Crypto Traitors
On this extremely cursed episode of Gaslit Nation, we take a break from gas station dictatorships to talk about their emo tech cousin: crypto, the shadow banking system for oligarchs, autocrats, and the Trump family, with Andy Greenberg of Wired, author of Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency.
Greenberg walks us through how Bitcoin was sold as untraceable “freedom money”–digital cash for the revolution!–and instead became a giant glowing crime map. Dark-web drug empires, massive child sex abuse rings, ransomware gangs, investment scam sweatshops, North Korean weapons programs, autocratic terrorists like Russia and China. Turns out their transnational crypto crime sprees left a trace. Greenberg profiles investigators who followed the blockchain to catch some of the world’s worst monsters and advises how to “follow the money” in the digital age. We also discuss Trump’s crypto war on the U.S. dollar and how he and his family enrich themselves with the help of crypto criminals.
This week’s bonus show, for our Patreon supporters at the Truth-teller ($5/month) level and higher, features Gaslit Nation’s book club discussion of Deaf Republic by Ilya Kaminsky and Total Resistance by H Von Dach–and an urgent wake-up call to see the Kremlin’s long-game in exporting oligarch-fascism, before it’s too late. Just today, it was reported that Russia tried to plant bombs on U.S.-bound flights, following similar reports of planned attacks across Europe.
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Show Notes:
Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency by Andy Greenberg https://bookshop.org/p/books/tracers-in-the-dark-the-global-hunt-for-the-crime-lords-of-cryptocurrency-andy-greenberg/b449e45a97a6794b?ean=9780593315613&next=t
Trump pardon of billionaire sparks concerns https://www.youtube.com/watch?v=fwcHn1GSZwo
Aaron Rupar: “Wow -- Russia reportedly plotted last year to plant bombs on US-bound flights (gift link)” https://bsky.app/profile/did:plc:4llrhdclvdlmmynkwsmg5tdc/post/3m7lbz4g7nc2v
Scott Pelley (00:00):
Last month, president Trump granted a pardon to a billionaire felon. After the felons company enriched a Trump family business. The pardon went to Changpeng Zhao, a Chinese born businessman who was accused by the Justice Department of "causing significant harm to US National security." The president says he does not know Zhao. Our reporting shows that Zhao's company supported a Trump family firm at critical moments leading up to the president's pardon. Changpeng Zhao is founder of Binance, the world's largest exchange for cryptocurrency or digital money on the internet. In 2023, Zhao and his company pled guilty to failing to prevent money laundering on Binance. Binance paid a $4 billion fine. Zhao served a four month sentence.
Elizabeth Oyer (01:02):
He's one of the richest men in the world, and he was essentially allowing his company to be used as a platform to finance criminal activity to send money to terrorist organizations, Al-Qaeda, Hamas, ISIS, and he was prosecuted criminally for that.
Scott Pelley (01:20):
Elizabeth Oyer knows Pardons. She was in charge of vetting pardon? Applications at the Justice Department. She's been a critic of the Trump administration since she was replaced last spring by a Trump loyalist. Oyer told us Zhao wasn't close to meeting Justice Department guidelines for a pardon. You would describe this pardon as unusual?
Elizabeth Oyer (01:46):
The influence that money played in securing this pardon is unprecedented. The self-dealing aspect of the pardon, in terms of the benefit that it conferred on President Trump and his family and people in his inner circle, is also unprecedented.
Scott Pelley (02:01):
Is this justice?
Elizabeth Oyer (02:03):
This is absolutely not justice. This is corruption.
Donald Trump (02:07):
Wow. Hello everybody.
Scott Pelley (02:09):
In the 2024 campaign, Donald Trump offered full throated support for the crypto industry, and online, he, his family and partners announced they were opening a crypto firm of their own.
Donald Trump (02:25):
We're embracing the future with crypto and leaving the slow and outdated big banks behind. That's what we want to do. Go to World Liberty Financial.com.
Scott Pelley (02:36):
World Liberty Financial would be like a bank offering financial services in digital currencies. Its pitch to investors, usually called a white paper, was gilded as a gold paper.
(02:49):
When World Liberty Financial launched before the election, was it a big success?
Austin Campbell (02:55):
It was largely unknown. They had had a fundraising round that had only been partially filled. They had a team that I think only had one or maybe a handful of engineers at best and honestly, not much was going on there.
Scott Pelley (03:09):
Austin Campbell is a former banker who's briefed Congress on crypto. He was a crypto executive and now teaches at New York University.
