>> TURNING TO THE WORLD OFCRYPTOCURRENCIES AND THE FLAWSOF THE DIGITAL PHENOMENON, THENMcKENZIE, BEST KNOWN FOR HISSTARRING ROLES IN TV SHOWS "THEOC," AND "GOTHAM,"MADE ACAREER CHANGE.

HE HAS MADEA NEW BOOK, "THERISE AND FALL OF DIGITALCURRENCIES. "

>> ACTOR AND AUTHOR BENMcKENZIE, THANK YOU SO MUCH FORJOINING US.

FIRST, OUR AUDIENCE MEMBERS OFA CERTAIN AGE MIGHT RECOGNIZEYOU FROM A COUPLE OF TV SHOWSAND SAY, WAIT, WHAT IS THE GUYFROM"THE OC" DOING TALKINGABOUT CRYPTOCURRENCY.

WHAT GAVE YOU THE IDEA TO WRITEA BOOKABOUT CRYPTOCURRENCIES,THE SCANS, SOME OF THECHARLATANS INVOLVED.

HOW DID THIS HAPPEN?

>> IT IS A PRETTY INTERESTINGSTORY.

I HAVE A DEGREE IN ECONOMICSFROM THEUNIVERSITY OFVIRGINIA.

ABOUT 20 YEARS OLD.

I KIND OF SET IT ASIDE AS IPURSUED MY HOLLYWOOD PACK.

BUT I WOULD SAY, EASY MONEY.

IT IS ABOUT MONEY AND ALLYING.

I KNOW ABOUT MONEY.

I DO IT FOR A LIVING.

ANDTHE CRYPTOCURRENCIES, YOUKNOW, THEY ARE NOT CURRENCIESECONOMICALLY SPEAKING.

ANYONE WITH AN UNDERGRADUATEDEGREE SUCH AS MYSELF KNOWSTHAT.

IT LET ME DOWN A PRETTY WILDRABBIT HOLE WHERE I INTERVIEWEDSAM BATEMAN FREED OF FTX, AND ITRAVELED THE WORLD TRYING TOGET TO THE HEART OF THE MATTERIN TERMS OF WHAT IS CRYPTOANDWHY DO SO MANY PEOPLE PUT SOMUCH INTO IT?

BUT I HAD THIS SUSPICION.

I HAD THIS SUSPICION THAT IF IWAS RIGHT, WHAT I WAS LOOKINGAT WAS EFFECTIVELY THE BIGGESTPONZI SCHEME IN HISTORY.

SOME 40-50 MILLIONAMERICANSBOUGHT CRYPTOCURRENCY.

I WAS STRUGGLING WITH THISDURING THE HEIGHT OF THE MEMEYEAH IN 2021.

I WAS READING THE YOUNGDAUGHTER A STRIKE.

I READ HER "THE EMPEROR'S NEWCLOTHES.

"AND I HAD FORGOTTEN A COUPLE OFPOINTS.

FIRST, THE SWINDLERS TRICKEDTHE EMPEROR AND ALL THE PEOPLEIN TOWNBYSAYING THAT ONLY THEPEOPLE OF THE HIGHEST STATION,THE SMARTEST PEOPLE, CAN SEETHE IMAGINARY CLOTHES THATTHEYLEAVE.

SO IT REALLY APPEALS TO STATUSWORSHIP AND EGO.

AND THE SECOND THING IS THAT ATTHE HEIGHT OF THE STORY, AS THEEMPEROR GOES TO TOWN NAKEDANDTHE ADULTS PRETEND NOT TONOTICE, IT ISA CHILD.

HE DOES NOT KNOW HE IS BEINGBRAVE.

HE SIMPLY IS TELLING THE TRUTH.

IT WAS HARD NOT TO PUT MYSELFIS THAT CHILD.

WHAT DO I KNOW?

I AM A FORMER TEEN IDOL.

20 YEARS IN SHOWBIZ.

THEN AGAIN, I DO HAVE ANECONOMICS DEGREE.

I HAVE DONE THE RESEARCH.

