Understanding the Crypto Dudebro Fraud Phenomenon
'Easy Money' by Ben McKenzie and Jacob Silverman is a peek behind the Dorito-crumbed curtain
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I had been waiting for a book exactly like this one. Not just ‘what is crypto’ or even ‘what happened’, but specifically ‘why did it happen like this?’ Easy Money: Cryptocurrency, casino capitalism, and the golden age of fraud delivered exactly what I hoped it might. Yes, it explains the blockchain and original big promises of the technology (to free us from traditional banking and finance institutions, or ‘TradFi’, as the cryptobros liked to call it) and it does explain how the house of cards came tumbling down. Rather exhilaratingly, it tracks the biggest scandals right through until early 2023, which is an impressively tight publishing turnaround time. But best of all I now feel I understand why, specifically, of all the phenomenon that might have gained a chokehold on a particular segment of the population at a particular time, crypto had the throats of young men around the world these last few years.
It’s funny that the author is, in his own words, a random middle-aged and slightly depressed actor with an old economics degree. I missed the OC craze. I can recognise the actors’ faces because I was in highschool when it premiered and ran but the name ‘Ben McKenzie’ didn’t mean anything to me. ‘Ryan from the OC’, however, definitely did. I like to keep an open mind about people having books in them. (In my world view the ‘anyone can cook’ line from Ratatouille applies equally to ‘anyone can write’.) McKenzie is delightfully self-aware throughout this book. (‘One day I will win that damn surfboard,’ he says, about being nominated six times for a Teen Choice Award.) He makes frequent but not-too-frequent references to his status as an amateur investigative journalist, and he appears happy to be honest about when he got help and who he got it from. I don’t know the extent to which Jacob Silverman co-authored this (the word ‘with’ instead of ‘and’ can mean a lot of different things or nothing at all) but I know Silverman isn’t really doing publicity for the book.
Regardless, what is even better than McKenzie’s humorous mea culpas, is the fact that his celebrity status specifically as a former teenage heartthrob appears to give him a strategic ‘edge’. Not only are top dogs in the world of crypto giving him interviews, but people are often underestimating him. I know from great experience how useful it can be when an egotistical interviewee has underestimated you as a journalist. In other words, I’m not sure if more or fewer people will pick up this book because of McKenzie’s fame, but I’m sure the content is better for it.
I care very little about the tech involved in cryptocurrency. You know why? Barely anybody does. There were historical arguments about it being a potentially revolutionary way to escape the grasp of the evil TradFi big banks by decentralising money transfers, but that’s not what people actually did with crypto. What they did with it was trade and gamble. The things that made me specifically interested in reading about the phenomenon were the societal causes and effects. Why were young men in particular so evangelical about it? There was a year or two around 2021 in particular when criticising—or even questioning—cryptocurrency would see you receive irate spittle from men online. These cryptobros were evangelical about their leaders and fervent in their belief in the blockchain being the future. In 2021 I heard of a lot of girlfriends and wives who were seriously concerned about how much their male partners were losing on the trading apps. To suggest it was a bubble that would eventually burst —as all bubbles do—would whip them up into a frenzy. Why so defensive?
In the very early pages of Easy Money McKenzie raises the argument that trust in institutions is at an all-time low. He’s writing in an American context, but we can extrapolate. After the 2008 crash when regular folks had been screwed and banks had been bailed out, ‘a powerful narrative developed’. Cryptocurrency fit into that narrative, not as the knight in shining armour itself, but as the special tool that would let every man becoming a knight in shining armour himself. ‘An estimated forty million Americans and hundreds of millions worldwide—disproportionately young and male—were drawn into the speculative frenzy.’ Almost all of them lost more than they gained.