(03:17):
If you're starting a crypto company from scratch, what are the technical hurdles?
Austin Campbell (03:23):
You need to hire engineers. You need to deploy all of the infrastructure that you'll need essentially to run a tech company.
Scott Pelley (03:31):
Enter Changpeng Zhao. Last fall, fresh out prison, sources tell us. Zhao's company Binance donated software to World Liberty to help the Trump family venture launch a cryptocurrency. A source familiar with events told us without Zhao, "the technology doesn't exist." The next month, Changpeng Zhao applied for a presidential pardon and shortly after the application, he was at the center of a blockbuster deal that put World Liberty on the map. Zhao is a citizen of the United Arab Emirates in the Persian Gulf and in May an Emirati fund put $2 billion in Zhao's finance. Of all the currencies in the world, the deal was done in World Liberty Crypto.
Austin Campbell (04:28):
So it took World Liberty from being a small project that maybe was on the roadmap after the election, purely for the name, to being one of the largest stable coins in the world in a single transaction. So it vaulted them from small time to the big leagues.
Scott Pelley (04:45):
The Emiratis entrusted $2 billion to a currency that had been on the market five weeks. One source told us, "It wasn't strange. It was nuts."
Lawrence Lessig (04:56):
The only reason it makes sense is to ingratiate with the president.
Scott Pelley (05:02):
Lawrence Lessig has spent nearly 20 years on ethics in politics. He teaches law at Harvard and has campaigned with the left and the right against the corrupting influence of money.
(05:15):
Are you saying that the president is compromised by this transaction?
Lawrence Lessig (05:20):
Compromised is exactly the description because we can't know what's the actual reason for the decisions that the administration is making. Are the reasons helping America or are the reasons helping America and also helping them privately?
Scott Pelley (05:38):
The Emiratis told us they chose world liberty for "business suitability." Last May, two weeks after their World Liberty deal, Trump announced that the Emirates would invest in America and the US would provide something the Emiratis coveted: highly restricted chips for artificial intelligence.
Andrea Chalupa (06:13):
Welcome to Gaslit Nation. I am your host, Andrea Chalupa, a journalist and filmmaker and the writer and producer of the journalistic thriller, Mr. Jones, the film the Kremlin doesn't want you to see, so be sure to watch it.
(06:25):
And this is Gaslit Nation, a show about corruption in America and rising autocracy worldwide. This week we are joined by the wonderful Andy Greenberg, a senior writer for the essential Wired magazine, which is doing the damn work these days. Thank you Wired. And we last had Andy on the show in 2019 for his chilling must read book, "Sandworm, A New Era of Cyberwar and the Hunt for the Kremlin's Most Dangerous Hackers." I will link to that interview in the show notes. Andy's latest book is "Tracers in the Dark, the Global Hunt for the Crime Lords of Cryptocurrency," an eye-opening thriller where he takes us into the dark underworld of crypto. Welcome to the show, Andy. A million questions for you. How are you doing?
Andy Greenberg (07:21):
Well. I'm very glad to be back here and ready to get into it.
Andrea Chalupa (07:25):
So the debate I have on the playground here in Brooklyn with these savvy innovator parents, moms and dads who are working in cryptocurrency, they assure me that it is the future. It is the democratization of decentralization and that it empowers people to control their own finances physically on some sort of tech device, having it in a vault. Well, you can keep your device with crypto in a vault, but they assure me that this is going to undermine the global banking financial system, which is corrupt anyway. It's crashed the economy in the 2008 Big Wall Street crash and that the innovative revolutionary crypto movement is putting power back in the hands of the people.
(08:15):
Could you just walk us through what is crypto? Because it's also created this wild, wild west of a transnational crime underworld that you've been documenting. So what is crypto? What is the revolution that it's sparking? And then we'll get into your book and all of the crime that you uncovered there and how people were able to track it.
Andy Greenberg (08:38):
Right. Well, Bitcoin, when it first appeared, I guess more than a decade and a half ago, offered this really interesting way. I mean, it's just technically fascinating. I have to agree with crypto advocates about this. To send money across the internet without any intermediary, no bank, no government. It's basically like digital cash for the internet where you can essentially store the keys to control it on your own computer. And nobody can mess with that. Nobody can seize it, freeze it, sensor the transaction. And people thought too that you couldn't trace it, that this was cash in the sense of the digital equivalent of unmarked bills in a briefcase. And you can meet somebody in a back alley of the internet hand off that briefcase and nobody can tie your identity to that transaction. Now the last of those attributes of all the ones that I listed turned out to be the opposite of correct.