AND I DO KNOW ABOUT LIGHTING.

AND WHAT IF I AM RIGHT?

WHAT AN ADVENTURE THATMIGHTBE.

IT ENDED UP BEING EVEN MORE OFAN ADVENTURE THAN I COULD HAVEEXPECTED.

>> NOW, WHEN YOU MENTION YOUROWN RESEARCH, THAT IS KIND OFTHE CRYPTO GOSPEL, IF YOU WILL.

PEOPLE WHO BELIEVEINCRYPTOCURRENCIES AS THISSTRUCTURAL TRANSFORMATION OFECONOMIES AND THE BANKINGSYSTEM, THEY ALWAYS SAY, DOYOUR OWN RESEARCH.

HERE YOU ARE KIND OF DOING YOUROWN RESEARCH.

WHAT WERE THE FIRST THINGS THATSURPRISEDYOU?

>> WELL, THE MARKET STRUCTURE.

CRYPTO VOLUMES RUN THROUGH THEOVERSEAS EXCHANGES PRIMARILY.

PLACES LIKE THE BAHAMAS, WHEREFTX WAS BASED BEFORE ITCOLLAPSED.

THE CARIBBEAN ISLANDS.

PLACESLIKE THAT.

THESE ARE AREAS WHERE OBVIOUSLYAMERICAN REGULATIONS ARE NOT INEFFECT, AND IF AMERICANCUSTOMERSARE ACCESSING--THEYCALL THEM CRYPTO EXCHANGES, BUTECONOMICALLY SPEAKING THEY ARECASINOS BECAUSECRYPTOCURRENCIES DO NOT DOANYTHING PRODUCTIVE.

THEY ARE KNOWN INECONOMICS ASA ZERO-SUM GAME.

IT IS LIKE PLAYING POKER INVEGAS.

YOU AND I CAN SIT AROUNDATABLE.

I MIGHT WIN A HAND OR YOU MIGHTWIN A HAND.

WE ARE NOT CREATING ANY VALUE.

WE ARE TRADING BACK AND FORTHAMONGST OURSELVES AND ME FILETHE HOUSE IS TAKINGTHE RAKE.

THAT IS WHAT KEEPS THE LIGHTSON IN THE CASINO.

SO COULD YOU WIN IN VEGAS?

SURE.

BUT, OVER TIME, THE AVERAGEGAMBLER WILL LOSE BECAUSE THATIS HOW THEY KEEP THE LIGHTS ON.

CRYPTOIS A UNREGULATED,UNLICENSED CASINO IF IT ISOVERSEAS.

SO YOUR ODDS ARE EVEN WORSE.

THAT WAS MY FIRSTSORT OFFUNDAMENTAL INSIGHT.

BUT IT FIRST STARTED WITHLANGUAGE.

THESE THINGS ARE NOTCURRENCIES.

THEY ARE SECURITIES, MEANINGTHEY ARE INVESTMENTS.

THERE ARE 20,000CRYPTOCURRENCIESOUT THERE.

THAT IS MORE CRYPTOCURRENCIESBY NUMBER THEN STOCKS IN THEMAJOR U. S. STOCK MARKETS.

AND THEY ARE EFFECTIVELYSTRUCTURALLYPAY STOCKS.

NO DISCLOSURE.

NO REAL INVESTOR PROTECTION.

THAT IS REALLY DANGEROUS.

THAT WAS TERRIFYING WHEN IDISCOVERED THAT.

>> WHAT ABOUT THE UNDERLYING,KIND OF, TECHNOLOGICALARGUMENTS THAT WEREBEING MADE?

ONE OF THE BIGGEST CHALLENGESTHAT CRYPTOCURRENCY PROPONENTSSAY THAT THEY PROPOSE IS TO THEEXISTING FIAT OR THE PAPERCURRENCY.

THE BANKING SYSTEM THAT WEKNOWOF.

THEY ARE SAYING THAT THIS ISCOMING AT A TIME WHEN THERE ISSUCH LITTLE TRUST IN OURFINANCIAL INSTITUTIONS, WHEREWE HAVE COME ACROSS FINANCIALCRISESLIKE THEMORTGAGEMELTDOWN.