In a strange structural choice, the other part of the explanation for crypto’s gendered appeal then sits at the very end of the book. There is plenty of evidence to suggest that trading in crypto has all the same psychological markers as gambling, and McKenzie presents a compelling analogy to the boom in online poker and sports betting in recent years. Both crypto and sports betting share a low barrier to entry, 24hr access, and a packaged sense of community for the ‘coveted young male demographic’. In America alone, sports betting went from being worth $5 billion in 2018 to over $57 billion in 2021. In late 2020 and 2021 when COVID had shut down sports in real-life, ‘a different bright shiny object appeared to be wagered on’. McKenzie speaks to people who run a ‘boutique addiction service’ in New York City who said the crypto addicts were all men under forty and ‘crypto appeared even more addictive than traditional gambling’ because it had the semblance of being a system that, with enough research, you could genuinely ‘win’. Most addicts did not consider themselves ‘addicts’, but ‘investors’, and ‘inside crypto’s hyper-masculine culture, complaining about losses is verboten, considered a sign of weakness.’
Matt Damon did a Superbowl ad in 2021 that basically coward-shamed you if you didn’t jump on the bandwagon. ‘Embrace the moment and commit,’ he says, ‘…four simple words that have been whispered by the intrepid since the time of the Romans: fortune favours the brave.’ (Lol; the Romans.) Watch it now and feel your jaw drop. Sports stars in particular—Tom Brady, LeBron James, and Aaron Rodgers—all promoted different exchanges and apps as being ‘the future of finance’. The crypto community had its own language and shit-tier meme humour. Crypto owners were ‘largely young men trading alone from their phones or computer screens, some of them steeped in trollish internet subcultures or libertarian political forums’. According to a PEW study over 40% of men aged 18-29 had bought or traded crypto. They were in it together. The ones who bought LUNA tokens, for example, called themselves Lunatics, and the creator Do Kwon named his daughter Luna, Tweeting ‘My dearest creation named after my greatest invention.’ (Kwon has subsequently been charged with fraud and LUNA is worth almost nothing.) The guys behind Three Arrows Capital bought a $50 million yacht and called it Much Wow, and an NFT artwork called CryptoDickbutt#1462. As you can imagine, I could go on; Easy Money does.
McKenzie points out all the ways this ‘community’ actually resembled a multi-level marketing scheme (‘MLM’). Many of the most famous MLMs, such as Avon and Mary Kay, are targeted towards women. Lately, for example, we’ve seen a lot of essential oils ones doing the rounds. These schemes and the people who get sucked into them are easy to dismiss, but accuse a cryptobro of being an MLM pawn and watch his fingers dance in rage across his keyboard. The promise, for example, that crypto could free you by helping you get away from the big banks, was an act. As McKenzie writes, ‘the decentralised utopia promised by crypto leaders seemed not only unachievable, but in many cases a deliberate deception.’ Instead of redistributing power from regulated organisations, the power was concentrated into a small number of private hands. But the podcasts kept coming, and the celebrities kept endorsing, and even traditional media outlets bought the hype. Puff pieces about key players appeared across the Fortune and Bloomberg covers. In 2022 SXSW held a giant crypto convention thing. That was just last year! McKenzie and Silverman walked around there and ‘nearly everyone’ they spoke to had been scammed at some stage. It was a rite of passage or accepted cost of entry ‘to an unfettered market defined by financial freedom.’ The truth, as McKenzie very satisfyingly makes clear, was that ‘Constantly preaching idea of community, democratic empowerment, and individual liberty, crypto’s leaders and influencers had instead created an anarchic set of markets that invariably funnelled money from information-poor retail investors to well-connected insiders and whales.’
The bigger fight McKenzie has is with all the enablers. The sections on Sam Bankman-Fried’s donations to political parties are as shocking as they are compelling. Now that we are all watching the Bankman-Fried trial, seeing the evidence coming out each week about exactly how much of the entire industry was based on deception and puffery, the questions are bigger than one fall guy: who enabled all this? Where did the billions actually go? If the vast majority of regular people caught up in this were losers, where are the winners?