(09:35):
It turns out that Bitcoin is extremely traceable and that if you can analyze the blockchain, this essentially like database as a list of every transaction copied out to thousands of thousands of computers, then you can follow the money with even more transparency than even in the traditional finance system. So that part was a complete 180. It took me about a decade to realize just how wrong this idea of crypto's untraceability was. And when I did, I learned in fact that there was this group of detectives who had used the traceability of crypto as this kind of investigative super weapon secretly for years to take down some of the biggest cybercriminal operations in the world. That's the story of my book. Now, all of those other attributes of crypto I think are true that it is decentralized, that it is fully in the hands of the user and that seems exciting.
(10:26):
I do think that in reality, crypto has just made rich people richer. I mean, let's be honest about that. We don't see it being really adopted by the unbanked people around the world in any significant way yet. I mean maybe there's still the potential for that. It's a speculative investment for almost everyone. And the people who can afford to make big speculative investments are people who are wealthy. So just in all reality, crypto has enriched wealthy people, especially those who have a libertarian bent. And now it's become, I think, part of the conservative culture of America for reasons that are complicated and I think maybe require some sort of cultural studies PhD to fully understand. But it's become, I think almost like a partisan issue where we see MAGA and the White House enriching themselves with crypto. I think truly the opposite of some kind of progressive tool for the unbanked that it was maybe promised to be in decades past.
Andrea Chalupa (11:29):
Right. So just like the tech revolution of Silicon Valley, the pirates of Silicon Valley, there was a lot of influence, of course, of the Whole Earth catalog in Northern California's progressive hippie culture. But the reality is that Silicon Valley just became the Wall Street of the west. So is that basically what's happening with crypto?
Andy Greenberg (11:50):
I wrote a whole book about the cypher punk movement, this group of radical libertarians in the nineties who came out of Silicon Valley and believed that they could use encryption technologies to take power from governments and big corporations and give it to individuals. And this is a really important movement that produced a lot of the cryptography tools we use today for all kinds of really important journalism, human rights, activism, protests. But it's important to note that the cypherpunk movement was a very selfish movement in the way that it started. It came out of, as you said, Silicon Valley guys who I think one of their first thoughts was like, how do I protect my money from taxation? What if we could do in fact financial transactions with total secrecy protected by cryptography? And what if we could even create a kind of crypto money that is fully secret, that cannot be taxed kind of digital gold that, I mean, gold itself is a libertarian tool for many people. What if we could create the digital equivalent hide away our millions and truly create a kind of gulch of digital technology that is a kind of origin story of the cypherpunk movement, which I should say has now become more diverse and enables all kinds of more human rights focused, more empowering the vulnerable and protecting people. But its origins definitely are in this kind of selfish Silicon Valley culture among other things.
Andrea Chalupa (13:14):
Are you surprised, given all your years in investigating technology, the industry, are you surprised to see this fascist tech-bro movement help bring Trump an open fascist to power?
Andy Greenberg (13:28):
I dunno, in some ways it's very natural. One of the founders of the cypherpunks was Tim May, who was a fascinating, brilliant guy, made enormous amounts of money at Intel solving incredibly interesting technical problems there, but then retired and was mostly just thinking about how to protect his wealth and also how to usher a kind of libertarian revolution. He was the one who came up with ideas like Black Net, a fully encrypted communications system where people could buy and sell corporate secrets, for instance, with total impunity. And he definitely dreamt of a kind of gold crypto cash as well. The cypherpunk movements I do think gave rise to cryptocurrency, and Tim May, if you read his writings, he was also, he was a racist. Definitely. That's not something that is a convenient story to tell for people in the cypherpunk movement today, which is, as I said, much more diverse and not simply a kind of white male movement, but that is its origins.
(14:33):
And I do think that he had some fascist tendencies, although I would say it's more of a libertarian movement. But this is the strange thing about the modern Republican party is that there's a lot of libertarian impulses that have somehow flipped onto the other side of the spectrum and become a party of wanting total control, wanting, I think, authoritarian impulses that are truly the opposite of libertarianism. But we see the way that Trump has successfully courted a large part of libertarian movements and did so in his campaign in many ways through his advocacy for cryptocurrency and the pardon of Ross Ulbricht, the founder of the Silk Road. Maybe we can get into that story.
