>> TO WASHINGTON, WHERE SENATORS WILL CONSIDER A LONG AWAITED BILL THAT COULD HAND THE CRYPTOCURRENCY INDUSTRY A MAJOR REGULATORY WIN.

ACCORDING TO OUR NEXT GUEST, THE CONSEQUENCES COULD BE DEEPLY TROUBLING.

IN A NEW DOCUMENTARY, BEN McKENZIE TAKES A DIVE INTO THE WORLD OF CRYPTO.

HE JOINS HARI SREENIVASAN TO EXPLAIN.

>> BEN, WELCOME BACK TO THE PROGRAM.

WE SPOKE A COUPLE YEARS AGO WHEN YOU HAD A BOOK OUT ABOUT CRYPTO CRYPTOCURRENCY.

NOW YOU HAVE A DOCUMENTARY CALLED "EVERYONE IS LYING TO YOU IN MONEY".

>> SURELY I CAN FIGURE OUT THIS CRYPTO STUFF.

>> NO BANKS.

NO FEES.

>> TAKE ALL YOUR MONEY, BUY BITCOIN.

>> I HAD A FEW QUESTIONS.

>> ONE OF THE THINGS YOU TOLD ME WAS ONE OF THE MOST PERNICIOUS PARTS OF CRYPTO IT IS EXPLOITED.

ANYTHING CHANGE?

>> THE TRUST HAS LESSENED, I WOULD IMAGINE.

DONALD TRUMP'S EMBRACE OF CRYPTO BEGAN IN THE SPRING AND SUMMER OF '24.

IT'S OUTSIDE OF THE EVENTS THAT THE FILM DOCUMENTS.

BUT IN MANY WAYS, TRUMP'S EMBRACE OF CRYPTO SYMBOLIZES SO MANY OF THE THINGS I WAS TALKING ABOUT IN 2022 AND 2023.

IF MONEY DOESN'T COME FROM THE GOVERNMENT, WHERE DOES IT COME FROM?

THE ANSWER WITH CRYPTO IS CORPORATIONS AND PEOPLE.

DONALD TRUMP, HIS CORPORATION HAS THEIR OWN CRYPTO VENTURES WHICH THEY PROFITED OFF OF IMMENSELY.

IT'S TRUE OF BITCOIN, BY THE WAY.

THE MAJORITY OF BITCOIN ARE MINES BY MULTIBILLION DOLLAR CORPORATIONS.

ONE OF THE PROPERTIES WITH PRIVATIZE ING MONEY IS FRAUD AND MANIPULATION.

HISTORICALLY, THAT'S BEEN TRUE.

WE TRIED IT IN THE 19th CENTURY.

WE ARE --HISTORY IS REPEATING ITSELF WITH ALL OF THESE ENDEAVORS BY THE PRESIDENT AND FAMILY THAT MADE THEM AN ENORMOUS AMOUNT OF MONEY.

THE ALLEGATION IS THAT --ABOUT ONE OF THE TOP INVESTORS IS THAT HE HAS BEEN DEFRAUDED.

THEY ARE BEING SUED RIGHT NOW.

THE ALLEGATION IS THAT HE DIDN'T ACTUALLY HAVE CONTROL OVER HIS INVESTMENT IN THIS CRYPTO VENTURE BY TRUMP AND HIS FAMILY.

I THINK IN A WAY THE TRUST IN OUR SYSTEM AS CRYPTO SEEPS FURTHER INTO IT, THE TRUST WEAKENS --THAT'S MY FEELING ANYWAY --I'VE BEEN TRAVELING AROUND THE COUNTRY, GOING TO SCREENINGS, DOING Q&A AFTERWARD AND HAVING CONVERSATIONS WITH PEOPLE.

SO MANY PEOPLE KNOW SOMEONE WHO HAS SCAMMED.

FEW FEEL LIKE THEY HAVE BEEN SUPPORTED BY THE ELECTED LEADERS.

FEW HAVE FOUND RESTITUTION FOR THE LOSSES.

IT'S QUITE SAD.

>> ONE OF THE THINGS I FOUND MOST COMPELLING ABOUT YOUR FILM IS YOU TOOK THE TIME, VERY CARINGLY, TO TALK TO PEOPLE WHO HAD INVESTED IN DIFFERENT CRYPTOCURRENCIES AND LOST A SIGNIFICANT A. MOUNT OF MONEY.

NOT A SPOILER ALERT.

BUT YOU ASK THEM WHETHER THEY STILL HAVE FAITH.

