n a back room at my local café a curious group assembled. Some years ago, how many I forget, I stumbled upon an eclectic mix of deeply passionate people buzzing about something. Posted outside of the entry to the back room was a flier for “Bitcoin.” I must confess that at the time I was not that interested. The flier was one step above Microsoft Paint in design and, I’m almost certain, used the font Comic Sans. I poked my head in, staying only briefly to overhear a flurry of technobabble jargon about blockchain and cryptocurrencies, infused with a libertarian zeal. Needless to say, I didn’t take it seriously, although in hindsight I partially wish I had, especially as at one point in 2021 one Bitcoin was worth $64,000. The realization of having missed out—the manifestation of FOMO (fear of missing out)—was somewhat real.
That realization has, however, been markedly tempered by the sheer chaos of the cryptocurrency community. The collapse of the crypto exchange FTX and unseating of the crypto-king Sam Bankman-Fried, the failure of countless “coins” and shady exchanges, and the inability of acolytes and adherents alike to explain just what problem cryptocurrency solves in practice—not just theory—all makes one slightly less disappointed in having missed out on the next big thing, which was assuredly going “to the moon.”
Ben McKenzie, an actor best known for his roles on “the O.C.” and “Gotham” is a curious figure to serve as a cryptocurrency Cassandra. A bit high, as he recounts, and spurred on by a family member, he started to investigate the world of cryptocurrencies and was alarmed by what he saw. With freelance journalist Jacob Silverman, McKenzie embarked on a crusade against crypto’s false prophets, which culminated in the penning of a searing and entertaining account of the fraudulent world of cryptocurrencies and an indictment of America’s fetishization of casino capitalism in “Easy Money.”
Underpinning “Easy Money” is a fundamental unanswered question: what is the problem it is seeking to fix? It is not as anonymous as acolytes would suggest. Andy Greenberg’s “Tracers in the Dark” demonstrates quite clearly how law enforcement managed to break Bitcoin’s anonymity to hunt down global crime syndicates. It is a highly volatile store of value. Even Bitcoin and Ethereum, the two most popular coins, fluctuate wildly in value. As McKenzie and Silverman show, the vast majority of the other coins are merely the modern equivalent of “pump and dump” stocks—promoted aggressively before their offering and then sold by those behind the scheme. Even its libertarian ideals of a decentralized currency are wholly empty. Throughout “Easy Money” the authors show power behind the coins was concentrated in the hands of very few people, people like Sam Bankman-Fried (SBF) and Changpeng Zhao, the co-founder and CEO of Binance, a FTX competitor. It is a poor store of value as very few places accept it—even vendors at the Miami Bitcoin conference seemed to prefer cash. Is the American and Western financial system perfect? No. Is crypto the solution? Absolutely not.
If the logic behind cryptocurrency is digital bunk, what’s left? For McKenzie and Silverman, crypto currency is simply a digital version of a Ponzi scheme, one that capitalizes on human avarice and the desire to make a quick dollar. Regardless of the initial motivations—ideological, technological, or otherwise—a handful of very clever, highly creative individuals saw a way to make a lot of money and fast, and paved a pathway to leverage other people’s money into untold virtual wealth. A few won and won big, but most lost everything. Unlike many Ponzi schemes of the past, the acolytes of cryptocurrency saw losing or being scammed as part of the process, masking their pain with cliches of “DYOR” or “do your own research.” Crypto gained its own cult-like following.
The sheer silliness of the crypto craze reached its apex with the proliferation of non-fungible tokens or NFTs—those silly images of “bored apes” that went for millions of dollars during the pandemic only to be rendered nearly worthless now. In essence you would “own” a JPEG or an image and your ownership of that image was registered in the blockchain. A NFT of Jack Dorsey’s first Tweet was sold in 2021 for $2.9 million. It is now worth just $4, if that tells one anything about these bizarre virtual items.
