Lawfare Daily: Crypto, Corruption, and Cons, with Ben McKenzie

Nah, no small things to end.

“Besuch the red-capital life in Freiburg, with Euron Mehl's, Dörona, and her channel,”

Typen von Neben, an animal, and all the years. Endeck to our interactive exhibition by the elite tour, Artur guide and a classic, and the next parvillion,

the whole world of red-capital life, the red-capital life, only a second-long entfernt.

[MUSIC] In the grid and in the grid present, jobs, by which you don't have a lot of love, today, in the winter. [MUSIC] What is this? [MUSIC]

[MUSIC] That's a job for premium products. With real profits, it won't happen. For trading, for such a deal, and for a full-fledged talent, with premium products. [MUSIC]

Make the deal easy.

Now on in the dot.au/recruiting.

[MUSIC] All cryptocurrency is a computer code, stored on ledgers called blockchains, that obscure the identity of the people that are transacting, but if it's just a computer code that doesn't actually

“do anything in the real world, then you're sort of just investing in the idea of it, right?”

Or you're using it's commit crime. [MUSIC] It's a law fair podcast. I'm senior editor, Michael Feinberg, and I'm here today with actor director and writer journalist Ben McKenzie.

I think that really gets at the heart of sort of the fundamental misunderstanding of cryptocurrency.

Even Bitcoin has people behind it. There are developers who maintain the operating system. It's not like you can just create these things and they exist on their own. And they sort of have to exist with people because we made them up. Today we are discussing his new film, everyone is lying to you for money, a deep dive into

the senior side of cryptocurrency. We're going to very much get into the substance of the film, but like you at the outside of the project, I was very much newcomer to the idea and field of crypto. And having read your book now and watched your film and done some independent research, I find myself very much in agreement with your conclusions.

So to keep this sort of interesting, I'm going to steal a page out of John Stuart Mills playbook and ask you as a sort of anti-crypto advocate to sort of step out of your own skin for a moment and try and give me the best argument you can think of to promote any aspect of crypto. Whether it has a positive use for society or it's filling a gap that otherwise would go on

“fields, just if you were a crypto proponent, what would you say to me?”

Sure. I love this framework. If I were a crypto proponent, I would say the regulated financial system sucks. It's deeply unequal unfair. The banking system is deeply flawed and rent seeking. I would say in many ways. And there are many people all over the world who suffer as a result of that. I was just doing another interview earlier and journalist was pointing out there's a woman in Afghanistan who's not allowed to bank under the Taliban's rule and she's running a company

and so she was using Bitcoin to make payments. Bitcoin is a tool. Just as money is a tool and it could be used for good or for ill. I would say that's the most charitable argument I can make for it. All right. So let's spend the next 50-55 minutes demolishing that argument. Yes, because I think I think I've heard of us fully buy into it and I suspect that the demolition will occur naturally as we sort of walk through the film in your own journey. And I think it's with your own journey

that I'd like to start. The film and the book, the book is called "The Easy Money" by the way, it has a different title than the film but they tell largely the same story which is sort of Pilgrim's progress of somebody who was not particularly familiar with the crypto industry. Gradually became aware of it, became concerned about it, wrote a couple of journalistic pieces, mildly or at least sort of softly critiquing it. And by the end of the journey is writing an

entire book and a film arguing that it is probably one of the more corrupt economic endeavors in American history. So I don't think I'm spoiling the plot to say that before you began this journey,

How do you go from acting into what I will call without judgment advocacy journalism?

“I received an undergraduate education in economics at the University of Virginia,”

I majored in economics and foreign affairs, which is their fancy way of saying international

relations. But I've always been interested in economics, interestingly enough, not because of the

math, I'm very bad at math, and that probably kept me from becoming an economist, but I always was interested in behavioral economics. And I always thought it was sort of interesting that the popular perception of economics is as the sort of dry mathematical science whereas in reality the way I see it and the way many behavioral economists see it, the study of economics is really studied human behavior in many ways, human behavior on an individual level and then on a

group level, a societal level. So I've always been interested in true crime, I love true crime, and my favorite kind of true crime is what I like to call stupid crime,

“which is where criminals are sort of obviously committing crimes. So often in broad daylight,”

sometimes via tweet, and then they get caught and then they turn on each other because of course

the criminals aren't actually a community. They are benefiting from each other, which is criminal activity briefly and then turning on each other as soon as they possibly can. And so when I stumbled upon crypto in 2020, it was the throws of the pandemic. Showbiz was on ice, there really was no way to practice my profession when we didn't know how bad this pandemic was going to be. And I was tearing my hair out, you know, I was around 40

years old and had a couple kids and was just what do I do with my life here? My buddy came to me and said I should buy Bitcoin, old friend and Dave. A lot of people thought this experience, but Dave gave me terrible financial advice when I was younger. Encourage me to invest in a an obscure stock, a company that had supposedly produced synthetic blood. It wasn't there and I was, but it was some sort of precursor to this idea. Anyway, we put money into it and promptly

lost it. Dave was scamming me, but I, you know, took that's a heart when he came back to me in 2020 and said I should buy Bitcoin. And almost immediately, I was very, very suspicious. I mean,

the first thing that I was suspicious of is the word, you know, an economics currency's do things.

