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60 mins

The Problem Podcast

Why the FTX Crypto Scam Is a Tale As Old As Time

“Whatever fun name you wanna put on it, it’s the same damn thing we’ve seen over and over again.” David Dayen, executive editor of The American Prospect, joins us to discuss the spectacular rise and fall of crypto exchange FTX and its disgraced leader, Sam Bankman-Fried. We dive into the ways its collapse mirrors the worst failures of more mainstream markets, how SBF was able to use effective altruism as cover for garden-variety political influence, and why it’s a mess that the House Agriculture Committee ended up regulating exchanges like FTX.

Why the FTX Crypto Scam Is a Tale As Old As Time

EP 218 FINAL TRANSCRIPT

Jon: I’m just going to be wondering around and just thinking like—

Henrik: “You know I should swing by there and grab some food.”

Jon: “I should swing by there and get myself a plate of latkes.” [HENRIK LAUGHS] I’m assuming it’s gonna be latkes, I’m assuming this is a holiday party, not just a Christmas party. 

Jay: It’s your show. [JAY LAUGHS] 

Jon: Oh, right, oh, that is true. 

Jay: You can send a special request. 

Jon: Can I design the appetizers? 

Jay: 100 percent.

[INTRO MUSIC]

Jon: Hello everybody. Welcome to the podcast. The Problem, uh, with me, Jon Stewart. The show, we got the problem with Jon Stewart. It’s on Apple TV+. Season two is out now, and we got more new episodes early next year so you can check those out. Today is a very, very special day. It’s, well, first of all, it’s December, the holiday spirit, I think everybody is, is feeling it. And in the spirit of the holidays, we’re gonna be talking to David Dayen and he is the executive editor of the American Prospect about the collapse of the Crypto Exchange FTX and how Sam Bankman-Fried’s networking and lobbying donations showed that he was actually just part of the establishment corruption, and he was not an innovator. He was just joining the party that already existed. But first, as always, uh, writers gonna be joining us, Jay Jurden and, and Henrik Blix. Happy – happy holiday. May I say Merry Christmas or Happy Holidays?

Jay: You better say Merry Christmas Jon.

Henrik: Merry Catholic Christmas. [JAY LAUGHS]

Jon: Are we allowed to say that in America anymore? 

Jay: I don’t know.

Jon: Merry Christmas, gentlemen, uh, a pleasure to see both of you. What is on your minds this fine holiday season?

Henrik: Well, uh, yesterday afternoon Jay and I were talking about how we believe we’re living in a golden age of scammers. We’re in an amazing–

Jon: Oh you believe this, this, this age you believe is different than scammers of the past?

Henrik: I don’t think the scammers are different. 

Jon: Uh huh.

Henrik: Our theory is that their reach has been amplified. 

Jay: This is what does it. [JAY SHOWS HIS CELL PHONE]

Henrik: Like before we were like to get a scam going in the early 2000s, you had to be like a Doctor Oz, where you at least had to be a cardiologist and then you could get on Oprah–

Jon: You’ve got to have access to television or Oprah. Yes. 

Henrik: And then you can sell it, and now you can just be like the Liver King. [JAY LAUGHS] I don’t know if you know about The Liver King.

Jon: I do not know about the Liver King. 

Jay: Oh Jon!

Jon: But—

Henrik: So if you wanna imagine the Liver King, picture a guy on steroids.

Jon: Okay.

Henrik: Now double the amount of steroids that guy is on—

Jon: Oh boy.

Henrik: —and sprinkle some steroids. [JON LAUGHS] and imagine—

[LAUGHTER]

Jon: Wait, wait, wait. But why, why is he the, the, the Liver King? Is he a fit – I’m assuming he’s a fitness buff. 

Henrik and Jay: Yes.

Jon: All right. 

Henrik: So his. So this is a man who looks like, “Hey kids, if you take steroids, this is what’ll happen and you won’t like it.”

Jay: Jon, he’s a shade of aubergine. He is– [JON LAUGHS] 

Henrik: Jay said yesterday, he looks like a sweet potato that works out. 

Jay: Have you ever seen the one kind of gnarled sweet potato at the top of the pile? 

Jon: There’s always one.

Jay: That’s what he looks like. 

Henrik: He looks like you know, if you overcook uh Bratwurst and it bursts?

Jon: But that doesn’t seem muscular, that none of what you’re describing suggests a physique like a Mr. Olympic. 

Henrik: He’s, he’s more than that. 

Jay: He’s jacked.

Henrik: But anyway, his, his whole deal is, he’s like, “I’ve never done steroids. I got this way, uh, by eating raw liver and testicles.”

Jon: Oh my God, he’s a cannibal.

Jay: There’s all these pictures of him holding up like huge cow livers and holding up balls, which – 

Henrik: I’m like [HENRIK MAKES CHEWING SOUNDS]

Jon: Okay. And so he’s got kind of a Fear Factor thing going but how does he monetize? If you’re a scammer, why would you monetize something that’s easily available to everybody? 

Henrik: Well Jon, guess what? He has supplements that you can buy. 

Jon: What?! Wait what?!

Henrik: Made— Made based on his nine ancestral tenets. 

Jon: So his scam is this, unless you want to actually eat balls to get what I look like you’re going to have to take these pills. 

Jay: And listen, we’re not yucking anyone’s yum.

Henrik: No. He’s like, you should also eat the balls. On your own time eat the balls-

Jon: Oh really?

Henrik: But also buy my supplements. 

Jon: In addition?  

Henrik: In addition, buy my supplements.

Jon: That’s interesting. 

Henrik: He made $100 million last year selling supplements. 

Jon: Guys come on! You are f***ing with me.

Henrik: And guess what scandal just dropped. Last week, it turns out his emails got revealed. He’s doing $15,000 a month of steroids. 

Jon: Wow. Uh, can I tell you something? That is incredibly judicious given his overall income. Generally, you like to put 5% of your income to steroids, at a hundred million dollars. Uh, this has been exposed now. I’ve gotta tell you something. I don’t think it’s going to affect his business that badly.

Henrik: No, I don’t think so either.

Jay: But Jon, every podcast that he went on. Every podcast, the first two questions were, are you on steroids? And, are you on steroids? [JON LAUGHS] And his answers were he always went. “No. If you guys ate more testicles, if you guys went out into the sun more, if you guys had a liver queen at home, you would look like this.”

Jon: All right, so here, and I’m gonna tell you guys something, and I didn’t want to say this before. Um, I do nothing but sit in the sun and eat testicles. [LAUGHTER] And I’m gonna tell you something. 

Jay: I thought I saw you at that party. 

Jon: This is, this is what it does. This is, this is all testicles and sun baby.

[JAY LAUGHS]

Henrik: Jon we’ve been saying you’re looking huge around the office. F***ing yolked.

Jon: I, I, I am yolked. Now, is he on an apology tour? 

Henrik: Yes. 

Jon: Is he, is he going back to those and saying, “Hey man, I got caught up in the pressure of it. ” 

Henrik: It’s, it’s worse than that. So this is, it’s kind of analogous to a lot of these grifts right now where they’re like, “I grifted with the best of intentions.” Uh, which he said he did this because men are killing themselves. Men are sad. Men are having a hard time. And he needed to rescue them, uh, with his system.