Nearly every institution from Disney to UFC (the mixed martial arts organization) sought to cash in on the seemingly easy money of NFTs. It’s quite striking how quiet that market has become. To no one’s surprise, the value of NFTs was another Ponzi scheme of sorts. These receipts traded back and forth between wallets owned and controlled by solitary individuals to make it look like the value was only going up. Step No. 1: Sell it back and forth between you and, well you. Step No. 2: Promote the hell out of it on social media. Step No. 3: Find someone foolish enough to buy it. Step No. 4: Profit.
The story of “Easy Money” is not restricted to the digital world. McKenzie and Silverman head to Miami—a one-time destination of choice for “crypto bros”—the multimedia festival SXSW in Austin, Texas, and to El Salvador, the president of which declared it to be a haven for Bitcoin. These vignettes are interesting, but unevenly illustrative. In Austin, the authors find themselves drinking with an ostensible CIA officer who may or may not have tried to recruit them both, but really only ended up getting worryingly drunk (almost assuredly with U.S. taxpayers picking up the bill). Its inclusion is a touch strange, but works to reinforce the strangeness of both SXSW, and by extension, also the crypto community.
In Miami, Mayor (and now candidate for the presidency) Francis Suarez unveiled a curiously castrated “crypto bull” to symbolize the city’s future as a home of new finance. Somewhat ironically, the city is slowly souring on the crypto fad as it has failed to live up to expectations, with its only legacy being even higher property prices and rents, failed businesses, and an entire ecosystem of “crypto bros” consuming highly-marked up, overpriced bottles of alcohol at the city’s clubs. The highly leveraged fad may be deflating, but the city certainly hopes to pivot toward attracting tech startups, so long as it remains above water (financially and literally).
The story of El Salvador and its president, Nayib Bukele, is likely the most curious of the crypto-affiliated tales McKenzie and Silverman pen. A Millennial, tech-forward president, Bukele hoped to turn his country into the destination of choice for cryptocurrencies, becoming the first to adopt Bitcoin as legal tender. His government opened crypto wallets for its citizens, many of which were outright stolen through identity theft, and promised to create a Bitcoin beach and investment community with a new airport at the base of a volcano. Like much of the cryptocurrency hype, it was inflated vaporware at best and fraud at worst. “Easy Money” explores the juxtaposition of these ambitions and the reality on the ground, showing most El Salvadorans are struggling to get by and are far less interested in gambling on digital ones and zeroes.
That so many were so taken by Bitcoin, cryptocurrency, and people like Sam Bankman-Fried—who curiously seems to want to be liked by McKenzie to an unhealthy degree both during and after his interview—is reflective of the era of casino capitalism that we may still find ourselves in the midst of. With historically low interest rate and the government pumping money into the economy to keep the markets alive during COVID-19, and a lot of people with a lot of time on their hands, markets surged. Politically, with Trump in the Oval Office, and economically, with people like SBF spouting “get-rich-quick” schemes, the titular easy money never seemed easier. People were making big bets with other people’s money and making it big, so you could too … or so the thinking went. It didn’t matter whether you were a con artist or were convicted of fraud—as some of the people profiled in “Easy Money” were—just invest your money and hold on for dear life (known as HODL in crypto speak).
It was bad enough that individuals were caught in this web, but major financial institutions and Congress were rapidly co-opted as well. Through savvy spending (again) of other people’s money Bankman-Fried wooed Republican and Democrat politicians alike, working against regulation and oversight. By spreading enough campaign money around and making it appear as though he was a grand “effective altruist”—a philosophy that suggests the best way to do the most good is by making the most money—Bankman-Fried worked his sleight of hand and played on the ignorance of politicians.
Crypto is a solution in search of a problem. The driving forces behind it may have had noble intentions from the outset, but it clearly became co-opted by greed and avarice—a most common economic narrative. The technologies that underpin it like blockchain and the motivations behind it like Decentralized Finance (DeFi) may well lead to structural changes in the long-run. Government regulation may well follow and legitimize much of the industry. In the near-term, we’re likely to see more Wolf of Wall Street and Gordon Gecko than J.P. Morgan, and that spells disaster for a lot of unwitting (and some witting) investors.
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The False Promises of Digital Lucre
August 12, 2023
In "Easy Money," actor Ben McKenzie embarks on a crusade against cryptocurrency's false prophets, revealing that there isn't really a problem that crypto fixes. McKenzie is an unlikely voice to debunk the false claims of crypto, but an effective one, writes Joshua Huminski.
