This is Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio.
Well, Tim, as you know. In twenty twenty one, crypto went mainstream, with the likes of celebrities from Tom Brady to Matt Damon endorsing it. Investment funds were buying it. TV ads hailed it as the future of money, and retail traders were making fortune off of dogecoin, which was originally created as a joke in twenty thirteen. So was it all just a game of epic proportions? While a new book by Bloomberg's own Zeke Fox dives deep into this,
it's called Number Go Up. Inside Crypto's wild rise and staggering Fall. He went on a quest spanning across the world to understand what's behind the crypto bubble. He brings readers inside Sam Bankman Freed's penthouse as the fallen Crypto King faced imminent arrest, but he also discovered the crypto hell on the other side of his spam text, where he uncovers a crypto powered human trafficking ring in camb Bodia.
It's really fascinating. Zeke's I were very plas pleased to have Zeke Fox here Financial Investigations and reporter here at Bloomberg News. He's here with us in the Bloomberg Interactive Broker Studio. So it's hard to figure out where exactly to start off. But what was the motivation obviously of going into this and how long it took you to sort of span across the world to write this book.
So Ever, since I was like a kid, I wanted to write like a crazy nonfiction story like I loved like John Krackauers Into Thin Air or Ben Mezrich's Bringing down the House about the Mt. Blackjack kids. But I never found a story crazy enough to turn into a whole book, because the last thing I want to do
is bore anyone. And I got once. I was kind of resistant to crypto, but as once I jumped in, I started meeting all these like wild billionaires and hustlers and con men and scammers and like at some point maybe when I found myself on one crypto crazy crypto billionaire's yacht off the Bahamas, I was like, wait, this is the adventure, Like you're on it right now, this is what you got to write about. And I've ended
up spending two years going down this rabbit hole. And yeah, I don't know that the world will ever see a financial mania like this like ever again.
And we're still in the midst of it too. I mean, we see big moves in crypto, not like we saw a couple of years ago, zeeke. But you know we're not We're not done talking about crypto at this point. There's a lot that that sticks out to me from the book, but there's this one quote that I want to read to our audience. From the beginning, I had thought that crypto was pretty dumb, and it turned out
to be even dumber than I imagined. So even after spending years working on this book, talking to crypto billionaires, diving into these cryptocurrencies, you still think crypto's dumb.
I think that if you anyone who's lived through like these last couple of years, I don't think we can just like memory hole that like all. I went to the one of the first places I went was Bitcoin twenty, this big conference in me at Miami, right after COVID restrictions.
When where everybody got COVID.
Yes not me. I became convinced after that that I was immune to COVID and I would never get COVID, but pretty soon after that I did get COVID. But like I'm meeting, some of these guys were really legit at the time. Like I met Celsius's Alex Mathschinski. He was like talking to everybody and he was promising eighteen percent yields if you deposited your savings with his company.
And he told me when we met, somebody's lying. Either the banks are lying that they can only pay zero percent or Celsius is lying that we can safely deliver eighteen percent. And like a couple of weeks ago, he got arrested. Just like a huge number of the founders that I met have are now facing lawsuits or bankruptcy or criminal charges. So well, I do think they're probably
is some good cryptocurrency company out there. I'm not going to be the one to spend the effort to sift through like another giant pile of scammers to find it.
Something that struck me too, because you did travel to all these different hotspots, from you're in Manhattan to Miami, you're in Bahamas, like you mentioned earlier, El Salvador, to the Philippines, and so you were talking about how that you did see a lot of empty hype and a lot of scams. And what struck me was this new kind of investment fraud that you found where it often started with a text, and it was a scam called
pig butchering. Explain what that is and how that actually ended up happening to you.
So, pig butchering is when someone approaches you with the spam text, like we all get them, and it's like, hey, Dave, did you get the milk for the cat on your way home? Like they don't, they're like a little off right, but if you write back, they'll try to make friends with you, and they'll often the person at the other end will pretend to be like an attractive young Asian woman and they'll start dropping hints about they didn't have a rich uncle who's able to make these really profitable
crypto trades. And I started I got one of these texts and started playing along and developed a penpal friendship with this person who was saying their name was Vicky Ho And she eventually told me, hey, by one hundred tethers, which are like a mainstream stable coin you can get on coinbase or crypto dot com or any of the like normal crypto apps and send them to this other crypto app called zbxs, And Vicky promised me that if I did that, she was going to introduce me to
profitable short term node trades that would generate reliable thirty percent returns. And like, we all know this is nonsense, but in this like crypto world, like where for a couple years it seemed like anything was possible. A lot of people were falling for this. People sent in hundreds of thousands, millions of dollars. One expert that I spoke to estimated that ten billion dollars have been lost to these crypto romance scams. And the crypto plays two roles
in it. One is it's like it's the story that gets people to send their money. And the other thing is that you can go on crypto exchanges, acquire these tether tokens very easily, and then zap them over and you'll never get them back. It's anonymous, there's no way for the authorities to trace them.