Jay: By doing steroids. 

Henrik: And the only way was steroids.

Jon: Yeah, I get that.

Jay: The only way to stop these young men from killing themselves and being isolated online was for him to just run a bunch of HGH and run a bunch of tests.

Jon: What I have always said is, the secret to male happiness is back acne and tiny testicles. 

Henrik: And, and an anger problem. 

Jon: And an anger problem. And if you don’t,  if you don’t do that, you know, the biggest problem we have with young men is they’re not angry enough [LAUGHTER] and they’re not muscular enough. 

Jay: Wait, Jon, what the f*** did you just say?

Henrik: They don’t spend enough on supplements.

Jon: It is really just a recipe for road rage. 

Henrik: Yeah.

Jon: Can I ask you and, and this is not an opportunity to just suggest that I am completely out of touch, but why don’t I know about the Liver King?

Jay: I think it’s a very specific part of, I guess, gen Z – millennial internet where like everyone became a fitness bro over the past two years. Everyone on TikTok is obsessed with getting jacked as f***, wearing short shorts. So everyone became obsessed with fitness in like an alpha return to masculinity sort of way. And he was the poster child. He would go on these podcasts shirtless.

Jon: I just want to know what part of my media diet am I missing?

Jay: Balls.

Jon: I mean, how is this man such as me, atrophying during this podcast. I’m literally wasting away as we talk. And here’s a gentleman with the answer to all of my problems, [JAY LAUGHS] and I’m not gonna have to eat testicles to get there, and I don’t know it. How- I’m the target audience!

Henrik: You really are. Cuz he is like, people say, you know as you get older you lose testosterone. He’s like, I’m 45. 

Jon: Yes.

Henrik: Look at me. And I got this way just by eating liver.

Jay: And balls.

Henrik: And balls. It’s so important that you don’t skip the balls.

Jon: As a vegetarian, balls and liver are sort of out, but I can take the supplements.

Henrik: That’s true, yeah. I, I, my guess is it-

Jon: How am I missing this?

Henrik: My guess is it’s an Instagram phenomenon is probably part of it.

Jon: Oh for God’s sake. So I’ve gotta get Instagram.

Jay: Jon, you’ve got to get Instagram?

Jon: Yes, I’ve got to get Instagram.

Henrik: that’s my guess is that it’s an Instagram phenomenon. I also would guess that you’re not listening to the podcast that he’s going, the podcast that he’s on every dude looks the same. It’s a guy that looks like me, basically. [JAY LAUGHS] Who’s like, who’s like–

Jay: And, and Jon, funny enough, a guy that looks like me. 

[JON LAUGHS]

Henrik: It’s basically, it’s basically evil me and Jay. Who are like “so there’s a lot of dudes out there that wish they were getting more ass, what do you gotta say Liver King?”

Jon: So this is all and I, and I’m just curious if they do look like the both of you, how have you guys not decided to jump in on this trend and start capitalizing on this newfound, uh, anger at all that has happened to men.

Jay: We haven’t negotiated contracts for next cycle yet so.

Jon: All right. 

Henrik: We’re trying to get some, uh, TPWJS supplements going.

Jon: Well, we can get’em. Listen, my problem is I just spend too much time on the Goop Instagram site. So, uh… 

Jay: Henrik, tell, tell the Goop, tell the goop – Goop. 

Henrik: Oh. So here’s, here’s my goop on the goop. This was kind of my grift awakening about five or six years ago, when I found out that the supplements that Alex Jones sells and the supplements that Gwyneth Paltrow sells are the same ingredients, just in different packages and marketed for different reasons. So Gwyneth Paltrow’s is like pink and white and like, it’ll give you better hair and nails and skin and help you, uh, feel calm and good. And Alex Jones is like, this will help you rip your steering wheel off. [JAY LAUGHS] You’ll be so strong.

Jon: Can I tell you something? And I, I don’t say this lightly. It shows that we really are all connected. You know what I when I think about [JAY LAUGHS], you know, when I think about our culture and what’s gone on and, and the division, we really are all the same. All of us are deeply unhappy with, with the nails and our hair and, and we’re all it’s all the same. 

Jay: It’s very funny because all of my gay frog friends love Goop, so there does seem to be like a connection to the two.

Henrik: We’re all suckers looking to become scammers.

Jon: Looking to become scammers. All suckers looking to become scammers. Henrik, you couldn’t have picked a better segue. For God’s sakes, because you know who’s on the program today we’re talking to David Dayen, Executive Editor, the American Prospect. He’s gonna be talking about Sam Bankman-Fried, who no one could look like more of a sucker, and no one could be more of a scammer. And with that, I’m just gonna drop, I’m. Do I, do I have a mic to drop? 

Henrik: Throw your mic on the ground. 

Jay: Yeah. [JAY LAUGHS] Throw your podcast mic.

Jon: As I put my hand up into the camera, I realize I need some f***ing supplements, And I need them now because this s*** is deteriorating faster than I can possibly have it. All right. Gentlemen, thank you so much. We’ll, uh, I’m gonna talk to David Dayen and, and we will be back to wrap it up in just a moment.

Interview with David Dayen Begins

Jon: Talking to our guest, we’re bringing him on there. It’s David Dayen. He’s the executive editor of the American Prospect and he has been doing tremendous reporting on, on crypto and corruption in the crypto area and Sam Bankman-Fried, the third [DAVID LAUGHS] and, and everything that went down. David, thank you so much for joining us. 

David: Well, thanks for having me on. 

Jon: We’re gonna talk about this FTX, FTT, Alameda. I don’t understand an awful lot about [DAVID LAUGHS] any of this, but the one premise that I think I have, and I’d like you to talk about is when I read about how these crypto exchanges and ah companies have been set up, it seems that the biggest mistake they’ve made is they are mirroring the worst excesses of the actual stock market, but with a much more volatile commodity. It seems like —

David: Yeah.

Jon: — they’ve centralized things. There’s only a few like big crypto exchanges. All the conflict of interest and corruption inherent in our more standard markets, they seem to have mirrored and they’ve, they’ve lost the lessons of sort of what this was supposed to be.

David: Yeah, I mean I’d like to say that this is some sort of innovative and new-fangled way to separate people from their money but I think the real answer is that it’s really dull. 

Jon: Right.

David: It’s the same schemes transported to something new with different acronyms. I mean, uh, what you have here is you had two separate companies owned essentially by the same person. You know, the FTX and Alameda research.

Jon: Now, FTX was the uh exchange —

David: That’s right.

Jon: —where people could go on and trade different, uh, cryptocurrencies.

David: Right.

Jon: And Alameda was just kind of a simple hedge fund. 

David: Yeah.  Alameda was a customer on FTX, so —

Jon: Well, that seems completely above board. [DAVID LAUGHS] Why would that be — why would that be something that would draw people’s attention?

David: Well, not only that, but they didn’t have to play by the rules that everybody else played by on FTX.

Jon: What?

David: Regarding margins and leverage.

Jon: Yes, apparently not.