They're a medium of exchange unit of account and store a value. Media exchange means you can buy and sell stuff with them, you know, to the account, you can run your books with them and store a value. There are any good currency that a value stays relatively consistent over time. It was very clear almost immediately that Bitcoin couldn't do any of the three functions of the money. I couldn't go to my neighborhood, Delhi, here in Brooklyn, and buy a bagel with Bitcoin.

They would look me like I was crazy. I didn't quite know why that was yet, but we can talk about that later. Some of that has to do with the technology itself, but it couldn't be a medium exchange and it couldn't be a unit of account or store a value because the price was so volatile. It was, you know, jumping. People love to celebrate the jumps up with the jumps down or quite dramatic, and so, you know, the fact that Bitcoin was

the price was jumping around like a rabbit on foot. I mean, it's made me think that this is not a currency and it wasn't being used as a currency. It was being used by my money Dave and others as a form of investment. People were putting money into it, hoping to make money off of it through no work of their own. That is an investment, or should be under American law. It is how you define investment on an American law, but crypto hadn't been classified that way.

So, as it was in the news and just kept growing and growing, as celebrities got involved, particularly in 2021, I just felt like I needed to speak up, and so I reached out to a journalist Jacob Sullivan. We started writing articles about it and sort of build up, build up our bona fides enough to where we could, we could sell a publisher on a book project. We started reporting on that, and that's when I turned the camera on and just figured I would document, you know, whatever I

found along this investigation journey that I was on. Okay, so you actually hit on a couple of threads I want to pull throughout this interview. And you mentioned one thing that I wasn't planning

“on discussing, but I think it might be fruitful to actually take a look at. You pointed out”

the dichotomy between a currency and an investment vehicle. And there's certainly our cases, not to get like two economically nerdy on this, but like there are mechanisms where something can be both. I mean, people do invest based on exchange rates and stuff like that. But it's

when there's not a pre-existing exchange infrastructure, which has accepted it as a tried-and-true

“idea, right? Like we can bet on things like the you on or the renminbi or not bad, I guess,”

but speculate on where they're going to be in position to US dollars. But those forms of currency and viewing them as investments, they've been around a long time. Bitcoin has not. It has no real track record or historical analog. And to me, that would make it a very risky investment. Now, I'm not somebody who is particularly aggressive investments, so maybe I'm not the target audience or Mark or whatever you want to call it. But you did mention that you were sort of fascinated

by behavior economics. I'm guessing if we're roughly the same age when you were UVA studying it, it was very much at the time where a couple professors at University of Chicago had published some very popular books explaining and playing English. What do behavioral economists do? Why doesn't

“matter? How does it differ from classical models where everybody is a purely rational actor?”

And we don't need to dive into the weeds of that. There's plenty of books in articles and probably documentaries. Our audience could follow up with, but it's all about incentives. And I guess what I'm wondering is for something is unproven is Bitcoin. What is the incentive to put all of one savings in it? As many people in your film do? The incentive is you're going to get rich quick. I mean, it really is quite simple. It's a get rich quick scheme wrapped in a certain modern

sounding techno battle. But to just focus on the investment side for a second, one thing that

it really needs to be stated. So blindingly obvious, we often just sort of skip over it is a Bitcoin and cryptocurrencies are quite a strange investment because what are you investing in? What is the tangible real world asset that your investment represents? You know, all cryptocurrency is a computer code stored on ledgers called blockchains that obscure the identity of the people that are transacting. But if it's just computer code that doesn't actually do anything in the real world,

then you're sort of just investing in the idea of it, right? Or you're using its commit crime. And investing in the idea of it is kind of predicated on other people investing in the idea of it. There's a couple of things in economics that are sort of worth pointing out. One is called greater fool theory, which is that the price of a speculative asset rises and people start investing in it and they assume that they can buy it and then sell it to a fool greater than themselves.

And this is going to last for quite a long time. It's a fun game. Everyone wins on the way up, but as soon as, you know, it tops out and you're the biggest idiot left holding the bag. It's not quite quite as much fun. The other thing is what Robert Schiller pointed out, Robert Schiller, you know, obviously one of the most famous behavioral economists and his work influence, me more than probably anyone else. He talks about naturally occurring Ponzi schemes,

where the price of a speculative asset rises far beyond any relation to its real world value. People notice that and then buy it thinking that it's going to continue to go up, which, of course, sends it further up, which, of course, brings more people in. And so it just goes

“around and around and these things can last for a very long time. And so that's how I started to view”

crypto. It's basically, you know, the only thing you can really do with cryptocurrencies is gamble.