What I didn’t expect from Easy Money was to be confronted with a philosophical, existential question I needed to sit with; I didn’t have any sympathy for the people who lost their money to crypto. There is a particular type of arrogance required for belief in conspiracy theories and ‘get rich quick’ schemes, and if a person thinks so much of themselves—that they have special knowledge others don’t—then they deserve the fall that inevitably follows the peak of the ego’s exercise. But in the chapter comparing crypto to gambling, McKenzie speaks to that addiction help service and notes that gamblers have the highest suicide rate of any addiction. I do hate the gambling industry. Regular News & Reviews readers will know that. I have huge sympathy for people struggling with that addiction.
There was a racial and class-based component too; according to one study, 44% of regular crypto traders—the people who lost their money—were people of colour. ‘Many had been excluded from the mainstream financial system and saw crypto as a way of creating generational wealth.’ Specific celebrities and specific ad campaigns and schemes sold them this vision. Bitcoin Academy, for example, was a collaboration between former Twitter CEO Jack Dorsey and Jay-Z. ‘The project attempted to educate residents of the Marcy Houses, the housing development in Brooklyn where Shawn Carter (aka Jay-Z) grew up, on the wonders of Bitcoin.’ The announcement about Bitcoin Academy spoke to a particular section of the American population and exploited their very real financial and historical struggles. When it launched on 9 June 2022 Bitcoin was worth over $30,000 per coin. By 20 June 2022 it was worth less than $20,000 per coin. If you had believed the hype you would have lost a third of your money in about a week.
Crypto is basically a Ponzi scheme.
‘The premise of a traditional Ponzi scheme is quite simple: a fraudster promises investors he can produce incredible returns if they give him money to invest on their behalf. Instead of legitimately investing that money, the con man pretends to have generated profits and uses that story to lure in more investors. He pays the original investors off with the money from the new ones (See? It works!), while pocketing a good chunk himself for his trouble. The cycle then repeats itself over and over again, drawing in ever more investors, until ultimately it fals apart. Either the supply of new investors dries up, or worse, the current ones wise up to the fraud and demand their money back, only to discover it isn’t there.’
Bernie Madoff is the most famous Ponzi fraudster. His plan had been rolling along for decades until 2008 undid him, when people started trying to get their money back because they got nervous about the markets in general. I didn’t realise until I read Easy Money money that: a) many of the power players owned both the coins and the exchanges, meaning they could easily manipulate the market; b) that they frequently did lie to the general public about how many of the good-looking trades were actually taking place; c) when regular people tried to get their money out they would experience errors and tech crashes that prevented them from doing so; and d) getting ‘hacked’ was an accepted part of the system, and millions of dollars ‘worth’ of crypto would regularly but unpredictably disappear to who-the-fuck knows where.
Truly. Tether added language to their terms of service ‘that practically gave them the right to refuse redemptions for any reasons’. In other words, they could keep your money if they wanted. And they did want. I have huge sympathy for the people whose lives were shattered in the 2008 crash, and I loathe the bankers who walked away. Easy Money wasn’t just an entertaining read, it challenged me to re-think my own winners-versus-losers narrative. Overall an excellent book; anyone can write!
This book did not initially appeal to me. At all. But, after reading your review, I've added it to my list! I also had no sympathy for those that were scammed, so interested to see if I change my mind after reading this.
Very interesting!
This also makes me think of the book “Cultish: The Language of Fanaticism” by Amanda Montell, and how language is used to ensnare and control people by playing into their optimism for a better life or situation. Apparently, people who are naturally sceptical are much less likely to fall for “cultish” language and the promises that come with it. I wonder if these cryptobros are so into it because they see it as an easy way to success, so many of their peers are doing it so it must be legit, and they find a sense of community where they are otherwise struggling to connect. Which seem to be similar to the gambling world too. And Emma Pegrum’s comment from above is super interesting about her partner’s friend and his motivation!!