David: Yeah. So, uhh you know, the exchange is supposed to make its money essentially through, you know, small fee– fees on transactions, right? So they are supposed to have — it’s basically a bank that are depositors. There are these entities that are trading on the exchange and they get a little bit of money from each trade, and that’s how they sustain themselves. Uh, the number one thing you are not supposed to do if you’re a bank or a bank-like object, like an exchange, is take the customer money and gamble with it.

Jon: What? Wait, pause. Yeah this is okay. Hold on one second now. Now you’ve really stepped into something. 

David: I have. I apologize.

Jon: Because if I’m– if I’m not mistaken, that is the foundation of American capitalism. [DAVID LAUGHS] That’s, when they repealed Glass-Steagall, I’m pretty sure if you looked at the fine print, it said, “Oh, and by the way, uh, if you wanna place like a really wild, long shot bet using these deposits on, let’s say subprime derivative bundles, knock yourself out.”

David: Right. But I mean, the point you make is the correct one, that we solved this problem almost a hundred years ago.

Jon: Yes. [JON & DAVID LAUGH]

David: And we continue to fall into it over and over again. So just like MF Global, just like, you know, some of the mortgage derivatives that we saw —

Jon: the savings and loan scandals.

David: — just like the SNL scandal.

Jon: The saving and loan scandals. The Keating Five. 

David: I saw an economic historian say it’s like the South Seas Company from the 18th century.

Jon: Oh my God. 

David: This is just the same kind of thing. They took customer money, they made a bunch of bets. They lost those bets, and the customers wanted their money back and they didn’t have it. Whatever fun name that you want to put on it, it’s the same damn thing that we’ve seen over and over again.

Jon: It — and it’s incredible because I think all the players within this space, played their roles in enabling this corruption to a T in the exact same way that they’ve played them from all past things. All the pundits, all the, uh, financial reporters who did these incredibly glowing profiles of this young altruistic boy genius. [DAVID LAUGHS] And it’s all nonsense. I mean, I’m struck by, — you’ve got guys like Jim Kramer, who in the — he was praising this guy.

David: You have a problem with something Jim Kramer said?

Jon: Yeah, well. [DAVID LAUGHS] But is there any accountability for any of these knuckleheads? Like before the crash of this, Kramer says, “He’s the new JP Morgan. [DAVID LAUGHS] Rolling out credit lines to save crypto institutions.” You know, JP Morgan apparently is a paragon of financial— 

David: But yeah like why is that a good comparison is one question.

Jon: And then the next one is a pathological liar and a conman.

[JON & DAVID LAUGH]

David: You know, there’s just a fine line between JP Morgan and a pathological liar and a conman.

Jon:. It’s f***ing insane. Here we go. “Fortune: The New Warren Buffett. “A white knight” and now uh uh it’s a ton of things out there that are like “The disgraced wunderkind. We were duped too.” And you’re like, you’re a reporter. [DAVID LAUGHS]

David: Well, uh, you know I think one thing that we’ve seen here is not only did Sam Bankman-Fried or SBF, as he is sometimes so cutely called.

Jon: Sure. You gotta have a moniker. If you’re a boy wunderkind, you have to have a moniker. 

David: Yeah. Right.

David: So, one thing that he did and continues to do very skillfully, I think, is not only does he use, did he use his paper wealth to dole out money to politicians on both sides of the aisle. 

Jon: Yes.

David: I mean, SBF was kind of a running point on the Democratic side and then they had this Co-CEO, Ryan Salame, who gave 23 million to Republicans. So, you know, this is a common thing in the financial industry where you have your Democratic guy and you have your Republican guy and the money goes out separately but it’s all to the same end.

Jon: And there was a bipartisan group — 

David: Yes. 

Jon: — of Republicans and Democrats known as the Blockchain Eight?

David: Well known by – known by me as the Blockchain Eight.

Jon: Known by you as the Blockchain Eight. And basically they were just being greased by this company FTX,

David: Yup.

JON: To lobby to make sure that whether it was the FTC or the SEC the commodities CFTC, uh, any of those sort of regulatory bodies that they would lay off.

David: Yeah. I mean, what happened was way back in March when the SEC was engaging in some inquiries to crypto firms. 

Jon: That’s right. 

David: In large part about the use of customer deposits, like what they were doing – 

Jon: Right.

David: – with this exchange money, these eight members led by Tom Emer, who was recently elected the number three in the house leadership. He’s the new incoming Majority Whip. They wrote this letter saying essentially intimating that the SEC was overstepping its boundaries by asking these inquiries of crypto firms. 

Jon: That’s right.

David: And saying that you know “We don’t think that you’re doing this above board. We think you’re violating a hilarious law called the Paperwork Reduction Act” [JON LAUGHS] which is a law that came into play I believe in the nineties it’s like a Gingrich-era law, that says that, “we don’t wanna burden these companies with having to do all this paperwork, so let’s not regulate them right.”

Jon: That makes total sense.

David: So meanwhile it’s not applicable to a law enforcement investigation, but they used it anyway in this context, 

Jon: Right.

David: So, they were —

Jon: And probably not applicable I would think to an online cryptocurrency. 

David: Well, they’re you go. Paperwork reduction isn’t —

Jon: Where there’s probably not a lot of paperwork to begin with.

David: Yeah, I don’t think they’re using the mimeograph machine. 

Jon: That’s right. 

David: But the point being that — so in not too veiled away, they were saying “back off”. They were saying to the SEC back off of these firms that you’re conducting these inquiries in. What we recently learned in the wake of the FTX collapse is that one of the companies the SEC was investigating back in March in this manner was FTX–

Jon: FTX. Right. And now Emer is blaming the SEC.

David: Yes. 

Jon: He’s saying that this is in his mind, this shows how the government is unable to effectively regulate cryptocurrencies and exchanges without ever acknowledging that he’s the one who told them to back off. 

David: Exactly. And five of these eight members who put forward this letter received direct campaign contributions from FTX. Emmer before becoming House Majority Whip ran the NRCC which is the National Republican Congressional Committee. That’s the committee that tries to elect Republicans. They benefited from $2.75 million from both FTX’s own PAC. And this guy Salame, who was the Republican version of SBF in terms of giving money to Republicans. So there was a lot of money being thrown around—

Jon: And to make it clear the investigation was specifically [DAVID LAUGHS] that they were using customer money to make these, uh uh you know, bailing out their own hedge fund using FTX customer money like, that, they were specifically looking into that.

David: They were looking into, you know, a version of that. It was about how they handled customer deposits. We now know that those deposits were being funneled to Alameda, the hedge fund that made a bunch of bets and lost. And they also asked them about this program that gave depositors interest which sounds like that would be fine. They gave interest on the crypto assets.

Jon: Sure. 

David: But that would turn them into a security, which means it would have to be registered with the SEC. 

Jon: That’s right. 

David: So there were a couple different phases to the inquiries, but it was all around customer deposits, which were the problem. So you, you assume if the SEC is enabled to continue to investigate they might have seen the leaking out of customer deposits by the billions over to this associated hedge fund.

