Alison Stewart: This is All Of It. I'm Alison Stewart, live from the WNYC studios in SoHo. Thank you for sharing part of your day with us. I'm really grateful that you're here. On today's show, we'll preview the New York Public Library's World Literature and Arts Festival, which kicks off this Wednesday. George Motz joins us to discuss Hamburger America, his state-by-state guide to the best places in the United States to get a burger. That's the plan. Let's get this started with Everyone Is Lying to You for Money.

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Alison Stewart: In the 16 years since Bitcoin's release, the world of cryptocurrency has seen extreme highs, a certain degree of idealism and incredible hype, but also extreme lows, with billions of dollars lost and prison sentences for some of the crypto world's most influential people. The documentary Everyone Is Lying to You for Money follows my guest, Ben McKenzie, as he tries to figure out what's behind cryptocurrency and why people are putting money in it.

You might recognize Ben as an actor, but the truth is, he was an economics major at the University of Virginia. When he first heard about cryptocurrency, he was left scratching his head. He started down the rabbit hole, trying to understand it. This journey took him from rubbing elbows with Sam Bankman-Fried before he was sent to prison to a village in El Salvador that's being displaced to build a "crypto city", to his staring at a computer screen just trying to make sense of it all.

He's directed Everyone Is Lying to You for Money. The doc is a little bit gonzo, a little bit of punk, and it's actually pretty funny, not funny, for a film about the financial system. Everyone Is Lying to You for Money will be in theaters this Friday. You can catch an advanced screening at IFC Center tonight with an extended introduction from Ben. He's also doing a series of sold-out Q&A sessions. Let's get into it with Ben McKenzie. Hi, Ben.

Ben McKenzie: Hi, Alison. Thanks for having me.

Alison Stewart: Let me ask you a question, going all the way back, what drew you to getting a degree in economics from UVA?

Ben McKenzie: Ooh, good question. I didn't know what I was doing. I was 18 years old. We were just chatting earlier about your son, who's going off to college, and I feel like this is a common theme. I didn't know what I wanted to study. My father's a lawyer. I figured I'd get a degree in things that would vaguely prepare me for law School. I studied international relations, which at University of Virginia they call foreign affairs, very sexy, and economics. I studied economics not because I'm good at math, because I'm not good at math, which kept me from being an economist, but because I was fascinated by human behavior.

If you think about economics, really, the popular perception is as dry and mathematical, but in actuality, there's a whole field of economics called behavioral economics. How do people behave, both individually and in groups? Surprise, surprise, we're not "rational." We do a lot of things that don't really quite make a lot of sense in terms of statistically improving our chances of success. Cryptocurrency fell beautifully into this field that I love. Specifically, the true crime of it all, as well, was appealing to me.

Alison Stewart: All right. You're the grandson of one of the founders of the Corporation for Public Broadcasting and a UT professor. Your parent's, as you said, a lawyer. Your uncle's a Pulitzer Prize-winning playwright. You come from good stock, to put it that way. What did you learn your household about asking questions?

Ben McKenzie: Ooh, that it's okay to. Yes, we try and teach our kids that as well. That not only is it okay, of course, it's what you need to do, especially when you don't understand something. I remember we had wonderful conversations around the dining room table. My father's an attorney, my mother's a poet. My two brothers and I, we would discuss, argue over whatever was in the news that day. My father was quite-- and mother, quite patient with us. Yes, just the permission to do so is, I think, how it starts.

Alison Stewart: This started with your friend, Dave. Tell us a little bit about Dave.

Ben McKenzie: Sure. Dave has been a buddy since college. We met doing theater together. Dave, in the mid 2000s, there was-- Online poker was becoming a thing, and you could gamble with real money online. Dave was really into it. I liked playing poker because I was single, I was living in Los Angeles. I had a poker table in my house where I played games with my friends. I didn't do it online because, as I asked Dave, "Where are you sending the money?" Dave was like, "Ah, yes, I wonder." It turns out he was sending the money to the same Caribbean countries where the crypto companies were headquartered, including FTX.

