April 24, 2026 • 50 mins
Ben McKenzie joins Margaret Hoover to break down his new documentary about cryptocurrency, “Everyone Is Lying to You for Money,” and the dangers he believes crypto poses to investors and the economy itself.
McKenzie–best known for his performances on “The O.C.,” “Southland,” and “Gotham”--explains why he grew skeptical of crypto while other men embraced it and reflects on what he learned from talking to fraudsters like Sam Bankman-Fried and investors who got scammed.
The six-time Teen Choice Award nominee defends his assertion that cryptocurrency is only good for crime and gambling, highlights Jeffrey Epstein’s role in crypto’s development, and comments on the challenges of regulating the industry.
McKenzie also discusses President Trump’s crypto ventures and the conflicts of interest they present, and he criticizes fellow celebrities who have endorsed crypto products without understanding the risks.
Support for Firing Line with Margaret Hoover is provided by Robert Granieri, Vanessa and Henry Cornell, The Fairweather Foundation, The Tepper Foundation, Peter and Mary Kalikow, The Beth and Ravenel Curry Foundation, Pritzker Military Foundation, Cliff and Laurel Asness, The Margaret and Daniel Loeb Foundation, Katharine J. Rayner, Charles R. Schwab, Lindsay and George Billingsley, The Meadowlark Foundation, Jared Stone, Al and Kathy Hubbard, and Craig Newmark Philanthropies.
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(00:00):
Guys have, I guess you would call it a higher risk tolerance
and guys tend to be a little overly confident, let's say, in
their abilities to to win games.And also, I mean, just
scientifically for guys young enough, their prefrontal cortex
really hasn't developed yet. They're engaged in all this
behavior that's really not very smart, quite frankly.
And so it really makes a lot of sense that guys are into crypto.
(00:23):
That's actor and filmmaker Ben McKenzie explaining why
cryptocurrency appeals to young men.
I'm Margaret Hoover. This is the FIRING LINE podcast.
Who are you? Whoever you want me to be.
Two decades after the OC made him a star, Ben McKenzie has
emerged as one of Hollywood's most outspoken critics of
(00:47):
cryptocurrency. This is a film about a thing
called cryptocurrency. It's pretty stupid.
Mackenzie's new film Everyone IsLying to You for Money, examines
the risks he believes crypto poses to investors and the
economy. He says the film was funded in
part by betting against crypto stocks in the market.
If they want to be banks, then they need banking licenses.
(01:08):
They need to play by the rules. If we start mixing the fake
money with the real money, all hell will eventually break
loose. Mackenzie told me why he doubts
cryptocurrency's potential to bea force for good in the world.
You're creating this black market money that can be used
for all sorts of purposes, some of them good perhaps, but most
of it bad and really bad. Is it worth it?
(01:29):
And what he makes of the one time crypto skeptic Donald
Trump's embrace of the industry.Donald Trump is a convicted
fraudster. He is selling a coin and a
scheme that I and many, many others, including Nobel Prize
winning economists, have called a fraud.
That Mackenzie, welcome to Firing Line.
Oh. Thank you for having me.
You have gone from acting to becoming one of the most vocal
(01:55):
and outspoken critics of cryptocurrency.
You have criticized crypto in print, in Congress, and now in a
film. What made you so convinced that
this was not an innovation, but something much more dangerous?
Just a couple of months of research online in the midst of
(02:17):
a COVID pandemic. Originally I have a degree in
economics as an undergraduate, but like you said, I, I, I had
in showbiz and still in showbiz,but the pandemic, you know, kind
of shut showbiz down for a whileand I was really bored and.
Looking for a rabbit hole to go down.
(02:37):
Yeah, yeah. I think a lot of people can
relate to this during the pandemic and maybe particularly
guys and in terms of the Internet fascinations and, and,
and investing and, you know, what do I do with my money?
A buddy of mine came to me at that point and said I should buy
Bitcoin. Many people can relate to that
as well. But my friend Dave had given me
(02:59):
terrible financial advice beforewhen I was in my 20s and he told
me to invest in this penny stockand.
Red flags went off immediately. Yeah, red flags.
So I said, Dave, I'm not, I'm not investing in Bitcoin, but I
am interested what, what is it? You know, explain it to me.
And he couldn't, I mean, he justcouldn't, you know, I said, so
it's a, it's a, it's a currency.I, I, I truly had paid no
attention to cryptocurrency prior to 2020.
(03:23):
I mean, I'm not exactly at the edge of this sort of I'm not,
I'm not, I'm not a tech adopter.I'm not the first rug.
I'm pretty slow in that way. And I said, what is it?
And he said, you know, it's a cryptocurrency.
I said, OK, so it's, it's a current, it's a currency.
You can buy stuff with it. Well, and the conversation just
kind of went on from there because of course, Dave wasn't
(03:44):
using crypto to buy anything because hardly anybody uses
crypto to buy anything. He was putting money into it,
hoping to make money off of it through no work of his own.
That's the security. That's the definite, that's an
investment, right? Obviously.
And that should be a security under American law, but it
wasn't classified that way and it wasn't being treated that
(04:05):
way. Wasn't even regulated then.
Very loosely regulated. And so many of the companies
were operating, yeah, so many ofthe companies were operating
overseas, offshore in the Caribbean in particular, like
FTX, where Sam Bankman Freed hadhis company.
One of the amusing parts of thatis that I'm in my mid to late
40s, in the mid aughts, online poker was really coming into
(04:30):
vogue and you could play poker and send money onto these
websites and gamble with real money.
And Dave was really into this. And I remember asking Dave,
where are you sending the money?He goes.
And sure enough, you're, you were sending it to the same
Caribbean islands that guys werenow sending their money to buy
(04:52):
crypto. And I thought, this is bad.
This is really, really bad. The film begins with a desert
scene. It is introduced as a rack.
In the next scene, you're walking up the hill and it turns
out Iraq is actually West, TX. Why does that scene set the
(05:13):
stage for the film? The film is called Everyone Is
Lying to You for Money. I mean that quite literally.
Even in our best selves, we are putting on a face.
We're all performing. That scene is so crucial because
I sneak in what money is you payclose attention.
(05:36):
I say, what is money? Money is trust, but that trust
is fragile and it can shatter inan instant.
And then I reveal the joke that I have just fooled you, yes lied
to you for money. I really want people to
understand how fragile these these social constructs like
(05:58):
money are. We're, we're incredibly
privileged in the United States to have the world's reserve
currency since World War 2 or arguably even before then.
And so we benefit from quite frankly, the the most stable
currency that's currently existed in the most widely
traded in the in human history. But even our currency can can be
(06:24):
volatile. And what crypto is trying to do
is very dangerous because one ofthe things that it does is it
undermines the faith and confidence that we have in our
current system. I understand why people are
angry at our current system, butcrypto doesn't fix it, it makes
it worse. You write in your book Easy
Money. The original story that Bitcoin
(06:44):
represents a response to the devastating failures of the
traditional financial system holds significant power because
we all agree on its premise. Our current financial system
sucks. Yeah.
Does it really suck? Yes.
Why? There's approximately 1000
billionaires in the United States, and they control as much
(07:04):
wealth as the bottom 50% of the country.
But the power that these billionaires have, particularly
after Citizens United, their ability to use the money to
affect and quite frankly, undermine our democracy, I think
destroys the trust that we have in our economic system and our
financial system. Because a lot of people feel
that they can't get ahead. You know, the younger, younger
(07:27):
generation has a real hard time affording houses.
People can't afford childcare, medical care.
And yet we live in the most wealthy society that's ever
existed. So, so why can't we?
Why can't it be better? I guess is one way I'd put it.
So if I understand your argumentcorrectly, those who are not
benefiting from our economic andfinancial system are not getting
(07:52):
ahead are being duped by crypto that it could be a means for
changing their economic livelihood?
Absolutely. I mean, crypto is in many ways
just a get rich quick scheme forthe retail public.
It's just, you know, buy some crypto and and you're going to
get rich, right. And that story has worked off
and on. You know, crypto is so volatile
(08:14):
that it goes up and down, but but that's that's the essential.
So why is why is crypto not the answer to the grievances of
those people? Because most of them are going
to lose. I mean, most people are, most
people who have ever invested incrypto have lost money.
Most people will. And the reason that that that
has to be true is due to the fundamental nature of it.
So. Which is what?
So because cryptos don't really work as money, I can't go to my
(08:37):
neighborhood deli deli in Brooklyn and buy bagel with
Bitcoin, right? They're going to look at me like
I'm crazy because it doesn't really work as money works with
some form of investment. Well, what are you investing in?
You're investing in lines of computer code stored on ledgers
called block chains. But there's no correlation with
any real world asset. So it's a very strange
investment. You're basically investing in
(08:59):
the idea of Bitcoin and the ideathat other people will value it.
Well, in economics that's that'scalled greater fool theory.
You're basically hoping that there's you see the price of
something going up, you buy it because you think it's going to
keep going up and you can sell it to a greater fool than
yourself. But you know that's a fun game
until you reach the peak and then you're the biggest idiot
(09:21):
left holding the bag. Crypto can't be anything other
than at best a 0 sum game where for for me to win, you have to
lose. It's it's imagine where we're
playing cards at a poker table in Vegas.
You might win a hand, I might win a hand, but my winnings come
out of your pocket and vice versa.
(09:42):
There's, that's where the money is.
As we play the game, the house is taking the rake.
There's a tiny amount of money charged to the players to to
facilitate the game. So could you win in Vegas?
Of course, if you play long enough, though, the average
player in Vegas is going to lose.
Of course they are, because how else do they keep the lights on
(10:02):
in the casino? So crypto is sort of like an
unregulated, unlicensed casino. The difference I would say is at
least in Vegas, there's entertainment value.
They give you free drinks to tryto get you to gamble more.
You can catch a show, have a dinner.
You know, cryptos like Vegas without the drinks, the dinner
or the show. Take on this argument then,
(10:25):
because JP Morgan during the Iran war so far has reported
that crypto has held up better than gold and silver.
And if you look over the last seven years, there has been
enormous volatility in crypto. But Bitcoin has been up more
than 1200% in that period of time, right?
(10:47):
So even though it can be volatile in a diversified
portfolio, what's wrong with building in some crypto as a
hedge? So look, I'm not offering people
financial advice. I mean, I criticize quite
directly all the celebrities whodid offer financial advice, but
in the abstract, let's say the only thing I ever say to people
in terms of investing is don't gamble with money you can't
(11:09):
afford to lose. It's just basic stuff.
So let's talk. Your question was very
interesting, but it had a coupleof different parts to it and and
I want to take them each separately.