WE LOOK AROUND AND SAY HOW MANYOF THOSE PEOPLE WENT TO JAILVERSUS HOW MANY WERE LEFT OUTOF THEIR HOMES?

IT SEEMS LIKE THE SORT OFTECHNOLOGY WASTRYING TO, WELL,HARNESS THIS DISCONTENT.

>> IT ACTUALLY HARNESSED IT ANDI WOULD SAY EXPLOITED IT.

IF THERE IS ANYTHING I AGREEWITH THE CRYPTO FOLKS ON ISTHAT IT WOULDBE OURSYSTEM ISDEEPLY FLAWED.

BUT THAT IS TRUE WITH ANYSYSTEM.

WE HUMANS MADE UP MONEY.

WE MADE UP OUR FINANCIALSYSTEM.

WE MADE UP OUR ECONOMIC SYSTEM.

THEY ARE COLLECTIVEHALLUCINATIONS TO SOME DEGREE.

AND THEY ARE UNDEROURCOLLECTIVE CONTROL THAT WE SEETHE MYRIAD OF FLAWS IN THEM ANDTHAT GIVES THE STORY OFCRYPTOCURRENCY.

IN EFFECT, CRYPTO IS REALLYJUST A STORY.

IT GIVE THE STORY A LOTOFPOWER.

BUT THE TRICK THERE IS YOU GOFROM STARTING WITH ANASSUMPTION THAT MOST PEOPLEHAVE, WHICH IS THAT OUR SYSTEMIS NOT GREAT AND IT COULD BEIMPROVED, AT BEST, IF NOT ASOMEWHAT DARKER TAKE.

IT STARTS WITH THAT ASSUMPTIONWHICH MOST OF US AGREE ON.

THEN IT SAYS CRYPTO SOLVES ALLTHOSE PROBLEMS.

THAT IS THE TRICK.

THAT IS THE THREE CARD MONTEMOVE.

THAT IS NOT TRUE.

CRYPTOCURRENCY DOES NOT DO ANYOFTHE THINGS THAT IT SAYS ITIS GOING TO DO.

IT DOES NOT FIX ANY OF THEPROBLEMS THAT IT SAYS IT ISGOING TO FIX.

IN FACT, IT EXACERBATES ALMOSTALL OF THEM.

IT WAS SAYING THAT IT WAS GOINGTO CREATE GENERATIONAL WEALTH.

AND WAS MARKETED TO THE BLACKCOMMUNITY IN PARTICULAR AS AGENERATIONAL WEALTH BUILDER.

YOU RISKLOSING ALL OF YOURMONEY.

IT WAS MARKETED AS A WAY OFBANKING THE UNBANKED.

PROVIDING BANKING SERVICES TOPEOPLE WHO CANNOT GET THOSESERVICES PROVIDED TO THEM.

WELL, IT DOES NOT DO THATEITHER.

>> AND WHO FELLFOR IT?

MEANING, WHO ARE THE ONES WHOARE MOST AFFECTED?

>> IN TERMS OF WHO BOUGHT AND,EVERYONE.

AND I MEAN EVERYONE.

40-50 MILLIONAMERICANS BROUGHTCRYPTOCURRENCY.

IT IS ACTUALLY FAIRLY FAMILIAR,THE PERCENTAGES.

THATEQUATES TO 15-20% OF THEAMERICAN PUBLIC.

IT IS EVERYONE FROM THE WEALTHYTO THE MIDDLE CLASS TO THEWORKING CLASS.

ALLRACES.

BOTH SEXES.

IT WAS DISPROPORTIONATELY MEN.

UNFORTUNATELY, THEMINORITYGROUPS BOUGHTTOWARDS THE ENDOF THE CYCLE, IN ADISPROPORTIONATE NUMBER.

SO THEY HAVE SUFFERED, I WOULDARGUE, THE MOST, WHICH IS ONEOF THE MOST PERNICIOUS PARTS OFCRYPTO.

