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Should we do a wellness track on Crypto Bros?

I mean, the ones that still exist, of course. No, the point of this episode isn't just to hate on the Bros, well, not entirely. But as the cryptomania continues to dwindle, it is really useful to reflect back on the peak craze and think, how the F did we get there? And how do we make sure we're not going to go back? We can stop history from repeating itself. And when I say that, I don't mean that I think there's going to be another crypto surge beyond what we've already seen, but there will always be scams, and knowing how to identify them will help you not fall for them. To break down the mechanics of crypto and the scams that went along with it, I'm talking to someone unexpected, Ben McKinsey. You might be surprised to hear Ben's name in connection with this conversation, and if you are, he totally gets it. Most people know Ben from starring on the TV show The OC, and fewer people know him from his economics degree, but both are on his resume. Today, I talk to Ben about the systemic issues that made both of us skeptical of crypto from the jump, Ben's meeting with the infamous Sam Bankman-Fried, and how to look out for financial red flags.

Here's Ben. Ben McKinsey, welcome to Money Rehab.

Hi. Nice to be here. Thank you for having me.

Hi. Nice to have you.

I'm so excited to dive into one of my most favorite topics, Hating on Cryptocurrency.

We're going to get along just great, you and I.

So in the pandemic, you, like a lot of folks, We're really curious about crypto. And after some digging, you asked yourself, Am I crazy or is this a total scam? I asked myself a very similar question. So tell me about that moment.

Yeah. So it's 2021. I live in New York normally, but COVID hit. The entertainment industry was on ice, and I just had all this time on my hands. There was no active work to be had. And so a buddy of mine comes to me and he tells me that I should buy Bitcoin. And at the time, of course, Bitcoin was the bee's needs, and it gone up to 50, $60,000 a Bitcoin or something like that. My buddy Dave tells me, I got to get in. I thought about it. I was tempted. I got FOMO, but I have a degree in economics. Also, my buddy Dave had given me terrible financial advice.

Yeah, I was going to ask, who is Dave? Did he have an economics degree?

That is a good question. What is Dave's major? I don't remember, but it wasn't Econ. He went to college with me. We were college friends, and we're still good friends, and he's lovely. But I don't always trust his takes on money, let's just say.

You had an investment in your 20s that was a bad experience, and Dave was also involved in this?

That's right. David encouraged me. I'm in my 20s. I made a little money on the OC, and I've always been very conservative with my money, and I've always kept it in things like real estate. But Dave comes to me one day and he's like, Dude, we got to invest in this company. I'm like, Okay, what does it do? Dave made synthetic blood. I'm like, Really? Okay, really? He's like, Yeah, it I was at a wedding. This guy told me. I'm like, Okay. I was excited by his excitement. I threw, I think it was 5 or $10,000 at it. So not nothing, but we promptly lost most of it.

So Dave had a stellar track record for investment advice.

Yeah. And honestly, that was the last time I had really, the only time, had really even touched the stock market. I got this degree in Econ, but I was always interested in more of the theory behind it. I liked the social, political, cultural dynamics of it, and I was always really bad at the math part. I had always avoided the stock market because I just figured it was something beyond my expertise. Dave provided me the one bad experience. Anyway, when he came to me in 2021 and he said, I should buy Bitcoin, I did my research for a couple of months and I came back to him and I was like, Dude, not only should I not buy it, you should sell it. This is going to go down. When he made aside that I was hilariously wrong on the bet, I bet that Bitcoin was going to be worth less than $10,000 a by the end of 2021, which was fantastically wrong. I think it was $45,000 or $50,000 in Bitcoin.

You just needed to scooch the date.

Yeah, exactly. Anyway, I lost that bet. But I gained an obsession with it. I was just fascinated by it. I reached out to a journalist who had written an article that I thought was funny. Even Donald Trump knows Bitcoin is a scam. I DMed him on Twitter, and I was like, Hey, man, can I take you to drinks? I pitched him on this crazy idea of writing that I didn't know how to write about events that hadn't happened yet. And he agreed.

When did you decide that crypto was a scam? What did you do? Did you actually invest in any of it? What did you see that really solidified your opinion on it?

Things didn't make sense from jump. So I'm a storyteller. Words are tools. You can use words for a variety of purposes. You can educate, entertain, or you can deceive and potentially even defraud people, right?

Sensationalize.

