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Tales from the world of cryptocurrency and casino capitalism

Bitcoin  logo displayed on mobile with representation of  Bitcoins cryptocurrencies seen in this photo illustration. on 17 January 2023 in Brussels, Belgium. (Photo illustration by Jonathan Raa/NurPhoto via Getty Images)
Bitcoin logo displayed on mobile with representation of Bitcoins cryptocurrencies seen in this photo illustration. on 17 January 2023 in Brussels, Belgium. (Photo illustration by Jonathan Raa/NurPhoto via Getty Images)

Just a couple of years ago, cryptocurrency seemed like an investment not to be missed:

“We had heard so many stories of people getting rich overnight on crypto that even like the craziest promises seemed kind of plausible,” Zeke Faux says.

But then came 2022 and the trillion-dollar crypto wipeout.

Now, crypto mogul Sam Bankman-Fried is expected to go to trial on fraud charges. We’re in the depths of crypto winter. $2 trillion in value wiped out last year.

Today, On Point: Tales from the world of cryptocurrency and casino capitalism.


Zeke Faux, investigative reporter for Bloomberg Businessweek. Author of “Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall.”

Book Excerpt


Excerpted from Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall by Zeke Faux. Copyright © 2023 by Zeke Faux. Excerpted by permission of Crown Currency, an imprint of Crown Publishing, a division of Penguin Random House LLC.


Part I

DEBORAH BECKER: Two weeks from today, perhaps the most well-known cryptocurrency billionaire faces trial on fraud charges. It’s been a spectacular fall for Sam Bankman-Fried, who was arrested 10 months ago, going from running one of the world’s largest cryptocurrency exchanges, FTX, from his $30 million Bahamas penthouse, to now sitting in a jail in Brooklyn.

Shortly after FTX filed for bankruptcy, Bankman-Freed said no one had been intentionally defrauded. There were just some management failures. Here’s what he told George Stephanopoulos on Good Morning America.

SAM BANKMAN-FRIED: I wasn’t spending any time or effort trying to manage risk on FTX. Trying, and that, that obviously —

GEORGE STEPHANOPOULOS: That’s a stunning admission.


STEPHANOPOULOS: That’s a pretty stunning admission.

BANKMAN-FRIED: Yeah, I mean it, I don’t know what to say. What happened. And if I had been, if I had been spending an hour a day thinking about risk management on FTX, I don’t think that would have happened. I think I stopped working as hard for a bit. Honestly, if I look back on myself, I think I got a little cocky, maybe more than a little bit.

BECKER: What Bankman-Fried banked on was the volume of people investing in crypto. Celebrity endorsements were used to try to convince people not to miss out on investing in digital currency. Celebrities like former Patriots quarterback Tom Brady urged others to use FTX, Bankman-Fried’s digital exchange.

Here’s Brady holding a portable flamethrower in an ad for FTX.

TOM BRADY: You don’t need a flamethrower to buy, sell, or trade Bitcoin and crypto safely. You just need FTX.

BECKER: The Justice Department is now reviewing those ads as the investigation continues into Bankman-Fried and other crypto moguls after the staggering fall of crypto with $2 trillion estimated to have been wiped out in the last year.

I’m Deborah Becker, in for Magna Chakrabarti, and this is On Point. Our guest this hour has spent some time talking with Sam Bankman-Fried and dozens of others for his new book about the cryptocurrency world. He spent years talking with those who won and those who lost in the complex digital currency universe.

Zeke Faux is an investigative reporter with Bloomberg Businessweek. He’s author of the new book titled “Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall.” Zeke Faux, welcome to On Point.

ZEKE FAUX: Thanks so much, Deborah.

BECKER: So you wrote in your book that you had done a piece about Sam Bankman-Fried earlier when FTX was still riding high in the crypto bubble, and that may have been why he agreed to talk with you again as his arrest was imminent.

Explain to us how that interview took place and tell us, who was Sam Bankman-Fried?

FAUX: I was fascinated by his story from the start. What really got me was that, here was a kid that when he was in college at MIT, he was really committed to this idea he wanted to do something good for the world.