Jon: And how big was the – the hole was what? 6.8 billion? 7.2 billion? It was some crazy —

David: Yeah in that range. And we know that personal loans were going out to the individuals uh uh who were working at FTX. 

Jon: Right. 

David: So yeah, a lot going on here in terms of shuffling around money. And, the SEC was prepared to investigate and was investigating but they were getting pressure from the Hill. And the Hill was compromised. I mean they were certainly taking money from folks at FTX. 

Jon: And the thing that I find most galling about all of this is the sort. “Well, crypto is so difficult to understand and that, you know, there’s no way that we could have seen this or foreseen it. It’s this brand new world” as though – as we talked about earlier, the general tenets of the corruption that exists between our government and the markets and all these big players. You could substitute out Lehman, you know, Ken Griffin at Citadel. I mean, how is this different than Ken Griffin running a hedge fund at Citadel and also being the most gigantic market maker that we have – 

David: Yeah. 

Jon: And who’s the biggest donor to all kinds of politicians? It’s Ken Griffin.

David: Right. 

Jon: I mean, the markings for corruption are all over our system. But they wanna point to this as an anomaly.

David: The conflicts of interest are very familiar and dull, as I say. I mean, I’m, I’m sorry to be brought on your show to tell you that things are dull, but — 

[JON LAUGHS]

Jon: You’re not dull at all, baby. We’re moving this through.

David: But it goes further than that. So, one thing we know is that SBF was very active and FTX, the company, was active in this particular piece of legislation. And the legislation is called the Digital Commodities Consumer Protection Act [JON LAUGHS] because you gotta put consumer protection in there, right?.

Jon: Because you have to live in an Orwellian dystopian hellscape whenever you make legislation.


David: Exactly, exactly. So this bill —

Jon: Right. 

David: The goal of this bill was to move jurisdiction over certain types of digital assets from the Securities and Exchange Commission, which was doing this investigation over to what is called the Commodity Futures Trading Commission. 

Jon: Right, which has less teeth so to speak. It’s considered —

David: It’s not as big an agency. It’s a much smaller agency. It doesn’t have a strict consumer protection mandate. That’s not part of its purview. 

Jon: It’s only part of its name. [DAVID LAUGHS] It’s just not part of it.

David: It’s only part of the name of the bill, right? 

Jon: That’s right. 

David: So FTX was consulting on and lobbying for this bill. Now, uh, stay with me. [JON LAUGHS] This bill –  

Jon: Uh oh. All right. 

David: This bill which seeds over to the CFTC is being put through, not the banking committee, but the Senate Agriculture Committee. And the reason is that CFTC jurisdiction is in agriculture because commodities back in the day —

Jon: Soybeans.

David: — were things like pork bellies and soybeans and things like that. And so they retained that jurisdiction in the agriculture committee. So you have a bunch of rural state senators, frankly, who are putting forward this very sophisticated — incidentally, Commodity Futures Trading Commission had control, oversight over the derivatives markets during the financial collapse, right? 

Jon: Oh my God. 

David: So, you have the Chair and the Ranking Member of that committee, Debbie Stabenow and a guy named John Boozman from — 

Jon: Arkansas. 

David: Stabenow’s from Michigan.  John Boozman’s from Arkansas. And they also took money from FTX. They are the CFTC’s chair is a guy named Rostin Behnam. And he was Debbie’s —

Jon: No, I’m – sorry, that’s, I’m sorry. That’s fictional. I apologize. 

David: So much of this is fictional.

Jon: That’s a character in a Dickens novel.

David: But anyway, that guy was previously the lead staffer for Debbie Stabenow.

Jon: Oh, for f**k’s sake.

David: So, if they move jurisdiction to CFTC for a lot of these crypto assets. Number one, they elevate this committee that the key staffer for uh, the chair of the commission is a former staffer. Second, they say — they get essentially congressional jurisdiction over this side of crypto.

Jon: Right.

David: Which means the money can keep flowing from crypto companies because they don’t want too stringent oversight from Congress. So there’s this jurisdictional fight going on between the banking committee and the agriculture committee over this. And it’s all wrapped up in this bill that FTX and Sam Bankman-Fried consulted on. 

Jon: Holy s**t. So he’s greasing the skids, he’s paying off the referees–

David: It gets darker and darker and darker as you think about it.

Jon:  He’s stacked the stands with supporters. And I’ve watched his interviews and God bless him and the Chauncey Gardener character that he’s playing now, [DAVID LAUGHS] where he’s, where he sits up there and he just goes, [DAVID LAUGHS]  “Ugh, I’m just a child. I wanted a lemonade stand. But in the absence of it, I decided” but he played this perfectly.

David: Yes.

Jon: I mean, he started his own, he seeded his own media ventures. He gave money to like Vox, he gave money to everybody that could possibly have a role, he basically put them on the PR payroll.

David: Yeah. The media aspect of this, I think, is very important. 

Jon: Mind blowing. 

David: It created this, not just the certain credulity over what people, you know, believed he could do and, and how he could innovate. 

Jon: Mm-hmm. 

David: But it created almost a subculture. Of, uh, sort of a culture between media types, uh, this weird kind of philosophy known as effective altruism –

Jon: Yes. 

David: Uh, where he was basically espousing – 

Jon: Yes.

David: This idea that “I’m just making a bunch of money so I can give it away.” 

Jon: They used to call that tithing, I think in the old days.

David: Yes, indeed. And so he created a lot of affinity among a certain type of center left, uh, media professional.  

Jon: Mm-hmm.

David: Who was very invested in both this philosophy and in, you know, access to this individual who had a lot of power–

Jon: That’s right.

David: – and had a lot of money that could, that could, you know further their operation. 

Jon: And it’s clearly very considered, as you say, it’s, it’s incredibly strategic. He’s the face of it as the center-left-effective-altruism-guy who’s created this crypto world. Meanwhile, underneath it all behind the scenes, they’re also greasing the Republican skids at the same amount of money. 

David: Right.

Jon: I mean, it is–

David: But I mean, the difference is that that guy, the Republican guy, he doesn’t have wacky hair and, and dresses like he’s –

Jon: Yeah. Salame is not, is not a great media icon that they can you know–

David: Right. You know, he’s not dressed like he’s heading to a LARPing convention [JON LAUGHS] or, you know, something like that. So there is a skewed sense in the media, you know, in the aftermath. That this was the Democrat’s big guy, and that’s been taken down in a spread of corruption. And you could, you could think of it in the sense of being one-sided, but no, it, this was bipartisan. 

Jon: That’s right. 

David: This was, uh, a– across the spectrum.

Jon: And the only, I think if there is a silver lining here, it’s that at this point the crypto industry is quarantined enough from the econom- at-large as to not create the kind of contagion that would’ve been created as that happened in the 2008 subprime crash and all those things. But it’s the exact same f***ing mechanism. 

David: Yeah.

Jon: And that’s the part that is so frustrating. Is to watch us play this damn song over and over again, and we’re always told “hey man, no, this is just the, the, this is the system as it has to be.”

David: Right.

Jon: “You know, in a capitalist system.” It, but it’s not, it’s utterly corrupt. At its core. And that’s not a bug, it’s a feature.