Yeah. I mean, there's sensationalize, and then there's actually just lying to people. The word that I bump up against was currency. My econ degree was 20 years old, but I was pretty sure that one of the things you could do with money was buy shit with it. Crypto, you couldn't actually buy.

Now, I didn't get an econ degree, but I don't think you need an econ degree to deduce that. But crazily, not a lot of people were.

Because it's this sleight of hand where it's cryptocurrency. Oh, so if it's money? Well, yeah, but it's a midway of payment, but it's also an investment. And you're like, Okay, you got to pick a lane here because there are investments, like stocks, bonds, whatever, and there are currencies. Could you invest in currency? Sure, you could do currency trading. But let's be honest, 99% of the public is using money as a way of paying for stuff, as a way of accruing over time and then investing. The word currency was the big thing that bummed me, and I know people gloss over that, but it's really crucial to understanding the sleight of hand. I'm not saying it was intentional. Whoever Satoshi Nakamoto was this person that created Bitcoin, they may or may not have good intentions. We have no way of knowing. But what was happening when I came on the scene in 2021 was obviously it was speculation. I mean, obviously people were buying crypto, hoping to sell their crypto for a higher price. Economically speaking, that's greater fool The price of an asset becomes uncorrelated with its actual value. Like, what do these cryptos do?

They're not based on anything in the material world. What can you do? Oh, well, you can sell them for more. All right. Well, if you can find a bigger idiot to sell to, that's fine. But if you can't, then you're the biggest idiot. Unfortunately, most Americans bought at the hype, right? Unfortunately, most Americans are learning this lesson in the most painful way possible.

Yeah, because of the psychology that you want to get rich quick. Every Everyone falls for that. I think there's an old dad joke that's like the quickest way to double your money is folded in half. There's no quick way to do it otherwise. But you get really enthralled by the sell of it, which is what happened to a lot of people.

I mean, give it as quick scheme is as old as money itself. People are pulling these kinds of cons for forever. It's interesting to understand why crypto story, the con, worked so well in this particular time period, I think. There's a lot of distrust of government. There's a lot of distrust, perhaps understandable distrust of our financial system that after subprime, people were like, No, screw these banks. I get that. I don't even disagree. But the sleight of hand with crypto is like, Oh, you hate the banks? Try crypto. Actually, it's worse. I hate to say it. I interviewed this guy, Alex Mishinsky. He was the CEO of what they called a crypto bank, a crypto lending firm called Celsius. It all felt like a Ponzi scheme. He's talking about 18% guaranteed return on your money thing. Then sure enough, his whole thing imploded three months later, filed for bankruptcy. He's now indicted for fraud. It's like, if it sounds too good to be true, it probably is.

So that's what you did in your book, Easy Money. After it came out, you got a bunch of hate from Crypto Bros. I would use that as a badge of honor. I get hate from Crypto Bros all the time. I was early on being like, What the F is this? I am not here for it. I got all this crypto hate from these guys that were like, you're so wrong. We're going to prove you wrong. And I loved responding to the trolls. It was my most favorite sport. But what did it look like for you? What were their big arguments?

I got hate from day one. As soon as you stick your hand up and you're like, It seems like bullshit, they come after you pretty hard. I think that in and of itself is fascinating to think about. If it actually is the future of money, if it was this transcendent thing that was going to solve all the problems of the legacy financial institutions and make everybody rich, then why do you care what I'm saying about it?

Yeah, why are you so upset, dude?

Why are you so triggered, bro? I loved it. They were like, You're just this two-bit actor, and you're like, I'm sorry, Bitboy 327-939. I haven't lived up to your standards of excellence. But come on, give me a break. You're going to get that grief when you go into it. I love reading people's tales. Why would you do that if it was legitimate? If I'm pointing out valid stuff. Now, if I was making arguments that were invalid, illogical, not backed up by the data, sure, fair game. But if all I'm doing is laying out very obvious things about crypto, blindingly obvious, as you pointed out, you don't need to agree an econ to know it's not money.

I'm assuming that didn't resonate, the currency argument. Did anything Does everything resonate?

