But the truth
is getting rich in five is almost impossible to pull off,
and building wealth over thirty even a janitor can do it.
Speaker 4 (38:01):
So and I'll say, like, also, I believe in like
investing in yourself. Yeah, absolutely, learning new skills. Even with
this book, like, I put a lot of effort into it.
And I also the way nonfiction books work, you get
paid some money in advance to write the book, and
I like spent that money traveling in the world to
(38:21):
investigate this stuff to do because I wanted to, first
of all, because I thought it'd be fun and I
get good stories, but also because I wanted to make
like a killer book and hopefully that's going to be
good for my career in the future.
Speaker 2 (38:34):
Well, it is a killer book, and we'll tell our
audience you should buy it.
Speaker 1 (38:38):
And she read it for sure.
Speaker 2 (38:39):
Two more questions before we let you go, Zeke, I
mean one of the other takeaways, I think you said,
if you don't understand something, maybe it just doesn't make sense.
Is that another important takeaway that like, Hey, if you
can't explain it to yourself, much less to your eight
year old child or something like that, then you are
investing in something that doesn't really have It doesn't make
sense really and you should avoid it.
Speaker 4 (39:00):
Yeah, I mean, I kept I don't like to think
of myself as like I see these other people, I'm like,
they're really smart. They must know something that I don't.
And the lesson I learned was like, no, they don't.
Like they either like it's just fomo for them too,
or they're running a scam, or they aren't as smart
as I thought. So I personally, I'm gonna trust my
(39:22):
instincts a little more in the future.
Speaker 1 (39:24):
Or they're lying. I mean, time after time you write
about folks who were speaking to you as if you
were dumb, and they oftentimes will say, uh, I'm telling
you the truth here, or either we're telling you the
truth or we're lying, and it turns out time after
time that they were in fact lying, that they were
in fact prosecuted. So again, given all of the scams
(39:45):
and the volatility that we see with crypto, I'm curious
as to what you think the future might be. Because
whether investors wanted or not. It looks like crypto is
continuing to gain momentum as opposed to losing momentum. Yeah,
the bitcoin it's doubled in this year, and it seems
like major players like black Rock, they are on the
cusp of getting a Bitcoin ETF approved by the SEC
(40:07):
Gray scale. Yeah, they're working towards converting their trusts. But like,
do you like, with all that in mind, do you
think that they're still hope for crypto given the fact
that they're seeing there seems to be maybe a more
healthy march forward.
Speaker 4 (40:20):
I'm a pessimist and I'm gonna I'm gonna give you
a lesson that I learned from Jay on the doge coin.
Speaker 3 (40:25):
He said that.
Speaker 4 (40:28):
Elon Musk was gonna appear on Saturday Night Live, and
there was a lot of chat about what Elon Musk
mentioned doge coin on Saturday Night Live. Yeah, and I
think Jay was like, this is a by the rumor,
sell the news thing. It's gonna dump after he goes
on SNL. There's no way it can live up to
the hype and so and it did. So I think
that similarly, there's there's a lot of excitement about this
(40:50):
Bitcoin ETF, but maybe once it comes out, we'll realize that, Hey,
the people who wanted bitcoin, they already have it. They
bought it on robin hood or coinbase or whatever. Yeah,
and maybe this quenty TF isn't actually such a big
deal of it interesting.
Speaker 2 (41:02):
Hey, thank you so much for taking the time today,
sharing the stories and kind of informing us about what's
going on behind the scenes, especially giving what happened at
the end of last week. Having you being able to
speak to that today on our show just means a
whole lot.
Speaker 3 (41:15):
So we really appreciate you.
Speaker 2 (41:16):
And where can our listeners find out more about you
and your book, which is awesomely titled Number Go Up.
Speaker 4 (41:23):
Yeah, Number Go upbook dot com or you know, at
your support your local bookstore check it out.
Speaker 1 (41:30):
Awesome. Thank you so much for your time, Zeke.
Speaker 4 (41:32):
Thanks for having me on. Wish I was down there
drinking craft beers with you guys.
Speaker 2 (41:36):
Next time, dude, we'll do it in person. Beers on
us sounds good?
Speaker 1 (41:39):
All right, madam.
Speaker 2 (41:40):
I'm looking forward to getting beers with Zeke in person because,
like I said.
Speaker 1 (41:43):
Espresso specifically, I want to want a shot out of
his one thousand dollars machine.
Speaker 2 (41:47):
Me too, can you imagine, and does anybody have better
stories than Zeke right now? I mean, given kind of
what's going on the cultural zeitgeist, sure it like Zeke's
the man that be hanging with wet.
Speaker 1 (41:58):
We got lucky with us when Yeah, it was well time.
Worre made it a lot of fun. And seriously, we
would recommend for folks to check out Number Go Up
as he documents all. I mean, he literally chronicles his
travels and he's seen the negative side, he's seen all
the different scams and how that has plagued so many folks.
Speaker 2 (42:14):
And if you couldn't tell just from hearing him talk,
he's massively entertaining. And the book is too. And so
if you want like a good book to tell like
as opposed to a puff piece, like Michael Lewis wrote,
if you want a good book to kind of tell
you the ins and outs of what was happening with crypto,
not just SBF, but but cryptocurrency in general, this book
is the one to get. Yeah, but Matt, what was
your big takeaway from this?