David: And what was layered onto it was this idea of innovation that they’d have Matt Damon in ads saying “fortune favors the brave” [JON LAUGHS], that they’d have these Larry David ads. 

Jon: Right. 

David: That was for FTX, by the way, the Larry David ad. 

Jon: Right. 

David: There was this sort of boundless optimism around this, and not the fact that it was just sort of another way to fleece people.

Jon: Right.

David: Uh, much of what, uh, on, if you talk to people on Capitol Hill, uh, who were boosters of crypto, what they’ll say is that this promotes financial inclusion. This gets poor people into the banking system in a way that they couldn’t before, which is just kind of nonsensical, ludicrous that – [DAVID LAUGHS]

Jon: Wasn’t the whole point that sort of blockchain would decentralize all of this and you wouldn’t need the type of consolidation and yet when you really look at it, they followed a playbook of the big banks of –

David: Absolutely.

Jon: Of the big hedge funds. 

David: If there’s a good thing we can say here, it’s what you just brought up. The fact that this was not integrated into the broader financial system, and so there wasn’t any contagion that could spread from the collapse of this particular exchange – 

Jon: Right. 

David: Or the collapse of crypto more generally. Uh, that was a conscious decision by the regulators to not necessarily allow that. 

Jon: Right. 

David: Uh, there were certainly efforts made to move crypto into the payment system, to get it access to the Federal Reserve’s discount window, to move crypto into people’s retirement accounts, uh, all of these things were attempted. 

Jon: Right. Right! To join the corrupt system we already have. I mean, that’s the part that I would really like your thoughts on, you know, there was a lot of talk of allowing them to join into–

David: Yeah. 

Jon: The generally corrupt system that we already have. Like the thing you just said about giving them access to the discount window. Why do we even allow that in these, in these large institutions?

David: [DAVID LAUGHS] Sure. 

Jon: Uh, uh, to go and dip in at 0% and then turn around and buy treasuries at 1.5 like–

David: Right, a carry trade, yeah.

Jon: What are we doing? And, and they’re gonna try and say, this is an anomaly.

David: Right. 

Jon: And not just Lehman, as you said, dressed up in a mop-top wig in a LARPing suit. [DAVID LAUGHS] Like it’s the same f***ing thing over and over and over again.

David: Right. Yeah, I mean, I think that’s definitely true. And, uh, you know, to take the one bright side is that, um, you know, we’re hearing in the wake of this a lot of calls for, you know, “we need to regulate crypto. We need to, uh, come up with some regulation to help this system.” And, and my kind of view on it is that we already have regulations on fraud. They’re called fraud, right? [JON LAUGHS] I mean, like we don’t need more laws to say that when you take customer money and gamble with it – 

Jon: Right. 

David: Then that that is illegal. That already is a violation of law. If you start to quote unquote “regulate crypto”, what you’re going to do is you’re gonna bring it into that corrupt system that you’re talking about.

Jon: Right. 

David: And so I think that it is much, a  much more prudent way of going about this is to, uh, maybe, uh, look at the way in which it advertises and think you know, what do we do with cigarettes, right? We slap a warning label on it and say “Okay, you can do this.”

Jon: But you’d have to do that–

Jon: You’d have to do that with the stock market. You’d have to do that with, with everything. 

David: If you look at the over the counter market there, there’s a big warning. Like “you’re doing this at your own risk with your own money.” Uh, I’d think more of those kinds of warnings and then just actually policing fraud when you see it, uh, is the better way to go than to come up with some grandiloquent, uh, regulatory regime.

Jon: Mm-hmm. 

David: That will allow for and facilitate bailouts and facilitate that kind of thing.

Jon: That’s exactly right. If they were to join the system at large then this situation, let’s play it out in the way that it would play out in the real world. 

David: Mm-hmm.

Jon: Uh, there’d be TARP bailouts, there’d be some kind of billion dollar. The Fed would turn on, uh, a money hose and we would be told that, “Hey man, we gotta land the crypto plane. It’s on fire. And I’m sorry that all these individuals lost their houses and their savings, but we did bail out FTX at 100% on the dollar. Now, there is some fraud here and so they are gonna have to pay a billion dollar fine.” [DAVID LAUGHS]

David: Yeah. A vig essentially to get there. 

Jon: That’s right. They’re gonna have to give us a cut of those profits. I mean that’s, that’s the problem with all this because the regulators are the ones, it’s a revolving door around it. They’re probably, half of them will go and work for FTX then at that point. [DAVID LAUGHS] Like if they were to join the system at large.

David: I’m sad to inform you that’s already happened. 

Jon: Are you serious? 

David: Uh, so the chief public policy guy of FTX. Is, uh, this guy named Mark Wetjen, who was a commissioner of the CFTC, the Commodity Futures Trading Commission. 

Jon: Oh for f***’s sake.

David: The fix was in to do this. To move, uh, crypto regulation to this lightly uh, regulated this kinda laissez faire agency. 

Jon: Yeah. 

David: And then, you know, kind of legalize some of these practices and the fact that this blow up happened when it did before they had a chance to put that regime into place – 

Jon: Mm-hmm. 

David: Is actually a positive thing. You know, there was a hearing just last week about the fallout of FTX and it was at the agriculture committee that we were talking about before. 

Jon: Sure, the Agriculture Committee, crypto currency, why not? Makes total sense.

David: That guy Benham, Rostin Benham was–

Jon: Yes. 

David: Was he the one witness at that hearing. 

Jon: Sure. 

David: And these guys were like falling all over themselves to say, “just because this one very large exchange–

Jon: Oh dear God.

David: – “Uh, uh, blew up doesn’t mean, you know, this means now more than ever we need”, it’s like there’s this now more than ever syndrome when like something happens and you actually are trying to do what you wanted to do in the first place? You say “well now more than ever, we need the regulation that I talked about before, uh, because, uh, you know, this, this blow up of the system showed the need for, uh, what I already wanted to do.” And, uh, it’s actually quite the opposite. 

Jon: Right. 

David: But that, you should check out that hearing. It was, uh, these people trying to reverse time and, try to come up with a way that, this system didn’t reveal itself. 

Jon: Right. And have they, you know, are any of them drawing the parallels to the current system that we have in place right now for what are called the regulated markets?

David: Right.

Jon: And the inherent corruption and conflicts of interest and monopolies that exist to dominate those financial industries? And put so many people’s pension funds at risk? Like has anybody drawn the parallel here? 

David: By the way, the, there is a teacher’s fund that was invested pretty heavily in FTX and uh, it’s in Ontario, Canada and we’re probably gonna see that, that company or that, that pension fund lose a bunch of money–

Jon: Oh that sucks. 

David: And it shows the real world examples of this.

Jon: That just, that just sucks.

David: Um but, I think what you’re seeing, you know, now there’s this sort of battle between the Ag Committee – 

Jon: Mm-hmm. 

David: And the Banking Committee. And the Banking Committee members are kind of saying, “I told you so.” There, there’s a, what I would call a, a rise of a bulls**t caucus that, uh, is finally saying out loud what they may have believed before, but didn’t want to say – 

Jon: Mm-hmm.