No. I mean, they'll do this thing. They'll try to agree with you on one part, but then come back to you with some other nonsense, which sometimes even contradicts the thing that they originally agreed upon. I mean, I'm not impugning everybody these motives. I understand people really believe in this stuff. There's a small percentage of the public that believes in it. Maybe it's 5, 10%, maybe. The overall number of people that bought into crypto was somewhere between 15 and 16% of the adult American public, so 40 to 50 million Americans, according to Pew. That's a lot of people, but most of those people bought at the hype because they were being told it was going to make them rich. Most people don't really believe in it. They just wanted to make some money on it. The people that really believe in it, it's a much smaller set. I don't know what to tell you. Just because you believe something to be true doesn't mean that it is. 10% of the American public thinks the Earth is flat. Okay, it's not, but you do you. I use it as a joke, but it's actually true. There is a study.

People start to rationalize in all sorts of ways. It often starts with a libertarian-esque thing that's just gone completely the haywire, and you take some understandable gripes about the government, about how our financial institutions work or don't work for the better of the average Joe. You start with those, and then you convince yourself crypto is the solution, but it's just not. Most people are going to lose, and most of the money is going to go to the insiders, the people that run the exchanges and the market making firms and stuff like that.

Yeah, and those few evangelists are so fucking loud, by the way. And so that's what confuses, I think, the rest of people who are actually just curious, right? They have a lot of smart questions. Was there any argument in your search for the baloney behind the cryptocurrency that has resonated with people that are just on the fence, not evangelists, not naysayers?

I mean, the most effective arguments are love economists, but they can be They can be awfully condescending and they can be awfully snooty in the way that they... Economics is this language that's adjacent to English, but not really the English. They use all these terms. It's so much jargon. My goal is to speak it plainly. The most effective arguments are actually just set up the intellectual stuff and explain to people that money is made up and it's based on trust and you can't replace people with computer code. At the end of the day, when they say trust the code, what they mean is people that write the code, you take those things and then you show them in the real world. Sam Bankman-Fried, for example, he's alleged to have instructed one of his lieutenants to change a single number in millions of lines of code, create a secret back or you could basically steal his customer's money. You start with the theory, explain what that really means, and then you pay it off. You go, It literally just happened. That's as good as I can do. The people that are still going to believe in it despite all evidence to the contrary.

Like, okay, I'm not going to invest it, but would you mind just being a little less of a jerk publicly as you try to convince the rest of us? But most people are gone. The money is out of the casino. Now it's basically the authority is trying to track down where the real money is, where it's left, trying to protect American consumers.

Did anyone, though, reach out to you who was grateful for your book, that had lost money in crypto, who had the opposite experience of the haters?

Oh, yeah. I mean, a lot of the most vociferous skeptics started off as believers or people that thought they were going to make money, and then they got burned. But I tell a story at the end of the book about a preacher who had reached out to Jacob me early on, just out of the blue, and said, I really appreciate that you guys are writing stories critical of the industry. My dad, my whole family, really suffered because my dad fell into it and lost all this money. I tell that story at the end of the book because it's really important to understand that so much of crypto is really dumb and fun to make fun of. I don't discount that. To fight a fake narrative, economic narrative, you have to come with a true one. One of the best tools is humor. What you and I are doing, making fun of them on Twitter, is actually very valuable But it's real money behind it, and there are real people. For every other people who just waded a little bit of money that they could afford to lose, like my buddy did, he's fine. He's upper middle class.

He has a good job. He didn't throw his life savings into it. So cool. All good. But for every 100 Dave's, there's several people that bought the whole thing and lost everything. I refuse to believe that those people are the ones at fault, at least not completely. They're being lied to by people that know what they're doing. These are not unsophisticated players. I feel like that's worth calling out.

So SBF, Sam Bing, Manfred, you got an interview with him because his assistant was a fan of the OC.

Is that true?

Yeah, I don't think that hurt.

That's awesome.

Yeah, it was pretty awesome. I don't know how I got the interview, except Sam clearly liked to talk. I tell it in the book, but actually it came off of a tweet where I egged on the bros. Itty, you guys want to come at me? I can take a punch of it in Hollywood, but a few words of advice don't miss. It's pure and stupid, so of course, it works like a charm in crypto. Sam tweeted back, Did you ever consider the price might go back up? I'm like, Yes, Sam. I considered that.

Thanks, Captain Obvious.

Yeah, thanks, Captain Obvious. And we started following each other on Twitter. I was able to DM him, and we reached out for an interview. I truly did not expect him to want to talk to us. I mean, it was in our Twitter profiles writing a book about crypto and fraud, and yet he did, and he agreed to do it on camera and everything.