IN PART, IT HASEXPLOITED ANUNDERSTANDABLE LACK OF TRUSTWITH OUR REGULATED SYSTEMANDIT SAID THAT CRYPTO COULD FIXIT WHEN, IN FACT, CRYPTO MAKESIT WORSE AND IT CAN AND FURTHERRISKOF HEART IMPOVERISHINGPEOPLE.

I WANT THEM TO UNDERSTAND IFEVEN INTERESTED HOW THEY MAYHAVEBEEN SWINDLED.

AND THEY HOPEFULLY KNOW THEYCAN TAKE FROM THAT SOME LESSONSIN THE FUTURE.

>> YOU HAD A CHANCE TO SIT DOWNWITH SANDBANK MEN FREED.

HE BECAME THE FACE OF THECRYPTO INDUSTRY.

HE WAS ON THECOVER OFMAGAZINES.

HE WAS CALLED THE J. P. MORGAN OF HIS GENERATION.

HESITS DOWN WITH YOU FOR ANINTERVIEW ON CAMERA ANDWHATHAPPENS?

>> AND FELT AT THE TIME LIKE IWAS PUNCHING AGAINST AIR.

WHAT I KNEW OF SAM WASPRETTYMUCH WHAT THE PUBLIC KNEW.

HE WAS ON THE COVEROF ALLTHESE MAGAZINES.

HE WASTESTIFYING IN FRONT OFALL THESE GOVERNMENT OFFICIALS.

HE WAS THE GOLDEN BOY FROMCALIFORNIA WHO WAS GOING TOCLEAN UP, YOU KNOW, INNOVATIVEINDUSTRY THAT JUST NEEDED ALITTLE BITOF REGULATION.

AND WHAT I FOUND INSTEAD, A30-YEAR-OLD KID.

SMART.

FROM A FAMILY OFLAW PROFESSORS.

HAD ALL THE CREDENTIALS.

BUT WHEN I ASKED HIM BRACESIMPLE QUESTIONS --FOREXAMPLE, I ASKED HIM, GIVE MEONE COMPANY, ANYCRYPTOCURRENCY, THAT IS DOINGANYTHING PRODUCTIVE THAT HAS ANACTUAL USECASE.

HAS A GOOD OR SERVICE THAT ITPROVIDES ORDOES ANYTHING.

HE STRUGGLED TO ANSWER THATQUESTION AND ULTIMATELY TALKEDABOUT A CRYPTOCURRENCY THAT HE,IN FACT, OWNED A LOT OF, WHICHI FOUND AWFULLY CONVENIENT.

WE WENT AROUND AND AROUNDANDAROUND.

AND THE MORE WE TALKED, THEMORE HOLLOW THE WHOLE THINGFELT.

NOW, I CANNOT PUT MY FINGER ONEXACTLY WHAT WAS WRONG.

AT THE TIME, WE DID NOT KNOWWHAT HE WAS ALLEGED TO HAVEDONE, WHICH WAS BASICALLY TORUN A PONZI SCHEME.

BUT ALL THE SIGNSWERE THERE.

HE WAS RUNNING AN EXCHANGE THATWAS DOMICILED OVERSEAS.

SO FREE OFU.

S. REGULATION.

HE WAS RUNNING A MARKET-MAKINGFIRM THAT WAS RUNNING THATEXCHANGE.

THAT IS A CONFLICT OF INTERESTAND IS NOT ALLOWED IN REGULATEDMARKETS.

HE HAD A VERY SMALL GROUP OFPEOPLE HE WAS FRIENDS WITH.

THAT IS WHAT FRAUDSTERS DO.

THEY NEED TO KEEP THE CIRCLE OFTRUST TIGHT.

THAT HE WAS DONATING A LOTOFMONEYTO POLITICIANS, BOTHDEMOCRATS AND REPUBLICANS, TOTRY TO STEER LEGISLATION THATWOULD BE FAVORABLE TO HISINDUSTRY.

MAYBE, ANY ONE OF THOSETHINGSIN ISOLATION IS NOT A HUGE REDFLY, BUT ALL THOSE COMBINEDTOGETHER IS MASSIVE.