David: Which is that crypto is a bunch of bulls**t. Um, uh, we’re seeing this from Elizabeth Warren– 

Jon: Just as a – you see, I always just assumed that I am a tiny brain that doesn’t understand the algorithmic beauty of the blockchain and, and that crypto and that, because that’s the other thing we didn’t really discuss. You know, the other part of FTX that’s so bizarre is they just created their own token, the FTT, and, and decided to fund it through this creation.

David: Yeah. There’s no real use case for crypto. I, I still have not seen –

Jon: Right.

David: Sort of in, in my experience, it’s not a store of value. You don’t- something that volatile you don’t want to use it to pay for your house. 

Jon: Crypto always struck me as a solution in search of a problem. 

David: Yeah, completely. 

Jon: It was sort of that sense of so “what’s wrong with money again?” 

David: Right. Exactly. 

Jon: What, like – How’s that not happening? 

David: My favorite thing is this stuff called stable coins. Uh, and stable coins are supposed to be pegged to the US dollar. They’re like a money market system. 

Jon: Right. 

David: And you can use, you can, you can convert your money into stable coins and use that to trade crypto and it’s like doesn’t the dollar work as the dollar? Like why are you tying the dollar to something else [JON LAUGHS] Uh, if none of it makes any sense at all, it’s just a triumph of marketing and, and they found a bunch of people that say, “yeah, this sounds cool. I can trade crypto and make a bunch of money.”

Jon: Now it does. Those strike me as there is something valuable in these blockchains.

David: In theory, maybe on a blockchain kind of system, you could, you could get to a place where, uh, you know, for example, maybe it improves the mortgage record keeping system or something like that. But honestly people just want to gamble money with it. [JON LAUGHS]

Jon: Well, that, that’s it. That’s it. 

David: Honestly, I mean, the way SBF made his money, by the way, was that he was doing these coin transactions in uh, in a region, I believe there were like Japanese trades because he figured out that, that the timing, there was a timing difference. There was an arbitrage that was available to him –   

Jon: Mm-hmm.

David: – where he could, he could buy Bitcoin or whatever the coin is, uh, in the US and sell it in Japan. And because of the timing difference, not time zones, but like there was an actual timing difference–

Jon: Right.

David: That he could make a bunch of money. So he just exploited this arbitrage and that’s how he made his initial billions. 

Jon: He’s Icarus. 

David: He did fly a little too close to the sun. 

Jon: I mean, if, if you figure out that, like how come the figuring out the front-running in Japan wasn’t enough. Like that’s your, your, your Beanie Baby right there, like you did it. Get out before everybody figures out it’s just a f***ing. 

David: It was a big red flag. The other big red flag was he went on this podcast on, uh, Bloomberg and, uh, they, they asked him to explain something that is ridiculously technical and stupid called yield farming, and the way he explains it is he goes, “well say you have this box. And, uh, the box doesn’t really do anything, but if people start putting money in the box, they’ll think, oh, the box must be valuable.” 

SBF: If people just decide to put $200 million in the box. This is a pretty cool box, right? And now all of a sudden, of course, the smart money, it’s like, oh wow, like this thing’s now yielding like 60% a year in X tokens. And then it goes to infinity, and then everyone makes money.

Jon: Oh my God. 

David: And what he was explaining was a Ponzi scheme. Like he was explaining it very directly that this is a Ponzi scheme, and the host that was on with him and says like, “you know, I like to think of myself as cynical, but this is extremely cynical. Like this is more than I’ve ever said.” 

Jon: Wow. 

Interviewer: I think of myself as, like, a very cynical person. And that was so much more cynical than, yeah, this isn’t how I would’ve described farming. Like you’re just like, “well, I’m in the Ponzi business and it’s pretty good!”

David: He outed himself kind of as this guy. Over and over and over again. And the fact that nobody picked up on it is in some ways part of the corruption. Right.

Jon: So a lot of the wealth of it was begun off of just a conjuring, so to speak.

David: Yeah. The thing that really triggered the downfall,

Jon: Mm-hmm. 

David: Was a look at the balance sheet, uh, I believe of Alameda and finding that most of–

Jon: That was the hedge fund –  

David: The hedge fund – 

Jon: – that Sam Bankman-Fried had, yeah.

David: Most of the money that was, or the assets that were in Alameda at that time was FTT.

Jon: Which was the token that FTX created. 

David: Yeah, and once people saw that and said, uh, you know, there’s an old, uh, Monty Python bit about, uh, a conjurer that creates a block of flats with his mind. 

Jon: Uh-huh.

David: He creates apartments with his mind and the people living in the apartments have to believe [JON LAUGHS] in the apartments or else they’ll fall down. 

Jon: Oh no, that’s like the coyote when he goes over the cliff and then he, he’s fine until he looks down.

David: The FTT moment was the moment where people stopped believing in the block of flats and that’s what brought it down.

Jon: Wow. 

David: And by the way, you could make that, you could, you could make that analogy for the subprime crisis.

Jon: No question. But the only difference is the people that control it already know there’s no f***ing flats. Like that was the thing that you remember about the subprime contracts. Those banks knew that those assets were toxic, and at the time they were trying to unload them on their own customers.

David: And, and certainly,

Jon: Yeah. 

David: Uh, FTX was aware that they were funneling customer deposits, 

Jon: Of course.

David: Into this associated hedge fund. 

Jon: Mm-hmm. 

David: And, the assets of that hedge fund were not based in reality and that they had lost a lot of money and that– 

Jon: There’s a reason he’s based in The Bahamas. [DAVID LAUGHS] There’s a reason they’re not based in the United States. Like, for them to act like they don’t know that any of this was sort of on the edge there. Well then why are you in international waters ?

David: [DAVID LAUGHS] I mean, yeah, the fact that all of the date lines of these glowing profiles are in The Bahamas [JON LAUGHS] should be a giant red flag to the entire enterprise.

Jon: Yes.

David: Like from the British Virgin Islands.

Jon: Right. 

David: I mean, like why are you in this tax haven right now? Why are you in, you know, outside of the US jurisdiction?

Jon: Yeah. No it’s shocking to me now that, again, as I was saying, he’s playing the sort of, uh, being there card. [DAVID LAUGHS] Where it’s just, I, I just wander around and I, you know, I pick out the same t-shirt every day and I go have a cup of oatmeal and–

David: Well, and he is very subtly blaming Alameda, even though he takes 90% of the profits from Alameda. 

Jon: Right. 

David: He’s saying like, “I didn’t run Alameda. I don’t know what is going on there.” Apparently there was a CEO who was put in charge of Alameda. Who is like–

Jon: It was like his girlfriend. 

David: His girlfriend, right. Who lives or was his girlfriend, I guess, who lives down there in the compound in The Bahamas. So it’s like, he’s basically saying, “Well, look, I know about my bedroom, I don’t know about the bedroom down the hall, [JON LAUGHS] I don’t know what’s going on there.”

Jon: “And we’re not allowed to talk about it at the breakfast table because that would be against the regulatory regime.” 

David: That’s right. “And we’re very, we’re very ethical.”

Jon: How are they going to play this off as though our system itself isn’t at incredible risk of everybody realizing that the flats aren’t real?