Andrea Chalupa (15:11):
Yeah, please do. Because that was a purchased pardon, wasn't it? There was a donation from someone in his family.
Andy Greenberg (15:17):
I mean, I'm not sure, maybe you know more than I do. I haven't seen an actual transaction for that pardon. But the transactional nature of Trump's politics, so the Silk Road founded at the beginning of the last decade was this black market that used Bitcoin and the anonymity software TOR to allow people to buy and sell drugs and guns, mostly drugs, did hundreds of millions of dollars worth of sale of narcotics. Ross Ulbricht, the creator of the Silk Road, who went by the name the Dread Pirate Roberts espoused a lot of libertarian ideals, like ultra libertarian philosophy, even had a libertarian book club that he ran in the forums of the site. But the Silk Road became eventually just a massive drug empire. And Ross Ulbricht himself was communicating with people who we thought were Hell's Angels to try to sell harder drugs on the site.
(16:09):
And vast quantities, there were opioids, heroin, fentanyl, methamphetamines for sale on the Silk Road. It was, I would say a corruption of some of those libertarian ideals, even if you believed in them in the first place. Ross Ulbricht eventually tried to have people killed who he thought were threatening his business, for instance, although those turned out to be false murders for hires that he paid for that were perhaps scams. One of them was an undercover DEA agent. But because of the kind of initial libertarian philosophy that he put out there as the Dread Pirate Roberts in the forums of the site, he was described by his own users as this kind of Che Guevara figure who was going to usher in almost like an anarchist revolution. A lot of libertarians saw him that way, protested on his behalf at his trial, have built up a kind of cult of personality around Ross Ulbricht that has persisted to this day.
(17:02):
And so Trump, I think very cannily saw this opportunity to promise a pardon for Ross Ulbricht, who was eventually identified, prosecuted, sentenced to two life sentences in prison, which I did think was a kind of incredibly harsh sentence. He saw an opportunity to win the favor of this libertarian community by promising a pardon for Ross Ulbricht. That's the transaction that I saw in plain view. I think it really worked. It was like he was showing that he would support cryptocurrency, that he would pardon Ross Ulbricht, that he would give this wing of the Libertarian Party what it wanted. And I think that he won an enormous amount of support in that way, despite the fact that I would say that it violates everything that he espouses about being a law and order president currently who is threatening a war with Venezuela over narcotic trafficking. He pardoned, I would say, the creator of an entirely new ecosystem of drug dealing online. Full pardon. Not even the commutation of his sentence, essentially saying that that entire trial, those charges never existed. I think have covered that case very closely. I feel like I see Ross Ulbricht and his full complexity and his ethics and his philosophy, but I also talk to the prosecutors in that case who are appalled by this result.
Andrea Chalupa (18:22):
That is fascinating. So the whole crypto criminal underworld, this wild, wild west and these criminals thinking that they can get away with drug trafficking, human trafficking, because your book goes into child sex crime, the real QAnon, which it sounds like Trump is empowering. Long time Jeffrey Epstein friend Donald Trump is empowering the child sex crime pedophile world, which runs on crypto. Would you say that's accurate?
Andy Greenberg (18:55):
I mean, crypto was used in this case that I get into in my book kind of charts, the escalating the ever darker uses of crypto in all kinds of crime, starting with the Silk Road, which had this kind of libertarian ideal to it, but then became fully adopted by much more hardcore cyber criminals on sites like Alpha Bay, and then eventually was used on welcome to video, this child sexual abuse material site, what we used to call child porn site that's allowed people to buy and sell these abhorrent, really terrible, tragic materials with Bitcoin. Now, they thought that they could do that because Bitcoin was untraceable. This was in 2017, 2018. People were still only just starting to learn then that Bitcoin could be traced on the blockchain. Now it turned out that of course, Bitcoin is the opposite of untraceable because of that blockchain record that if you can decipher people's Bitcoin addresses, you can see on the blockchain how one address sends money to another.
(19:57):
If you can start to tie identities to those addresses very often because you can follow the money to a Bitcoin exchange where it's being cashed out or where people there are know your customer requirements, then you can start to identify whose money is whose and what transactions they've made. And so in that welcome to video case, the IRS mostly IRS criminal investigations was able to trace pretty much every transaction that went into and came out of welcome to video, this giant repository of child sexual abuse exploitation videos. And as a result, 337 men around the world were arrested. A couple dozen children were actually rescued from exploitative situations. This was actually, I would say, a kind of incredible win based on the trap that Bitcoin set for people seeking privacy and also people seeking to use it for criminal purposes.