And he met a philosopher who pitched him this idea of earning to give. He said, “Hey, you’ve been handing out pamphlets for this vegan group. Anyone could do that. You’re really smart. How about you get rich and then give that money away?” And then when I met him, it’s less than 10 years later. He’s 29 years old.

He’s one of the richest people in the world, and he’s saying that he did it all out of this motive of altruism. And yet he hadn’t really given very much away. So, I was really fascinated by this idea of whether he would follow through. Or whether he’d be corrupted by his quest to amass as much power and money as possible.

And, as you said, when things were going well, I flew down, I spent a couple days with him, I wrote a profile of him that was focused on that point, and not so much about, is there a giant fraud going on? And then, cut to only a few months later, now, FTX had failed. And there were $8 billion missing. And if you’re baffled by some of these cryptocurrency terms, it’s really, it’s not that complicated.

You can think of FTX as like an e-trade, but instead of buying Apple shares or Exxon, you’re buying Bitcoin or Dogecoin, you send them your money. You buy these coins, you trade them. And then later you ask for your money back. And what had happened was that a lot of customers had asked for their money back, they’d found it wasn’t there, there were $8 billion missing, it sure looked like a giant fraud had occurred, but Sam Bankman-Fried had yet to be arrested, he was holed up in his penthouse in the Bahamas, and I decided to fly down there and see his side of the story.

BECKER: And what did he tell you? So what was his defense here?

FAUX: So what he said was that, so what had happened was that he had this e-trade, this FTX, and then he also controlled a hedge fund called Alameda Research. And Alameda had borrowed the customer’s money from FTX and then gone and gambled it away. They’d spent tons of it on like this real estate spending spree in the Bahamas.

They’d been giving tons of political donations. They’d been, and it all looked like this had come from customer money. And what Sam told me, which was just truly bizarre. First off, I walk into this this $30 million penthouse, not part of the tour on the first profile, when he was trying to paint this picture of himself as someone who’s above caring about things like fancy apartments.

He famously liked to say he drove a Toyota Corolla and slept on a beanbag at his office.

BECKER: And he was doing it all just to give it away.

FAUX: Yes, so I walk into this penthouse, and the first thing that struck me were the shoes. There were just tons, this giant pile of shoes right at the entrance. And it was that all of these FTX employees, who had lived there, had fled the island in such haste that they left behind all their things.

And these are like, young kids who’d moved to, mostly Americans, who’d moved to Hong Kong with him, when he was running his company there, and then to the Bahamas, and when things started to look bad, they’d fled. And some of them had, they’d been in tears, they’d moved back with their parents, it’s really, imagine that. Your first job, and then it collapses just like that, it’s really, it’s really wild to see.

And Sam led me into the most modest room of this fancy apartment, and just started talking and going on and on about how he just hadn’t been paying attention. He had, he’d lost track. He hadn’t done anything intentionally wrong. But none of it seemed very credible to me. Because here’s someone who, even if you take him at his word that he was doing it all to give it all away, he’s someone who dedicated his life to making a lot of money.

And he was basically trying to tell me, “I wasn’t even paying attention to how much I had, I lost track.” And at one point he said that he’d misplaced $8 billion. And I’m like, “Are you really telling me you just misplaced $8 billion?”

BECKER: Billion with a B, we should say.

FAUX: With a B, yeah.

And he says to me, “Misaccounted.” And he almost sounded like proud of himself with this explanation, but I’m just sitting there in disbelief. I couldn’t imagine that this was really the case.

BECKER: And so do you think then, was any of that altruism true? Was that the truth? Did he really start this because he just wanted to amass a large amount of wealth and give it away and quote-unquote, save the world?

Was any of that true and then it just got corrupted? Or what happened?

FAUX: So feel free, you may think that I’m too committed to my original thesis.


FAUX: But I actually believe that I spoke with him. I spoke with people who’ve known him his whole life. Many of his colleagues. These people really were spending all their time thinking about effective altruism, which takes you to some weird places.

They were thinking about the risk to the world posed by out-of-control AI. Or the next pandemic, and they really thought that by directing their billions to the right causes, they could change the course of human history potentially. And this kind of hubris, I think, made them more dangerous, made them willing to take huge risks.

Because what’s like a little cryptocurrency fraud if you might be able to save the world on the other end?