So in terms of the price having gone up over time, if you're
saying if I bought in early, I would have made money and I'm
describing it as a Ponzi scheme or a multi level marketing
(11:31):
scheme, one of the features of which is if you buy in early,
you make money. It's not really a refutation of
the argument, right? Yeah, it's it's it's a very it's
a very power. It's probably the most powerful
argument that crypto advocates have is trying to give you what
they call FOMO. Fear of missing out on the.
Investment. Yeah, we used to call it greed,
(11:52):
but now we call it FOMO. But, you know, which is fine.
You know, human, human nature, that's a very powerful
psychological argument, right? But it doesn't refute the
essential criticism that no, structurally this is still a
Ponzi scheme or multi level marketing scheme.
As for the other side of crypto,we've talked a lot about the
gambling, but crypto only has two use cases.
(12:12):
It's gambling and it's crime. And the crime is a very
important part that we really need to focus on, particularly
at this moment because what crypto does is go around the
regulated system, right? You're not using a bank to send
this thing of value. You are.
You are using the blockchain. Now, who does that appeal to?
(12:33):
I mean, quite frankly, it appeals to criminals by and
large. Could you use crypto for a good
purpose? You sure?
It's a tool, but let's just be honest, you know, the amount of
crime that's facilitated via cryptocurrency is staggering.
There was an estimate, a study done by a crypto company that
found that last year approximately $150 billion of
(12:55):
illicit activity was financed via cryptocurrency, $150 billion
in a single year. We're talking about massive
International Criminal organizations.
You've likened crypto to a cult.Yeah, there are even people who
you interviewed in your film wholost their life savings in
(13:16):
crypto fraud schemes. And even still believed in the
power of cryptocurrency. Perhaps had to believe because
they'd lost. So I interviewed victims of a
scam called Celsius and earlier in the film I interviewed the
CEO and he's just a complete used car salesman.
(13:38):
You know, guy he's now in jail and I initially wanted to talk
to these folks just to understand them and and and kind
of sympathize with them quite frankly, and I did I found it
was all guys we had posted on a Reddit page for self use victims
and every single response was from a man, which I think is
(13:59):
interesting and can. I ask you about that really
quick. I mean, the largest percentage
of people who are involved in crypto in the United States are
men. Under 5025% of men under 50 are
involved in crypto. What is that about?
It's 42% amongst men 18 to 29. OK, it is almost half.
(14:19):
It is a huge number. What?
I mean, you just said that's sort of interesting.
Like what is that appeal? Well, so, so guys are more
likely to be gamblers, especially young guys.
And I, you know, I'm not a youngguy myself, but I, what I was
once, I remind my kids all the time and I remember I, you know,
let's go back to the online poker example I used earlier.
I liked poker At the time I was single.
(14:42):
I was living in Los Angeles. I would have games at my house.
I bought a poker table so I could understand that guys, I
have, I guess you would call it a higher risk tolerance.
You're young, you're kind of, what else are you going to do?
You might as well sort of get that endorphin rush from
gambling, right? And guys tend to be a little,
you know, overly confident, let's say, in their abilities
(15:04):
to, to win games. And, and also, I mean, just
scientifically for guys young enough, their prefrontal cortex
really hasn't developed yet. Well, truly.
So like they really don't have the same level of judgement as
women do. And so that's why they die in
car accidents more often as young and they, they smoke
cigarettes, you know, that they're do engage in all this
behavior. That's really not very smart,
(15:24):
quite frankly. And so it really makes a lot of
sense that guys are into crypto,right?
But what was so heartbreaking about talking to the victims is
I, I, I spoke with them, I bonded with them.
And at the end of the film, I come back to them and I asked,
do you still believe in cryptocurrency?
And every single one of them says yes.
And that really changed my understanding of what we were
(15:46):
talking about. How?
Well, imagine another investment.
Imagine you invested in some stock, you know, Google, but
your timing was wrong and somehow it went down.
If I asked you about that, you go, yeah, probably shouldn't
have done that. You know what I mean?
Like it? Was like the emotional
connection. How do you understand?
That because I think for some ofthese guys, this was a major
(16:10):
investment for them, not just financially, but mentally,
psychologically, this was their ticket out.
This was their way to achieve the American dream.
One guy, construction worker in Texas, he just wanted to have a
little money so he could spend more time with his daughter.
And he felt because he lost the time, he felt because he lost
(16:31):
the money, he was letting her down.
And I felt so bad for I'm a father.
It was an incredibly powerful scene.
I mean, you, he cried. You cried.
It was over Zoom. It was over zoom.
I know, such a weird thing to beover zoom crying.
It was actually very touching just to see how how how much it
really moved. To and so you know I I can have
by the way, I have had so many wonderful conversations with
(16:52):
people who invested in cryptocurrency.
When you have an actual conversation with them either in
person or via Zoom A1 on one conversation, they're the
conversations are usually quite respectful and even sometimes
loving online, the vitriol is crazy, but online is not reality
Online people are masking their identities and doing all sorts
of stuff. So I, I wanted to show in the
(17:14):
movie that we need to break out of that online construct and
talk to each other, particularlyas men, quite frankly, so that
we can understand each other andhelp each other because men are
very, I can include myself here.Men are prideful.
When we lose money, we do not like to admit it.
(17:34):
Unfortunately, men often hide itfrom their families and, and it
can create devastating consequences.
So I, I think it's really important to understand the
psychology. What was interesting at the end
when they said that they still believed in it, is that really
is a cult, right? I mean, I, I, I, I hesitated for
so long to use that word. There's a great paper when
prophecy fails about what happens when the
(17:58):
prognostications. I'm using that word correctly.
When the, the, the cult leader says the world's going to end
tomorrow and it doesn't do the, what are the members of the
cult? Do they leave the cult?
No, they double down. They, they feel they believe in
it more. And I think that's one of the
things you see with a, with a hardcore group of crypto
investors that's only 5 to 6% ofthe population.
(18:19):
There's a whole other group. They're just playing around with
it and then there's 80 plus percent of the country that's
never bought it. I made the phone for the 80 plus
percent and maybe that 10% that's playing around with it.
The five to 6%, I'm never going to be able to convince them no
one is. They're but they're gamblers.
Right. Some of some of them are
gamblers very much so yes, absolutely.
The hardcore, some of the hardcore ones refer to
themselves as D gens, meaning degenerate gamblers.
(18:43):
That's that's their term for themselves.
So that kind of tells you what you need to know there.
But then there's also a bunch ofguys who are, you know, bought
some because they like this guy in Texas.
They just. I said take it out.
Yeah, yeah. And that says more about us and
our society and our economic system and financial system and,
and kind of the lack of opportunities.
(19:04):
It also says about a lot about us not protecting them.
Yeah, because one of the big beefs with cryptos, it's not
properly regulated. And so the investor protections
aren't there. And that's how these guys get
scammed. And they don't know that.
No, you talk about the men you spoke to.
Another man you spoke to was SamBankman Freed, the founder of
FTX, the crypto exchange that isnow serving 25 years in prison.
(19:30):
You spoke to him very, very, I mean, not, not only a few months
before he was arrested and before the downfall of FTX.
At the time, he was a phenom, widely respected in in finance
and in the media and in Washington.
What did you take away from thatinteraction?
(19:53):
I couldn't tell if there's one where you're like wait, am I
wrong about this? Oh, I absolutely.
Yeah, absolutely. And in retrospect, I would have
gone even more aggressively at him.
Yeah, if only you'd known he would be arrested.
Three months. Later, right?
I mean, I was sipping out of a mug that said fraud
investigator, so I had some ideaof what was going.
On that which was. Thank you.
Yeah. Chef Kiss.
(20:14):
I think one of the wonderful things about being a skeptic,
and there are lots of us, right?I might be one of the more
public faces of the script of skepticism, and I'm one of the
very few people who's been foolish enough to devote years
of my life to this. But we hold ourselves to
account. If I misspeak, if I say
something that's incorrect, I try to, I try to correct it.
I am genuinely interested in thetruth in all of its complexity.
(20:38):
So, and, and quite frankly, the crypto boosters, the really
hardcore ones are, I'm sorry, they are not, they don't engage
honestly with this intellectual conversation.
If you really believe in cryptocurrency, then you really
have to grapple with the human cost from the gambling and the
crime. And if you don't grapple with
(20:58):
those, you're not really being honest with Sam.
What was so concerning was he didn't have answers to basic
questions, right? What does crypto do?
What's the good that it can do? Well, he admitted that it isn't,
you know, fully self actualized as a currency.
Right, it doesn't work now it. Doesn't work in the future.
Yeah, which is, you know, a timehonoured con man.
As you look back on that conversation now, given the
(21:21):
events that have unfolded in Crypto Sunset, how do you do you
look at it differently? Like how do you see Sam Pink
Winfried now when he was being interviewed with you?
How do you understand his interactions with you?
Yeah, great question. I so I attended the trial for
Sam, not every day, but but several days here in New York.
And we were able to learn through the the documents
(21:42):
produced for that case what was really going on with him.
And it's fascinating because at the time he was like, as you
said, he was on top of the world, right?
He had just held a conference inthe Bahamas attended by Bill
Clinton and Tony Blair. He was supposedly one of the 100
wealthiest people in the world going to Bloomberg.
He would very soon thereafter beon the cover of Fortune with the
(22:04):
headline the next Warren Buffettquestion mark.
So he really was king of the world.
But crypto was going down, the price had been crashing, and he
was supposedly going to bail it all out.
He was likened to JP Morgan as the guy who bailed out all the
banks in the early 1920s to savethe race.
He was the JP Morgan of crypto. Exactly.
And yet when I sat in this room with this 30 year old.
(22:26):
Not even. Yeah, 20 something year old kid
in cargo shorts and AT shirt andsneakers.
And I asked him a basic question.
What does it do? And he can't answer adequately.
I mean, yeah, I just, I didn't know what to feel.
I felt very concerned with what was about to happen.
And then what we learned later is that his empire was also
(22:47):
falling apart. You know, the way he ran his con
is he changed the code or he hada, one of his employees changed
the code inside of the FDX source code so that his trading
firm could borrow from the assets of his customers on his
exchange, steal their money. And his trading firm, which was
(23:07):
supposedly one of the best in the world, was actually terrible
at trading. It was losing tons of money and
so it needed to borrow, steal more and more money.
And even when I was speaking to him in July, they were in deep
trouble. So now I look back at the
interview and I realized why he was so fidgety, why he was so.
Because he knew the truth. He must have.
Yeah, you have said for the billionth time, crypto has only
(23:30):
two use cases, gambling and crime.
I want to push back a little. I have had a Afghan
entrepreneur, a woman named RoyaMahboob, who is one of the first
tech founders in Afghanistan, inthe time when Afghanistan was
(23:51):
protected by the United States and all of our allies.
And she still runs her organization in Afghanistan, now
under the Taliban, and maintainsthat Bitcoin has provided a
financial lifetime to women in Afghanistan who are denied
access to banks by the Taliban. It's helped Venezuelans protect
(24:11):
themselves under the material regime.