That the price is going up or down speculation, but it's really gambling. I would say, because there's no asset underneath it. And then, crime, you can use it to, you know, but because you can obscure your identity, you can do things. You can send something of value somewhere, instantaneously anywhere in the world, and you're avoiding people knowing you are. You're also avoiding the banking system with all of its pesky rules and regulations. So, for those, you don't know,

if you make certain types of cash transactions at a bank that are irregular in size or groupings or time periods, and over a certain dollar threshold, you're automatically going to generate something that's called the suspicious activity report, which banks are mandated to pass on to the government and are often used to predicate criminal investigations. If you try and avoid suspicious activity reports, and you do a number of transactions under the dollar threshold, you could be

charged with something called structuring, which is specifically to avoid SARS. But from what

Yeah, and the technology itself is innately difficult to track, right? I mean,

“because you don't know who controls each of these addresses, sort of like accounts. And because”

there are these other things called mixers, crypto mixers, where basically you send your cryptocurrency to a site, and they mix it with all these other cryptocurrencies, and it comes out the other side with its identity obscurity even more. And because transactions don't have to happen on the blockchain, you can have what's called it over the counter transaction, where you're transacting cash and exchange. For cryptocurrency to the technically, the address hasn't moved,

you never see any transaction. But in fact, ownership has changed. So, there's all sorts of ways

to use cryptocurrency to facilitate criminal activity. And to give you a sense of the size of the criminal activity that's facilitated, there's a crypto company called chain Alice's that came out with a study last year, or sorry, early this year, about last year, that will have found that approximately $154 billion of a list of activity had been financed via cryptocurrency. 150 or billion in one year. It is an extraordinary amount of illegal activity. A lot of it is money

laundering, but it's also sanctions of Asian tax evasion. It's child sexual abuse material, Jeffrey Epstein was merely investor and crypto in Bitcoin. We could talk about that. And so,

you know, you really are talking about a massive amount of crime. So, when you ask the John Stuart

no question earlier, and I advocated for people can use crypto for good, that is true. People can use it for good, of course, it's tool. But realistically, if you were being adults here and you

“would know this better than I and your former profession, what are people using this for on average?”

They're using it. The retail public is gambling, and the criminals are using it to get paid for their crimes. And the crimes are really fascinating. It's Russian oligarchs selling sanctioned oil to the Chinese via crypto and exchange for drones that they send to Ukraine. I mean, it's stuff like that. It was really wild. So, it has enormous social costs. I think that's just something that ought to be put at the forefront when we're talking about crypto and practically what it does and

what it's used for. So, even if it was a reasonable sort of libertarian leaning substitute for government issued currency, what you're saying is they're still even then would be a lot of negative externalities that get borne by the rest of society, including those who don't use crypto at all. Yeah, and we should interrogate the premise that you, you can have a currency devoid of

“government issue. So, if the money doesn't come from the government, where does it come from?”

The crypto folks don't like to talk about this, but the answer is corporations in the case of

cryptocurrency. It's not just world-limited, financial, Donald Trump's corporation that issues his currencies, but it's also Bitcoin. The overwhelming majority of the Bitcoin that are mind currently are mined by multi-billion dollar corporations, which are publicly traded. So, if corporate money seems like a good idea to you, if you'd like corporations to have even more control over our daily lives and even more influence in our economic and financial system, then okay, but I would argue that's a

really bad idea, and I think the majority of the public believes that as well. They just don't quite perhaps see it as clearly as I do because I haven't spent four years or five years looking at this, but that really is the answer. It's corporate money, which is also called private money, as opposed to public money. We've actually even tried this before, so we don't have to think in three radicals. We can go back to the Wildcat Banking Era of the 19th century.

America was trying to expand West, trying to provide credit for folks that were West being like Michigan at this point, or far West, and so banks were allowed to issue their own notes, their own currencies, as long as they held a certain amount of state bonds. It was called the free banking era, and also the Wildcat Banking Era, and it was called the Wildcat Banking Era, because you are allowed one chapter for your bank, and you would often set it up as far away

from your depositors as possible, where the Wildcat's room, and once you had their money, what's to stop you from taking off with it? There was a lot of fraud, there was a lot of instability, sometimes it worked, it worked better in New York than it worked for their West, but the overall takeaway, I would say, is that the system did not work that well, and was eventually replaced by a central bank. That's really been the story of money over time, I would say, or one of the

central themes is that because money is a fiction, we made it up, it's just a social construct, like government or religion, it relies on social consensus. You can obtain that social consensus

and our system, a quasi-democracy prince, and aspirational democracy, and so the story of

crypto is really kind of false in so many many different ways. It's sort of can't work fundamentally technologically, we could talk about that, but also historically, it has failed in the past, and just should seem like a bad idea to the majority of the public who are already suspicious of corporations and their power. All right, so let me play Devil's Advocate on a couple of the points you've raised, and the arguments that are going to be implicit in my questions are not necessarily,

“well, they're definitely not ones I believe, but I think we should address them. The first is”

earlier in the conversation, you talked about crypto not being backed by anything. In other words, it's not a real representation of something fungible, right? Like, there are certain currencies in the world that are backed by actual physical assets or minerals or something along those lines, and for a long time, the United States tender was backed by gold, and there is a decision in the 70s for a variety of reasons to go back, to go back from that, and you know, today, the only value

that American currency has in a marketplace is essentially the backing of the federal government, this sort of implicit trust that the government of the United States and its institutions will hold long enough for transactions to be completed, investments to run their course. In other words, it's a sinus stability. How is crypto different from that, except that it just doesn't have the 250 year history of the United States, or is that lack of history enough to make us doubt it? It doesn't

have the 250 year track record of the world's most powerful country, and also the most powerful

country that's ever existed in human history. Yeah, that's a pretty big distinction. I would argue, I mean, I do think it's different. Look, we should talk about the gold standard, though, actually, as well, if you don't mind, because crypto advocates will also make this argument that sort of they're used to be real value to our currency, because we are on the gold standard, but when Nixon abandoned in the 70s, you know, it's been untethered from any thing that's sort of real in the real world.