BECKER: So did they just get corrupted then by the amount of money involved? Or did they just make really bad mistakes and take too many risks? So without getting into all of the boring crypto details, essentially at one point from what I’m told by my sources, Sam and his top lieutenants, other young people like him, they learned in the summer of 2022 that essentially their hedge fund was out of money, and it was time to call it quits. And they had a meeting and decided, “Hey, should we just admit our failure?

Or, should we dip into these customer funds, take this gamble and maybe we can keep this going.” And if crypto keeps going up and up, no one will ever know. And from what I was told, they decided to take that gamble. And if that’s true, it’s a very illegal gamble. And it didn’t work out. And now Sam’s top lieutenants have all pleaded guilty.

They’re going to be testifying against him. It’s going to be a very dramatic trial to see these old friends who conquered the crypto world together. All turning against each other.

BECKER: So let’s explain a little bit of the basics for folks who don’t understand the crypto world, myself included here.

So when we’re talking about FTX as an exchange, let’s explain what that is and what that means in cryptocurrency.

FAUX: If you want to buy a Bitcoin, you have to somehow exchange your real dollars for that Bitcoin. And the place where you do that is called an exchange. And you could do that on a more mainstream app like a Robinhood, or you could go to FTX and it’s just like a, it’s a user-friendly app.

That’s why they had Tom Brady and Larry David pitching it. You send them money. And then once your money is in the app, you can trade whatever cryptocurrencies you want. And then win or lose, you’re going to take it out later. And like I was saying before, you would be very surprised to find the money wasn’t there.

You sent this money to gamble on crypto. And once you have your winnings, you expect them to be available to take out just like at a casino. So I think of them, these crypto exchanges, just like offshore casinos, the reason it was in the Bahamas is that there’s a lot of rules around investing in the U.S.

It didn’t follow them, so it was based in the Bahamas where the rules are different.

Part II

BECKER: Zeke, it seems to me a real premise here is you’ve got to get a lot of people to believe in the value of this currency.

So it’s value will go up. That’s essentially what we’re talking about, right? Is that how you would describe it?

FAUX: Yeah. So if we roll back two years, when I was getting started in this world, that was the question that I had too. I was like, “Isn’t there, is there something more to this?”

‘Cause I’m hearing about it all over the place. It’s practically inescapable. And I didn’t really, even as an investigative reporter, I didn’t really want to investigate it, because I thought, “What’s to investigate?” Oh, people just, everyone starts talking about Dogecoin, which for those who aren’t educated on this, is a cryptocurrency that’s based on a popular picture of a dog.

And there’s nothing more to it. You go on your Robinhood or FTX, you click buy, and you buy some Dogecoin. No one’s promising it even does anything. For a couple years there, prices of Dogecoin and all these other cryptocurrencies were just going up so high that people started talking about it like this might be the future of finance.

And I’m just sitting there being like, “Is this all there is?” Surely there has to be something to this. Like, all these smart people have been working on this for so many years. They must have some sort of real-world purpose. And I cut to two years later and I find that I’m talking to Sam in his apartment, and I find that in fact, this guy who had been hailed as like the crypto genius, the smartest trader in crypto, himself had totally bought into this thinking. And had made huge bets on things like totally asinine things like Dogecoin or that his supposed giant wealth, a lot of it consisted of stockpiles of totally made-up coins, even ones that he’d made up himself.

And it was like this sort of unreality bubble that was created by the numbers, the prices of all these cryptocurrencies going up and up. It just became hard to question. Even the craziest things that all these people are saying.

BECKER: I suppose it’s easy to look at it now that there’s been such a big fall and say, “Wow, how did so many people believe that?”

But I think, as you mentioned, two years ago, this was a very big deal. I remember, actually, one of my grown children saying he wanted to invest in Bitcoin. I said, “I don’t understand it.” And I literally said this because I have a drawer of buttons in my house. I said, “If I convince everyone that my buttons are worth a million dollars, then they are worth a million dollars?

And that’s Bitcoin.” And he told me I was being ridiculous, but I still wonder whether that’s true now. But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year’s Bitcoin conference with a lot of cheers from crypto enthusiasts about his government’s use of Bitcoin.