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It was a pretty wild hour and a half.

Let's double click on that wild hour and a half. Your conversation, you say, made you even more uneasy. Tell me why.

Yeah. So at that point, I was aware of enough red flags for what was going on there. He's operating an exchange located in the Bahamas, not exactly known for its strict regulatory environment. It's a bunch of his buddies and a girlfriend, ex-girlfriend. They're all living together in this penthouse. That's a tight circle of trust. That's what you need if you're running a fraud. He's selling unregistered and licensed securities. Start with that. That's what cryptos are, effectively. Legally speaking, that's certainly what they should be classified as. Anyway, they're a bunch of red flags. So I sat down with them, and while I couldn't accuse him of any crimes, I was trying to get a satisfying answer to any of my questions. That's where I started because I worked my way up the hierarchy of crypto at that point, and I was at what at least was being sold as the top. He was the J. P. Morgan of crypto. His face was everywhere. He was going to make crypto safe for the average American. And I kept getting unsatisfying answer after unsatisfying answer. Then at the end of the conversation, when he thought the cameras weren't rolling, he started to slag off the other big players in crypto.

I thought that was really bizarre. Yeah, it left me with a pit in my stomach. I mean, at the end, I was like, Oh, man, whatever Whatever's going on, there's more to come. Sure enough, there was.

Do you remember where you were when he was indicted?

He was probably in this office. Honestly, I was in a daze because I couldn't believe as so much information started coming out, what he's alleged to have done is so simple, and it's so dumb. So first of all, you can print as much crypto as you want. Not Bitcoin, but like the other ones. They created this token FTT, and there's billions of them, and nobody really uses them or trades them. But I sell you one FTT token, Nicole, for $1. You give me a buck. I've got $4 billion. Well, magically, $4 billion market cap. Yeah, but I mean, obviously not, right? But they were marking these assets, what they said they could sell them for. They were stealing their customers money, allegedly. Just all the shenanigans you could possibly... They were running their accounting on Quickbooks. This is a multibillion dollar corporation. They were signing off on billion dollar loans with emojis.

So gap accounting vibes.

Yeah, right. Exactly. It was just like, what would happen if you put a dozen 20-something-year-olds with unlimited resources in an island nation, gave them plenty of drugs and stimulants, and just said, I'd, Yeah, make it up, figure it out. Are we really that surprised that it happened? I think the crypto diehards are still trying to make this argument that Sam's an aberration or that's not real crypto. But at this point, give me a break. There are bigger players still to come. Binance is the biggest exchange, but it's been sued by the SEC, the CFTC, the DOJ is investigating. Meanwhile, all these other companies are bankrupt, and all the people that invested in them can't get their real money out. So The story dies just as fast as it spread. It's like a virus. At a certain point, you reach herd immunity, and enough people have been burned that you run out of suckers.

But you think Bitcoin is different?

Well, it's different in the It means that... So Bitcoiners use a bunch of arguments that are wrong. One of them is that it's digital gold, which they say that, or they try to say that because they say only 21 million Bitcoin can ever be mined, which is true according to the code. The code is changeable, but that's a whole other story. So let's say that that is true, that only 21 million Bitcoin can ever be mined. They say that then makes it valuable, like gold. They're confusing supply for scarcity. In economics, scarcity only occurs when demand exceeds supply at the price of zero, when there's actual organic demand for something. And gold has been in demand. Look, our love of gold is somewhat a fiction, too. It's not the most scarce mineral out there or anything like that. It's pretty. That's part of one of the things that we've loved about it for millennia. And so it's always been treated as something of value. But crypto is just computer code. So when you say its supply is limited and therefore it's scarce. Well, no. If the demand for it, this thing that's so crucial for scarcity to exist, if the demand for it has been made up, has been inflated by things like wash trading, where you're basically trading crypto back and forth amongst accounts you control to make it look like there's a market, there isn't really a market.

If it's been manipulated, demand isn't actually real, then when people find out that this thing they've been told is digital gold is instead dog shit, then they will sell it, and then it will crash, and that's exactly what it's done. Now, they've been pretty good at keeping the balls afloat. So little crypto is really liquid. Most people, if they bought crypto, they bought it last couple of years, they have some Satoshis or whatever. But 0.01% of Bitcoin wallet addresses control some huge percentage of supply. It's just off the charts in terms of its centralization, ironically enough. And so that means the whales hold enormous power. And when you combine that with all the shenanigans on the exchanges, on places like FDX, but not just FTX. I mean, It's harder to point to a crypto exchange that hasn't shut down than the one that currently still exists. They've shut down all the time. And it's usually because they ran off with your money. There's a whole decade of history here. So the digital gore argument is Baloney, and the limited supply is not scarcity. I lay it out in the book, people can either believe it or not, but the economics of it are pretty much undeniable.