“I think that fundamentally misunderstands the nature of money, because why is having this pretty”

thing called gold valuable? It's valuable, not because it's the most scarce mineral on the planet it's not, but because other human beings have, for centuries, millennia really assumed it to be valuable. It's been traded all over the world for a very, very long time. But there are real just advantages to a currency being tied to anything that is that tangible. And let me give you a specific example during the Great Depression prior to the Great Depression, particularly we were on

the gold standard. And there's a great book, "Lords of Finance" by Lokwatt Ahamad. I have it sitting up on the shelf. Great, great. So he chronicles the central bankers at the time of the major powers, the UK, the United States and France. And because the powers of the world at the time were all on the gold standard when the economy suddenly shrunk. There was very little that they could do to expand the money supply. And so the economy just folded inward. People stopped

buying and started hoarding and the ripple effects were sort of enormous. So he makes a very persuasive argument that one of the contributing factors to the Great Depression was the insistence

“underlying on the gold standard, a standard that, of course, ultimately was scrapped. I think that's”

really important for us to understand. Let me give you a counter example, which would be COVID, right? When COVID hit, and the economy could have easily crashed in a extremely dramatic way, right? If people can't go about their daily lives and be productive or a large swaths of them, then the economy could, could go south very quickly. And these social constructs like money,

like government, like religion, they're ultimately quite fragile. You know, if there's a massive event

like a global pandemic, and people lose faith in the government or in the currency, then things can get really bad really fast. So what did the government do? It printed a ton of money. It flooded the zone with money. We can argue over how well it did. In many ways it did not do it that well. But the overall strategy worked. The economy didn't crash. It had a very quick recovery. And yes,

that better. But we prevented a global depression. You know, that is a very, very good thing for

the world. And something that is not possible, I would argue if we were still on the gold standard.

“Yeah. And I mean, I think we should note. And this is a little awkward for me because I very much”

used to move in these circles. But I think the supporters of going back on a gold send, like, they're on a pretty far libertarian fringe at this point. It's this sort of thing you see in Robert Heinlein novels and some think tanks out on their own peninsula. So I don't want people to walk away from this. At least from my point of view thinking that this is a, that's a real option going back on the gold standard in today's modern world. That was my unintentional editorializing

on our conversation. No, I'm really glad you brought it up because I think that's true. I mean, you obviously can find some economists from what's called the Austrian school who are more sort of gold buggy, but it's really hard to find a mainstream economist who who believes the gold standard is even worth considering again. And I'm sorry, I should have made the correlation between the gold standard and crypto more clear. What the crypto advocates argue is that Bitcoin's limited

supply, only 21 million Bitcoin can ever exist, makes it scarce. And so it makes it like a digital

gold, but they fundamentally misunderstand even the gold standard because or really scarcity, scarcity can only exist if demand exceeds supply at the price of zero. And I would argue that really if this thing is a Ponzi scheme, then it's limited supply, but it's not scarce. I use an example in the book where the difference between limited supply and scarcity. Imagine, I live in Brooklyn. Imagine, I owned the rights to all the dog shit in Brooklyn, all of dogs poop, not the dogs themselves,

but the feces. There's only so many dogs that can exist. There's only so many times they can

defecate what I have is you know, monopoly over your limited supply of a of a certain good,

but it is what I have scarce. No, because no one wants to buy my dog shit. It is just dog shit.

“And that's what I would say crypto is economically. It's a vehicle for crime. And as an asset,”

it's dog shit. I think Warren Buffett referred to his rat poison, which is another way of phrasing it, I guess. No, no, no, it's not a flene for such a end. Besuch the road kept in a business world in Freiburg, with Oren Mehlitz, Dürr, Omer, or then Kymnaller, Typen Von Neben, an animal, and all the years. A text of our interactive exhibition by the elite tour with audio guide and a classic

and the next parvillion, the whole world of road kept in the road kept in the business world, only a set of people. For trawing greed, for so-and-dead, and find a qualified talent with premium stones and saying, "Mach the indeed, either.e/recruiting." All right, so I had a couple other questions I wanted to ask you, but I'm going to put them aside,