Basically, Dave was really into stuff like that. Dave had also-- I'm sorry, I hate slagging him off because he's a good friend, he's a good guy. He gave me terrible financial advice when I was in my 20s. I'd made a little money on TV, and he had talked to some guy at a wedding who said, "You got to put money into the stock," that had produced synthetic blood. It wasn't Theranos, but it was some precursor scam kind of thing. Anyway, we put money in, we both lost it. Dave came back to me in 2020, and he's like, "You got to buy Bitcoin." [laughs] I was like, "Dave, I'm not doing it, but explain it to me." He couldn't explain it to me.

Alison Stewart: What made it so attractive to him? Cryptocurrency.

Ben McKenzie: Honestly, if you wanted a 10-second synopsis of crypto, it's a get-rich-quick scheme. It really is. It becomes-- Because owning it doesn't represent ownership of anything that exists in the real world, it's just lines of code stored on ledgers called blockchains, it's a strange investment. You're really investing in the story of crypto. I have come to think of crypto as really a projection of the hopes and dreams of all of these different investors. Some of them will win, some of them will make money. Really, the ones that got in early have made a lot of money, which, if you believe, it's Ponzi scheme, multi-level marketing scheme. That's one of the aspects of a Ponzi scheme and a multi-level marketing scheme.

Most people are going to lose. It's a little bit like playing cards in Vegas. If you're playing poker at a table, you might win a hand, Alison. I might win a hand. If you win, it's coming out of my pocket and vice versa. As we play the game, the house is taking the rake. They're taking a tiny little bit amount of money to facilitate the game. Could you win in Las Vegas? Of course, you could win. If you play long enough, on average, you're losing. Because how else do they keep the lights on at the casino?

Crypto is like Vegas without the drinks, the dinner, or the show. There's no entertainment value, I would argue. You're just sitting in front of a computer screen, betting that the price of this or that crypto is going to go up or down. Nothing wrong with that, per se, if it's regulated correctly. It's not a productive use of capital. You're not doing anything that's additive to the world. For you to win, someone else has to lose. It's called a zero-sum game in economics, but not necessarily wrong. Crypto is doing that through companies headquartered in the Caribbean with very loose regulation. The celebrities were selling it in 2020, 2021, in particular. I just had a bad feeling that this was not going to end well.

Alison Stewart: As you started this project, what questions did you have? Then how did those questions evolve?

Ben McKenzie: At the beginning, I had every question. What is it? What does it do? How does it work? I was originally stumped by, well, is it a currency? It says it's a currency, but it's not being used like a currency. Dave wasn't buying stuff with Bitcoin. He was putting money into it, hoping to make money off of it through no work of his own. That's an investment, quite plainly. It's actually-- There's a very broad test for what constitutes an investment of security under American law. Yet somehow, crypto had been classified as a commodity. It wasn't really abiding by the same rules. That was the first question. What is it? How does it work?

I had questions about the technology, which we can talk about if you want, but the technology, which was pitched as this new frontier of cryptography, and somehow it was the future of money. The technology is really old. Blockchain has been around since 1991, so it's a 35-year-old technology. You'll notice that blockchain isn't used really outside of cryptocurrency. It's very hard to find companies or organizations that use it because it doesn't work very well.

What it does have is an ability to obscure your identity, so you're able to transact without anyone knowing who you are transacting with. It is a ledger, it is a record, and it's not anonymous. It's pseudonymous. Am I saying that word correctly? I never can say that word correctly. We don't know who controls what account, but there is a record of the transactions. Who would that appeal to? Quite frankly, it would appeal to criminals. Could you use crypto for good? Of course. If you're trying to obscure your identity, most of the time that's for criminal activity.

Alison Stewart: We're talking about the documentary Everyone Is Lying to You for Money from director Ben McKenzie. I wanted to point out something that I thought was really interesting. You say this conversation about cryptocurrency feels like a "generational hallucination." What social and historical factors do you think made this generation particularly susceptible to cryptocurrency?

Ben McKenzie: I think the Internet, of course, to state the obvious. Crypto really can't exist without the Internet. Then the pandemic. The pandemic further isolated us on an individual level from each other. We were spending so much time on our phones and devices trying to have connection with people, but not IRL, as the kids say. It's much easier to perpetrate a scam online than it is in person. You can fake people and companies and all that online.