There's very few legitimate economists who to really take crypto seriously. There are some Austrian types who are quite vociferous who say this digital gold argument, but for the most part, economics treats it as a bubble, as a story.

Well, because it also traded that way when interest rates went up. It just followed what all other assets were doing. If it were digital gold, it would have done the opposite.

That's a great point. Yeah. I mean, obviously, if it truly was scarce, then it wouldn't trade the most speculative thing you can imagine. That's actually what started my journey into this, in part was the realization that fraud runs hand-to-hand with easy money times. When people have access to money in the form of stimulus payments or loans or credit, they gamble with it. Some of that's investment and really innovative stuff that actually does change the world, the internet, for example, like companies like Amazon. But some of that's fraud. Some of that's just people telling you it's going to change the world, and it isn't. Fraud has always gone along with easy money. Given that we were in the most easy money time of all and the response to the pandemic- Everything was going up. I think one of the things that's so fascinating about human psychology is we immediately start to accept that that might be the future or the reality rather than, Well, hold on. This thing came out of nowhere. Does it seem legitimate? What if it's just a bubble? We're all susceptible to the story that you don't get it. You're just stupid.

But all these other people seem to be making money off of it, so you should just go along with it. That's really what sold crypto. It's not people understanding blockchain, which has been around for 30 years. I really did try to take the blockchain argument seriously, and I don't care about blockchain. It's a distributed budget. I could care less. But I really tried to look at it and try to find examples of use cases that weren't gambling or crime. There aren't any. It doesn't really work very well. It doesn't scale very well. You need people to be able to collaborate in the append-only ledger where you can only add blocks of information to something. You can't go back, you can't reverse any transaction. Crypto people treat that as a feature, but it's a bug. Imagine you couldn't reverse a charge in your credit card bill. That would be a problem. There's a lot of problems with blockchain that make it highly unsuitable for almost everything. The encryption part is useful for a pseudonymity, but that pseudonymity is very helpful for conducting criminal activity. Really, you combine that with gambling, which is really what retail customers are doing, hoping the crypto would go up in what's at best a zero-sum game.

They're just playing poker at an unlicensed casino and hoping they have better cards than the other players. You combine that with retail, and that's pretty much all blockchain has been used for is gambling crime. If blockchain finds a use case, great. But the thing that they're doing with crypto, we tried private money before. It doesn't work for a very simple reason, which is that money is trust. Trust is only earned through experience living up to that trust. Now, you can criticize US government, but the safest investment in the world is US treasuries. Why? Because people know that they're not going to default. If they defaulted, it was probably over anyway.

Yeah, it's the Apocalypse. Nobody cares about your bond, dude.

Yeah. You can't replace the existence of the world's most powerful economy and military, all that other stuff, with these magical bits of computer code and go, That's the future money. It's like, No, it's not. It's the past of money. Private money, we tried in the 19th century, and it didn't work, and it didn't work in part because of fraud.

Yes, totally agree. We also had Nouriel Rubini, the economist on the show, who did not mince words at all. It was hilarious. He was like, Carnival Barker is buying their prostitutes and their Lamborghini. I can't do his accent, but it was amazing. He called all of the other coins, shit coins. When you went down this rabbit hole, you must have seen some really bananas crypto scams, shit coins, dog shit. I think you mentioned earlier was your classification of it. What really stuck out to you?

Well, I went to the biggest crypto conference in the world, which is in Miami. It's basically a trade show. There's all these booths and people are selling you on mining equipment is a big thing. You can buy all this equipment to mine your own Bitcoin, which unfortunately is not very profitable at this point with the prices where they are. You could invest in all these different schemes. One of them was a DAO, a decentralized autonomous organization. It was a DAO that was going to democratize yachting. That was one of my favorites. Another was Panties for Bitcoin, which was a family business, father and son team team selling you panties that you could only buy in Bitcoin. It's a trade show. It's a bunch of dudes getting drunk, trying to make some deals. It's an excuse to party. When you look at it from that angle, it all makes sense. What's interesting is it's not a car show where you drive the car. There's not a timeshare where you can at least look at the brochures for the timeshare you can invest in.