What about the case where, underan authoritarian regime, the
freedom fighters are the criminals, right?
And they're the ones who are benefiting from this murky
system that allows them to create a livelihood that is
actually aligned with our principles.
Right, right. That's.
(24:31):
Using using the this currency. That that's a great example.
Let's look at that. So as I understand it, I'm not,
you know, I only know what you just told me, so you have to
correct me. But the Taliban isn't allowing
banking, right? So what she's doing?
Is criminal. Is criminal right?
But we believe in it morally right, ethically, we, the you
(24:53):
and I believe that what she's doing is not only not wrong,
it's good. But that illustrates my point
perfectly, which is that that iscriminal activity.
Now the the bigger question to me is.
Yeah, but it's banking for womenin Afghanistan.
Right. But but so how much is going on
of that versus how much is goingon of a bad crop?
(25:14):
No question. I mean, I mean, unfortunately
you cannot find statistics on this because it's crime.
They're not going to tell you what they're doing.
But I just want to point out thecrime and what it is.
Jeffrey Epstein was a secret funder of Bitcoin development.
You. Want to go there now?
Well, we need to. Talk about what kind of crime
we're talking about. We're talking about child sexual
(25:37):
abuse material we're talking about.
Terrorist financing. We're talking about Russian
oligarchs selling sanctioned oilto the Chinese for Chinese
drones to send to Ukraine. We're talking about the Iranian
government who is charging thosewho wish to pass through the
Straits of Hormuz in cryptocurrency.
Yes, of course they are, becausethey don't want to deal with the
(25:57):
banks. And so the question we have to
ask ourselves is why are we failing so many different ways
to provide for the good people like this, you know, woman in
Afghanistan, the ability to actually interact with our
financial system and allowing the criminals to succeed so
(26:19):
wildly in committing their crimes.
We're failing and we have to fixthose.
You mentioned Jeffrey Epstein. Files released by the Department
of Justice reveal Jeffrey Epstein's role in the early
development of Bitcoin. Crypto boosters have downplayed
Jeffrey Epstein's involvement inthe industry, but why do you
think it's so significant? What a shocker.
They downplayed the world's mostnotorious pedophile being
(26:41):
involved in their cryptocurrencyfrom a very, very early stage.
Because it doesn't. What does Jeffrey Epstein's
association with crypto say about OH?
Well, so if Jeffrey Epstein score businesses were money
laundering and blackmail, A synonymous currency that
operates outside the banking system might would be very
(27:01):
attractive. So it doesn't take a genius to
figure out why Jeffrey would have liked it.
I think it just again points us back to the same question you
and I have been going or the same point I've been hammering
and you and I have been going back and forth over is you're
creating this, there's the gambling, that's the retail
side. You're creating this black
market money that can be used for all sorts of purposes, some
(27:23):
of them good perhaps, but most of it bad and really bad, right?
Is it worth it? Is this system?
I'm not, I'm not advocating to outlaw it because I don't think
that would work because of the nature of crypto.
I don't think outlawing it, you'd have to do it on a global
scale. It seems very difficult, but you
(27:45):
can properly regulate it and theway to regulate it on the
speculative currency side, Bitcoin, Ethereum, the 20,000
cryptocurrencies out there is assecurities for the stable coins,
which is the the way that these tankers are paying their passage
fees through the Strait of Hormuz is is via stablecoins.
(28:05):
Stablecoins are cryptocurrenciesthat are pegged 1 to one with
real currencies like the US dollar.
Which, by the way, are legal nowbecause of the Genius Act, which
was passed by the House of Representatives and the Senate
and signed by Donald Trump. And one of the things the Genius
Act accomplished was to provide that by law, every coin that was
(28:27):
issued in the United States has to be backed by the value of the
US dollars, some material wealth.
It can't be just tied to nothing.
It has to be backed by the valueof a dollar.
Yes. However, what it's really doing
is it's also sort of integratingthe stable coin economy into our
(28:47):
banking. System it's, it's legitimizing
it. Very much so, and and not quite
treating them like banks sort ofbecause.
They're not FDIC protected. Exactly.
And that's that's really the crux of the issue to me is if
they want to be banks, then theyneed banking licenses.
They need to play by the rules. If we start mixing the fake
(29:07):
money with the real money, all hell will eventually break loose
because at some point, these stable coins, which have failed
repeatedly over the years, one of them fails in 2022 and it
starts the crash that I documentin the movie.
When one of them fails and it's tied into our banking system, if
it's big enough, it can take down the entire system and we'll
(29:28):
end up bailing these guys out, just like we did in the subprime
crisis, which is why crypto was created to begin with, right?
So we'd be recreating the same thing that crypto was supposedly
against. It is well known that the crypto
industry has doubled down on their political activism, their
support for political candidatesand elected officials on both
(29:52):
sides of the aisle. The amount of money that has
been spent on political campaigns and on educating
members of Congress has skyrocketed in recent years.
Is that what you think the the crypto industry wants from the
US government? Ultimately, they want to be in a
(30:12):
position where they're so legitimized that they can be
bailed out by the American taxpayer if the whole thing goes
sideways. I mean, I don't know that it's
that complicated. I think it's more they just
don't want meaningful regulationor they want to be able to play
by a special set of rules where they're not treated as
securities, they're treated as commodities.
(30:34):
The There's another piece of legislation that is threatening
to pass Congress. This is the Clarity Act.
The CLARITY Act, which is a market structure Bill that
would. What's your problem with the
Clarity Act? It would put the CFDC, the
Commodities Future Trading Commission, in charge of crypto
as. A.
And you think it should be the SEC of the Securities and
Exchange? Commission.
Yeah, this. I see it.
I know this gets dorky, but the CFDC?
This is firing line. We are just.
(30:55):
Firing. This is we're dorky.
This is who we are. We're no the CFDC is the
smaller, weaker agency and has always been so.
And the crypto industry has longwanted the CFTC to be in charge.
Sam Bankman Freed was pushing a bill that was affectionately
known on Capitol Hill as Sam's bill that had certain
similarities to the Clarity Act where crypto would be treated
like a commodity. That was before he was arrested
(31:18):
for running one of the largest Ponzi schemes in history.
So we can do this again, right? We can do this again.
And like I say in the movie, many times we are living in the
stupidest age, you know, imaginable.
But it's also dangerous. Those things are not in conflict
or something could be stupid anddangerous at the same time.
Donald Trump is a good example. So in terms of the market
structure, the speculative currencies need to be regulated
(31:40):
securities, But the stable coins, I really think we need to
ask a question, which is if you're saying something is a
dollar, they're saying these stable coins are worth a dollar
and yet they're not backed by the full faith and credit of the
United States. Isn't that a counterfeit dollar?
Why are we allowing these guys to trade off of the credit, the
full faith and credit that we collectively have given to the
(32:04):
United States dollar in the formof our labor, in the form of our
participation in the economy andletting them draft off of that
and with no cost to them, and then we're going to end up
bailing them out? Outrageous.
I mentioned this is a dorky program.
This program actually has been adorky program for more than 50
years. William F Buckley junior started
this program in 1966. It went through 1999.
(32:27):
You can go back to the archives of Firing Line and find
something relevant to every single conversation I've had
with every single guest. And in this context, well,
Buckley never spoke about cryptocurrency.
He did talk about regulating theSEC and its role in regulating
markets. In 1996, in a Firing Line
debate, a gentleman named Bob Hormats, who was the vice
(32:48):
chairman of Goldman Sachs, had adebate on Firing line with
William F Buckley Junior and they discussed the role of the
SEC working with the markets to regulate the Stock Exchange.
Take a look. The SEC does important things.
First of all, it ensures adequate disclosure of
information. More information to the market
is good for the market. It's good for people who are
(33:09):
considering buying stocks wouldn't.
Provide this on its own. The market may or may not.
It seems to me that the market from time to time has not been
providing adequate disclosure. And in fact, there's a history
of certain amounts of of deals made with that adequate
disclosure, which is in part thereason we have the SEC.
But the SEC has learned over a period of time to work with the
market. Most of the regulations put out
(33:29):
by the SEC, not all, but most, are done in conjunction with
participants in the market and are done relatively
constructively. I wouldn't abolish it.
I think Wall Street needs to work with it and does work with
it so. How refreshing.
So, but, but this is the argument that, you know, the SEC
can work with the markets and they can successfully regulate
the stock market. The Trump administration and
(33:49):
Congress are consulting the crypto industry as they develop
regulations that will ostensiblyregulate crypto markets.
Why is the SEC better positionedto regulate crypto markets?
Because these are investments. I mean, we really need to start
with what they're doing. You're putting money into them,
(34:13):
hoping to make money off of themthrough no work of your own.
There's a thing called the Howietest, which has four prongs.
So securities laws at the federal level were passed in the
1930s originally because we didn't have them in the 20s.
And the Roaring 20s was fun until the crash of 1929, which
led to the Depression and, and we realized we needed to have
(34:34):
some rules. So for almost 100 years we've
defined securities quite broadlyunder the Howie test, an
investment of money in a common enterprise with the expectation
of profit to be derived from theefforts of others.
And that is applied to all sortsof legitimate investments and
illegitimate ones. And the SEC is also in charge of
(34:56):
regulating Ponzi schemes, of determining whether investment
schemes are essentially fraudulent.
Now, they can't, you know, presscriminal charges, but they can
do fines and things like that. And they can refer cases to the
DOJ. And so this system has worked
for nearly 100 years. And yet crypto says, oh, no, no,
no, no. We're, we're, we're so new,
We're so innovative, even thoughthe technology is old, that we
(35:18):
need our own rules. You know that is a a a just a a
an obvious tell. The Internet doesn't even have
its own rules. It's being it's being regulated
by cable company Rules I. I think, I think you're the clip
that you played is really interesting because he he
mentions directly what securities laws are predicated
on and it's disclosure. You need to know who you're
(35:39):
giving your money to and what they're doing with that money.
And the crypto industry doesn't want that information out there.
Now, why, if you were a legitimate investment, would you
be afraid of telling people thisis where your money's going and
this is what we're doing with it?
Fortune favors the brave. You have been comically critical
(36:01):
of celebrities who have put their names on crypto.
Yeah, you have even said that Matt Damon's Super Bowl
commercial of crypto.com, like haunted your dreams.
Yes. Why?
Because even when I was startingout and I hadn't really done a
(36:21):
ton of research on crypto, I knew that Matt Damon didn't know
anything about cryptocurrency. How did you know that?
Really, really Matt Damon sitting there like studying the
blockchain taking cryptography classes with Gary Glensler,
which by the way, I did former head of the SECI took his one of
his online classes about what what is this crypto stuff Look,
I knew is perhaps too strong. I had a strong suspicion that
(36:46):
the way that these deals work isthat the celebrities are paid in
real money to convince you to take your real money and turn it
into something else that is really dangerous.