It's very difficult to fake actual buildings and actual physical human beings that you meet in person. Scams have proliferated in the age of the Internet. With the pandemic, people also had money to spend because the government was-- That's why we named the book that this film is based on, Easy Money, because the government printed an enormous amount of money and sent to people, which they should have done in the abstract. That's the correct thing to have done. We can argue over how they did it, which wasn't necessarily great, but people had money to spend. They're alone.

These young guys in particular don't have a lot going on because they can't maybe hang out with their friends or whatever. They gamble with it. The guys do, in particular. Crypto's a very male, heavy--

Alison Stewart: Very bro.

Ben McKenzie: Very bro. Like 42% of men 18 to 29 have invested in cryptocurrency. Almost half. That's a huge number.

Alison Stewart: That's a big number.

Ben McKenzie: Yes. Most of them are just gambling. They're just like what Dave was doing. They have a little extra money, and they're gambling. We can argue over whether that's a good thing or a bad thing. It's not on net, I would argue, a very good thing, but it's not the worst thing in the world. What is bad about it is that some of the guys get addicted to it because it's very addictive. The markets never shut off. You can gamble on your phone in seconds. Obviously, the money, that's the real money that's put in by the regular people, the retail customers, provides the liquidity for the thing to have value so that criminals can use it for their own ends. That's the other side of it.

Yes, I would say the Internet and the pandemic are really important to understand how crypto took off.

Alison Stewart: Part of the excitement about Bitcoin was hinged on the argument that our financial system is broken. Right?

Ben McKenzie: Yes.

Alison Stewart: How was cryptocurrency supposed to fix capitalism?

Ben McKenzie: The argument is great because it's very simple. It says, "Do you think our regulated system stinks?" Everyone raises their hand. Then it says, "Well, Bitcoin fixes this." It's the second part that's obviously the part where this sleight of hand occurs. All this started with a thing called the White Paper, a Bitcoin white paper, which is basically just an academic document that was dropped on the Internet in 2008.

It outlined a way-- This was the height of the subprime crisis, and it outlined a way in which people could send something of value, some currency, directly without the banks. Very appealing idea. The banks were even more unpopular than they usually are at that time, understandably. Bitcoin developed this and cryptocurrency more broadly developed this reputation as this democratized, decentralized system where you are going to be able to own your own money. The government wasn't going to be able to take it away from you, and you would become rich, too.

I think so many of the things that it claimed have just already been shown to be blatantly not true. First of all, it's not decentralized if when it starts to go down, as it did in 2022, which I document in the movie, if it starts to crash, you realize all the companies are connected to each other, and they start folding because they've been betting-- they've been in financial relationships with each other. They've been leveraged to the hilt. It's not decentralized.

In terms of the democratized part, I think one thing that really has to be pointed out with cryptocurrency is if the money doesn't come from the government, crypto makes this argument, the libertarian argument that we want to free money from the dead hand of state. First of all, we do live in a democracy. I know it's maybe not exactly a perfect democracy, but we live in a democracy.

Second, if the money doesn't come from the government, where does it come from? They don't like to talk about this, but the answer when it comes to cryptocurrency is corporations. It's World Liberty Financial and Donald Trump and his coins. It's also true of Bitcoin, the majority of the Bitcoin that are mined today, the new coins that are created, are mined through multi-billion dollar corporations, many of which are publicly traded.

If the idea of corporations issuing their own money seems like a good idea to you, then okay. I think for the majority of the public, that sounds like a terrible idea because we're already upset at how much control corporations have over our lives. To give them control over our monetary system seems like a really, really bad idea. It's also a bad idea in the sense that we've tried it before. In the 19th century, there was what's called the free banking era.

We were trying to expand west and provide credit. West was like Michigan at the time. Banks were allowed to issue their own notes, their own currencies, as long as they held a certain amount of state bonds. It was also called the wildcat banking era because you were allowed one chapter of your bank, and so you would often set it up as far away from your depositors as possible, where the wildcats roamed. Once you had the real money, what's to stop you with running off with it?

There was a lot of fraud. The system was very unstable, and basically, ultimately, it was scrapped, and we realized we needed a central bank to ensure that this currency would be stable. One of the deepest ironies of crypto to me is it kept saying it's the future of money, it's actually the past of money. We've tried it before, and it hasn't worked.

Alison Stewart: It's amazing, in the documentary, you go to El Salvador, and you also-- it was wild, you had an interview with Sam Bankman-Fried, now the disgraced FTX. He's been convicted, 25 years in prison. When you first realized that he would talk to you, what did you think?