THOSE WERE MASSIVE RED FLAGS.

I WILL PUT IT THIS WAY.

THE TITLE OF THAT CHAPTERISENTITLED"THE EMPERORISBUTTNAKED. "

>> AND YOU HAD SXSW.

WHAT DID THAT CONVERSATIONWITH HIMSHOW YOU AND WHAT HAPPENEDTOHIM?

>> I SAT DOWN AT ANIMPROMPTUSETTING.

I JUST SAW HIM AND KNEWSOMETHING ABOUT HIS HISTORY.

I ASKED TO INTERVIEW HIM ANDHEAGREED.

I WOULD SAY THE MOST SHOCKINGTHING ABOUT OUR INTERVIEW,TOME, WAS I ASKED HIM HOW MUCHMONEY INCRYPTO ISRAEL.

ANDHE DID NOT NEED ME TO EXPLAINWHAT REAL MONEY WAS.

HE SAID, 10-15%.

THE RESTIS SPECULATION.

AT THE TIME, THE CRYPTO MARKETCAP WAS, I BELIEVE,$1.

8TRILLION.

SO GIVE OR TAKE WHAT HE WASSAYING, $1.

5 TRILLION OF THATWAS NOT THERE.

IT IS LEVERAGE ANDSPECULATION.

IT IS ALL THESE THINGS THATEXIST IN OTHERMARKETS.

BUT THE AMERICAN PUBLIC IS NOTBEING SOLD ON THAT.

THE GLOBAL PUBLIC,THEY WEREBEING TOLD THIS IS THE FUTUREOF MONEY.

IF YOU JUST PUT YOUR MONEY IN,YOU WERE GOING TO MAKE A TON OFMONEY.

IN FACT, WHAT WAS REALLYHAPPENING WAS THE PRICES OF ALLTHE SPECULATIVE ASSETS WEREBEING MANIPULATED UPWARDS TOGET REAL PEOPLE IN, AND,ULTIMATELY, AS THE PRICESWENTDOWN, REAL PEOPLE WANTED THEIRREAL MONEY BACK, ONLY TO FINDTHAT IT WAS NOT THERE.

SO ITALKED TO MINKSENSKI INMARCH OF 2022.

JUST A COUPLE MONTHS AFTER ISPOKE TO HIM,HIS COMPANY WENTBELLY UP.

IT IS IN CHAPTER11.

AND 300,000 PEOPLE WHO HADGIVEN THEIR MONEY TO CELSIUSNOW CANNOT GET THEIR MONEYBACK.

IT IS UNCLEAR HOW MUCH OF THATMONEY EVEN EXISTS.

MINKSENSKI IS BEING SUED BY THENEW YORK ATTORNEY GENERAL FORFRAUD.

>> SO YOU TESTIFIED IN FRONTOFCONGRESSLAST DECEMBER.

WHAT ARE THE THINGS THAT WE CANDO?

WHAT CAN LEGISLATURES DO TO TRYTO PREVENT MORE PEOPLE FROMBEING SWINDLED?

BECAUSE CRYPTOCURRENCIES STILLEXIST.

THERE ARE STILL EXCHANGES.

YOU AND I CAN GO BUY WHATEVERWE WANT.

>> WE HAVE TO ENFORCE OURSECURITY LAWS AND COMMODITYLAWS RIGOROUSLY, AND THEN WENEED THE DOJ TO SHUT DOWNSOMEOF THESE PLACES OVERSEAS.

I USE THE EXAMPLE INTHE BLOCK.

ONLINE POKER IS REALLY THE BESTPARALLEL HERE.

IN THE 2000'S, ONLINE POKERTOOK OFF AS YOUNGMEN SAW--AGUY NAMED CHRIS MONEYMAKER WONTHE WORLD SERIES OF POKER ANDHE WAS JUST AN AVERAGE JOE.

THEY THOUGHT, HEY, IF HE CAN DOIT, SO CAN I.