I
n a back room at my local café a curious group assembled. Some years ago, how many I forget, I stumbled upon an eclectic mix of deeply passionate people buzzing about something. Posted outside of the entry to the back room was a flier for “Bitcoin.” I must confess that at the time I was not that interested. The flier was one step above Microsoft Paint in design and, I’m almost certain, used the font Comic Sans. I poked my head in, staying only briefly to overhear a flurry of technobabble jargon about blockchain and cryptocurrencies, infused with a libertarian zeal. Needless to say, I didn’t take it seriously, although in hindsight I partially wish I had, especially as at one point in 2021 one Bitcoin was worth $64,000. The realization of having missed out—the manifestation of FOMO (fear of missing out)—was somewhat real.
That realization has, however, been markedly tempered by the sheer chaos of the cryptocurrency community. The collapse of the crypto exchange FTX and unseating of the crypto-king Sam Bankman-Fried, the failure of countless “coins” and shady exchanges, and the inability of acolytes and adherents alike to explain just what problem cryptocurrency solves in practice—not just theory—all makes one slightly less disappointed in having missed out on the next big thing, which was assuredly going “to the moon.”
Ben McKenzie, an actor best known for his roles on “the O.C.” and “Gotham” is a curious figure to serve as a cryptocurrency Cassandra. A bit high, as he recounts, and spurred on by a family member, he started to investigate the world of cryptocurrencies and was alarmed by what he saw. With freelance journalist Jacob Silverman, McKenzie embarked on a crusade against crypto’s false prophets, which culminated in the penning of a searing and entertaining account of the fraudulent world of cryptocurrencies and an indictment of America’s fetishization of casino capitalism in “Easy Money.”
Underpinning “Easy Money” is a fundamental unanswered question: what is the problem it is seeking to fix? It is not as anonymous as acolytes would suggest. Andy Greenberg’s “Tracers in the Dark” demonstrates quite clearly how law enforcement managed to break Bitcoin’s anonymity to hunt down global crime syndicates. It is a highly volatile store of value. Even Bitcoin and Ethereum, the two most popular coins, fluctuate wildly in value. As McKenzie and Silverman show, the vast majority of the other coins are merely the modern equivalent of “pump and dump” stocks—promoted aggressively before their offering and then sold by those behind the scheme. Even its libertarian ideals of a decentralized currency are wholly empty. Throughout “Easy Money” the authors show power behind the coins was concentrated in the hands of very few people, people like Sam Bankman-Fried (SBF) and Changpeng Zhao, the co-founder and CEO of Binance, a FTX competitor. It is a poor store of value as very few places accept it—even vendors at the Miami Bitcoin conference seemed to prefer cash. Is the American and Western financial system perfect? No. Is crypto the solution? Absolutely not.
If the logic behind cryptocurrency is digital bunk, what’s left? For McKenzie and Silverman, crypto currency is simply a digital version of a Ponzi scheme, one that capitalizes on human avarice and the desire to make a quick dollar. Regardless of the initial motivations—ideological, technological, or otherwise—a handful of very clever, highly creative individuals saw a way to make a lot of money and fast, and paved a pathway to leverage other people’s money into untold virtual wealth. A few won and won big, but most lost everything. Unlike many Ponzi schemes of the past, the acolytes of cryptocurrency saw losing or being scammed as part of the process, masking their pain with cliches of “DYOR” or “do your own research.” Crypto gained its own cult-like following.
The sheer silliness of the crypto craze reached its apex with the proliferation of non-fungible tokens or NFTs—those silly images of “bored apes” that went for millions of dollars during the pandemic only to be rendered nearly worthless now. In essence you would “own” a JPEG or an image and your ownership of that image was registered in the blockchain. A NFT of Jack Dorsey’s first Tweet was sold in 2021 for $2.9 million. It is now worth just $4, if that tells one anything about these bizarre virtual items.