“because you're statement about the Austrian school spurred a thought in my mind that I think we should”

follow up on, and I don't think has been covered in any of the other interviews or writings you've done on this. Austrian school is essentially a group of economists who take their inspiration largely from Hayek and von Mises, and have a pretty laws-a-fair to say it mildly attitude towards how economies should function. And I think what we see in the progression of the Austrian school is you start with Hayek and it begins with what I think is actually a very

persuasive critique of command economies and how they are unreliable profits of pricing. I don't know how else to put it in a colloquially fashion, but you have Hayek and then it goes to one Mises who takes the ideas of Hayek and promotes them into a more political sphere, and probably in my estimation at least loses a little bit of the intellectual credibility that the movement started with. And by the time you get to our era, you have individual theorists

involved the economy and political science. I'm thinking things people like Murray Rothbard who

in this almost utopian vision of how society should be structured. And I don't want to just

“pick on the right. I think there are many economists. I'm thinking of some of the individuals who”

were prominent in Greece when it had its financial catastrophe, a decade or so, back who took the ideas, if I was trying to be provocative, I would say Marx, but I'm not trying to be a provocative, you know, they were sort of museums on steroids. And I think the further they got from the general theory of Keynes and the stuff he talks about in the economic consequences of the piece, they started broaching out into larger societal diagnoses that were outside the sort of strict parameters

of the financial sector. So I think this does happen on the left and the right. And, you know, economic ideas have a certain amount of intellectual currency in any society, largely because it's sort of the sacred mystery that a lot of people just don't understand. But it also inevitably,

economic ideas have political ramifications and oftentimes the second and third order consequences

of those ramifications are not ones the original thinkers intended. Now let's bring this back to the subject of your film in the book. Bitcoin is the result of a theoretical paper published by an individual or a group of individuals who use a pseudonym. And the New York Times actually published an expose yesterday, reporting to potentially identify the individual behind it. But there's this what I will call a manifesto, a white paper, what have you spelling out the promises of crypto currency.

Now Adam Smith spells out capitalism, Karl Marx spells out Marxism, King spells out Keynesianism, and all of these philosophies, if taken to an extreme, can have both very positive and very negative effects. Do you think that the corruption and instability that seems to naturally flow from Bitcoin is baked into its founding principles? Or do you think this is a value neutral idea which somehow goes off the rails? I think it's more the form. I think Bitcoin advocates fundamentally misunderstand

the nature of money. One of the things that they argue in the white paper is that you could create a

“trustless money. A money that doesn't require trust. All you have to believe in is the computer code.”

And you can see the computer code in front of you on this public ledger called a blockchain. And therefore we can ignore and avoid having to those pesky things like human trust and human social interactions and economic interactions. And that's just wrong because computer code doesn't fall from the sky. People write computer code. And whether Cetoshi Nakamoto is Adam back or somebody else or Adam back and how many working together another group talker for whom's since died, we don't know,

but in some sense, it doesn't matter because you can't trust code. Only the people that write it. And to give you a very vivid example, Sam Beckman Freed, who I interviewed for the film, is now doing 25 years in jail for stealing his customer's money. The way that he stole the money, was he told one of his employees to change a single line of code inside the FDX source code. So that his trading firm could borrow if you're listening to his son using air quotes,

borrow from the exchange. In other words, steal his customer's money.

“I think that really gets at the heart of sort of the fundamental misunderstanding of cryptocurrency.”

Even Bitcoin has people behind it. There are developers who maintain the operating system. It's not like you can just create these things and they exist on their own. And they sort of have to exist with people because we made them up. You know, these are all made up human social, you can't have a social construct without social, without society. And so I think it's wrong

headed. And then ultimately is very dangerous, ultimately it's extremely dangerous because it does two things.

And it further schemes and frauds as well as criminal activity. And the combination of those is really sort of the deadly poison that we're facing today. Okay, so you mentioned Bigman Freed, and I do want to talk about him a little bit, not because I find he himself a particularly interesting character. But his story is the catalyst for a lot of how views about crypto currency change over time. And I want to talk about three groups that I really see as having promoted

cryptocurrency as a legitimate going concern. The first is celebrities. The second I would say is a

group of financial journalists who frankly buy their training shift known better and the third is the

“political class. And I think it's important to take them in that order with increasing importance.”

So let's just sort of go through each of them. There is a moment in your film where I think you start cursing at a Matt Damon commercial, that ran during the Super Bowl. And this isn't to just dunk on Matt Damon, but there were a pretty good number of celebrity endorsers of crypto currency. And I was wondering if you could sort of dive into why you think that might be? I realize I'm asking you to armchair psychology, but is it just

simply a matter of doing an endorsement like any other commercial endorsement? Yeah, I mean, it's very simple. They were paid in real money to convince you to take your real money and turn it into something else. They were maybe not explicitly, but implicitly offering you financial advice, which is a legal technically to be done if you're not a licensed financial advisor. But more to the point, they

celebrities have always showed products. I have fun in the movie. Even my wife is an actress

has done hair commercials before. There's only more wrong with celebrities showing consumer products like hair care, soap or cars or whatever. But a financial product is a very different thing. There's also some rules around financial products because we really want customers or investors to be fully informed and to be protected in the event of fraud or or even

“just mismanagement of their funds. And so that's why securities and the proper classification of”

crypto's asset securities is so essential to getting a hold of this thing. I think that the celebrities, you know, I would never be able to know what was inside their brains, nor would I

try. And of course it would vary from person to person. But the essential thing that I was so

angry about is that they shouldn't be doing it period because it's a financial product and they weren't thinking about it clearly or were just to sort of accepting that this was okay. Even though they didn't to sell somebody on something, they didn't probably know much about themselves and weren't exposed to because they weren't buying the crypto. It was the other people. Not even it wasn't out there going buying Bitcoin and Ethereum or whatever. Somebody's asking about that actually.