This portion of the book that Jessica it just is referring to is from was in the book, but we also were able to get you to talk to us about it. A couple of weeks ago, Zeke was featured in the August twenty first issue of Bloomberg Business Week. Excerpted in there you also you know, I got to tell you. After our conversation and reading that excerpt, Zeke I stopped. I started thinking about those spam texts in a completely different way because it's really ugly the truth there.
I mean, you spoke to somebody who had escaped from essentially prison or slavery indentured servitude by cobbling together an iPhone, making an iPhone work by essentially hot wiring it.
Yeah, so that is the really dark part is that the people on the other end of these texts are often.
It's not VICKI.
Yeah, they're like Vicky disappeared, never never found out who she was. But what I did find out is that a lot of the people sending these messages there are people from Southeast Asia who've been tricked into traveling to Cambodia and then trapped and like, legitimately sounds like a conspiracy theory, but I've seen it with my own eyes, huge like office towers filled with floor after a floor of people who are sending these spam text messages around
the clock. So that the person that sent you that kind of nonsense text, like it's not a bot, it could be someone who is being threatened with beatings of the torture, who would have who can't leave this job without paying a ransom, And like you said, yeah, well, I spoke to Twee, who was victimized in this way and had raised money for the ransom from a YouTuber.
And when I spoke to him, he returned to Ho Chi Minh City and Vietnam, and he told this crazy yeah mcguy verage story about how he was able to get an iPhone and charge it using no tools and a fluorescent.
Lamp, and he had to smuggle the iPhone in.
So his story was that he had stolen it from the guards, but not the charger. He had secreted it inside himself, a trick that he learned in prison, and that he when he was alone, he took this iPhone apart and peeled out the battery and then hot wired it to a fluorescent lamp. And so very respectfully, when we were together in Vietnam, I was like, tweet, I don't think you can do that. Like you're like, I'm very sorry for what you went through, but like are
you shit, is that really true? And he was like, I'll show you right now. We bought an iPhone. He took it apart with no tools, took apart a led lamp in my hotel room, wired the battery to this lamp, charged it and turned it right on. Uh yeah, I was. I was floored.
Wow.
We're very pleased to continue our conversation right now with Zeke Fox. He's financial investigation reporter for Bloomberg News. He's with us in the Bloomberg Interactive at Broker's studio. He's got a brand new book out. It's out today. You've seen the excerpts everywhere, including in Bloomberg BusinessWeek magazine. It's called Number Go Up. Inside Crypto's Wild Rise and Staggering Falls. Zeke's right here with us in the Bloomberg Interactive Broker's studio.
Zeke the board Ape yacht club. Everybody was doing this a few years ago. And by everybody, I mean if you had like tens of millions or hundreds of millions of dollars, you were a celebrity. Maybe you went on Jimmy Fallon and talked about a board ape, what are these things? And you actually bought.
One yeah, I mean so much of this crypto boom was just like pretty silly. And one of the silliest parts that I really liked was the board Ape Yacht Club. And these are like cartoon images of monkeys, and it's like a jpeg. You can see it, you can you can download it, you can have it on your computer. But if you want to have the right to say that you own this particular cartoon image of a monkey on the blockchain, you got to pay five hundred thousand
dollars something like that. And for a while a lot of celebrities were doing it like great question. Well, basically if you were a celebrity. First of all, there's some accusations that celebrities may not have paid. I think they mostly deny it, but there's some accusations that there were discounts to be had, but set that aside. Basically for a while, it's hard to imagine now this was only
like a year ago. It was cool to be like with it and to change your name to like like Jimmy Fallon on Twitter became Jimmy maybe like Jimmy Fallon dot ether and then he picked yes to show that you're like, you're with it. You know about the future of finance, and you make your profile picture one of these monkeys, and like I I yeah, we all laugh at.