David: [DAVID LAUGHS] Uh, you know, I mean, I think it’s a little fascinating that he keeps talking that, uh, you know, against the advice of lawyers –

Jon: But isn’t that what narcissists do? Isn’t that what narcissists do? Isn’t that what–

David: Yeah. 

Jon: What megalomaniacs do is they just assume. I mean I’ve gotta tell you–

David: Look, I think, I think what we’re seeing here with the first days of, uh, the post collapse with Sam Bankman-Fried is similar to what we saw in the first days of Elizabeth Holmes. Right? 

Jon: Right. 

David: Uh, she came out and said, “This is a big misunderstanding. Uh, I wasn’t aware of the extent of this yada, yada.” And now it took several years, but she’s going to prison. 

Jon: Right. 

David: And, and, and I think the same thing is gonna happen ultimately,

Jon: Right. 

David: With, with Bankman-Fried. People say like, “well, look, Bernie Madoff, they found him. They got him, and, and he went right to jail.” Well, Bernie Madoff confessed.

Jon: Yeah. As soon as they found him, he was like, “Yep.”

David: “Yeah, I did it.”

Jon: “Been waiting for you guys.”

David: Right. So, uh, you know, you have to put together an investigation and, uh, if you don’t have a witness that is essentially giving up the game, so I think in a few years we’re, we actually are going to see the system. In a, in a weird way work because this was outside of the regulatory perimeter in a way that we didn’t infect the rest of the system. 

Jon: Right, right, right. 

David: Uh, and we’re going to police it in the way that you should police these things, which is through a fraud investigation. 

Jon: You think this guy will go to jail at some point? How are they gonna get him?

David: Well, I mean, uh, you know, they’d have to get the records and, and, uh, there’s a new CEO who has been, you know, put in place to deal with the bankruptcy.

Jon: Mm-hmm. 

David: So he has access to everything. And that guy hilariously, uh, also, uh, dealt with the Enron dissolution. 

Jon: Oh, wow. 

David: It’s the same guy. And he, he said like, “Look, I’ve dealt with Enron. This is another order of magnitude-”

Jon: Wow.

David: “This is something way bigger than Enron” Now, I think the only thing that is negative about this is that, you know, a bunch of customers of FTX are, are gonna suffer here.

Jon: That’s always how it goes. The little man always pays the price for the gross negligence of all of it.

David: Exactly. So you know I think we need to do a better job of policing on the marketing side, on the advertising side and make sure everybody knows, “look, you can, you can drink the bottle of hooch, but you’re gonna get sick in the morning.”

Jon: And what I love about this is that it demonstrated, it, it sort of, you know, the old thing of, uh, the “Native American used every part of the buffalo”, like this touches every part of our corrupt system –  

David: [DAVID LAUGHS] Right. 

Jon: And I look forward to, uh, this gentleman testifying in front of Congress, cuz I think he’ll find it irresistible.

David: Mm-hmm. 

Jon: And I think in the way that, I don’t know if you’ve ever seen those Datelines where they get the serial killer and he’s like, he’ll just talk his way out of it. Like it’s gonna be one of those.

David: Yeah, he does definitely give off a vibe that he thinks he’s, you know, the smartest guy in the room. And that always makes for riveting television. 

Jon: Yes. 

David: Especially if he happens to come up against someone who’s actually smarter.

Jon: Well, what he said, I think he said like, “I’ll get in there once I figure out what happened”, [DAVID LAUGHS] “I just gotta, I got, you know what I’m gonna have to do? I’m gonna have to go knock on my girlfriend’s door and be like ‘what happened?’”

David: He’s gonna find the real killer. He’s gonna do it. [JON LAUGHS] 

Jon: That’d be great if he writes a book “If I did it.” [DAVID LAUGHS] Uh David, thank you so much for, uh, for, for joining us on this. It’s remarkable. I’d love to talk to you again some time about some of the more kind of what we consider the legacy uh, industries in, in finance and the corruption inherent there and, and some of the risks, that are involved in, in that system. Cause I have a feeling that everyone’s gonna try and play this off as kind of an anomaly. 

David: Yeah. No, I’d love to do it. 

Jon: David Dayen, – Executive Editor of the American Prospect. Uh, thank you so much for joining us. 

David: Thank you.

Interview with David Dayen Ends

[TRANSITION MUSIC]

Jon: All right, David, uh, Dayen from the American Prospect. Jay, Henrik. Come on back. Gimme your thoughts, baby.

Jay: S*** sounds bleak. [JON LAUGHS]

Henrik: I do like how the Agriculture Commission regulates it. That feels like a true underdog story.

Jon: That does. [JAY LAUGHS]

Henrik: Where some senators, like “I may just be a simple farming man,” [LAUGHTER] “But no big city bank fellas that don’t know grapes from peaches going to tell me how crypto works.”

Jay: They come, they come in with a pig the whole time’s like [JAY SQUEALS LIKE A PIG]. Now listen—

[JON LAUGHS]

Henrik: “Bitcoin ain’t nothing but soybeans on the computer.” [LAUGHTER]

Jay: Henrik, you have to tell Jon the crazy– the even crazier coincidence.

Jon: Oh, okay. 

Henrik: I was Googling Sam Bankman-Fried, he and I were born on the exact same day. Two paths. 

Jon: Wow. Exact same. You are exactly.

Henrik: Yes, we are exactly the same age, within 24 hours of each other there.

Jay: There by for the grace of God goes Henrik.

Jon: If this is not an example of that astrology is bulls***, [JAY LAUGHS] there is not one horoscope that you could read [JAY LAUGHS] that would apply to Henrik and Sam Bankman-Fried. There’s no way.

Henrik: Also, if we’re just going based on, if you just took like, uh, a school photo of both of us. I should be scamming people financially and he should be in a comedy writer’s room. [JAY LAUGHS]

Henrik: He should be wearing sweatpants at work, and I should be wearing a white collar and being like “I got an opportunity.” 

Jon: Can I tell you something?  In my 35 years of being in writing rooms, you could not be more dead on. [JAY AND HENRIK LAUGH] I can’t tell you how many Sam Bankman-Fried’s won me Emmy’s in the early 2000’s. 

Jay: Oh my God. [JAY LAUGHS]

Henrik: We got switched at birth, I guess.

Jay: Oh Jon, it is like, there is like this odd confluence of like, whenever you hear about him and then you see him, you go, “y’all were listening to this dude? [JON LAUGHS] It was this guy?”

Jon: That’s what I meant by like when I was talking to David, the Chauncey Gardener of it all. Like you know – 

Jay: Yeah, he looks like the kind of person who would be scared to talk sternly to a waiter. You’d be like, “no, just, just order your food.” He’d be like, “I don’t wanna.”

Henrik: It feels very cultivated. Very Keyser Söze.

Jon: Oh, that’s interesting. You’re going Keyser. So you think this is one of those–

Henrik: That’s the Usual Suspects, right? 

Jon: That is correct.

Henrik: Okay. 

Jon: Yeah.

Henrik: I couldn’t remember if that was just a dictator. [HENRIK AND JAY LAUGH] .