I've never thought about that. He hasn't had any ever bought any. But they weren't doing it. They

“were getting paid in US dollars. So that's why I got so angry. The celebrity thinks pretty straightforward”

to me, having been in showbiz for, you know, 20 plus years. Like the crypto companies come to the major agencies. There's only a few talented agencies left because of the consolidation of the entertainment industry. They have a massive marketing budget and they say, you know, we'll pay $X dollars for this level of actor and they work their way down depending on who's willing to do it. And, you know, when you're talking about a Ponzi scheme, you have to get the more it grows,

the more people you need to get into the scheme to keep the thing afloat. And so it makes sense that it's peak in terms of popular perception. That is peak in 2021, 2022. The crypto companies needed the most famous people in the world to show for them. They're sort of, you know, the largest megaphone possible to reach the largest audience. But that didn't make what the celebrities were doing right. It simply explained logically why it happened. So yeah, I was outraged at the

time and I have a laugh at it in the movie, but I was really pissed off. All right, and I should know, like, I will say something you will not probably brag about yourself. But there's even a point in the film where you're asked to give advice on crypto. And it's very clear that you want to tell people to do a 180 and run far away, but you do point out like, I'm not a financial advisor,

exact opposite that you are critiquing. But there's another group that also played a real role in

promoting this. And I'm talking about financial journalists. And I would humbly argue that there are very different tiers of financial journalists and some who are writing legitimate in-depth stories for the FT or the Wall Street Journal or what have you. And then there's a tier that's on cable news screaming and telling you how to invest your money. But at one point in the film, there's a scene of Michael Lewis sitting down and doing a sort of hosted round table with Sam Bankman freed.

And Michael Lewis is somebody who I would probably put closer to the legitimate tier. I mean, definitely put closer to the legitimate tier of journalists than I would the screaming heads on

minor cable networks. How did otherwise educated financially literate individuals who are

probably familiar with the history of crashes and scams? Like I could guarantee you that, you know, Michael Lewis could very well explain why building an entire economy on the price of two lips

“in Holland was not a good idea. Why wasn't he able to see around the same corner with crypto?”

And I'm not asking you to talk specifically about Michael Lewis. I'm just using yeah, sure, sure. Well, so stepping back a bit, I agree with your analysis there. And I'm so glad to were able to talk about this because it was one of the things that was most frustrating to me. I'm obviously not a journalist by training and I was working with a journalist Jacob Silverman who wrote the book with me. But I was new to the world. And I was sort of the funnel just to how

people who were should at least have a, I mean, they should have more than a passing familiarity with economics if they're finance journalists. How they could take this thing seriously and not it at a minimum critique it or interrogated from a, you know, a sort of objective framework where you're sort of questioning all the logical inconsistencies that we've gone over in crypto. So I was deeply frustrated by it. When I came to learn was quite depressing. On the lowest end

of quote unquote journalists, you have a lot of online outlets where journalists are paid to write by crypto companies to write articles. I mean, I don't want to cite a specific examples because I don't want to get sued, but like this happens a lot. And there are crypto outlets specifically that, you know, have a kind of a complicated history with this, torture history with this. So that's the low end. But you work your way all the way up to Michael Lewis who I agree. I mean,

Michael Lewis, it kind of broke my heart. I mean, his first book, "Liers Poker" was probably the

work that influenced me the most in terms of being willing to write a book about financial markets that was much for from the behavioral side, how to sense a humor. It was kind of deenestifying finance because if you read that book, it's about his days. He worked briefly for Solomon,

“Brothers, I believe. And it was just, you know, it's a liar's book. It's about the culture of Wall Street,”

rather than the sort of intellectual trappings of it or whatever market structure, things like that. Very good book and Michael's a very good writer. I was deeply disappointed in his embrace of Sam publicly. And you know, why was he in that conference who flew him there? Did they put him up? Like, you know, this is sort of financial entanglements with the star, potential financial entanglements with the star, with the focus of your book, that, you know,

for most journalists would be, you shouldn't do that to be blunt because it's creating a conflict of interest. My critique, his book quite serious. I wrote a whole review of it in Slay. People can read it if you want. But I was very frustrated. He did things like, there's a scene he recounts in the book, FDX is collapsing. And there's a conversation between Sam Beckman freed and two of his colleagues on the balcony of the penthouse and the Bahamas, where they're all staying.