It and see a lot of those these days. I'll tell you that that's true.
Yeah, a lot the celebrities have mostly taken them off. But I got a lot of people were giving me a lot of a hard time in crypto world. I go to these conferences and a lot of people would ask me, what do you got? What's in your portfolio? And you know, at first I tried to explain, like, hey, the you know, presidential biographers, they're never the president. Sports writers can't hit a fastball. But they didn't like this answer, and I was like, you know what, maybe there's something
I am missing. I gotta try this out for myself. And if I'm going to try it, I want to go straight for the top. I want to join the bard Ape Yacht Club. And luckily, even though the good ones cost five hundred grand, there was sort of a bored ape derivative called a mutant ape. Now these were same idea little jpeg picture of a monkey, but sort of melted because it had drunk some sort of vile potion or something. Yeah, so it's like an even uglier picture,
and I was able. I sat down with my wife and I was like, Nikki, for the book, is there something important I got to talk with you about? Like my research has taken me to a weird place. And it turns out that in order to go to this party is a week long party headlined by Snoop and Eminem where I would get to meet elite crypto traders, join letter like Inner Synctum and see what's really going on. You had to have a board, ay to go to
the party, and I'd really like to buy one. And then like, okay, I'm like, so how much do you how much do you think I'm about to ask you for? Because I kind of was curious. She's like, well, like you sat me down, it's probably like at least five grand, and I'm like it's forty thousand dollars and I was just trying not to laugh. And the way book publishing works, you get paid in advance, so I had this money, but like, like, we this is a lot of money.
Just pay for a year of college. Now couple of weeks like college you so like Nikki's face contorted into this look of horror, but she's really supported of the project. She saw that this was important and that it would be the reader would want me to do it, And so I bought this uh mute and ape and it was it was actually I named him doctor Scum. He had a sweater made of maggots. And there's a lot of in this NFT world. There's a lot of like talk of community, and so I was all, I'm like,
I'm gonna go for it. I'm joining the community. I came up with it. I named him doctor Scum, and I said that he would get superpowers by smoking weed. But there were a lot of problems with this plan which I learned, which first of all, you have to to buy the n f T. You have to use like you have to actually do crypto. This means like when you go on coin base or Robinhood that's not really doing crypto. You need to like buy these coins and send them to meta mask like a crypto wallet.
And I like, it's a owunce real legit right now, maybe you've heard about it. What this means in practice is that your money lives Like in Google Chrome, there's like a red icon where you have the ad block near the URL. Then that you install another icon that's a picture of a fox and when you install this icon, it makes you watch a video they say this this I'm not making this up. They they're like, if you lose this password, your money will be gone, and they
make it in the video. They're like, engrave this password on a metal disk and bury it in your backyard. And I'm like, okay, I'm not.
Doing that New York's backyard.
Yeah sure, but like it was so terrifying to send my By the time I bought it, the price had crashed to twenty thousand, which was kind of good but also scary. So I had to send my twenty thousand from Bank of America to the Foxhead icon and like Bank of America called me. They're like, we think you're being scammed. Are you sure you want to do this? And I was like, I've never appreciated the banking system more. Yes, I am being scammed and I want to do it. So when I when I got to the to the
eight Fest, it was a bunch of drunk dudes. There were it was I mean, it's a good party. Snoop and Eminem were really there, but like everyone's wasted. Everybody stoned. Nobody wants to hear about doctor Scum.
Uh.
People act like I'm not cool because my ape sucks. It's the cheapest one, even like pimply teenagers have way better apes, like million dollar apes. And I did. But I did see Jimmy fallon there, and since the prices had crashed recently, I wanted to talk with him, so I went he went behind like the velvet rope and was like, hey, Jimmy, check out doctor Scum. He was like, gave me like a pretend interested look, and then I was like, hey, man, like you had a whole segment
on your show promoting these with like Paris Hiltan. You know, now everyone's lost, like real money. And he was, what do you say? He was just like, oh, I did it for the community.
I was like, all right, all right, and you know, no, you don't have doctor Scum anymore.
Zeke unloaded him at a two thousand dollars loss. Never been so happy.
All right, Hey, this and more in Zeke's brand new book, Number Go Up. Inside Crypto's Wild Rise and Stagger and Fall. Zeke Fox's financial investigations reporter for Bloomberg News. His new book Number Go Up It is out today. You can buy it anywhere you get your books. You're listening and watching Bloomberg BusinessWeek