Speaker 1 (42:33):
Condon? I was going to ask you forcause a lot.
It was certainly a lot of narrative and a lot
of story, but so I will. My big takeaway isn't
something that he specifically said, but it is something that
he documented in his book, and that is the fact
that scams and the attention of fraudsters go to where
the money is and when you had this period in time,
(42:55):
and I mean, he says for different reasons that he
doesn't think that this bubble is ever gonna happen and again,
but for various reasons, we had a ton of money
on hand. We had a lot of folks even like himself,
like he said that, who were bored, and with the
combination of those two things, you got money and you've
got time. It was a perfect storm. It was a
perfect storm. And stay at home orders sort going after
(43:16):
all this crypto, and of course scammers and frosters they
wanted a piece of that. And I think that is
also one of the reasons we have seen so much
fraudulent activity surrounding crypto. It gets funny because he said
he's a he's he's pessimistic when it comes to the
future of crypto. Personally, I'm still keeping up a pretty
open mind as to what it could hold. I'm not
(43:37):
certainly we don't recommend for folks to go out there
and buy some. But if you are interested in it,
and if you are a little more skeptically optimistic, perhaps
then scratching that itch with no more than five percent
of your your overall portfolio is something that we are
very comfortable with folks doing. Yeah, it's what I've done
personally as well.
Speaker 2 (43:56):
You have to be dotting your eyes and crossing your
te's and even five percent we say that in alternative
investments in general. Right, So so having five percent of
your exposure in crypto might be too much anyway, if you.
Speaker 1 (44:07):
Already have single some single stocks that you're a fan of,
will count that towards the five percent.
Speaker 2 (44:12):
If you're investing in art and whiskey and stuff like that,
which we don't love anyway, Like, well, you got to
keep it small and crypto can a portion of that
five percent can maybe be allocated towards crypto, but you
gotta be you gotta be really careful, and it's if
you're banking. I think a lot of my big takeaway
was the lottery ticket mentality that a lot of people
go into this with. That's what kind of Zeke was
talking about towards the end with the IKEA, Yeah, and
(44:33):
that's a great story. The thing is, of course, this
is why, this is why people in the people buy
in poverty by lottery tickets, because they're hoping. They believe
that the only way for them to actually accrue any
sort of meaningful financial status in this life is to
do it overnight. And people discount, and I get it,
I understand why that mentality exists, but they discount what
(44:56):
would happen if they stuck those dollars five dollars, ten
dollars of that time into index funds and that can
mean for them over the course of thirty years, And
they're like, if it doesn't happen two to three years
or overnight like tomorrow, then what's the point. So, yeah,
that lottery ticke a mentality. A lot of people go
into investing with that sort of idea in mind. We're
totally against that. We want people to think about their
(45:17):
timeline in decades, not even years, not months, not weeks,
And so I think that's just like an important thing
to recognize. In this whole crypto kerfuffle was a lot
of people hoping, hoping against hope, hoping against better facts
and knowledge that this would win out and make them
a bookoo of bucks, and in most people's cases, except
(45:40):
for Zeke's friend, it sounds like most people ended up
getting screwed. Yeah, for most folks, it did not panic,
even without there being outright theft, like in the case
of SBF that was like.
Speaker 1 (45:49):
Literally just stealing money.
Speaker 2 (45:50):
Sure, there were a lot of other ways where you
just lost it or you just lost some.
Speaker 1 (45:55):
Of it or whatever. Yeah, a lot of people. Or
you lost your password and that's what you lost. And
just just promises. There were a whole lot of promises
that were given and they just haven't delivered right, And
so folks were just even if there wasn't outright fraud,
folks were just led astray. I think the Winklevoss twins
recently Winklebi they there's a suit filed against them because
(46:16):
of how it is. They talked about promises basically that
they were going to deliver that they didn't end up
delivering on. So it's uh, it's the wild, wild West still,
and we want everyone out there to be incredibly careful
if you are interested in crypto. But Joel our beer,
you and I today we enjoyed a desert fog by
Marble Brewery. This is another beer that was donated to
(46:38):
us by Bob. What were your thoughts on this one?
Speaker 2 (46:41):
I really like this one. This one had like some
nice grapefruit notes in it, a bit more pithy. It
was just a bit bitter but also juicy at the
same time, So I kind of like that comments it.
Speaker 1 (46:49):
Was very juicy. Yeah, I was a fan of the
juice in it. You could taste the dry the dry hotness,
so it kind of had that that sharpness that almost
comes across as tartness that you get with a dry beers,
and sometimes that can be a bit muted, but it
was not in this one, and so it leads to
a very interesting beer when you're able to taste those notes.
So yeah, I really like to certainly enjoyed this one.
(47:12):
But you can find our show notes up on the
website at howdomoney dot com. We'll make sure to link
to Zeke's book his website and where it is. You
can check the book out if you are so interested.
Speaker 2 (47:23):
And also Matt's going to link to his bitcoin wallet
so you can go grab whatever you want, just empty
it just for kicks, all right, that's gonna do it
for this episode, Matt. Until next time, best friends out,
best friends out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.