THEY SAID YES.

IN YOUR CONVERSATIONS WITH THE PEOPLE THAT HAD BEEN SCAMMED, WHY DID THEY STILL BELIEVE?

>> I THINK THAT THEY STILL BELIEVED IN PART BECAUSE IT WAS ALMOST THE MORE YOU INVESTED, THE MORE YOU LOST, THE MORE YOU HAD TO BELIEVE.

IT WOULD HAVE BEEN TOO PAINFUL TO --IT WOULD HAVE BEEN TOO PAINFUL TO ACKNOWLEDGE THAT THE WHOLE THING IS SORT OF A HOUSE OF CARDS.

YOU HEAR IT A LOT.

I WAS INTERVENTING ABOUT INTERVIEWING THE HEAD OF CELSIUS, WHO IS IN JAIL.

MUCH OF THE GUYS LOST MONEY.

CELSIUS, THEY WOULD SAY, CELSIUS WAS A SCAM BUT BITCOIN ISN'T.

THEY HAVE REASONS FOR THAT.

I THINK IN TERMS OF PSYCHOLOGY, SOCIOLOGY OF IT ALL, WE ARE LOOKING AT DYNAMICS.

AMONGST THE 5% TO 6% OF THE POPULATION THAT'S INTO CRYPTO, WE LOOK AT A CULT.

THERE'S A FAMOUS CIOLOGICAL PAPER.

PEOPLE BELIEVE MORE.

IT'S TOO PAINFUL TO BELIEVE OTHERWISE.

>> SAM BANKMAN-FREED.

I HAD A CONVERSATION WITH ALEX OF CELSIUS.

I ASKED HIM HOW MUCH REAL MONEY IS IN CRYPTO.

HE SAID 10% TO 15%.

HE SAIDED THE REST IS SPECULATION.

>> I THINK THE NUMBER OF DOLLARS HAVE NOT CHANGED MASSIVELY BETWEEN THEN AND NOW.

>> PERHAPS THEY HAVE LESSENED.

>> THEY HAVE NOT INCREASED.

I DON'T THINK THEY HAVE DECREASED MASSIVELY, WHICH I THINK LINES UP WITH SOME OF YOUR THOUGHT THAT A LOT OF THIS WAS LEVERAGE -- >> PART OF THE PROBLEM IS THAT PEOPLE CAN'T GET THEIR MONEY OUT.

IMAGINE THIS IS A REGULATED BANK.

THIS WOULD BE A BIG PROBLEM.

>> THAT WOULD BE A BIG PROBLEM.

>> I DON'T UNDERSTAND WHAT IN HIS RIGHT MIND MADE HIM THINK HE SHOULD SIT DOWN WITH YOU, MAKING A DOCUMENTARY ABOUT CRYPTOCURRENCY.

THAT'S KIND OF WHAT I WAS SAYING.

A REPORTER WASN'T ASKING HIM THOSE VERY SIMPLE QUESTIONS THAT YOU WERE.

HE JUST DIDN'T SEEM TO BE ABLE TO GIVE YOU A DECENT ANSWER.

>> YEAH.

IT WAS PROBABLY THE MOST BIZARRE HOUR OF MY LIFE.

IT WAS REALLY STRANGE.

I DID ASSUME THAT HE WOULD BE ABLE TO ANSWER SOME FUNDAMENTAL QUESTIONS ABOUT CRYPTO, LIKE, FOR EXAMPLE, WHAT GOOD DOES IT DO?

GIVE ME ONE THING IT DOES THAT'S GOOD.

THEY TRIED BITCOIN AS A TOOL AND IT FAILED.

I SAID POLITELY, BOLOGNA.

HE HAD TROUBLE GETTING OFF OF THE TALKING POINT AND COMING UP WITH SOME OTHER JUSTIFICATION FOR THIS INDUSTRY THAT HE WAS SUPPOSEDLY THE HEAD OF.

IT WAS VERY BIZARRE.

I TALKED TO THIS EXPERT ON FRAUD AND PSYCHOLOGY OF FRAUDSTERS WHO WROTE A GREAT BOOK CALLED "LYING FOR MONEY. "

HE EXPLAINED FRAUDSTERS THINK OF THEMSELVES AS LEGITIMATE BUSINESSMEN.

THEY START OUT AS LEGITIMATE BUSINESSMEN.

BERNIE MADOFF.

THEY SORT OF HAVE TO CLING TO THE SELF-PERCEPTION THAT THEY ARE LEGITIMATE IN ORDER TO RATIONALIZE OR JUSTIFY THEIR BEHAVIOR.