Celebrities have always showed products.
There's nothing wrong with that.In the movie I kind of make a
joke out of it because my wife is showing.
Products. Hair, hair care products and why
(37:09):
do companies hire celebrities? Because they have a relationship
with the audience, right? There's a trust that people have
in these celebrities. And so, you know, Marina's
selling me a hair product, maybeI'll buy it.
There's nothing wrong with that.But this is different.
This is a financial product. This is an investment.
This is not, you know, a car or or soap.
(37:30):
And you're not supposed to offerpeople financial advice unless
you're a licensed financial advisor.
It's not a law that's enforced really ever.
But that's effectively what I what I felt the celebrities were
doing. And I assume having been in
Hollywood, the way this worked is the crypto companies came to
the major agencies in Hollywood with enormous amounts of money
(37:52):
and said, you know, for this price, we expect this level of
star. And, you know, they work their
way down and sort of see who they can get.
And at that time, in 2021 and early 22, they got the most
famous people in the world to sell for them actors, musicians,
athletes and for the celebrities.
(38:13):
My assumption is they weren't too concerned about what the
investment advice they were offering was.
They were they? They wanted the.
Dollar and your concern is that it dupes real people?
Of course it does. And, and that is when the
majority of the people who have ever invested in cryptocurrency
enter the market as 20/21 that, you know, there's an interesting
thing, the pandemic, you know, increase the money supply quite
(38:35):
significantly because we had stimulus checks and things like
that. So there were a lot of the
everyone was at home just like, just like me.
They were getting checks and then they were putting it in.
Crypto, some of it, Yeah, exactly.
But can I just tell you this is Matt Damon came out on this
program in 2022 and I asked him about his his crypto ads.
(38:55):
He said he was shilling because then he took the money from the
ad and put it directly into his charity.
And he explained a series of circumstances wherebycrypto.com
then partnered with water.org. And so ultimately he feels that
shilling for crypto ended up helping his charity, which is
(39:16):
helping to build water wells allover Africa.
So it was shilling for the common good.
So that doesn't address the criticism that the investors are
losing money, right? You're sort of shifting the
conversation to about this charity, which does sound like
it's doing wonderful work. I don't know what he'd say about
it now. I don't know what anybody say
about it now. That's probably all I feel
(39:37):
comfortable saying about it. The celebrities, many of them,
have gone awfully quiet about their previous support of
cryptocurrency. So President Trump's views have
changed about cryptocurrency. Back in 2021 he said this about
crypto. Bitcoin I just seems like a
scam. I don't like it because it's
(39:57):
another currency competing against the dollar.
I want the dollar to be the currency of the world.
That's what I've always said. Since then he has changed his
tune and he has said this. We're making the United States
the Bitcoin superpower, the crypto capital of the world, and
it takes a lot of the pressure off the dollar it takes it does
a lot of good things. At the same time, according to
Forbes, Trump has made an estimated $1 billion off of his
(40:22):
crypto holdings. What does President Trump's
embrace of crypto tell you? That he's the most corrupt
president in U.S. history and it's not even close.
I mean, to state the obvious andhe's the main vehicle for his
corruption is cryptocurrency. That's where the majority of the
(40:44):
money that he's made his brief time in office, the second time
around where it comes from, he made a little money off of these
meme coin things like Trump coinand Melania coin.
But he made most of the money. He and his family made most of
the money off of a stable coin. And to give you an example of of
the kind of money we're talking about, Sheik in the UAE invested
(41:08):
$500 million into Trump's stablecoin.
And as I believe the Wall StreetJournal, New York Times
reported, in exchange the UAE received NVIDIA AI chips.
They also I would argue. They they argue that there was
nothing, there was a complete coincidence in the timing of the
(41:28):
sale of the NVIDIA AI chips to the UAE.
Yeah, that's a very expensive coincidence.
Why don't you buy that? I mean, I, I don't, I don't know
what else to imagine that the $500 million was not in the form
of cryptocurrency, but was just money.
They just here's $500 million. What would you call that?
(41:50):
I would call that a bribe. So we're just changing the word
and we're putting this word cryptocurrency, which most
people don't really know anything about, just sort of
kind of distract from this sort of basic corruption of the
scheme. I mean, it's so grotesque.
It's really kind of infuriating.And we have to remember that
Donald Trump is a convicted fraudster.
(42:11):
You know, he was convicted on 30.
The Trump Organization was convicted on 34 counts by a
jury. The amount of the penalties has
been thrown out but the the verdict still stands.
So he's a convicted fraudster. He is selling a coin and and and
a scheme that I and many many others including Nobel Prize
winning economist have called a fraud.
(42:33):
Months after that, there was a a$2 billion finance deal.
What happened was the brother ofthe president of the UAE, who
had bought a 49% stake in World Liberty Financial, later used $2
billion of World Liberty's stablecoin to invest in the
crypto exchange Finance. Soon afterward, the Trump
(42:55):
administration announced that itwould give the UAE access to
advanced AI chips than NVIDIA chips that you mentioned.
Despite sincere national security concerns, everyone
insisted that the two incidenceswere unrelated.
Months after that $2,000,000 Finance deal, President Trump
pardoned Finance's Co founder Chung Peng Zhao was known as CZ,
(43:21):
who had pled guilty to enabling money laundering.
The Wall Street Journal reportedthat Finance's engineers had
also helped build the technologybehind World Liberty's stable
coin. Again, Finance and the Trump
administration say there is no connection, but these are the
kinds of conflicts. It seems to me that as long as
the president is personally invested in the future of
(43:41):
crypto, make a person plausibly want to question where his
interests actually lie. Do you agree?
Of course, I think that for anyone just listening to the
facts that you just recited, it's quite sad as an American to
feel as though the President of the United States is not only
(44:04):
not looking after the citizens who elected him, but enriching
himself and his family, hardening convicted criminals
and undermining again this thingcalled money trust that has done
(44:24):
so much good for this country and the world.
I would argue stability and trust of our currency,
undermining it all via cryptocurrency.
Does this say more about Trump or does it say more about
crypto? I don't think you have to
choose. I mean, it reveals so much of
the essential problems of cryptocurrency.
(44:45):
Again, just going back to our but.
Does Trump's involvement in it somehow legitimize it?
I mean, if the president of the United States is participating
in this scheme, does that legitimize that?
And is it dirty because of Trump?
Or is it? You know, like, oh, it's always
been dirty. I mean, Jeffrey Epstein was
investing in cryptocurrency whenDonald Trump is still calling it
a scam and, you know, criminal activity.
(45:06):
And they were friends, by the way.
Right and criminal activity really was the first use case
for crypto is so when it came out in 2009, it kind of
languished. There really wasn't anything you
could do with it. And the first use case for
crypto was the Silk Road, a darkweb drug marketplace where you
could also order assassination attempts and and that's where
(45:27):
Bitcoin found a use case. You can pay people on Bitcoin to
obscure your identity. So crime has always been a part
of cryptocurrency from its very,very, very early days.
So John Trump's nothing new but in that sense.
But he is, I mean, he's the mostpowerful man in the in on on the
planet. He's also the head of the most
powerful government on the planet.
(45:48):
And crypto was set up to be outside of government control,
right? It's the decentralized,
democratized future of money. Pretty ironic that they now need
the most powerful man in government to to spread their
message far and wide. Does it give it legitimacy
perhaps to some people who who who believe in this convicted
(46:11):
fraudster president. But what it really does is allow
him to use his power to get crypto further into our
regulated system. And when it blows up again, we
will be footing the bill collectively all.
Of us all the while enriching himself correct.
Just want to sort of wrap it up and play it forward.
First of all, there is a recently published paper by
(46:31):
Google suggesting that breaking bitcoins cryptography key using
quantum computing is perhaps only 7 to 10 years away.
In other words, this entire technology could be obsolete,
made completely obsolete by a new technology.
For a crypto skeptic like you, how would that underline your
(46:55):
argument? I mean, the technology argument
behind Bitcoin is kind of ridiculous.
Blockchain has been around for avery long time.
It's 35 years old. It goes back to 1991.
Stuart Haybert and Scott Stornetta at Bell Labs, building
off the work of cryptographers like David Chong.
You'll notice something about blockchain.
(47:15):
Nobody outside of the crypto industry uses it for anything
because it doesn't work very well.
Bitcoin can only process 4 to 6 transactions, 5 to 7
transactions a second. Visa can do 24,000.
It cannot scale as a payments method.
Even Sam Bagmafried admitted that when I interviewed him.
(47:35):
So their argument that Bitcoin was attack innovation has always
been false. What Bitcoin does do, what
blockchain does do is obscure the identities of the people who
are transacting, which is reallyhelpful if you're a criminal.
So the only use case that Bitcoin has had, of course,
again is crime and gambling. I don't know that quantum, you
(47:56):
know the the the eventual undoing of bitcoins cryptography
via quantum computing. That is so far outside of my
ability to understand that I would never.
But would you welcome it? But what do you think?
Look, in a piece for Slate last year, you you warned that the
convergence of cryptocurrency inthe banking system could really
(48:18):
be driving toward the next greatfinancial crisis.
If there were to be a recession and investors rush to dump their
crypto assets and those are mainstreamed within the American
banking system, then as you've said, we're all on the hook for
it right now. How much more likely is this
scenario becoming? I think I wrote that in the
(48:42):
spring summer of last year. Since then, the Genius Act has
passed. The Clarity Act is being
debated. And Jamie and.
And Jamie Dimon and the banks are fighting the the crypto
community over whether crypto will be regulated like a bank.
Right. But crypto is already, even if
the Clarity Act isn't passed, has already gone much further
(49:02):
into the system or is on its way, and the probability of
recession has increased significantly.
So what does it take to prevent that from happening?
In the medium to long term, it requires new legislation.
It requires a different administration that will
actually enforce the law. I mean, the Trump
administration's gutted. The SEC just gutted it.
I don't. I figure whether it's hundreds
(49:23):
or thousands of lawyers have left, but many, many, many
lawyers have left. I've heard from some of them.
You have. Yeah.
And we either have laws in this country and respect for the rule
of law, or we don't. But the myriad ways in which the
Trump administration is attacking the rule of law
unfortunately includes financiallaw.
(49:43):
Are you saying if we have a? Recession if we You're saying
this could happen on Trump's watch?
Yeah, absolutely. Yeah, sure.
I mean, I can't predict the probability of any recession.
No one, no one could. But my worry is that or.
It could happen on the next person's watch because of the
instability created during this period.
Absolutely. And predicting recession is sort
of an impossible game. But there are very troubling
(50:04):
warning signs of a, of a potential recession.