Andrea Chalupa (20:50):
So I talked to a mom that I know on a play date who works in Bitcoin and crypto, and she was insisting, it's actually quite clean for the reasons that you listed because of this track record that's left behind in the blockchain itself. You can see the entire record of crypto, am I using this language correctly? But you can follow the blockchain, and if you see any murkiness around that blockchain, then that's a red flag.
Andy Greenberg (21:21):
Right. So that's how people maybe think of crypto now. When it first was created, Satoshi Nakamoto, this mysterious creator of Bitcoin who still has never been identified like one of the greatest mysteries in the history of technology, he or she, or they got this wrong and wrote in the initial email describing the features of Bitcoin, this first ever cryptocurrency that participants can be anonymous. And that was because there's no bank, there's no PayPal account, there's no company that holds your money. So that means that you don't need to tie any identifying information to the money itself. And Satoshi Nakamoto is proof of that. You can remain anonymous, but if you ever start to cash out that money or spend it somewhere where even some part of it, you spend somewhere or cash it out somewhere where they demand your identifying information, then it turns out that your money can be traced from address to address until they find your whole stockpile, sometimes all of your addresses in a big cluster.
(22:17):
There are lots of interesting mathematical tricks to do this, and then you've been completely outed. And that's what happened to these purveyors of child sexual abuse materials, including people who were creating this stuff themselves, uploading it actual hands-on abusers of children. That was the surprise. That was the kind of turning on the lights on the dark web that occurred with cryptocurrency in its first decade. People thought it was untraceable and it was the opposite. That's really the story of my book, is that realization like, wow, people think that they're invisible and we can see them in full technicolor doing all of their crimes. That was what a group of federal agents realized that led to this incredible string of busts and takedowns. Now, Bitcoin and cryptocurrency is different because people I think do understand the traceability of it better. It's not used for crime in the same way it's used for, I would say, crime in non-extradition countries.
(23:15):
It is empowering ransomware, hackers, ransomware gangs in Russia to carry out an absolute epidemic of incredibly disruptive, extortion based hacking that's threatening our infrastructure, our companies. It is absolutely like a plague on our society. It is empowering North Korean hackers who are stealing crypto by the billions and using it to fund the weapons development of the Kim regime. But that's because the money can be traced to these people, to the Russian hackers, to the North Korean thieves on the blockchain, but you can't do anything about it. It's already gone at that point. They are out of our reach. And then just to your point, I think finally, to get back to what you were saying about the role of the elites in the US, the current White House, it's also just being used for corruption in plain sight in America today in the book, because the book came out in 2022.
(24:09):
But the other group of people using crypto for crime or corruption, at least I would argue it's, I mean, I do think some of these things probably are crimes are just people who know they can get away with it. So for instance, Changpeng Zhao, the founder of Binance, the world's biggest crypto exchange, at least at some points I think maybe it still is, was found to be guilty of enabling all kinds of criminal transactions by enabling money laundering and sanctions of Asian on Binance. There's no doubt, some amount of child sexual abuse transactions that went into Binance too. I'm not sure how much exactly Binance was found to be engaging in all sorts of dirty money laundering, essentially. And the company paid a huge fine, a record corporate fine of more than $4 billion. And Changpeng Zhao, CZ, as they call him, he went to prison.
(25:02):
And this was kind of a landmark case for a lot of the people in my book who were tracing this kind of use of cryptocurrency for crime. I mean, this was the biggest crypto exchange in the world, essentially fessing up to enabling massive amounts of illicit finance. And then essentially under the Trump administration, CZ, Changpeng Zhao, has helped Trump to launch his own crypto coin or the Trump corporations Trump's business interests. And then he was fully pardoned. This is just happening in plain sight. I can't really understand any other justification for pardon for CZ who had already pled guilty, had served his term, that had to be wiped from the record for the kind of coherence of this story of crypto and MAGA's support for it or something. As with Ross Ulbricht, I think it's just a very transactional pardon and one that Trump's family, Trump's business interests were paid very well for.
Andrea Chalupa (26:03):
In what way?