IN SOME WAYS, FRAUDSTERS ARE THE ULTIMATE METHOD ACTORS.

THEY HAVE TO BELIEVE THEIR HYPE TO NOT THINK OF THEMSELVES AS LIARS AND THIEVES.

>> THERE'S BEEN SO MUCH REVEALED ABOUT HOW THE FRAUD AT FTX OCCURRED.

IN THE DOCUMENTARY, YOU GO THROUGH AND YOU SHOW THE LINE OF CODE.

EXPLAIN TO OUR AUDIENCE, IF THEY HAVEN'T SEEN IT OR IF THEY WILL SEE IT, WHAT'S HAPPENING THERE?

WHAT WAS LITERALLY ALMOST A TINY SENTENCE THAT CHANGED THE COURSE OF THE SUCCESS OR FAILURE OF THIS?

>> I FIND THAT FASCINATING.

I WENT TO THE COURT CASE AGAINST SAM HERE IN NEW YORK FOR SEVERAL DAYS.

WE WERE ABLE TO SEE DOCUMENTS PRODUCED FOR THAT CASE.

AND THE EVIDENCE AGAINST HIM.

IN SOME WAYS, THE SCAM WAS SO SIMPLE.

IT WAS SO SIMPLE.

TWO LINES OF CODE.

ALL IT DID WAS ALLOW THE TRADING FIRM THAT HE HELD TO BORROW THE ASSETS FROM THE EXCHANGE, FROM THE PEOPLE THAT PUT MONEY ON THE CRYPTO EXCHANGE.

THIS PARTICULAR PHRASE, ALLOW UNDERSCORE NEGATIVE, WHICH I THOUGHT WAS EVOCATIVE OF CRYPTO, ALLOW NEGATIVE.

THAT'S ALL THEY WERE DOING.

THEY WERE BORROWING BUT WITHOUT THEIR CUSTOMS' KNOWLEDGE, THE MONEY TO FUND A TRADING FIRM, WHICH ACTUALLY WAS LOSING MONEY.

THEY WERE VERY BAD AT TRADING.

ANOTHER MISPERCEPTION --I THOUGHT THEY MUST HAVE BEEN MAKING TONS OF MONEY.

IT WAS LOSING MONEY.

THEY HAD TO BORROW TO FILL THE HOLE AND THE LIE GOT BIGGER AND BIGGER AND BIGGER.

I THINK THE WAY THAT SAM AND HIS COLLEAGUES COMMITTED THE FRAUD IS IMPORTANT FOR US TO UNDERSTAND IN THE CONTEXT OF THE STORY OF CRYPTO AND WHY IT'S FALSE.

WHAT CRYPTO SAYS IS WE WILL PLACE THIS HUMAN THING, MONEY, THIS THING THAT HUMANS MADE UP, WITH COMPUTER CODE.

ALL YOU HAVE DO TO DO IS TRUST THE CODE.

YOU DON'T HAVE TO TRUST PEOPLE.

IT'S SO CLEAR WITH SAM THE LIE THERE.

COMPUTER CODE DOESN'T FALL FROM THE SKY.

PEOPLE WRITE COMPUTER CODE.

WHEN YOU TRUST THE CODE, YOU ARE TRUSTING THE PEOPLE THAT WRITE THE CODE.

IN THIS CASE, PEOPLE TRUSTED SAM AND HIS COLLEAGUES.

THEY WERE DECEIVED.

IT ILLUSTRATES THE INTELLECTUAL CRYPTOCURRENCY AT ITS CORE.

YOU CAN'T REPLACE SOMETHING THAT COMES FROM HUMAN BEINGS WITH A FICTIONAL COMPUTER CODE, A CODE DIVORCED FROM HUMAN BEINGS.

>> YOU TOOK A TRIP TO EL SALVADOR TO TAKE A LOOK AT THIS IDEA CALLED BITCOIN CITY PROPOSED BY THE PRESIDENT THERE.

WHAT DID YOU FIND THERE?

>> NOT MUCH.

I FOUND A SLEEPY FISHING VILLAGE.

THE IDEA WAS HE SAID THEY WERE GOING TO MINE BITCOIN FROM A VOLCANO.

THEY WERE GOING TO TAKE THE VOLCANIC ENERGY AND EXTRACT IT AND USE IT TO RUN THIS.

THIS WOULD PRODUCE SUCH WEALTH THAT THEY WOULD HAVE THIS GOLDEN CITY, BITCOIN CITY.