And in his recounting, one of the colleagues with Sam says, oh, I'm really worried we're all going to go to jail. You know, what do I do? And Sam reportedly says, well, you didn't do anything wrong,

“right? So you should be fine. And the guy says, well, I don't know. Maybe I did. He says, oh,”

well, you know, it's, it's going to be all right, you know, something like that. And so it port of paints, Sam is the sort of responsible guy, you know, who's like, kind of trying to be a good shepherd here. It paints the colleague is the one who may have committed crimes. And it's recalling it in dialogue. You know, it says, though, it's an actual scene, but there's an asterisk at the end of the scene. And at the bottom of the page, it says, effectively, this is from Sam's

You know, what are we doing here? I am not a journalist by training, but it doesn't take a journalist to know that that is, you know, it should be unacceptable. So I don't know what happened with,

with, with, with Mr. Lewis. He's still an incredible writer and he can turn a phrase like,

“nobody else. I wish I was just going to write her. But I think what's frustrating for me is that he,”

you know, he's supposed to be writing nonfiction here. But the lines are getting pretty blurred. And I don't, I don't know why I, I don't know why he didn't change course actually in the interim, because I thought what would, what would have been very smart to have done was to enter the same place where you believe that Sam was, you know, like, like so many other people was, was this incredible, you know, mathematical savant and an innovator and entrepreneur. And then as that's

revealed to be false, realize you were duped too, put yourself in that role and be humble about it. And I think that could have been a fantastic book, but he didn't do that. He doubled down and was even saying things like his book was a, was a letter to the jury, you know, trying to influence them to have, I guess, some sort of sympathy for Sam. I mean, that is, I don't know. I don't, I don't agree with that. I went to the trial. He was there occasionally. All of the journalists

are were naturally seated on the prosecution side. That's where the court officers were sat us. Michael Lewis was the only one on the defense side. All right. I just have two more questions for you. What is a continuation of what we've been speaking about just now? And that is the third group that was really involved in giving soccer to this industry. And that's politicians. You host a number of video clips and a number of still photographs of very influential and

powerful politicians engaging what I will just call shilling for the crypto industry.

“Ted Cruz has a speech, which I think in this day and age comes off particularly bad.”

But one of the things that really interests me is towards the end of the film, you go and testify before Congress about what you've learned. And the hearing is specifically in response to Sam Bankman Freed's criminal activity. Like at this point, it's been charged. It's been adjudicated. We have proven beyond a reasonable doubt that the foundations of this entire house were just sat. And what amazes me is as you're giving the testimony, knowing what the public knows now

about what was going on, there are still some senators who preface all of their questions with a defense of the crypto industry. And they end almost all of their questions with the Jeremiah against regulating it. Is this just as simple as regulatory capture?

“It's regulatory capture and it's corruption. I don't know how it's to put it. I mean, I guess”

it's perhaps legal corruption. In some senses, thank you. So since the United, yet again, but the crypto industry has spent enormous amounts of money. I'm talking like over $200 million in the 2024 cycle. As a group that did a study that estimated that something like 40, 40 something percent of all corporate contributions in the cycle came from the crypto industry alone. That's more than the defense industry and pharmaceuticals and all of them combined. It's really

sort of staggering amount of money. And they used it as both a they use it as both a carrot and a stick. So if you are friendly to them, they will give you money. If you support this sort of legislation

that they want past or have passed. And if you're a critical of them, even in sort of mild ways,

they will come after you. And they did specifically with Sherrod Brown, who was the chairman of the committee when I testified in 2022. I mean, all he's doing is calling a hearing because there's been this massive Ponzi scheme that's imploded. And in the news, it feels like something we should be talking about. And in retaliation, the crypto industry spent $40 million boasting a literal car salesman in Perna, Marano, and who won. Now the crypto industry isn't always successful. Sometimes it's

been tons of money and people lose anyway. But one of the interesting things that the crypto lobby does, much like APAC, is they obscure what it is, they're where the money is really coming from in the sense that they create these superpacks with these sort of benign names, protecting America's

And yet they're really crypto, crypto packs. So why do you need to do that? If you're

causing so just, so that the sad truth is, and this is one reason why I want to be so glad to be here of law fair. And I want to speak up so clearly here and express my opinion informed by years

“of research. Because I think it's critical for law fairs, listeners who are very well informed”

and listen to these things and have a lot of political capital themselves to spend. It's extremely important to understand that it is not just the Republicans who have been co-opted by the crypto lobby. The genius act, which is a bill that was passed last year, that allows corporations to issue their own currencies in the form of stablecoins, a hundred Democrats voted for that, including hockey and Jeffries, including Chuck Schumer, including my current congressman, Dan Golden and New York's

10th, that's outrageous or it should be outrageous. If the Democratic Party, I'm Democrat, I'm a little progressive. If the Democrat party stands for anything, it should be anti-corruption. And it is really galling that these representatives of the people are doing something that goes against the wishes of the people. Because if you look at the polling, the majority of the public is deeply skeptical of crypto and for good reason. So I'm quite angry that members of the Democratic

lobby have been, in my opinion, co-opted. And I'll be speaking out on this every chance I get. On glad we could afford you the opportunity here. And I just want to cover one more thing that is not in the film, but please a pretty decent part in the beginning of your book.