Andy Greenberg (26:05):
Well, it's been reported that Binance helped to launch USD1, this stable coin as it's called, created by World Liberty Financial, which is a Trump family venture, basically a Trump family crypto company. And then Binance listed that cryptocurrency on its exchange, the biggest exchange. And that is an enormous favor done essentially to the Trump family. I'm not sure how much money they made from it, but it was a $2 billion deal. And that absolutely enriches Trump and the Trump family. And then you don't need blockchain analysis. You don't need some brilliant crypto tracing technique to then see that Changpeng Zhao is then pardoned. You don't have to even follow the money. You can just see in plain sight this is a transaction. And I know maybe there's some alternative explanation for why the CEO of this company that paid a four plus billion dollars fine a record fine for its elicit finance was then pardoned, but I don't know what it is. It's kind of an Occam's razor situation.
Andrea Chalupa (27:06):
Right. It's the quid pro quo, which Trump is famous for. That's what got him impeached with Zelensky is trying to get Zelensky to invent a scandal to hurt Biden in the 2020 election. And Trump was like, there's no quid pro quo. There's always a quid pro quo with you Trump. And so with the crypto king of the White House, they had some big crypto party at the White House with all these crypto people, who's who of crypto grifters at the White House. And then you have David Sachs, south African, PayPal Mafia, good friend of Peter Thiel's and Elon Musk and a rampant Kremlin disinformation machine on X formerly Twitter. It's amazing. I mean, I say that in the most disgusted way, like what he says against Ukraine and has four years, and what Musk's platform has emboldened him to say, and this guy is in the White House as basically the crypto czar. It's amazing how crypto also along that line empowers Russia to evade sanctions. So could you walk us through that?
Andy Greenberg (28:14):
Well, absolutely cryptocurrency has become a kind of shadow economy among other things. There's a sort of boring western economy of Bitcoin as your, I dunno, fellow mom on the playground was pointing out. One feature of crypto that absolutely is something that's powerful is that it can be used for cross-border payments. That's something that it does really well. And when the full scale invasion rather in Ukraine, crypto was used to send an enormous amount of money to fund Ukraine's war effort, but it has also been used by Russia to evade sanctions on an enormous scale. In fact, there are Russian rogue exchanges that are in fact just serving as cash out points for not only sanctions of Asians money, but all kinds of cyber crime that essentially exist as a kind of alternative to all of these know your customer exchanges that have made the rest of Bitcoin rather transparent.
(29:15):
These exchanges like Darrentex, and there have been others like Suex and Chat X that have been shut down sometimes through international pressure. They have served as kind of ATMs for all sorts of crime, including the ransomware that has completely plagued the west, including the theft of vast amounts of cryptocurrency and including scams, crypto scams like investment scams, romance scams that turn into investment scams, the biggest form of cybercrime in the world, tens of billions of dollars that have been taken from Western victims, from people in the United States that fund human trafficking operations in Asia. This is such a global web of illicit finance that it's hard to keep it focused on one topic. But yes, absolutely, crypto has served as a release valve for the pressure that the west has tried to put on Russia in the midst of its war with Ukraine. And that has absolutely extended this war cost countless lives enabled Putin to continue the atrocities that he's carried out in the Ukraine.
Andrea Chalupa (30:19):
Without question, and I know that activists in countries like Iran that are under sanction human rights activists in Iran also depend on crypto to accept donations and to fund their work. And Iran right now is going through a youth quake renaissance of young people dancing in the street and music being a weapon of resistance. It's a beautiful flourishing, I want to say Tehran spring, if you will, in Iran. And crypto, of course helps make that possible. And I've interviewed activists who say they depend on crypto. They certainly do in Ukraine. So I know that there is a positive to crypto getting around some of these financial restrictions when you're operating in a country that's a dictatorship under sanctions, certainly without question, we recognize that. But I was pressing a friend who's a hardcore Ukrainian patriot. She's from Ukraine, and she works in the crypto space, and her eyes were just like saucers telling me that everything's going to be crypto. We all have to get into crypto. It's so exciting and revolutionary. And I was asking her, but you're Ukrainian, your family is under threat in Ukraine, but crypto is also empowering the Russians to go around sanctions. How do you justify that? And she just didn't really have an answer to that. What are your thoughts?
Andy Greenberg (31:38):
Well, I think the fact is that a lot of technologies that have subversive applications, those can be human rights tools, freedom fighting tools like just like these anonymity, privacy tools that both enable whistleblowers, child sexual abuse materials, for instance. There are just two sides to every technology that can kind of go around authority. And crypto is one of those. I mean, it crosses borders extremely well, and it has literally just funded both sides, both Russia and Ukraine in this war. But I think that that's the donation element of this is just a very small part of it. I think Russia is a richer country than Ukraine, so it has a much larger economy that we in the West, I think for good reason, have tried to quarantine, have tried to sanction and pressure in an attempt to stop this brutal invasion of Ukraine. So if you create a system, an entirely new economy where all the rules are off, sanctions don't work still, crypto can be traced, so sanctions should work, but it's still new enough.