Nearly every institution from Disney to UFC (the mixed martial arts organization) sought to cash in on the seemingly easy money of NFTs. It’s quite striking how quiet that market has become. To no one’s surprise, the value of NFTs was another Ponzi scheme of sorts. These receipts traded back and forth between wallets owned and controlled by solitary individuals to make it look like the value was only going up. Step No. 1: Sell it back and forth between you and, well you. Step No. 2: Promote the hell out of it on social media. Step No. 3: Find someone foolish enough to buy it. Step No. 4: Profit.
The story of “Easy Money” is not restricted to the digital world. McKenzie and Silverman head to Miami—a one-time destination of choice for “crypto bros”—the multimedia festival SXSW in Austin, Texas, and to El Salvador, the president of which declared it to be a haven for Bitcoin. These vignettes are interesting, but unevenly illustrative. In Austin, the authors find themselves drinking with an ostensible CIA officer who may or may not have tried to recruit them both, but really only ended up getting worryingly drunk (almost assuredly with U.S. taxpayers picking up the bill). Its inclusion is a touch strange, but works to reinforce the strangeness of both SXSW, and by extension, also the crypto community.
In Miami, Mayor (and now candidate for the presidency) Francis Suarez unveiled a curiously castrated “crypto bull” to symbolize the city’s future as a home of new finance. Somewhat ironically, the city is slowly souring on the crypto fad as it has failed to live up to expectations, with its only legacy being even higher property prices and rents, failed businesses, and an entire ecosystem of “crypto bros” consuming highly-marked up, overpriced bottles of alcohol at the city’s clubs. The highly leveraged fad may be deflating, but the city certainly hopes to pivot toward attracting tech startups, so long as it remains above water (financially and literally).
The story of El Salvador and its president, Nayib Bukele, is likely the most curious of the crypto-affiliated tales McKenzie and Silverman pen. A Millennial, tech-forward president, Bukele hoped to turn his country into the destination of choice for cryptocurrencies, becoming the first to adopt Bitcoin as legal tender. His government opened crypto wallets for its citizens, many of which were outright stolen through identity theft, and promised to create a Bitcoin beach and investment community with a new airport at the base of a volcano. Like much of the cryptocurrency hype, it was inflated vaporware at best and fraud at worst. “Easy Money” explores the juxtaposition of these ambitions and the reality on the ground, showing most El Salvadorans are struggling to get by and are far less interested in gambling on digital ones and zeroes.
That so many were so taken by Bitcoin, cryptocurrency, and people like Sam Bankman-Fried—who curiously seems to want to be liked by McKenzie to an unhealthy degree both during and after his interview—is reflective of the era of casino capitalism that we may still find ourselves in the midst of. With historically low interest rate and the government pumping money into the economy to keep the markets alive during COVID-19, and a lot of people with a lot of time on their hands, markets surged. Politically, with Trump in the Oval Office, and economically, with people like SBF spouting “get-rich-quick” schemes, the titular easy money never seemed easier. People were making big bets with other people’s money and making it big, so you could too … or so the thinking went. It didn’t matter whether you were a con artist or were convicted of fraud—as some of the people profiled in “Easy Money” were—just invest your money and hold on for dear life (known as HODL in crypto speak).
It was bad enough that individuals were caught in this web, but major financial institutions and Congress were rapidly co-opted as well. Through savvy spending (again) of other people’s money Bankman-Fried wooed Republican and Democrat politicians alike, working against regulation and oversight. By spreading enough campaign money around and making it appear as though he was a grand “effective altruist”—a philosophy that suggests the best way to do the most good is by making the most money—Bankman-Fried worked his sleight of hand and played on the ignorance of politicians.
Crypto is a solution in search of a problem. The driving forces behind it may have had noble intentions from the outset, but it clearly became co-opted by greed and avarice—a most common economic narrative. The technologies that underpin it like blockchain and the motivations behind it like Decentralized Finance (DeFi) may well lead to structural changes in the long-run. Government regulation may well follow and legitimize much of the industry. In the near-term, we’re likely to see more Wolf of Wall Street and Gordon Gecko than J.P. Morgan, and that spells disaster for a lot of unwitting (and some witting) investors.
