It’s probably wise to avoid celebrity advice on money, but The O.C.’s Ben McKenzie has a point.
Emily Stewart covers business and economics for Vox and writes the newsletter The Big Squeeze, examining the ways ordinary people are being squeezed under capitalism. Before joining Vox, she worked for TheStreet.
Ben McKenzie thinks you should not listen to famous people when it comes to crypto. Except for him.
When other celebrities like Tom Brady and Matt Damon were out there pushing regular investors to ride the digital investing wave, McKenzie — perhaps best known to many as Ryan Atwood on The O.C. — was moving in the opposite direction, warning them to steer clear. It’s not like the industry was banging down his door to appear in their Super Bowl ads in February 2022, anyway. “I wasn’t famous enough to get the offers, so I can’t say I was ever tempted,” he says. “No one came to me and was like, ‘Hey, would you like an extraordinary amount of real money to go and do an ad where you convince people to take their real money and turn it into something else?’”
Regardless, the former Gotham star appears to have wound up on the right side of the most recent crypto craze.
Many of the high-flying companies, projects, and people in the crypto space in this latest boom-and-bust cycle have since crashed and burned. Others are still holding on, but they’re under increasing regulatory and legal scrutiny.
The price of bitcoin isn’t anywhere near its almost $70,000 peak — it’s currently hovering around $30,000. That’s not zero, though, or even below the $10,000 mark McKenzie bet a friend it would be at by the end of 2021. In his recently released book, Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud, written alongside co-author and journalist Jacob Silverman, McKenzie says he’s shorted — meaning bet against — cryptocurrencies as well as companies whose activities he considers not to be above board. He says he calls it “investing in fraud.”
So why should you care what Ben McKenzie thinks about crypto? The short answer is … I don’t exactly know. As a general rule, people probably shouldn’t listen to celebrities about money. McKenzie’s answer is that he studied economics as an undergraduate, so he knows about money, and he’s an actor, so he knows about lying. He’s testified about crypto before Congress, too. And he’s not trying to get you to buy anything (except maybe his book).
Whatever the case, McKenzie, 44, has now fashioned himself as the famous face of the crypto skepticism movement. I spoke with him for about an hour in mid-July about his theory on the case of crypto, his experiences looking into it, and why he hopes people will pay attention.
Can Ryan Atwood sell you on anti-crypto? He thinks so.
For those of us of a certain generation, McKenzie is best known for playing the bad-boy character Ryan Atwood on The O.C., a mid-aughts drama about the trials and tribulations of California teens. Think HBO’s Euphoria, but 20 years earlier and allowed on broadcast TV. McKenzie has since managed to distance himself from The O.C. somewhat, though he’s not severing ties entirely. In our conversation, he referred to Sam Bankman-Fried, the disgraced founder of collapsed crypto platform FTX, as the “Ryan Atwood, the pin-up boy, of crypto.”
McKenzie’s story of his crypto journey goes a little something like this: He was a bored, middle-aged dad stuck at home during the pandemic and, like a lot of people, thought about getting into investing. Previously, he’d mainly been in real estate. “I saw these knuckleheads getting rich … Joe Schmo made $10 million overnight on a crypto coin named after a dog or whatever,” he says.
When he started looking at crypto more closely, in part at a friend’s urging, it didn’t pass the smell test. “The words didn’t make any sense. Like they weren’t currencies, they weren’t being used like currencies. They were investments, but then if they were investments, they were unregulated,” he says. “So it actually started with words, which I think is fitting because, you know, I’m a storyteller.”
He eventually embarked on a two-year project investigating the industry alongside Silverman, a Brooklyn-based journalist. They met with Bankman-Fried and other prominent crypto industry figures, interviewed lawmakers in Washington, DC, and even traveled to El Salvador to look into its bitcoin endeavors.
McKenzie’s theory of the case is that the combination of the Federal Reserve pumping up the economy and asset values — hence the title “easy money” — combined with the pandemic led to rampant fraud, particularly in crypto. “It’s not a single Ponzi. It’s like multiple different little Ponzis that all sort of coalesce, maybe like the Russian nesting doll of Ponzis,” he says. “You’re creating fake money, and you’re distributing it through unregulated, unlicensed exchanges, which are effectively casinos overseas.” He compares it to online poker, which he thinks the origination of bitcoin may be rooted in, though his evidence is limited.
