Actor Ben McKenzie carved out a nice career in his two decades in television, playing a rookie cop on “Southland,” a young Commissioner Gordon in “Gotham,” and most famously, Ryan Atwood in the mid-2000s drama “The O.C.” But for the last few years, he’s worked as a part-time journalist and evangelist, trying to convince people that the cryptocurrency world is a giant scam. His new book is “Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud,” co-written with journalist Jacob Silverman.
McKenzie’s journey with crypto started during the early days of the COVID pandemic, when a buddy encouraged him to buy Bitcoin. And while he was unsure about the idea — this friend had once given McKenzie what he describes as “the worst financial advice of my life” — he considered it.
Then he stumbled upon the word “currency.” It set off the first alarm for McKenzie, who graduated from the University of Virginia with a degree in economics.
“You could trade [cryptocurrencies] and hope that they went up in value. … But I live in Brooklyn now, and if I went to my neighborhood deli and tried to buy a bagel with Bitcoin, they’d look at me like I was crazy. I actually tried this. They did. And so I was like, ‘If they’re not currencies … what are they?’ And they seem to be investments. But that's weird because they don't seem to be regulated very much. So it just took me down a rabbit hole.”
While the hope is that one day cryptocurrencies can be used to buy and sell goods, McKenzie says that right now, it’s just a narrative and represents an unstable source of money.
He points to the Silicon Valley banks that collapsed: “We saw the bank failures earlier this year. Three banks, all of whom have some tight ties to crypto, all went belly up. But people didn't lose their money because there's a thing called the FDIC and it insures your money.”
He further argues that cryptocurrency is based on a trustless form of money that relies on code — and is fallible.
“A code does not fall from the sky. People write code. And so when you say you're trusting the code or you're coding a trustless money, well, first of all, that's nonsense. You can't create trustless money because money is trust. So saying you want to create a trustless money is like saying you want to create a government-less government or religion-less religion. The words you're searching for are anarchy and cult.”
McKenzie uses the example of FTX Founder Sam Bankman-Fried, who allegedly ordered engineers to write backdoor code that allowed him to divert investor funds.
“I'm using the biggest air quotes you can possibly imagine if you could see me. [He borrowed] against his customers' money, basically [took] their money. So trusting the code, you're really trusting the people that write the code. And when you're in an unregulated marketplace, there's really nothing preventing them from stealing your money or very little preventing them from stealing your money.”
While writing “Easy Money,” McKenzie sat down with Bankman-Fried to talk about cryptocurrency. He details the interview in a chapter titled “The Emperor is Butt-Ass Naked,” inspired by the folktale “The Emperor's New Clothes.” The interview was strange, and as McKenzie explains, unsatisfying. The two discussed use cases for cryptocurrency and Bankman-Fried offered remittances as an example.
“I had just come from El Salvador, which is a country that is heavily reliant on remittances. And nobody was using the government system that they set out to encourage people to use crypto, because it doesn't work very well, because people were getting trotted. Shocker, shocker. He was pitching that as the way of making a global payment system.”
McKenzie continues, “Well, if it doesn't work, imagine Visa and MasterCard shut down totally. Everyone in the world can't use their credit cards all of a sudden, [it’s] like pandemonium.”
While McKenzie can’t explain Bankman-Fried’s motivations, he started studying fraud to make sense of it all. He points to the fraud triangle, which includes three components: need, opportunity, and rationalization.
“Need to commit fraud is important, but it can come from a mistake. Opportunity is essential, because [you aren’t] able to commit the fraud if [you] can't do it. The last one is rationalization. And the rationalization, I thought, was fascinating. That really stuck with me because no matter what Sam felt, what it felt to me was rationalizing. … He was like, ‘Yeah, it's not working now, but it will in the future.”
No one is immune from the allure of cryptocurrency, McKenzie mentions, pointing to a 2021 Pew Research Center survey that showed an estimated 16% of Americans had invested, used, or traded them. In conversation with the owners of a boutique addiction clinic, he learned that some traders are psychologically impacted.
“It's very similar to other addictions in the sense that you get this endorphin rush. And then … seeing the money go up and down on your screen is extremely addictive.”
He adds, “It didn't matter whether you are rich or middle-class or even working-class. It didn't matter if you had a ton of financial education. They said some of the most sophisticated people in finance, Wall Street guys, would come to them with crypto-gambling addictions. It wasn't just Wall Street guys with lots of money. It was also parents who were bringing in their children, their teenagers, who were gambling away their minimum wage job paychecks.”