Let’s listen.

NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).

BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you find out there?

FAUX: So I’m just returning to your button story for a minute, it would be hard to sell your buttons for a million dollars.

But imagine how happy you would be if the government of El Salvador announced that its new currency would be Deborah’s buttons, right? That would obviously be very good for the price of, for Deborah’s button prices. So that’s why these crypto guys were so thrilled that this country announced that it would use Bitcoin as a currency.

And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it’s the future, it’s going to help the poor, they’re all using Bitcoin. And the listeners are probably asking themselves, “What does this even mean, how does this make sense?” And it doesn’t make sense. I got there, and one of the first places I went to was this little roadside store.

And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country’s main currency is the dollar, and they didn’t abandon that. But they’re supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.

And the clerk gave it to me, so I’m holding the water. And then in my terrible gringo Spanish, I said, “Puedo pagar con Bitcoin, por favor?” And the clerk just said, “Basura!” Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don’t want to use your Bitcoin.

And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.

They’re very slow on there and people complained. “Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?” So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I became one of.

BECKER: If we go back to the buttons for a minute, the buttons are at least tangible. I understand the use of them, right? I can sew a button on and it will keep clothing together or whatever. But I don’t get the, what are you getting here from, how do you explain that to people, what you’re getting?

It’s a new currency. And how is it safe? How are these merchants in El Salvador who are not taking Bitcoin because they’re skeptical, how do they know that it’s safe?

FAUX: You’ve just made your first mistake with button currency. By giving it a purpose, now it’s, we can say, okay, it’s only worth like a nickel or something, we need to be like, it’s better to never say what it’s for, and you can just make it sound like an amazing story that, this is a, who knows what millions of uses it’ll have in the future. This is the future of money. The price of buttons is going to the moon.

Bitcoin, yes, it isn’t anything. And I spent a long time trying to understand how it worked. And honestly, my book is not the one to read if you really want to get into the details of the blockchain and how it works. But I realized that the gist is pretty simple. Essentially there’s a database. And column A is a list of people and column B, think of a Google sheet, column B is how much money they have.

And the Bitcoin database is maintained collectively by all these computers. And it keeps track of how many people, all the people. And the column B, instead of how many dollars they have, is how many Bitcoin you have. So when I send someone a Bitcoin, they’re not receiving anything really tangible. Just we’re subtracting one from my line on the database and adding one to their line. And people, even now, people will pay almost 30, 000 to make that happen.

BECKER: Even now.

FAUX: It’s wild.

BECKER: So again, I wonder. What do you find to be the, you’ve written a lot of anecdotes in this book, but what you find to be the, one of the most amazing anecdotes that you find yourself going back to, about getting people to believe in the potential of Bitcoin, let’s say that, as its purpose and the reason to get on board?

FAUX: One of my favorite stories, I traveled all around the world for this book, and one of my favorite stories comes from the Philippines, it’s about a different cryptocurrency called Smooth Love Potions, which is a pretty silly name, and this was a cryptocurrency that you could earn by playing a mobile game called Axie Infinity, so you played this game on your phone, which it sort of looked like Pokémon, except that the creatures were based on these Mexican axolotls, these very cute little monsters.

You have your team of monsters, and the more you fought in the game, the more Smooth Love Potions you earned. And crypto people were promoting this as not just a fun game, but a new form of work. A way that the world’s poor could earn a living. And they said that this was the main example of Web 3, which is supposed to be a way that we would all own our data on the internet, and that we could use it to make money instead of just giving it away for free to the Facebooks and Googles of the world.

Seriously, they said that this game could be a panacea for global poverty and you might be asking, “Well, why would you want any Smooth Love Potions?” And the answer is, “Well, you need them breed your Axie monsters to play the game.” And then you might say, “Why do I want any Axie monsters?” And the reason is you need them to earn the Smooth Love Potions. So like it never made any sense. But it totally took off in the Philippines. At its peak, there were maybe a million people playing it.

Whole families were out of work because of the pandemic, and they were just playing Axie all day. And the price of Smooth Love Potions actually got pretty high, to the point that you could earn several, like a living wage, for a few months there, just clicking buttons on your phone and having these Axies play each other.