Some of McKenzie’s anecdotes on his crypto journey are eye-popping. Alex Mashinsky, the CEO of failed crypto lending platform Celsius who has since been arrested for alleged fraud, told McKenzie he thought only 10 to 15 percent of the money in crypto was real well before the crash. In his book, McKenzie tells tales of a confusing encounter with men who purported to be from the CIA and of exchanging DMs with Bankman-Fried claiming FTX’s customer deposits would eventually be backed by the federal government. In our conversation, he described a bitcoin advocate telling him that he’d lost his bitcoin in a “boating accident,” a trope in the industry meaning that oops, the bitcoin disappeared just as the IRS was coming to collect taxes.
“Unfortunately, in crypto, this stuff happens all the time. So if I started turning to law enforcement being like, ‘This guy, this guy, this guy,’ I would run out of fingers, I would run out of time,” McKenzie says. “There’s just too much scamming going on.”
The shit has indeed hit the fan in much of crypto
The most recent crypto bubble has largely popped. Big-name companies have failed. Cryptocurrency prices are well off their highs. Bored Apes are going the way of Beanie Babies. A lot of what went on has been revealed to be alleged fraud, which is really a tale as old as time.
I asked McKenzie if he was surprised about how all of this went, specifically about FTX’s Bankman-Fried, who a year ago was the industry’s brightest star. “I’m surprised with how obvious the alleged scam was and how stupid, quite frankly. I was not prepared for that,” McKenzie says, noting that he interviewed Bankman-Fried, who is currently under house arrest awaiting trial for a number of charges, last year. What Bankman-Fried told him at the time didn’t really make sense, but he also didn’t have proof that he’d committed any crimes. “There were multiple red flags … I just suspected that he was full of it,” he says. “I wasn’t going to accuse him of anything I couldn’t prove.”
It’s a relatable sentiment. Plenty of critics, observers, and journalists — myself included — feel a little bad they didn’t look more closely under the hood at FTX for so long. It’s unclear what even would have made a difference. Would Ben McKenzie calling FTX a scam have done the trick? Would anyone have listened? Maybe it’s a lesson for next time.
Tether, the cryptocurrency known as a stablecoin that’s supposed to be pegged to the dollar, may be the bee that’s gotten into McKenzie’s bonnet. He’s not an outlier — plenty of people have for years questioned exactly how Tether is pulling off that dollar peg and what’s on its balance sheet. Despite the skepticism, it’s still plugging along.
McKenzie thinks in crypto, broadly, the worst is yet to come. “My thesis is we still haven’t seen the full collapse yet, because we haven’t gotten anywhere near getting rid of the fraud that’s embedded in the system,” he says.
Probably still don’t listen to celebrities about money
It would be unwise to write crypto’s obituary right now — it has supposedly died and been revived plenty of times in the past. It’s by no means thriving. A lot of the buzz around it has been supplanted by the current hype around artificial intelligence. AI guys are the new crypto guys.
If the crypto industry is in an odd spot right now, then so are its critics. It’s awkward to sound the alarm when the fire is no longer blazing. The sense of urgency around the matter has diminished.
Beyond book sales and media appearances, McKenzie doesn’t really have a lot to gain from his anti-crypto crusade. He says he’s just trying to spread the message that crypto is dangerous and bad. When I asked him whether he feels like he’s won, given the sector’s contraction, he paused. “Winning might be the applicable term, if you’re talking about a zero-sum game, because there’s only winners and losers. It’s strictly competitive. But I don’t view life like that,” he says.
This was more about a journey to learn about crypto and money, to uncover flaws in the system and get an education, he adds. He doesn’t really care what happens to blockchain. “I do care about people becoming even less trusting of our system than they already are. I think it’s very dangerous,” he says. “And to the degree that crypto encourages that mistrust, and it does to a significant degree, and radicalizes people and makes them even more untrusting of their neighbors, I think it’s a very dangerous thing that we’re playing with.”
The gist of McKenzie’s argument makes sense. There is certainly a lot of fraud in the industry. On the non-fraudulent stuff, it’s often difficult to see a real point, at least for the broader public, at the moment. Whether he’s the guy people should be listening to on crypto is a separate matter. There are all sorts of questions around crypto: whether and how it should be regulated, what its actual benefits, if any, are. Nobody’s got all the answers here, including McKenzie.
I told McKenzie I don’t think the public should look to celebrities for information on crypto or money at all as a general rule. Why, then, should anyone listen to him?
“I spent two years investigating it. I believed that it was baloney,” he says. It’s certainly more time than the other celebrities hawking it spent. “I put my money where my mouth was both in terms of writing a book and investing and saying that this is going to blow up and I’m going to bet some of these companies are going to go down. And I’ve been right on both of those. So I’m not saying I couldn’t be wrong in the future, but thus far, I’ve been right.”
Source: vox.com