Jon: You know what could be. Could be. But I like the idea though, that he is Keyser Söze. 

Henrik: Mm-hmm. 

Jon: That he is this guy and you sit there and he’s spinning a tale and all of a sudden you look at your mug and go, wait, that’s the name he used. 

Henrik: Yeah.

Jay: I think that’s when we started to give people too much credit. I don’t think he’s playing 4D Chess in the sky. I think he and his friends saw a scam in their house in The Bahamas and they were just like, “no one seems to be calling us out on it.”

Jon: You don’t think, though, this seems very, it does seem or he understood the levers of power that he would have to co-opt to get himself–

Jay: As far as getting the left and the right?

Jon: –to grease those skids. Yeah. He went to the media outlets that would’ve reported on this. He went to the Agriculture Committee to try and co-op them, to get them from the SEC and to the, uh, CFTC. Like he – they did a lot that speaks of orchestration and not of coincidence.

Jay: It was that the Alameda side?

Jon: The Alameda side was just a hedge fund, but I mean, that was the engine by which he was, you know, feeding all that FTX money into, that’s why the exchange collapsed. But all the things that they did were very prescribed about gaining influence.

Henrik: He really understands the media landscape and how it’s changed because in the 90’s and early 2000’s we celebrated you for being like a rich douchebag. Like the show Cribs was like, “F***ing look how much money I got you idiots.”

Jon: Sure. Well, and Brett Easton Ellis and the whole American Psycho and all that s***.

Henrik: Exactly, “The greed is good.”

Jon: Yeah. 

Henrik: Like that was cool. 

Jon: Well, that was even earlier. That was, that was the Reagan era. That was Gordon Gecko.

Henrik: Well, listen, that’s my childhood. [JAY LAUGHS] I’m a big Reagan guy.

Jay: Henrik is one slick back away from actually believing all this stuff. Just you. [JON LAUGHS]

Henrik: If my hair gets any harder, I’m gonna start scamming people. [JAY LAUGHS] 

Jon: I like it.

Henrik: But I think he understands the media landscape now where being like, “I’m a f***ing douche bag. I love money,” that doesn’t fly anymore. And there’s like fake altruism that you just, you just sprinkle a little layer on like, “actually I’m doing this because it’s good.” 

Jon: But how the f*** does anybody not go, “You mean like the robber barons?”

Jay: Yeah. 

Jon: Like that, what’s different from that and Vanderbilt and Rockefeller. Rockefeller was like, I, “Yeah, I’m gonna f***ing exploit this resource but I’m also gonna buy an island and turn it into a bird park.”

Jay: The big difference for me is that at least steel was tangible. At least we have buildings.

Henrik: We have railroads.

Jon: Right. The value of it, you know, is in its utility. And crypto the value of it is just in its ability to make you believe you too can get wildly rich.

Jay: The ability to make athletes look stupid for putting their signing bonus in crypto.

Jon: Boy you’re not kidding.

Henrik: Like you said, it’s the same scam over and over again, just with like a different box to put money in. It feels like, if regulators had like a transparency with a mustache and a top hat and they just like held it up over him. They’d be like, “Oh, it’s this.” [LAUGHTER]

Jon: Oh my God. That should be the test. Well this is, this has been marvelous. I wish you all, am I gonna see you guys before Christmas and New Years and all those things?

Henrik: I’ll swing by. [HENRIK AND JAY LAUGH]

Jon: Thank you. Can I tell you one quick story though before we go?

Henrik: Please.

Jon: Uh, so Nate and I, my son Nate and I, we’d love to go to the Knick games and we always have a great time. Um, and generally, like I’ll, I know a guy up there at MSG and I’ll text him or call him and just be like, “Hey man, you know, we were thinking of a game, do you have any tickets available?” He texts me the other day, “Hey man, couple of tickets opened up. Great seats. Knicks, Cavs. You want to go?” As I said, “Nate, like you wanna go? It’s a Sunday night game. It’s six o’clock. It’s, yeah, let’s do it.” I think it was on Saturday he told me, drive up. Uh, we get in the thing, we get down to our seats. I’m looking around and I’m like, there’s six dudes on the court by the color guard with Yarmulkes on. And I’m like, what’s, what’s happening here? I look up, it’s like the Singing Maccabees. They’re the only Jewish acapella group. They do the national anthem. I realize it’s Jewish Appreciation Night at Madison Square Garden. [JAY LAUGHS]

Jon: This motherf***er – 

Jay: No.  

Jon: Without telling me, is like, “hey man, wanna come to a game?” And then I go, and it’s not a game, it’s a seder. It’s, it’s a f***ing, [JAY LAUGHS] and like the whole time I was like wait, is that why you,–

Henrik: You weren’t, you weren’t invited, you were cast. [JAY LAUGHS]

Jon: Right? That’s, wait, you called me because you thought, “oh well the other Jews here, he’ll be fine.”

Jay: Adam Silver said “we going, we going [JON AND HENRIK LAUGH] put some things straight. We’re gonna set some stuff straight this weekend.”

Henrik: “We are distinguishing ourselves from the other New York team.” [JAY LAUGHS]

Jon: So the other guy next to me was Amar’e Stoudemire, who is the world’s tallest Jew. 

Jay: Yes and the, and former Knicks player.

Jon: And former Knicks player.

Jay: Love Amar’e Stoudemire.

Jon: It all converged, but man, would I have loved a heads up on that one.

Henrik: Jay and I recently went to a Nets game and it was, uh, Filipino-American Appreciation Night, but they didn’t have an acapella group.

Jon: What?!

Jay: They did not have an acapella group, but they did, it was Kyrie and Ben Simmons first game where they kind of looked like they had played basketball before. So that was, that was nice.

Jon: And that was to show their appreciation. 

Jay: No John Morant though. This is us complaining.

Jon: This was, you saw, Nets Grizzlies?

Henrik: Yeah. And we were excited to see John Morant fly.

Jay: The text Henrik sent–

Jon: Maybe the most exciting player–

Henrik: Yeah.

Jon: –in the NBA at present. 

Henrik: He’s unbelievable to watch.

Jay: We got to see him dress comfy. [HENRIK LAUGHS]

Jon: And there’s no question why the Knicks got the third pick and not the second pick, because that is the Knick’s lot in life, is to finally get in the lottery to finally get that high pick and just be one pick away from John Morant. 

Henrik: Imagine him at the Garden jumping over people.

Jon: Oh, Jesus. I can’t even, don’t even, alright. [JAY LAUGHS] On that note, I’m gonna get out of here. [HENRIK LAUGHS] That is our show for God’s sakes. Jay, Henrik, thank you for being here David Dayen, and thank you for joining us. Check out The Problem it airs right now on Apple TV+. And, uh, enjoy yourselves and we’ll see you next week for our, I think it’s, next week is our year end wrap up in review podcast extraordinare extravaganza. Uh, it’s gonna be a lot of fun. We got some nice guests coming in, so join us for that. See ya. 

Henrik: Thank you, it was a blast. 

Jay: Bye. 

[OUTRO MUSIC]

Jon: “The Problem with Jon Stewart Podcast” is an Apple TV+ podcast and a joint Busboy Production.

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