Ben McKenzie: I couldn't believe it. I couldn't believe it. I wrote this book with Jacob Silverman, journalist, and in our Twitter profiles it said "Writing a book on crypto and fraud," like we were not hiding the ball. It was right there. Yet he agreed pretty much immediately to an interview on camera with no preconditions. Jacob and I were like grabbing each other, like, "What is he doing? Is he really going to do this?" I kept thinking he was going to pull out at last minute or whatever. Anyway, he didn't.

I've since come to understand perhaps what might have been going on. Obviously, I will never know. I spoke to an expert on fraud who wrote a wonderful book, Lying for Money, Dan Davies, about the psychology of fraudsters. Their psychology is quite different from other criminals. They're not generally violent criminals. They don't commit violent crimes. They think of themselves as legitimate businessmen. They often start out as legitimate businessmen. Bernie Madoff, a perfectly legitimate businessman, created a payment for order flow, which is a system that the financial markets use, and then decided to create an investment company. That's when he got himself in trouble.

With Sam, he had this mathematical background, MIT. His parents are professors of law at Stanford. Very erudite, educated guy, clearly very good analytically with math, with numbers, and had worked at Jane Street, this storied Wall Street firm, and then all of a sudden entered in the crypto market and had made a fortune. The story made sense. The story, "Oh, he's just this wunderkind California golden boy," and this brilliant, incredibly futuristic thing called cryptocurrency, which nobody really understands, or very few people understood. The story made sense, the marketing pitch made sense.

If you looked under the hood, none of it did. In terms of why he agreed to be interviewed, I think not only did Sam think at the time, or rationalize at the time, that he was a legitimate businessman, he still says it. He's still saying from prison, "No, no, you don't understand. I wasn't insolvent. I just didn't have the money at the time." Which begs the question, does he understand the word solvency? He still thinks that he's innocent.

These guys, and it is generally men, they rationalize and self-justify their behavior endlessly. The question of, did they know-- You can't accidentally commit fraud, you can only do it intentionally. They have to square that by, I think, presenting themselves as upstanding members of the community.

Alison Stewart: Let's listen to a little bit of your interview with him. This is from the documentary Everyone Is Lying to You for Money. This is Sam Bankman-Fried and Ben McKenzie.

Ben McKenzie: How much have you donated to politicians?

Sam Bankman-Fried: I don't remember the late-- I can get back to you. I don't remember the latest figure. [crosstalk]

Ben McKenzie: Can you give like a round number figure?

Sam Bankman-Fried: Ballpark, I think that in the tens of millions is where total political contributions have been so far.

?Female Speaker: Sam, you really need to.

Sam Bankman-Fried: Okay, got, yes.

Ben McKenzie: Thanks very much.

Sam Bankman-Fried: Thank you.

Alison Stewart: The PR person swoops it. [laughs] That was interesting. Why did you ask that question?

Ben McKenzie: Because Sam was making-- Like I mentioned before, they want to be seen as good guys. He was donating a ton of money to charitable causes, but he was also spending a lot of time on Capitol Hill and putting a lot of money into political campaigns. Outwardly, he was an avowed Democrat, and he donated massive sums to Biden and various other Democrats, like $40 million.

It was strange when I asked him, "How much have you donated to politicians?" The question I'd asked him before was, "How much have you donated to charitable causes?" He was happy to talk about that. Then I asked him about the politicians that he really, as you could hear, really couldn't answer, really had a hard time answering, couldn't look me in the eye. It was very obvious that he was uncomfortable. I couldn't figure out at the time why, because that was public record. You could search for that.

What it turned out once he was arrested, we got the full picture, which is that Sam was actually running a straw donor scheme, $100 million straw donor scheme, using his employees as cutouts to donate to the Republicans. One of his colleagues-- That charge was dropped eventually against Sam, but one of his colleagues is in jail right now, Ryan Salame, doing seven and a half years for making a little illegal political contributions. Sam was playing both sides, as would be smart if you were trying to get legislation through Congress. It was interesting that he didn't-- It felt like he didn't want to lie to me. He didn't want to tell me something that wasn't true.