(32:48):
There are still enough transnational outlets to even if you can trace the money to get around these currency controls, then yes, you're enabling an entire rogue regime that is just a fact. And so which side has it enabled more? I think it's probably hard to measure. It seems to me like Ukraine has kind of allied with the financial powers of the world. We in the West have, I think largely chosen the Ukrainian side despite what the current White House would like. And we have these incredible, I mean very controversial internationally, but currency controls that give the United States vast powers to punish a country like Russia. And that doesn't work with crypto in the world nearly as well. So I would argue that donations aside or whatever kind of smaller ways that crypto benefits Ukraine, I think that Russia gets a much larger leg up from an entire shadow economy.
Andrea Chalupa (33:45):
And I want to talk about the mighty US dollar having dominance currently on the globe and crypto. We've seen with social media being weaponized through these dictatorship owned bot farms, most famously of course Russia, but Iran and China are in the mix. In what way do you see crypto currently potentially being weaponized against US dollar dominance to weaken America's standing in the world? Not that we're not doing a good enough job of that already by electing Trump. How is crypto also a tool of our enemies to undermine us?
Andy Greenberg (34:28):
Well, it's a very strange thing for an executive branch to ally itself, to drink the Kool-Aid of a movement that is trying to do away with national currencies with the dominance of the dollar. I mean, that has been the mantra of the Bitcoin community from the very beginning. They in fact love to see the dollar weakened as Bitcoin becomes stronger. And that's like I'm not entirely unsympathetic to this idea that the dollar should not be this incredible cudgel that the US should be able to use anywhere and the world. I'm sympathetic sometimes to libertarians ideas about let's give the power to the people globally. Let's not be so nationalists, let's not try to give the US these imperial...
Andrea Chalupa (35:15):
Is that really what Libertarians want? Do they want freedom from everything, including empathy, including social responsibility? I think we're all sort of like...
Andy Greenberg (35:25):
I would say the libertarians are complicated people. I'm just saying that there's some sides to their philosophy that I find a little bit sympathetic in the same ways that leftists and anarchists want to fight the imperial impulses of the US. Sometimes they do too. I do think that very often comes from a more selfish place like protecting their own wealth as you're saying. So I'm not trying to give an advertisement to libertarians here, but my point is that Libertarians have allied themselves. I mean, more importantly, the White House has allied themselves with that movement, which is seeking to undermine our own currency. It's a very strange situation. I mean, Trump has promised crypto holders that Bitcoin will appreciate, and it has, I mean, it's taken a bit of a dip currently. It's still at a historic high compared to pre-Trump times. I think it's promised to probably go higher again, or rather, he has promised that to his supporters with ideas like a Bitcoin reserve where the US government would just spend dollars to buy Bitcoins.
(36:28):
The big time like believers in Bitcoin want to say it is not just that Bitcoin is going to go up in value. That value is moving from all global currencies and especially the dollar into Bitcoin. So this money, this value of Bitcoin doesn't come out of nowhere. It's like Bitcoin is a deflationary currency in its advocates' descriptions. There's never going to be more of them and dollars will be printed forever. That's how our monetary system works. And therefore Bitcoin advocates would say that value is going to move from US dollars to Bitcoin over time. And they love that because they're holding bitcoins. Some of them love a ideological reasons. I think a lot more love it just because they're getting really rich and that is absolutely going to weaken us power. So it's like a very strange, and I don't want to say treasonous, but it almost,
Andrea Chalupa (37:18):
It's treasonous. I'll say it.
Andy Greenberg (37:20):
Okay, you can say it and I won't disagree with you, move for the White House to back this system in a kind of transactional way to say, yes, Bitcoin advocates, I'm going to enrich you. I'm going to enrich your currency at the expense of the US dollar, which the rest of America depends on. And in fact, the rest of American power, hard and soft power in the world depends on.
Andrea Chalupa (37:44):
But it doesn't seem like Democrats are putting up much of a fight. And I understand they're not in power. I mean, Biden tried. I know Biden when he was in office, he passed some legislation, protective legislation against cryptocurrency that forced a family I know to move abroad to London because of Biden's regulations. So yes, Biden tried, but then currently you have Democrats who are voting in favor of crypto friendly policies. Could you speak a little bit about that?