What about the panties?

They did have samples.

See? You said there was nothing, but there were- No, there were panties. A father and son duo selling dubious panties.

It's true. They did not look at the highest quality. I don't want to smerch the good name of panties for Bitcoin, but yeah, you're right. There were products. There was a bar. They built this huge volcano because El Salvador was going to do this Bitcoin bond issuance. But Unfortunately, the President had to cancel that week because a civil war almost broke out his country or gang violence, and so he had to stay home. Anyway, they built this huge volcano, and behind it was a bar, of course. I asked to pay for my Budweiser in Bitcoin, but you'll be shocked to know their Bitcoin to real money machine was on the fritz. What a shocker.

You recently used one of those Bitcoin ATM machines, which I've never used, but I'm really curious. How do they work? What was the process?

I went around Brooklyn with this reporter who had a good idea about, Well, let's try to use it as real money. We went to an ATM, next to a hot dog stand, about 10 minutes walk from my house. It was complicated. You had to get on this other app, set up a wallet, get code, obviously insert your credit card or debit card in order to get the money. There was immediately a very high transaction fee. I forget what it was off the top of my head. I bought 30 bucks for the crypto, and I think immediately I had 24 or something, which is a pretty big fee. Then, of course, once you had this nice little lines of code, it was like, Well, what do you do with them? Of course, we went to the hot dog stand and asked to buy a hot dog in Bitcoin. They truly were like, What are you talking about?

You never got the A hot dog?

Never got the hot dog, went to Starbucks, had a funny encounter there, went to a bank, tried to set up an account. That didn't work either. I mean, it's not real money.

But no money came out of the ATM. It's called an ATM.

Oh, right. You could then go back and For some reason, it's through a different company, but through the same ATM, you could convert your Bitcoin into cash. But here's the thing. Somehow it worked out to where if I wanted to cash out of my now $24 that used to be $30, I would get $9 back. That's so funny and so telling about... Because crypto is supposed to be a way of transacting instantaneously all over the world and avoiding all these fees that all these horrible banks charge, all these terrible financial companies. But of course, it's the opposite. They tried to use crypto as real money in El Salvador, and the pitch was like, you'll use it for remittances to send overseas, but nobody uses it. Less than 2% of remittances use the system. I think it's less than 1% now because it doesn't work and the people don't trust it, and Salvadorians don't have money to mess around with. The average of Salvador makes 300, 400 bucks a month. They're not going to try your little Bitcoin bro crypto thing and lose all their money. They need to send the money to their loved ones.

So they'll use Western Union their money grant, even if they charge them a fee. And that's where the rubber hits the road with crypto. In reality, it just doesn't work.

Well, a big argument was that these countries that are experiencing crazy inflation would be adopters to it to hold some store of value in currency that would otherwise go to nothing. And we haven't How do you find that?

At least economically speaking, that at least has some potential substance there. But keep in mind that really the hard part with crypto is always, first of all, you got to get the money. Well, getting the money in is not that hard. It's getting the money out. That's the hard part. They make it very easy for you to get in, not so easy to get out. You're going to have to go through a bank account at some point if you want to get back into real money. The currency itself is obviously extremely volatile, and you're dealing with some pretty shady people at times. My experience has been that while perhaps some people in countries have benefited, certainly some, most people are either ignoring it or I think more people have gotten swindled and have benefited from it in my experience. It's hard to find numbers on that, but that's been my experience going to El Salvador and talking to a bunch of people.

But NetNet, overall, you think that the biggest use case is for crypto are nefarious things?

Yeah, it was useful for criminal activity, mainly because law enforcement hadn't really caught up. Blockchain is a ledger. It's literally a record of all the transactions you have ever done. So the only thing keeping law enforcement from knowing everything about you is that there's pseudonymity. But if they can figure out who owns what, what address, it's interacting with whatever other address, then they have your whole history. Now analytics firms are able to They're starting to be able to do that. So the criminals are realizing it perhaps wasn't as useful or isn't as useful now as it used to be. And so that's one of the reasons why you see interest waning. But the main thing that drove the bubble, of course, in the last two years was retail interest. It was getting the regular folks because that's just a huge potential market. If you can get 40 to 50 million Americans to give you a thousand bucks, even a hundred bucks, a lot of money. But now, most of those people have lost money, so most of them are done. So the gamblers could come back if they could reinflate the bubble, but the criminals are probably not as excited about it, and most of the gamblers probably aren't coming back.