THEY HAD A MODEL FULL OF GOLD.

IT WOULD BE THIS PARADISE IN EASTERN EL SALVADOR, WHICH IS VERY REMOTE.

WE WENT THERE.

THERE WAS NOTHING.

THERE WAS A FISHING VILLAGE.

NO SIGN OF BITCOIN CITY ANYWHERE TO BE FOUND, EXCEPT FOR ONE GUY, ONE GUY FROM ILLINOIS, WHO HAD MOVED THERE WITH THE DREAM THAT SOME DAY THE CITY WOULD MANIFEST.

I THOUGHT THAT WAS TELLING, TOO, THAT THE STORY REALLY ONLY APPEALED TO THIS ONE GUY FROM AMERICA WHO CLEARLY OWNED SOME BITCOIN.

HE WOULDN'T TELL ME HOW MUCH.

HAD MOVED DOWN THERE ON THE HOPE THAT AT SOME POINT THE CITY WOULD MANIFEST.

IT HASN'T.

THE CITY DOESN'T EXIST.

WHAT THEY DID DO IS THEY DISPLACED A COMMUNITY THAT WAS LIVING NEARBY IN ORDER TO BUILD A NEW AIRPORT.

THEY WERE TRYING TO BUILD A NEW AIRPORT.

A VERY STRANGE THING IN A COUNTRY THE SIZE OF EL SALVADOR.

IT'S THE SIZE OF NEW JERSEY.

THEY ALREADY HAVE AN INTERNATIONAL AIRPORT 100 MILES AWAY.

I DON'T KNOW WHAT THAT IS ABOUT.

IT LAID BARE, AGAIN, THE FALSITY OF THE WHOLE ENTERPRISE.

THERE IS NO BITCOIN CITY.

THERE WAS NEVER GOING TO BE A BITCOIN CITY.

>> IN THE FILM YOU TESTIFIED IN CONGRESS.

YOU TRIED TO POINT THIS OUT.

I WONDER WHAT YOU THINK NOW OF THE REGULATORY OR DEREGULATORY ENVIRONMENT THAT HAS COME WITH THE MOST RECENT ADMINISTRATION AND THEIR EFFORTS TO, WELL, EMBRACE CRYPTOCURRENCY.

>> IT'S REALLY BAD.

IT'S GOTTEN WORSE, I'M AFRAID.

SORRY TO BE THE BEARER OF BAD NEWS.

THERE'S A BILL THAT IS --SEEMS LIKE IT WILL BE MARKED UP THIS WEEK IN CONGRESS CALLED THE CLARITY ACT THAT WILL ACCOMPLISH WHAT CRYPTO HAS LONG SOUGHT, TO BE UNDER SURVEILLANCE, SUPERVISION OF THE CFTC, COMMODITIES, FUTURES TRADING COMMISSION, TEAD OF THE SEC.

THE CFTC IS SMALLER, WEAKER, REGULATORY AGENCY.

NOT ONLY WOULD THIS PUT THEM UNDER THE CFTC BUT CARVE OUT SPECIAL RULES FOR CRYPTO WHERE THEY DON'T HAVE TO OPERATE OR BE TREATED EVEN LIKE REGULAR COMMODITIES.

THEY ARE NOT TREATED LIKE BANKS, EVEN THOUGH THEY ARE MANAGING A LOT OF MONEY AND ARE POTENTIALLY OFFERING INTEREST TO PEOPLE.

FOR PUTTING THEIR MONEY ON THE EXCHANGES.

THEY ARE CREATING A NEW SET OF RULES FOR THEMSELVES, WHICH IS DEEPLY, DEEPLY TROUBLING.

ONE THING WE KNOW ABOUT CRYPTO IS IT'S VERY VOLATILE.

THE PRICE CAN GO UP BUT THE PRICE CAN GO DOWN QUICKLY.

YOU WILL SEE THIS IN THE MOVIE.

THE CRASH OF 2022.

THIS HAS HAPPENED REPEATEDLY.

WHAT HAPPENS IF WE CREATE THESE SPECIAL RULES FOR THEM?

CRYPTO CRASHES AGAIN BUT IT'S MORE MORE TIED IN WITH OUR FINANCIAL SYSTEM.

IN 2022, WHEN I TESTIFIED THAT YEAR, I WARNED IF CRYPTO GOT INTO OUR BANKING SYSTEM, THERE WOULD BE HELL TO PAY.

THREE BANKS FAILED THREE MONTHS LATER ED TO CRYPTO.