And if there is a recession, even if it's a mild recession,
the correction that happens in the markets when they
historically when, when they sort of sense the recession is
here or coming, the most speculative assets fall the
fastest. And because crypto, I would
argue is only speculation, thereisn't an asset behind it.
(50:24):
It has historically fallen very,very quickly and almost been
sort of a Canary in the coal mine for what might happen in
2022. When crypto crashed, it was
right when the Fed started raising interest rates.
I mean, it was right then, like within months.
And of course, the market corrected, too.
Now it's since gone up, but there's no reason to believe
that it couldn't happen again. And unfortunately, because
(50:45):
crypto is further into our system, the effects could be
worse. And Mackenzie, thank you for
joining me on Firing Line. Thank you for having me.
Guys have, I guess you would call it a higher risk tolerance
and guys tend to be a little overly confident, let's say, in
their abilities to to win games.And also, I mean, just
scientifically for guys young enough, their prefrontal cortex
really hasn't developed yet. They're engaged in all this
behavior that's really not very smart, quite frankly.
And so it really makes a lot of sense that guys are into crypto.
(00:23):
That's actor and filmmaker Ben McKenzie explaining why
cryptocurrency appeals to young men.
I'm Margaret Hoover. This is the FIRING LINE podcast.
Who are you? Whoever you want me to be.
Two decades after the OC made him a star, Ben McKenzie has
emerged as one of Hollywood's most outspoken critics of
(00:47):
cryptocurrency. This is a film about a thing
called cryptocurrency. It's pretty stupid.
Mackenzie's new film Everyone IsLying to You for Money, examines
the risks he believes crypto poses to investors and the
economy. He says the film was funded in
part by betting against crypto stocks in the market.
If they want to be banks, then they need banking licenses.
(01:08):
They need to play by the rules. If we start mixing the fake
money with the real money, all hell will eventually break
loose. Mackenzie told me why he doubts
cryptocurrency's potential to bea force for good in the world.
You're creating this black market money that can be used
for all sorts of purposes, some of them good perhaps, but most
of it bad and really bad. Is it worth it?
(01:29):
And what he makes of the one time crypto skeptic Donald
Trump's embrace of the industry.Donald Trump is a convicted
fraudster. He is selling a coin and a
scheme that I and many, many others, including Nobel Prize
winning economists, have called a fraud.
That Mackenzie, welcome to Firing Line.
Oh. Thank you for having me.
You have gone from acting to becoming one of the most vocal
(01:55):
and outspoken critics of cryptocurrency.
You have criticized crypto in print, in Congress, and now in a
film. What made you so convinced that
this was not an innovation, but something much more dangerous?
Just a couple of months of research online in the midst of
(02:17):
a COVID pandemic. Originally I have a degree in
economics as an undergraduate, but like you said, I, I, I had
in showbiz and still in showbiz,but the pandemic, you know, kind
of shut showbiz down for a whileand I was really bored and.
Looking for a rabbit hole to go down.
(02:37):
Yeah, yeah. I think a lot of people can
relate to this during the pandemic and maybe particularly
guys and in terms of the Internet fascinations and, and,
and investing and, you know, what do I do with my money?
A buddy of mine came to me at that point and said I should buy
Bitcoin. Many people can relate to that
as well. But my friend Dave had given me
(02:59):
terrible financial advice beforewhen I was in my 20s and he told
me to invest in this penny stockand.
Red flags went off immediately. Yeah, red flags.
So I said, Dave, I'm not, I'm not investing in Bitcoin, but I
am interested what, what is it? You know, explain it to me.
And he couldn't, I mean, he justcouldn't, you know, I said, so
it's a, it's a, it's a currency.I, I, I truly had paid no
attention to cryptocurrency prior to 2020.
(03:23):
I mean, I'm not exactly at the edge of this sort of I'm not,
I'm not, I'm not a tech adopter.I'm not the first rug.
I'm pretty slow in that way. And I said, what is it?
And he said, you know, it's a cryptocurrency.
I said, OK, so it's, it's a current, it's a currency.
You can buy stuff with it. Well, and the conversation just
kind of went on from there because of course, Dave wasn't
(03:44):
using crypto to buy anything because hardly anybody uses
crypto to buy anything. He was putting money into it,
hoping to make money off of it through no work of his own.
That's the security. That's the definite, that's an
investment, right? Obviously.
And that should be a security under American law, but it
wasn't classified that way and it wasn't being treated that
(04:05):
way. Wasn't even regulated then.
Very loosely regulated. And so many of the companies
were operating, yeah, so many ofthe companies were operating
overseas, offshore in the Caribbean in particular, like
FTX, where Sam Bankman Freed hadhis company.
One of the amusing parts of thatis that I'm in my mid to late
40s, in the mid aughts, online poker was really coming into
(04:30):
vogue and you could play poker and send money onto these
websites and gamble with real money.
And Dave was really into this. And I remember asking Dave,
where are you sending the money?He goes.
And sure enough, you're, you were sending it to the same
Caribbean islands that guys werenow sending their money to buy
(04:52):
crypto. And I thought, this is bad.
This is really, really bad. The film begins with a desert
scene. It is introduced as a rack.
In the next scene, you're walking up the hill and it turns
out Iraq is actually West, TX. Why does that scene set the
(05:13):
stage for the film? The film is called Everyone Is
Lying to You for Money. I mean that quite literally.
Even in our best selves, we are putting on a face.
We're all performing. That scene is so crucial because
I sneak in what money is you payclose attention.
(05:36):
I say, what is money? Money is trust, but that trust
is fragile and it can shatter inan instant.
And then I reveal the joke that I have just fooled you, yes lied
to you for money. I really want people to
understand how fragile these these social constructs like
(05:58):
money are. We're, we're incredibly
privileged in the United States to have the world's reserve
currency since World War 2 or arguably even before then.
And so we benefit from quite frankly, the the most stable
currency that's currently existed in the most widely
traded in the in human history. But even our currency can can be
(06:24):
volatile. And what crypto is trying to do
is very dangerous because one ofthe things that it does is it
undermines the faith and confidence that we have in our
current system. I understand why people are
angry at our current system, butcrypto doesn't fix it, it makes
it worse. You write in your book Easy
Money. The original story that Bitcoin
(06:44):
represents a response to the devastating failures of the
traditional financial system holds significant power because
we all agree on its premise. Our current financial system
sucks. Yeah.
Does it really suck? Yes.
Why? There's approximately 1000
billionaires in the United States, and they control as much
(07:04):
wealth as the bottom 50% of the country.
But the power that these billionaires have, particularly
after Citizens United, their ability to use the money to
affect and quite frankly, undermine our democracy, I think
destroys the trust that we have in our economic system and our
financial system. Because a lot of people feel
that they can't get ahead. You know, the younger, younger
(07:27):
generation has a real hard time affording houses.
People can't afford childcare, medical care.
And yet we live in the most wealthy society that's ever
existed. So, so why can't we?
Why can't it be better? I guess is one way I'd put it.
So if I understand your argumentcorrectly, those who are not
benefiting from our economic andfinancial system are not getting
(07:52):
ahead are being duped by crypto that it could be a means for
changing their economic livelihood?
Absolutely. I mean, crypto is in many ways
just a get rich quick scheme forthe retail public.
It's just, you know, buy some crypto and and you're going to
get rich, right. And that story has worked off
and on. You know, crypto is so volatile
(08:14):
that it goes up and down, but but that's that's the essential.
So why is why is crypto not the answer to the grievances of
those people? Because most of them are going
to lose. I mean, most people are, most
people who have ever invested incrypto have lost money.
Most people will. And the reason that that that
has to be true is due to the fundamental nature of it.
So. Which is what?
So because cryptos don't really work as money, I can't go to my
(08:37):
neighborhood deli deli in Brooklyn and buy bagel with
Bitcoin, right? They're going to look at me like
I'm crazy because it doesn't really work as money works with
some form of investment. Well, what are you investing in?
You're investing in lines of computer code stored on ledgers
called block chains. But there's no correlation with
any real world asset. So it's a very strange
investment. You're basically investing in
(08:59):
the idea of Bitcoin and the ideathat other people will value it.
Well, in economics that's that'scalled greater fool theory.
You're basically hoping that there's you see the price of
something going up, you buy it because you think it's going to
keep going up and you can sell it to a greater fool than
yourself. But you know that's a fun game
until you reach the peak and then you're the biggest idiot
(09:21):
left holding the bag. Crypto can't be anything other
than at best a 0 sum game where for for me to win, you have to
lose. It's it's imagine where we're
playing cards at a poker table in Vegas.
You might win a hand, I might win a hand, but my winnings come
out of your pocket and vice versa.
(09:42):
There's, that's where the money is.
As we play the game, the house is taking the rake.
There's a tiny amount of money charged to the players to to
facilitate the game. So could you win in Vegas?
Of course, if you play long enough, though, the average
player in Vegas is going to lose.
Of course they are, because how else do they keep the lights on
(10:02):
in the casino? So crypto is sort of like an
unregulated, unlicensed casino. The difference I would say is at
least in Vegas, there's entertainment value.
They give you free drinks to tryto get you to gamble more.
You can catch a show, have a dinner.
You know, cryptos like Vegas without the drinks, the dinner
or the show. Take on this argument then,
(10:25):
because JP Morgan during the Iran war so far has reported
that crypto has held up better than gold and silver.
And if you look over the last seven years, there has been
enormous volatility in crypto. But Bitcoin has been up more
than 1200% in that period of time, right?
(10:47):
So even though it can be volatile in a diversified
portfolio, what's wrong with building in some crypto as a
hedge? So look, I'm not offering people
financial advice. I mean, I criticize quite
directly all the celebrities whodid offer financial advice, but
in the abstract, let's say the only thing I ever say to people
in terms of investing is don't gamble with money you can't
(11:09):
afford to lose. It's just basic stuff.
So let's talk. Your question was very
interesting, but it had a coupleof different parts to it and and
I want to take them each separately.
So in terms of the price having gone up over time, if you're
saying if I bought in early, I would have made money and I'm
describing it as a Ponzi scheme or a multi level marketing
(11:31):
scheme, one of the features of which is if you buy in early,
you make money. It's not really a refutation of
the argument, right? Yeah, it's it's it's a very it's
a very power. It's probably the most powerful
argument that crypto advocates have is trying to give you what
they call FOMO. Fear of missing out on the.
Investment. Yeah, we used to call it greed,
(11:52):
but now we call it FOMO. But, you know, which is fine.
You know, human, human nature, that's a very powerful
psychological argument, right? But it doesn't refute the
essential criticism that no, structurally this is still a
Ponzi scheme or multi level marketing scheme.
As for the other side of crypto,we've talked a lot about the
gambling, but crypto only has two use cases.