You've talked really openly about how you feel about celebrities peddling crypto. You've written, The Hollywoodization of crypto is a moral disaster. These rich and famous entertainers might as well be pushing payday loans or seating their audience at a rigged blackjack table.

Yeah, I should have used poker table, but yes, that's what I feel. I mean, the celebrities didn't know anything for the most part. I don't think many of them were in on it or anything. I think they were just taking easy money. People are like, explain to me why the celebrity is going to fall in. I'm like, okay, so they got paid in dollars to convince you to take your dollars and turn them into something else. Most celebrities didn't know what was going on, but it doesn't absolve them of the moral, ethical, and potentially even legal responsibility of doing their own due diligence and not selling people what's equivalent of a snake oil. You'll notice that the celebrity is, for the most part, are keeping a very low profile on their former crypto investments or endorsements. Not so much of those anymore.

We shouldn't be mad at Giselle or Larry David.

I think we should mock them. I think locking them is the best tool. Giselle was FTX's ESG advisor. Or Larry David saying, You should buy. That was a bummer for me because it's Larry David. I love Larry David. Yeah. But now the argument that I've heard is like, well, because in the ad, he's the skeptic who's saying, don't buy a kept. They're going, technically, he never said buy it. I'm like, give me a break. Do you think Larry David was paid in FTT tokens? I'm pretty sure he's paid in dollars. I mean, look, if history is any guide, people will probably forget about this. The celebrities are probably doing the right thing, just keeping their heads down and doing what they actually should be doing, entertaining folks. But it doesn't mean we can't have fun and mock them a little bit. I mean, they should pay a little bit of price. That's what I plan to do anyway.

Do you think there should be more due diligence, especially with financial products and endorsement deals?

Well, yeah, of course, there should be. I mean, one of the ways we got into this whole mess was Bitcoin was classified as a commodity in 2014, 2015, a very under the radar. The crypto market was quite small. It came about in a very weird way. And so since Bitcoin was a commodity and all these other 20,000 cryptos hadn't been classified, you could make the argument that they weren't securities and they weren't investments, and therefore, you could do what is effectively securities fraud in all sorts of ways. People are now getting sued and sometimes prosecuted for doing things like that. But law enforcement has been way too slow on this. The powers that be regulators and lawmakers have been slow to react, and now, unfortunately, law enforcement is having to pick up the slack. That created this gray area that allowed for people to pretend like they weren't doing anything wrong.

You don't think they should be held accountable? If Giselle's followers or Larry David's followers put their life savings in the stuff they were peddling, do you think they should have any accountability?

I'm not a lawyer, so I have no idea what the law says there. I know there is a class action lawsuit, I believe, against these folks. You got to let a court decide. I mean, you're talking about a civil matter. You're not talking about criminal stuff. You're talking about people losing money, which is very serious. But in terms of liability, I have no idea. What is illegal is selling a specific unregistered licensed security, which is what Kim Kardashian arguably did when she showed for Ethereum max. That was the focus of Jacob in my first article in 2021. And Kim, two years later, had to settle with the SEC for $1.25 million, one assumes, because otherwise, they would have had to go to court and she didn't want that. So there are repercussions if you sell a specific But if you're shilling for an exchange, I don't know what the law is going to say. But that doesn't absorb you of moral and ethical responsibility. And by the way, just dumb for your brand. You know what I mean? Was it worth it? How much money did you really get? And was it worth the hit to your brand?

That's what I would argue. Just argue brass tax with them. If you could do it all over again, would you do it again? And if not, why?

We end our episodes with a tip listeners can take straight to the bank. Is there anything from these lessons that you learned writing this book about how to spot a sketchy investment, a better way to grow your money, or how to even, as you mentioned, talk to your kids about money?

The simplest thing to know about fraud is just go to the SEC's website. There's a page for Ponzi schemes, seven red flags for Ponzi schemes, Crypto checks off five, arguably six of the seven. It's simple stuff. You can educate yourself relatively easily, but just use your common sense. And if something sounds too good to be true, it probably is.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan LeVoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do.

So email us your moneyquestions, moneyrehab@moneynewsnetwork.

Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.