WHAT HAPPENS IF IT'S FURTHER TIED AND THERE'S ANOTHER CRASH?

THIS TIME IT CONTRIBUTES TO TAKING DOWN THE WHOLE SYSTEM.

THAT'S MY WORRY IS THAT FIRST OF ALL WE'RE DOING IT FOR NO BENEFIT ON NET TO THE POPULOUS.

ZERO SUM GAIN.

INSIDERS WIN.

SOME PEOPLE WILL WIN.

A SMALL NUMBER OF INSIDERS.

MOST PEOPLE WILL LOSE.

IT'S A NET NEGATIVE FOR SOCIETY.

AND WE RISK INTRODUCING THIS THAT COULD ULTIMATELY CONTRIBUTE TO THE NEXT CRISIS, WHICH IS DEEPLY IRONIC.

IT COULD BE RECREATING IT.

>> RIGHT NOW IN THE PAST YEAR OR MORE, WE HAVE SEEN A LOT OF MAJOR BANKS, PEOPLE WHO DEVELOP MUTUAL FUNDS, COME OUT WITH ETFs FOR THE GENERAL PUBLIC TO INVEST IN CRYPTOCURRENCIES THROUGH A PLACE THAT THEY TRUST A LOT.

WE TRY TO SAY AS CONSUMERS, LISTEN, IF THIS BANK, J P MORGAN OR VANGUARD OR FIDELITY, IF THEY TELL ME THERE'S A VEHICLE THAT HAS A TREMENDOUS AMOUNT OF UPSIDE POTENTIAL, LET ME PUT A LITTLE BIT IN THERE.

WHAT IS THE END CONSUMER MISSING THERE?

>> FIRST OF ALL, IT'S DEEPLY IRONIC.

CRYPTO IS SUPPOSED TO BE SET UP TO BE IN OPPOSITION TO THE HORRORS OF WALL STREET.

NOW THE CRYPTO INDUSTRY IS LOVING THE FACT THAT WALL STREET IS GETTING IN ON THEIR GAME.

IT'S REALLY IMPORTANT TO UNDERSTAND THAT --LET'S USE THE ETF.

THE LARGEST BITCOIN ETF IS ISSUED BY BLACK ROCK, MASSIVE FINANCIAL FIRM THAT MANY OF YOUR VIEWERS WOULD BE AWARE OF.

WHAT BLACK ROCK DOES, PUT MONEY INTO THEIR BITCOIN ETF.

THEY TURN TO COIN BASE AND SAY THIS IS REPRESENTING THIS AMOUNT OF BITCOIN.

THEY ARE FACILITATING THE TRADE AND TAKING A TINY PERCENTAGE BUT ON BILLIONS OF DOLLARS.

WALL STREET GETTING INTO THE CRYPTO GAME ISN'T A VALIDATION THERE'S ANYTHING TO IT OTHER THAN MONEY TO BE MADE.

THEY ARE NOT MAKING REAL MONEY.

THEY ARE NOT TAKING A DIRECTIONAL BET ON WHETHER CRYPTO IS GOING UP OR DOWN.

THEY ARE FACILITATING THE GAMBLING.

IT'S NOT REALLY A VALIDATION OF THE --IF ANYTHING, IT SHOULD BE REPUTATION OF THE SUPPOSED PURITY OF CRYPTO.

IF CRYPTO WAS A DECENTRALIZED, DEMOCRATIZED FORM OF MONEY, IS IT BEING ISSUED BY BLACK ROCK?

THAT SEEMS INCONGRUOUS.

I DO WORRY THAT, YOU KNOW, THE AMOUNT OF MONEY WE'RE TALKING ABOUT THAT IS PASSIVE EXPOSURE TO CRYPTO OR ACTIVE BUT THROUGH ETFs , THIS MARKET HAS GROWN QUITE LARGE.

OVER $100 BILLION.

I WORRY THAT IN A DOWNTURN, THE CRASH, THESE INVESTORS GO TO GET THEIR MONEY OUT, IF ENOUGH ARE GOING TO GET THEIR MONEY OUT, THERE MAY NOT BE ENOUGH BUYERS ON THE OTHER SIDE.

THAT WORRIES ME FOR THE INVESTORS AND FOR THE REST OF US IF THIS CONTRIBUTES TO A GREATER DOWNTURN.

>> ACTOR, AUTHOR, WRITER, PRODUCER, BEN McKENZIE, THANKS FOR JOINING US.

>> THANKS HARI.