(12:12):
It's gambling and it's crime. And the crime is a very
important part that we really need to focus on, particularly
at this moment because what crypto does is go around the
regulated system, right? You're not using a bank to send
this thing of value. You are.
You are using the blockchain. Now, who does that appeal to?
(12:33):
I mean, quite frankly, it appeals to criminals by and
large. Could you use crypto for a good
purpose? You sure?
It's a tool, but let's just be honest, you know, the amount of
crime that's facilitated via cryptocurrency is staggering.
There was an estimate, a study done by a crypto company that
found that last year approximately $150 billion of
(12:55):
illicit activity was financed via cryptocurrency, $150 billion
in a single year. We're talking about massive
International Criminal organizations.
You've likened crypto to a cult.Yeah, there are even people who
you interviewed in your film wholost their life savings in
(13:16):
crypto fraud schemes. And even still believed in the
power of cryptocurrency. Perhaps had to believe because
they'd lost. So I interviewed victims of a
scam called Celsius and earlier in the film I interviewed the
CEO and he's just a complete used car salesman.
(13:38):
You know, guy he's now in jail and I initially wanted to talk
to these folks just to understand them and and and kind
of sympathize with them quite frankly, and I did I found it
was all guys we had posted on a Reddit page for self use victims
and every single response was from a man, which I think is
(13:59):
interesting and can. I ask you about that really
quick. I mean, the largest percentage
of people who are involved in crypto in the United States are
men. Under 5025% of men under 50 are
involved in crypto. What is that about?
It's 42% amongst men 18 to 29. OK, it is almost half.
(14:19):
It is a huge number. What?
I mean, you just said that's sort of interesting.
Like what is that appeal? Well, so, so guys are more
likely to be gamblers, especially young guys.
And I, you know, I'm not a youngguy myself, but I, what I was
once, I remind my kids all the time and I remember I, you know,
let's go back to the online poker example I used earlier.
I liked poker At the time I was single.
(14:42):
I was living in Los Angeles. I would have games at my house.
I bought a poker table so I could understand that guys, I
have, I guess you would call it a higher risk tolerance.
You're young, you're kind of, what else are you going to do?
You might as well sort of get that endorphin rush from
gambling, right? And guys tend to be a little,
you know, overly confident, let's say, in their abilities
(15:04):
to, to win games. And, and also, I mean, just
scientifically for guys young enough, their prefrontal cortex
really hasn't developed yet. Well, truly.
So like they really don't have the same level of judgement as
women do. And so that's why they die in
car accidents more often as young and they, they smoke
cigarettes, you know, that they're do engage in all this
behavior. That's really not very smart,
(15:24):
quite frankly. And so it really makes a lot of
sense that guys are into crypto,right?
But what was so heartbreaking about talking to the victims is
I, I, I spoke with them, I bonded with them.
And at the end of the film, I come back to them and I asked,
do you still believe in cryptocurrency?
And every single one of them says yes.
And that really changed my understanding of what we were
(15:46):
talking about. How?
Well, imagine another investment.
Imagine you invested in some stock, you know, Google, but
your timing was wrong and somehow it went down.
If I asked you about that, you go, yeah, probably shouldn't
have done that. You know what I mean?
Like it? Was like the emotional
connection. How do you understand?
That because I think for some ofthese guys, this was a major
(16:10):
investment for them, not just financially, but mentally,
psychologically, this was their ticket out.
This was their way to achieve the American dream.
One guy, construction worker in Texas, he just wanted to have a
little money so he could spend more time with his daughter.
And he felt because he lost the time, he felt because he lost
(16:31):
the money, he was letting her down.
And I felt so bad for I'm a father.
It was an incredibly powerful scene.
I mean, you, he cried. You cried.
It was over Zoom. It was over zoom.
I know, such a weird thing to beover zoom crying.
It was actually very touching just to see how how how much it
really moved. To and so you know I I can have
by the way, I have had so many wonderful conversations with
(16:52):
people who invested in cryptocurrency.
When you have an actual conversation with them either in
person or via Zoom A1 on one conversation, they're the
conversations are usually quite respectful and even sometimes
loving online, the vitriol is crazy, but online is not reality
Online people are masking their identities and doing all sorts
of stuff. So I, I wanted to show in the
(17:14):
movie that we need to break out of that online construct and
talk to each other, particularlyas men, quite frankly, so that
we can understand each other andhelp each other because men are
very, I can include myself here.Men are prideful.
When we lose money, we do not like to admit it.
(17:34):
Unfortunately, men often hide itfrom their families and, and it
can create devastating consequences.
So I, I think it's really important to understand the
psychology. What was interesting at the end
when they said that they still believed in it, is that really
is a cult, right? I mean, I, I, I, I hesitated for
so long to use that word. There's a great paper when
prophecy fails about what happens when the
(17:58):
prognostications. I'm using that word correctly.
When the, the, the cult leader says the world's going to end
tomorrow and it doesn't do the, what are the members of the
cult? Do they leave the cult?
No, they double down. They, they feel they believe in
it more. And I think that's one of the
things you see with a, with a hardcore group of crypto
investors that's only 5 to 6% ofthe population.
(18:19):
There's a whole other group. They're just playing around with
it and then there's 80 plus percent of the country that's
never bought it. I made the phone for the 80 plus
percent and maybe that 10% that's playing around with it.
The five to 6%, I'm never going to be able to convince them no
one is. They're but they're gamblers.
Right. Some of some of them are
gamblers very much so yes, absolutely.
The hardcore, some of the hardcore ones refer to
themselves as D gens, meaning degenerate gamblers.
(18:43):
That's that's their term for themselves.
So that kind of tells you what you need to know there.
But then there's also a bunch ofguys who are, you know, bought
some because they like this guy in Texas.
They just. I said take it out.
Yeah, yeah. And that says more about us and
our society and our economic system and financial system and,
and kind of the lack of opportunities.
(19:04):
It also says about a lot about us not protecting them.
Yeah, because one of the big beefs with cryptos, it's not
properly regulated. And so the investor protections
aren't there. And that's how these guys get
scammed. And they don't know that.
No, you talk about the men you spoke to.
Another man you spoke to was SamBankman Freed, the founder of
FTX, the crypto exchange that isnow serving 25 years in prison.
(19:30):
You spoke to him very, very, I mean, not, not only a few months
before he was arrested and before the downfall of FTX.
At the time, he was a phenom, widely respected in in finance
and in the media and in Washington.
What did you take away from thatinteraction?
(19:53):
I couldn't tell if there's one where you're like wait, am I
wrong about this? Oh, I absolutely.
Yeah, absolutely. And in retrospect, I would have
gone even more aggressively at him.
Yeah, if only you'd known he would be arrested.
Three months. Later, right?
I mean, I was sipping out of a mug that said fraud
investigator, so I had some ideaof what was going.
On that which was. Thank you.
Yeah. Chef Kiss.
(20:14):
I think one of the wonderful things about being a skeptic,
and there are lots of us, right?I might be one of the more
public faces of the script of skepticism, and I'm one of the
very few people who's been foolish enough to devote years
of my life to this. But we hold ourselves to
account. If I misspeak, if I say
something that's incorrect, I try to, I try to correct it.
I am genuinely interested in thetruth in all of its complexity.
(20:38):
So, and, and quite frankly, the crypto boosters, the really
hardcore ones are, I'm sorry, they are not, they don't engage
honestly with this intellectual conversation.
If you really believe in cryptocurrency, then you really
have to grapple with the human cost from the gambling and the
crime. And if you don't grapple with
(20:58):
those, you're not really being honest with Sam.
What was so concerning was he didn't have answers to basic
questions, right? What does crypto do?
What's the good that it can do? Well, he admitted that it isn't,
you know, fully self actualized as a currency.
Right, it doesn't work now it. Doesn't work in the future.
Yeah, which is, you know, a timehonoured con man.
As you look back on that conversation now, given the
(21:21):
events that have unfolded in Crypto Sunset, how do you do you
look at it differently? Like how do you see Sam Pink
Winfried now when he was being interviewed with you?
How do you understand his interactions with you?
Yeah, great question. I so I attended the trial for
Sam, not every day, but but several days here in New York.
And we were able to learn through the the documents
(21:42):
produced for that case what was really going on with him.
And it's fascinating because at the time he was like, as you
said, he was on top of the world, right?
He had just held a conference inthe Bahamas attended by Bill
Clinton and Tony Blair. He was supposedly one of the 100
wealthiest people in the world going to Bloomberg.
He would very soon thereafter beon the cover of Fortune with the
(22:04):
headline the next Warren Buffettquestion mark.
So he really was king of the world.
But crypto was going down, the price had been crashing, and he
was supposedly going to bail it all out.
He was likened to JP Morgan as the guy who bailed out all the
banks in the early 1920s to savethe race.
He was the JP Morgan of crypto. Exactly.
And yet when I sat in this room with this 30 year old.
(22:26):
Not even. Yeah, 20 something year old kid
in cargo shorts and AT shirt andsneakers.
And I asked him a basic question.
What does it do? And he can't answer adequately.
I mean, yeah, I just, I didn't know what to feel.
I felt very concerned with what was about to happen.
And then what we learned later is that his empire was also
(22:47):
falling apart. You know, the way he ran his con
is he changed the code or he hada, one of his employees changed
the code inside of the FDX source code so that his trading
firm could borrow from the assets of his customers on his
exchange, steal their money. And his trading firm, which was
(23:07):
supposedly one of the best in the world, was actually terrible
at trading. It was losing tons of money and
so it needed to borrow, steal more and more money.
And even when I was speaking to him in July, they were in deep
trouble. So now I look back at the
interview and I realized why he was so fidgety, why he was so.
Because he knew the truth. He must have.
Yeah, you have said for the billionth time, crypto has only
(23:30):
two use cases, gambling and crime.
I want to push back a little. I have had a Afghan
entrepreneur, a woman named RoyaMahboob, who is one of the first
tech founders in Afghanistan, inthe time when Afghanistan was
(23:51):
protected by the United States and all of our allies.
And she still runs her organization in Afghanistan, now
under the Taliban, and maintainsthat Bitcoin has provided a
financial lifetime to women in Afghanistan who are denied
access to banks by the Taliban. It's helped Venezuelans protect
(24:11):
themselves under the material regime.
What about the case where, underan authoritarian regime, the
freedom fighters are the criminals, right?
And they're the ones who are benefiting from this murky
system that allows them to create a livelihood that is
actually aligned with our principles.
Right, right. That's.
(24:31):
Using using the this currency. That that's a great example.
Let's look at that. So as I understand it, I'm not,
you know, I only know what you just told me, so you have to
correct me. But the Taliban isn't allowing
banking, right? So what she's doing?
Is criminal. Is criminal right?
But we believe in it morally right, ethically, we, the you
(24:53):
and I believe that what she's doing is not only not wrong,
it's good. But that illustrates my point
perfectly, which is that that iscriminal activity.