Alison Stewart: It's interesting because Sam Bankman-Fried has agreed to help authorities go after the celebrities that have--

Ben McKenzie: Yes, I haven't seen this. This just happened.

Alison Stewart: Yes, it's really interesting. I'll read this to you. "Fallen cryptocurrency entrepreneur Sam Bankman-Fried, currently serving a 25-year prison sentence for fraud, has agreed to cooperate with a class action lawsuit against celebrities who promoted his FTX crypto exchange. The lawsuit targets big names like Tom Brady, Gisele Bündchen, Shaquille O'Neal, and Larry David, alleging they are responsible for around 11 billion in losses to American consumers." That's a big part of your documentary about how people with fame pitch this to people. Why did that bother you so much?

Ben McKenzie: Because it was clear they didn't know what they were talking about. I might not have known a lot about cryptocurrency and blockchain when I fell into it, but I did have a degree in economics. I am an actor who lies for a living, so I do have a relatively good BS detector. I felt like I could tell when people were lying, to some degree. It was pretty clear that Matt Damon and Larry David, and Tom Brady didn't know anything about it either.

There's a massive distinction between a celebrity hawking a consumer product, like soap or car or whatever, versus hawking a financial product. A financial product, you're actually not supposed to do it. It's technically illegal to give financial advice if you're not a licensed financial advisor. I guess just the obvious was like, what were these guys paid in? I'm pretty sure they're paid in dollars. They're paid in dollars to take your dollars and turn them into something else. That felt morally and ethically, not just questionable, but wrong. You shouldn't be doing that.

Alison Stewart: Another part of the documentary, which is really fascinating, was you leveraging your own fame-

Ben McKenzie: Yes.

Alison Stewart: -to get into places. People recognize you as Ryan Atwood from The O.C.

Ben McKenzie: Yes.

Alison Stewart: You use it for a while. You're like, "Yes, yes, yes." After a while, you realize, "This is my in."

Ben McKenzie: Yes. It's my superpower. Yes.

Alison Stewart: How was it helpful to you?

Ben McKenzie: It's so helpful because it did two things. First is they think they know you from TV. They, "Oh, he's Ryan Atwood," or Commissioner Gordon or whatever. Also, they underestimate you. "Ryan Atwood isn't going to ask me a probing question on cryptocurrency. I'm way smarter than that guy. He's just an actor." Well, we actors are smart as well, and we all contain multitudes. Yes. It's such a gift to be given access, first of all, and then secondly, to be underestimated. It's exactly what you want as an interviewer. If the interview you think is going to be adversarial, you need to get something out of them. Yes, it was very advantageous to be Ryan Atwood from The O.C.

Alison Stewart: You did some fine acting, by the way. [laughs]

Ben McKenzie: Thank you very much. I appreciate that, Alison.

Alison Stewart: How did this go over at home? We see your home life a little bit and how it infiltrated you. You became a little obsessed.

Ben McKenzie: Yes, a little. Yes. No, I was very, very obsessed. Which is funny because it's the same obsession, but on the other side, as the crypto bros who are obsessed with it but believing it's going to change their lives for the better. The irony was not lost on me. I would say I have an incredibly patient and gracious wife, Morena. Really, really. She just-- I have a hard time letting things go. When I'm really into something, I just go all in.

She could tell how important it was to me, even though I don't think it was really a subject that interested her initially. For my children, I think it was just very confusing with Daddy's bringing a camera into the house. It was interesting to talk. One of them wanted to be in the movie. One of them very much didn't, so he's not. Just on a personal level, this serves as a document of this time in our lives. For me personally, it has a lot of meaning because the movie is following my journey down the rabbit hole. Most of it's about cryptocurrency and the scams and the fraud, but you see little glimpses of my own life. For me, it's very meaningful.

Alison Stewart: The name of the film is Everyone Is Lying to You for Money from Ben McKenzie. They should follow you on Instagram for more updates about screenings?

Ben McKenzie: Yes, everyoneislyingfilm on Instagram. We have a website, everyoneislying.com, which has all of the film information. We're playing at the IFC Center. There's still tickets tonight, nine o'clock for that show. Then we're playing the rest of the week. We're also at the Alamo Drafthouse, Brooklyn, starting later this week.

Alison Stewart: Ben, thanks for joining us.

Ben McKenzie: Thank you, Alison.

 

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