BECKER: Because you would get a cut of the volume of people playing. In a way.

FAUX: Yeah the game just kept making more and more Smooth Love Potions, and as long as there were new people coming in to buy the love potions to make the monsters. They had some value. But of course this whole thing collapsed. And I went out there to see it for myself and to meet some of the people who had invested in this, and I saw it as a test case for what the vision of the future that the crypto people were promoting.

BECKER: And all of these people lost money.

FAUX: Some people did okay because they had been working as hired game players, like they would be almost like renting monsters from others and earning an hourly wage for playing. But other people had borrowed lots of money to buy their monsters, because the price of the monsters got to be pretty high, like a team might be a thousand dollars.

They would borrow money thinking they could earn a living from this. And my cab driver said that he had lost $2,100 that he borrowed from his wife’s sisters. And, this was so significant to him that he was contemplating suicide. And he said that he’d just been addicted to this game.

He was convinced it was the way he was going to earn his way to his financial goals. And when the thing collapsed, he was devastated. I talked with another woman who lived in a sort of shanty town in Manila, and she’d borrowed $1,500 from her mother. She still checked the price of Smooth Love Potions all the time on a cryptocurrency exchange like FTX where you could buy and sell them.

Because she was really hoping they’d come back up, but she’d lost so much money that she and her husband were considering leaving their small children with her parents and moving abroad to Dubai to find new jobs. And this all had collapsed, well before FTX, but it was memory hold by the crypto world. And I had wondered, would they adapt their products?

Would they change because of this Axie collapse? And instead, all I saw, again and again, was people promoting new schemes that were similar. And so it seemed like so much of these cryptocurrencies were really like totally unsustainable bubbles at best.

BECKER: And yet they kept attracting people.

And the games would just evolve, the currencies would just evolve, the exchanges would just evolve. And we should say that the whole reason really you started writing about this was because of another exchange called Tether. And you describe Tether as the molten core, right?

Of all of this. And it is actually supposed to be a stable coin that’s matched dollar for dollar with the U. S. dollar, right?

FAUX: Yeah. So this was a kind of mystery that I felt like I could really dig into. Tether, you can think of it as the central bank of crypto. And the major players in crypto use it to move their money around. And Tether tokens are supposed to always be worth a dollar because they’re backed by real dollars in a bank somewhere.

But when I started out two years ago, there were about 50 billion Tether tokens in circulation, which meant that Tether was supposed to have 50 billion real dollars somewhere.

They weren’t saying exactly where. There are a lot of rumors flying about whether that money was real or not. And there was so much concern about this that Janet Yellen had called a meeting of all of the top financial regulators, their meeting in Washington, D.C. to discuss Tether and whether it posed a risk to the global financial system.

And now as I started researching this, it just started to seem silly to me. One of the founders of the coin was a child actor from The Mighty Ducks. The guy running the company.

BECKER: The Disney movie.

FAUX: Yes he plays the coach in a flashback, misses a penalty shot. And the guy running the company had never given an interview.

He was a former plastic surgeon from Italy. The CEO on paper was seen so little in public, people wondered if he existed, and the company wasn’t even really based anywhere in the world.

FAUX: So I’m like, how did this get so big? Why are concerns about this silly coin dreamed up by The Mighty Ducks guy reaching the highest levels of the U.S. government?

Where’s this $50 billion? And it was just like this irresistible mystery that sucked me into the crypto world.

BECKER: And where’s the money?

FAUX: The search took me a lot of weird places by the end, I was in Cambodia, looking into crypto fueled human trafficking and Chinese gangsters using Tether to run these multinational scams.

Searching for this money was like the craziest adventure I’ve been on in my career.

BECKER: And did you ever get a satisfactory answer?

FAUX: Even as, in the summer of 2022, Crypto companies started collapsing one after another, and FTX and Sam Bankman-Fried came in November, a few months after the market really fell.

And this whole time, a lot of people who were suspicious of Tether were watching and saying, “This is going to be the time that if Tether doesn’t really have the money, it’s going to be revealed.”

BECKER: Okay, you’re going to have to tell us. We’re going to find out where the money was revealed after a break.

This article was originally published on WBUR.org.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

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