Now the the bigger question to me is.
Yeah, but it's banking for womenin Afghanistan.
Right. But but so how much is going on
of that versus how much is goingon of a bad crop?
(25:14):
No question. I mean, I mean, unfortunately
you cannot find statistics on this because it's crime.
They're not going to tell you what they're doing.
But I just want to point out thecrime and what it is.
Jeffrey Epstein was a secret funder of Bitcoin development.
You. Want to go there now?
Well, we need to. Talk about what kind of crime
we're talking about. We're talking about child sexual
(25:37):
abuse material we're talking about.
Terrorist financing. We're talking about Russian
oligarchs selling sanctioned oilto the Chinese for Chinese
drones to send to Ukraine. We're talking about the Iranian
government who is charging thosewho wish to pass through the
Straits of Hormuz in cryptocurrency.
Yes, of course they are, becausethey don't want to deal with the
(25:57):
banks. And so the question we have to
ask ourselves is why are we failing so many different ways
to provide for the good people like this, you know, woman in
Afghanistan, the ability to actually interact with our
financial system and allowing the criminals to succeed so
(26:19):
wildly in committing their crimes.
We're failing and we have to fixthose.
You mentioned Jeffrey Epstein. Files released by the Department
of Justice reveal Jeffrey Epstein's role in the early
development of Bitcoin. Crypto boosters have downplayed
Jeffrey Epstein's involvement inthe industry, but why do you
think it's so significant? What a shocker.
They downplayed the world's mostnotorious pedophile being
(26:41):
involved in their cryptocurrencyfrom a very, very early stage.
Because it doesn't. What does Jeffrey Epstein's
association with crypto say about OH?
Well, so if Jeffrey Epstein score businesses were money
laundering and blackmail, A synonymous currency that
operates outside the banking system might would be very
(27:01):
attractive. So it doesn't take a genius to
figure out why Jeffrey would have liked it.
I think it just again points us back to the same question you
and I have been going or the same point I've been hammering
and you and I have been going back and forth over is you're
creating this, there's the gambling, that's the retail
side. You're creating this black
market money that can be used for all sorts of purposes, some
(27:23):
of them good perhaps, but most of it bad and really bad, right?
Is it worth it? Is this system?
I'm not, I'm not advocating to outlaw it because I don't think
that would work because of the nature of crypto.
I don't think outlawing it, you'd have to do it on a global
scale. It seems very difficult, but you
(27:45):
can properly regulate it and theway to regulate it on the
speculative currency side, Bitcoin, Ethereum, the 20,000
cryptocurrencies out there is assecurities for the stable coins,
which is the the way that these tankers are paying their passage
fees through the Strait of Hormuz is is via stablecoins.
(28:05):
Stablecoins are cryptocurrenciesthat are pegged 1 to one with
real currencies like the US dollar.
Which, by the way, are legal nowbecause of the Genius Act, which
was passed by the House of Representatives and the Senate
and signed by Donald Trump. And one of the things the Genius
Act accomplished was to provide that by law, every coin that was
(28:27):
issued in the United States has to be backed by the value of the
US dollars, some material wealth.
It can't be just tied to nothing.
It has to be backed by the valueof a dollar.
Yes. However, what it's really doing
is it's also sort of integratingthe stable coin economy into our
(28:47):
banking. System it's, it's legitimizing
it. Very much so, and and not quite
treating them like banks sort ofbecause.
They're not FDIC protected. Exactly.
And that's that's really the crux of the issue to me is if
they want to be banks, then theyneed banking licenses.
They need to play by the rules. If we start mixing the fake
(29:07):
money with the real money, all hell will eventually break loose
because at some point, these stable coins, which have failed
repeatedly over the years, one of them fails in 2022 and it
starts the crash that I documentin the movie.
When one of them fails and it's tied into our banking system, if
it's big enough, it can take down the entire system and we'll
(29:28):
end up bailing these guys out, just like we did in the subprime
crisis, which is why crypto was created to begin with, right?
So we'd be recreating the same thing that crypto was supposedly
against. It is well known that the crypto
industry has doubled down on their political activism, their
support for political candidatesand elected officials on both
(29:52):
sides of the aisle. The amount of money that has
been spent on political campaigns and on educating
members of Congress has skyrocketed in recent years.
Is that what you think the the crypto industry wants from the
US government? Ultimately, they want to be in a
(30:12):
position where they're so legitimized that they can be
bailed out by the American taxpayer if the whole thing goes
sideways. I mean, I don't know that it's
that complicated. I think it's more they just
don't want meaningful regulationor they want to be able to play
by a special set of rules where they're not treated as
securities, they're treated as commodities.
(30:34):
The There's another piece of legislation that is threatening
to pass Congress. This is the Clarity Act.
The CLARITY Act, which is a market structure Bill that
would. What's your problem with the
Clarity Act? It would put the CFDC, the
Commodities Future Trading Commission, in charge of crypto
as. A.
And you think it should be the SEC of the Securities and
Exchange? Commission.
Yeah, this. I see it.
I know this gets dorky, but the CFDC?
This is firing line. We are just.
(30:55):
Firing. This is we're dorky.
This is who we are. We're no the CFDC is the
smaller, weaker agency and has always been so.
And the crypto industry has longwanted the CFTC to be in charge.
Sam Bankman Freed was pushing a bill that was affectionately
known on Capitol Hill as Sam's bill that had certain
similarities to the Clarity Act where crypto would be treated
like a commodity. That was before he was arrested
(31:18):
for running one of the largest Ponzi schemes in history.
So we can do this again, right? We can do this again.
And like I say in the movie, many times we are living in the
stupidest age, you know, imaginable.
But it's also dangerous. Those things are not in conflict
or something could be stupid anddangerous at the same time.
Donald Trump is a good example. So in terms of the market
structure, the speculative currencies need to be regulated
(31:40):
securities, But the stable coins, I really think we need to
ask a question, which is if you're saying something is a
dollar, they're saying these stable coins are worth a dollar
and yet they're not backed by the full faith and credit of the
United States. Isn't that a counterfeit dollar?
Why are we allowing these guys to trade off of the credit, the
full faith and credit that we collectively have given to the
(32:04):
United States dollar in the formof our labor, in the form of our
participation in the economy andletting them draft off of that
and with no cost to them, and then we're going to end up
bailing them out? Outrageous.
I mentioned this is a dorky program.
This program actually has been adorky program for more than 50
years. William F Buckley junior started
this program in 1966. It went through 1999.
(32:27):
You can go back to the archives of Firing Line and find
something relevant to every single conversation I've had
with every single guest. And in this context, well,
Buckley never spoke about cryptocurrency.
He did talk about regulating theSEC and its role in regulating
markets. In 1996, in a Firing Line
debate, a gentleman named Bob Hormats, who was the vice
(32:48):
chairman of Goldman Sachs, had adebate on Firing line with
William F Buckley Junior and they discussed the role of the
SEC working with the markets to regulate the Stock Exchange.
Take a look. The SEC does important things.
First of all, it ensures adequate disclosure of
information. More information to the market
is good for the market. It's good for people who are
(33:09):
considering buying stocks wouldn't.
Provide this on its own. The market may or may not.
It seems to me that the market from time to time has not been
providing adequate disclosure. And in fact, there's a history
of certain amounts of of deals made with that adequate
disclosure, which is in part thereason we have the SEC.
But the SEC has learned over a period of time to work with the
market. Most of the regulations put out
(33:29):
by the SEC, not all, but most, are done in conjunction with
participants in the market and are done relatively
constructively. I wouldn't abolish it.
I think Wall Street needs to work with it and does work with
it so. How refreshing.
So, but, but this is the argument that, you know, the SEC
can work with the markets and they can successfully regulate
the stock market. The Trump administration and
(33:49):
Congress are consulting the crypto industry as they develop
regulations that will ostensiblyregulate crypto markets.
Why is the SEC better positionedto regulate crypto markets?
Because these are investments. I mean, we really need to start
with what they're doing. You're putting money into them,
(34:13):
hoping to make money off of themthrough no work of your own.
There's a thing called the Howietest, which has four prongs.
So securities laws at the federal level were passed in the
1930s originally because we didn't have them in the 20s.
And the Roaring 20s was fun until the crash of 1929, which
led to the Depression and, and we realized we needed to have
(34:34):
some rules. So for almost 100 years we've
defined securities quite broadlyunder the Howie test, an
investment of money in a common enterprise with the expectation
of profit to be derived from theefforts of others.
And that is applied to all sortsof legitimate investments and
illegitimate ones. And the SEC is also in charge of
(34:56):
regulating Ponzi schemes, of determining whether investment
schemes are essentially fraudulent.
Now, they can't, you know, presscriminal charges, but they can
do fines and things like that. And they can refer cases to the
DOJ. And so this system has worked
for nearly 100 years. And yet crypto says, oh, no, no,
no, no. We're, we're, we're so new,
We're so innovative, even thoughthe technology is old, that we
(35:18):
need our own rules. You know that is a a a just a a
an obvious tell. The Internet doesn't even have
its own rules. It's being it's being regulated
by cable company Rules I. I think, I think you're the clip
that you played is really interesting because he he
mentions directly what securities laws are predicated
on and it's disclosure. You need to know who you're
(35:39):
giving your money to and what they're doing with that money.
And the crypto industry doesn't want that information out there.
Now, why, if you were a legitimate investment, would you
be afraid of telling people thisis where your money's going and
this is what we're doing with it?
Fortune favors the brave. You have been comically critical
(36:01):
of celebrities who have put their names on crypto.
Yeah, you have even said that Matt Damon's Super Bowl
commercial of crypto.com, like haunted your dreams.
Yes. Why?
Because even when I was startingout and I hadn't really done a
(36:21):
ton of research on crypto, I knew that Matt Damon didn't know
anything about cryptocurrency. How did you know that?
Really, really Matt Damon sitting there like studying the
blockchain taking cryptography classes with Gary Glensler,
which by the way, I did former head of the SECI took his one of
his online classes about what what is this crypto stuff Look,
I knew is perhaps too strong. I had a strong suspicion that
(36:46):
the way that these deals work isthat the celebrities are paid in
real money to convince you to take your real money and turn it
into something else that is really dangerous.
Celebrities have always showed products.
There's nothing wrong with that.In the movie I kind of make a
joke out of it because my wife is showing.
Products. Hair, hair care products and why
(37:09):
do companies hire celebrities? Because they have a relationship
with the audience, right? There's a trust that people have
in these celebrities. And so, you know, Marina's
selling me a hair product, maybeI'll buy it.
There's nothing wrong with that.But this is different.
This is a financial product. This is an investment.
This is not, you know, a car or or soap.
(37:30):
And you're not supposed to offerpeople financial advice unless
you're a licensed financial advisor.