SO ONLINE POKERWENT FROM AN INDUSTRYTHAT WASNONEXISTENT TO A MULTIMILLIONDOLLAR INDUSTRY IN THE SPAN OFA FEW YEARS.

LAWMAKERS REALIZED IT WAS THEWILD WEST AND PEOPLE WEREPROBABLY GETTING SWINDLED ANDIT WAS BEING USED TO FACILITATECRIME.

SO THEY PASSED A LAW IN 2006,AND BUSH SIGNED IT INTO LAW.

WELL, THE ONLINE GAMBLINGCOMPANIES AND POKER COMPANIESMOVED OVERSEAS, LIKE TO THECARIBBEANISLAND NATIONS.

ULTIMATELY, IT TOOK THE DOJSHIFTING THOSEWEBSITES DOWN ONWHAT IS CALLED BLACK FRIDAY INTHE ONLINEPOKER COMMUNITY.

AND ONE OF THE THINGS THAT THEYDISCOVERED, WHEN THEY SHUTITDOWN,WAS THAT SOME OF THESITES HAVE BEEN SWINDLING THEIRCUSTOMERS.

ONE OF THEM IN PARTICULAR HAD ASECRET GOD MODE WHERE INSIDERSCOULD SEE THE OTHER PLAYER'SCARDS.

SOME OF THE PLAYERS INCRYPTOCURRENCY ACTUALLY GOTTHEIR START IN ONLINE POKER.

>> ONE OFTHE CENTRALTENANTSOF CRYPTOCURRENCIES, OR ATLEAST THE MATH BEHIND IT, ISTHAT IT PROVIDES WHAT IS CALLEDA TRUST LIST SYSTEM.

RIGHT?

YOU TRUST THE MATH, THECRYPTOGRAPHY.

THIS IS NOT ABOUT WHAT AFEDERAL RESERVE CHAIRMAN ISGOING TO DO WITH INTEREST RATESOR WHAT A GOVERNMENT ORCURRENCY IS GOING TO DO INRESPONSE TO ITS OWN ECONOMICNEEDS.

WHAT DID YOU FIND AS YOU WENTTHROUGH THIS REPORTING?

>> YOU CANNOT HAVE A TRUST LISTMONEY.

BECAUSE MONEY IS TRUST.

WE MAKE MONEY UP.

IT IS NOT REAL.

SO WHETHER ITIS AGREEN PIECEOF PAPER WITH FUNNY LITTLEMARKINGS ON IT THAT I GIVE YOUTHAT YOU ACCEPT BECAUSE YOUKNOW YOU CAN TAKE THAT GREENPIECE OF PAPER AND USE IT TOBUY WHATEVER YOU WANT, MONEY ISBASICALLY TRUST SCALED.

SO SAYING YOU WANT TOCREATE ATRUSTLESS IS LITERALLYNONSENSE.

THAT IS LIKE SAYING YOU WANT TOCREATE AGOVERNMENTLESSGOVERNMENT ORRELIGIONLESSRELIGION.

CODE DOESNOT FALL FROM THESKY.

WHAT ISALLEGES THATSAMBANKMAN FRIED TOLD ONE OF HISSUBORDINATES TO CHANGE A SINGLELINE OF CODE --MILLIONS OFLINES OF CODE --TO CREATE ASECRET BACK TO WHERE HE COULDBORROW HIS CUSTOMER'S MONEY.

WE ARE ALL FALLIBLEAS HUMANS.

AND IT IS PERHAPS DISCOMFORTINGTO ACKNOWLEDGE THAT FACT AND TOACKNOWLEDGE THAT OUR SYSTEM ISDEEPLY FLAWED AND THAT IT NEEDSFIXING.

BUT THERE IS NO MAGICAL BITS OFCOMPUTER CODE THAT FAR FROM THESKY THAT WILL SOLVEOURPROBLEMS.

IN FACT, IT IS USUALLY BEINGUSED TO SCAM OR DEFRAUD YOU.

>> BEEN McKINSEY, THE AUTHOR OF"EASY MONEY.

"THANK YOU FOR JOINING US.