“And I want to cover it because I think it's probably, if you look at my life and career and”

interests and your life and career and interests, this is the only common part of the Venn diagram. I spent my career in counterintelligence, which meant I was dealing with CIA on a weekly if not daily basis. And at one point in the book, it seems to me very much that CIA is trying to recruit you. So as I told you before we began, I would not be a good member of the FBI family or alumni community or what have you if I did not take an opportunity to poke CIA and the eye. So let's sort

of walk through what that experience was like and just be as ridiculing in sarcastic as you want. Alright, well I don't know if I'll be able to satisfy your urge for ridiculing, but I'll do my best to portray it as I remember it. We were at South by Southwest in 2022, the big music tech film conference in my hometown of Austin, Texas. And we were at an event, we were getting a beer at the bar, it was some event for NFTs, it was ridiculous. And I get a tap on my shoulder, I turn around

“and there's a guy who says something like, "Are you who I think you are or something like that?"”

And you know, because I've been on TV, I'm kind of used to people recognizing me for various things and I say, "Well, yeah, I'm an actor." And I'm assuming he wants to picture or something

or just to say, "Hi, whatever." And he says, "I'm with the government. Do you have a second?"

Okay, sure. So I walk over and this guy was different. He was in NFT crowd, so it was a lot of asymmetrical haircuts, some people died hair and we were, you know, it was a very like, I guess he would so call it hip, definitely hip or the me crowned, but this guy was wearing like, you know, like the, you know, the government's way. Well, you do open your open Henry public. So I don't think you could disavow an extra affiliate. That's true. That's true. That's true.

I'm like a middle-aged Brooklyn hipster, I guess, on some level. But these guys were wearing sweater vests and, you know, college shirts and they seem very out of place. The group that he walks me over to.

And basically, yeah, they said they were very, very, very people, you know, working in

so the government and crypto had been an interesting thing for them. They had been useful to pay sources, specifically overseas one guy said that. And, you know, we had a little chit chat for a while and then the guy that approached me said, hey, you know, can I take you, you guys around, can we meet up? You know, can I take you to dinner? And, you know, I was new to journalism, but I figured as this is a sort of a voyeuristic work of a portage. When the CIA asked you dinner,

go to dinner with the CIA. What's the worst they could have? So what happened was Jacob and I went to a dinner with this guy in one of his colleagues or former colleagues, now in private, the private sector. And it was a bizarre night, you know, because I kept trying to understand, are these

with Ryan out from the O.C. or, you know, he's like, can you be a source for me? And I was like,

I don't think I feel comfortable with that. And anyway, it was a very amusing evening involving an enormous amount of vodka in the form of martinis and steaks. All I'm assuming on the government's tab, so I do apologize to the public for that, but it was at least entertaining evening out. And I decided I would not go further with that gentleman and his colleague in terms of interacting with them. And sure enough, I haven't spoke to them since, but fun chapter for the book.

And at least you got a good meal out of it. If I can say anything for CIA is that their budget is enormous. And it's reflected in how they cater their source meetings. And it's reflected in their

“cafeteria, which is easily the best government run dining outlet in Washington. But I think we will”

leave it there on too much action. Ben McKenzie, thank you again for joining us. I would be remiss if I did not note that Laughford is based in DC as is a lot of our audience. And you will have an opportunity if so inclined to see Ben talk about the film and do a Q&A at the American Film Institute on April 20th and April 24th in Silver Spring. I'd encourage you to check out the film. So thank you again. Thank you. And if anyone needs information on the film that all the

information is on the website, which is everyone is lying.com. But I will be in the DMV for that week

“for those two screenings. And we'll have some special guests. I think there's going to be some fun”

folks to talk to. And yeah, come out. It's a fun movie. It's, you know, that we've had a pretty serious conversation, but as hopefully you can attest to Michael. It's a fun lighthearted movie. I try to try to keep it short and sweet. And hopefully it's nice to see it in the theater. It's played the festival route. It's nice to see that theater amongst fellow members of this community, which seems

a pretty broad community, right? I mean, it includes, so it's basically everybody who's kind of

frustrated with the state of affairs here. And the fact that everyone is lying to you for money. So come out, support, and I hope to see you there.

“Wallfair podcast is produced by the Wallfair Institute. If you want to support the show and listen”

to add free, you can become a Wallfair material supporter at lawfairmedia.org/support. Supporters also get access to special events in other bonus content we don't share anywhere else. If you enjoy the podcast, please rate and review us wherever you listen. It really does help. And be sure to check out our other shows, including rational security, allies, the aftermath, and escalation. Our latest lawfair presents podcast series about the war in

Ukraine. You can also find all of our written work at lawfairmedia.org. The podcast is edited by Jen Potcha, with audio engineering by Cara Schillen of Goat

Radio. Our theme song is from Albert Music. And as always, thanks for listening.

With real proof, we won't be able to pass it. For trawing greed, for soar in deed and find qualified talent with premium stale in and say.