It's not a law that's enforced really ever.
But that's effectively what I what I felt the celebrities were
doing. And I assume having been in
Hollywood, the way this worked is the crypto companies came to
the major agencies in Hollywood with enormous amounts of money
(37:52):
and said, you know, for this price, we expect this level of
star. And, you know, they work their
way down and sort of see who they can get.
And at that time, in 2021 and early 22, they got the most
famous people in the world to sell for them actors, musicians,
athletes and for the celebrities.
(38:13):
My assumption is they weren't too concerned about what the
investment advice they were offering was.
They were they? They wanted the.
Dollar and your concern is that it dupes real people?
Of course it does. And, and that is when the
majority of the people who have ever invested in cryptocurrency
enter the market as 20/21 that, you know, there's an interesting
thing, the pandemic, you know, increase the money supply quite
(38:35):
significantly because we had stimulus checks and things like
that. So there were a lot of the
everyone was at home just like, just like me.
They were getting checks and then they were putting it in.
Crypto, some of it, Yeah, exactly.
But can I just tell you this is Matt Damon came out on this
program in 2022 and I asked him about his his crypto ads.
(38:55):
He said he was shilling because then he took the money from the
ad and put it directly into his charity.
And he explained a series of circumstances wherebycrypto.com
then partnered with water.org. And so ultimately he feels that
shilling for crypto ended up helping his charity, which is
(39:16):
helping to build water wells allover Africa.
So it was shilling for the common good.
So that doesn't address the criticism that the investors are
losing money, right? You're sort of shifting the
conversation to about this charity, which does sound like
it's doing wonderful work. I don't know what he'd say about
it now. I don't know what anybody say
about it now. That's probably all I feel
(39:37):
comfortable saying about it. The celebrities, many of them,
have gone awfully quiet about their previous support of
cryptocurrency. So President Trump's views have
changed about cryptocurrency. Back in 2021 he said this about
crypto. Bitcoin I just seems like a
scam. I don't like it because it's
(39:57):
another currency competing against the dollar.
I want the dollar to be the currency of the world.
That's what I've always said. Since then he has changed his
tune and he has said this. We're making the United States
the Bitcoin superpower, the crypto capital of the world, and
it takes a lot of the pressure off the dollar it takes it does
a lot of good things. At the same time, according to
Forbes, Trump has made an estimated $1 billion off of his
(40:22):
crypto holdings. What does President Trump's
embrace of crypto tell you? That he's the most corrupt
president in U.S. history and it's not even close.
I mean, to state the obvious andhe's the main vehicle for his
corruption is cryptocurrency. That's where the majority of the
(40:44):
money that he's made his brief time in office, the second time
around where it comes from, he made a little money off of these
meme coin things like Trump coinand Melania coin.
But he made most of the money. He and his family made most of
the money off of a stable coin. And to give you an example of of
the kind of money we're talking about, Sheik in the UAE invested
(41:08):
$500 million into Trump's stablecoin.
And as I believe the Wall StreetJournal, New York Times
reported, in exchange the UAE received NVIDIA AI chips.
They also I would argue. They they argue that there was
nothing, there was a complete coincidence in the timing of the
(41:28):
sale of the NVIDIA AI chips to the UAE.
Yeah, that's a very expensive coincidence.
Why don't you buy that? I mean, I, I don't, I don't know
what else to imagine that the $500 million was not in the form
of cryptocurrency, but was just money.
They just here's $500 million. What would you call that?
(41:50):
I would call that a bribe. So we're just changing the word
and we're putting this word cryptocurrency, which most
people don't really know anything about, just sort of
kind of distract from this sort of basic corruption of the
scheme. I mean, it's so grotesque.
It's really kind of infuriating.And we have to remember that
Donald Trump is a convicted fraudster.
(42:11):
You know, he was convicted on 30.
The Trump Organization was convicted on 34 counts by a
jury. The amount of the penalties has
been thrown out but the the verdict still stands.
So he's a convicted fraudster. He is selling a coin and and and
a scheme that I and many many others including Nobel Prize
winning economist have called a fraud.
(42:33):
Months after that, there was a a$2 billion finance deal.
What happened was the brother ofthe president of the UAE, who
had bought a 49% stake in World Liberty Financial, later used $2
billion of World Liberty's stablecoin to invest in the
crypto exchange Finance. Soon afterward, the Trump
(42:55):
administration announced that itwould give the UAE access to
advanced AI chips than NVIDIA chips that you mentioned.
Despite sincere national security concerns, everyone
insisted that the two incidenceswere unrelated.
Months after that $2,000,000 Finance deal, President Trump
pardoned Finance's Co founder Chung Peng Zhao was known as CZ,
(43:21):
who had pled guilty to enabling money laundering.
The Wall Street Journal reportedthat Finance's engineers had
also helped build the technologybehind World Liberty's stable
coin. Again, Finance and the Trump
administration say there is no connection, but these are the
kinds of conflicts. It seems to me that as long as
the president is personally invested in the future of
(43:41):
crypto, make a person plausibly want to question where his
interests actually lie. Do you agree?
Of course, I think that for anyone just listening to the
facts that you just recited, it's quite sad as an American to
feel as though the President of the United States is not only
(44:04):
not looking after the citizens who elected him, but enriching
himself and his family, hardening convicted criminals
and undermining again this thingcalled money trust that has done
(44:24):
so much good for this country and the world.
I would argue stability and trust of our currency,
undermining it all via cryptocurrency.
Does this say more about Trump or does it say more about
crypto? I don't think you have to
choose. I mean, it reveals so much of
the essential problems of cryptocurrency.
(44:45):
Again, just going back to our but.
Does Trump's involvement in it somehow legitimize it?
I mean, if the president of the United States is participating
in this scheme, does that legitimize that?
And is it dirty because of Trump?
Or is it? You know, like, oh, it's always
been dirty. I mean, Jeffrey Epstein was
investing in cryptocurrency whenDonald Trump is still calling it
a scam and, you know, criminal activity.
(45:06):
And they were friends, by the way.
Right and criminal activity really was the first use case
for crypto is so when it came out in 2009, it kind of
languished. There really wasn't anything you
could do with it. And the first use case for
crypto was the Silk Road, a darkweb drug marketplace where you
could also order assassination attempts and and that's where
(45:27):
Bitcoin found a use case. You can pay people on Bitcoin to
obscure your identity. So crime has always been a part
of cryptocurrency from its very,very, very early days.
So John Trump's nothing new but in that sense.
But he is, I mean, he's the mostpowerful man in the in on on the
planet. He's also the head of the most
powerful government on the planet.
(45:48):
And crypto was set up to be outside of government control,
right? It's the decentralized,
democratized future of money. Pretty ironic that they now need
the most powerful man in government to to spread their
message far and wide. Does it give it legitimacy
perhaps to some people who who who believe in this convicted
(46:11):
fraudster president. But what it really does is allow
him to use his power to get crypto further into our
regulated system. And when it blows up again, we
will be footing the bill collectively all.
Of us all the while enriching himself correct.
Just want to sort of wrap it up and play it forward.
First of all, there is a recently published paper by
(46:31):
Google suggesting that breaking bitcoins cryptography key using
quantum computing is perhaps only 7 to 10 years away.
In other words, this entire technology could be obsolete,
made completely obsolete by a new technology.
For a crypto skeptic like you, how would that underline your
(46:55):
argument? I mean, the technology argument
behind Bitcoin is kind of ridiculous.
Blockchain has been around for avery long time.
It's 35 years old. It goes back to 1991.
Stuart Haybert and Scott Stornetta at Bell Labs, building
off the work of cryptographers like David Chong.
You'll notice something about blockchain.
(47:15):
Nobody outside of the crypto industry uses it for anything
because it doesn't work very well.
Bitcoin can only process 4 to 6 transactions, 5 to 7
transactions a second. Visa can do 24,000.
It cannot scale as a payments method.
Even Sam Bagmafried admitted that when I interviewed him.
(47:35):
So their argument that Bitcoin was attack innovation has always
been false. What Bitcoin does do, what
blockchain does do is obscure the identities of the people who
are transacting, which is reallyhelpful if you're a criminal.
So the only use case that Bitcoin has had, of course,
again is crime and gambling. I don't know that quantum, you
(47:56):
know the the the eventual undoing of bitcoins cryptography
via quantum computing. That is so far outside of my
ability to understand that I would never.
But would you welcome it? But what do you think?
Look, in a piece for Slate last year, you you warned that the
convergence of cryptocurrency inthe banking system could really
(48:18):
be driving toward the next greatfinancial crisis.
If there were to be a recession and investors rush to dump their
crypto assets and those are mainstreamed within the American
banking system, then as you've said, we're all on the hook for
it right now. How much more likely is this
scenario becoming? I think I wrote that in the
(48:42):
spring summer of last year. Since then, the Genius Act has
passed. The Clarity Act is being
debated. And Jamie and.
And Jamie Dimon and the banks are fighting the the crypto
community over whether crypto will be regulated like a bank.
Right. But crypto is already, even if
the Clarity Act isn't passed, has already gone much further
(49:02):
into the system or is on its way, and the probability of
recession has increased significantly.
So what does it take to prevent that from happening?
In the medium to long term, it requires new legislation.
It requires a different administration that will
actually enforce the law. I mean, the Trump
administration's gutted. The SEC just gutted it.
I don't. I figure whether it's hundreds
(49:23):
or thousands of lawyers have left, but many, many, many
lawyers have left. I've heard from some of them.
You have. Yeah.
And we either have laws in this country and respect for the rule
of law, or we don't. But the myriad ways in which the
Trump administration is attacking the rule of law
unfortunately includes financiallaw.
(49:43):
Are you saying if we have a? Recession if we You're saying
this could happen on Trump's watch?
Yeah, absolutely. Yeah, sure.
I mean, I can't predict the probability of any recession.
No one, no one could. But my worry is that or.
It could happen on the next person's watch because of the
instability created during this period.
Absolutely. And predicting recession is sort
of an impossible game. But there are very troubling
(50:04):
warning signs of a, of a potential recession.
And if there is a recession, even if it's a mild recession,
the correction that happens in the markets when they
historically when, when they sort of sense the recession is
here or coming, the most speculative assets fall the
fastest. And because crypto, I would
argue is only speculation, thereisn't an asset behind it.
(50:24):
It has historically fallen very,very quickly and almost been
sort of a Canary in the coal mine for what might happen in
2022. When crypto crashed, it was
right when the Fed started raising interest rates.
I mean, it was right then, like within months.
And of course, the market corrected, too.
Now it's since gone up, but there's no reason to believe
that it couldn't happen again. And unfortunately, because
(50:45):
crypto is further into our system, the effects could be
worse. And Mackenzie, thank you for
joining me on Firing Line. Thank you for having me.
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