Andy Greenberg (38:17):
I think that it's a very difficult political landscape. I mean, that's true in a thousand ways right now, but it's very hard for crypto holders. Crypto users love this technology. They're obsessed with it. People who aren't invested in cryptocurrency kind of aren't paying attention, find it all kind of boring. I think for good reason. I could see it as a kind of cultish thing, but they're not really against it. So Elizabeth Warren and people like her who are fighting the good fight, I think to try to regulate cryptocurrency, sometimes I think maybe even she has gone too far and trying to treat it as a criminal wholly corrupt phenomenon when there are in fact some legitimate uses of crypto, as I said, to make transnational payments. But they have a very hard road to hoe. It's an unpopular policy because the only people who really care about this stuff are the people who are for crypto. In my view of the world, the weight of their desire for crypto is just so much greater than anti crypto sentiments among the majority of people who don't use this stuff would probably want it to be regulated, but just don't really care that much. When Trump started to fully adopt a pro-crypto set of policies, I couldn't help but sort of admire his political acumen. Corrupt though it may be that he observed that this is a political movement that he could tap into and that it would serve him. And it has.
Andrea Chalupa (39:42):
Yeah, just like birtherism.
Andy Greenberg (39:43):
It's slightly more complicated than that because there is truth to the fact that crypto can do things is a powerful technology. It's not just a lie like birtherism. It's dangerous in some ways. It's a dangerous subversive tool with dangerous applications that needs to be kind of adopted, but in a way with control, with restrictions, with regulation. I mean, just like any technology, I think that that is just undeniable. And so to ally yourself with the people who are against any of those safeguards is a really dangerous game to play.
Andrea Chalupa (40:17):
In my view. I mean, say what you want about the US. I think any real patriot of this country believes in improving this country. Just like James Baldwin said, I love my country. That's why I want to improve it. But you said it much prettier than that, but I wanted just to ask. Obviously it's in our best interest to protect the mighty US dollar, because if we don't, how the hell are we going to ever go abroad? It's going to be too expensive. Our money's not going to go very far, and it's going to kind of tether us even further to our homes here in the us. And if America becomes one of those shithole countries that Trump likes to rant about, we're stuck. And so yes, it's in everyone's interest for our own freedom, for our own freedom of movement to protect the US dollar.
(40:59):
And we do have a chance of fighting chance to reclaim our democracy and make America into the promise that our great experiment has always sort of envisioned and worked towards through hard fought progress of course. So I wanted to ask you along that line, what would you tell people out there? We have this new movement of Democrats rising people running for office for the first time. And yes, you're right, this Bitcoin technology, it's complicated. People don't want to be bothered with it, or they see it as cyberpunk, cool, edgy, and that's enough for them. And that's kind of a shallow way of thinking. They don't really scratch underneath the surface and be like, well, what actually is this? What is the long-term impact of this? So I want to ask you, what would be a list of things that activists who want to preserve our sovereignty, essentially, what should they be doing to regulate Bitcoin? What would that look like?
Andy Greenberg (41:54):
Well, I do think that tax the rich is a pretty simple idea. We're seeing a leftist resurgence in this country, although Zohran Mamdani doesn't say taxa rich every day. He says, make this city affordable. Those things go hand in hand, and it's popular. Although I just said that most of America doesn't care about crypto. What they do care about is the sense of an oligarchy forming of the rich getting richer of the average person suffering. I do think that one thing that the vast majority of America can get behind is the idea of making billionaires pay their taxes. But I think that the other thing that the average American also cares about is just preventing blatant criminal activity. And we have seen under Trump a rollback, even in this basic enforcement, we saw a destruction of the task force at the DOJ that was focused on crypto crime.
(42:46):
We've seen, for instance, the pardons of Ross Ulbricht and Changpeng Zhao as I was talking about these people who were the subject of landmark prosecutions, massive cases of crypto crime. I do think that the way forward here is also just to not confuse a kind of balance, the proto cryptocurrency, where you see its features that are helpful. You see its flaws with also just going after the people who misuse it to do really terrible things and actually holding them accountable. That is something that this White House has rolled back, I think in its just blanket support for all things crypto in an attempt to enrich itself and to win support in a transactional way.
Andrea Chalupa (43:28):
Wow. Okay. So in your book, Tracers, you follow tenacious investigators of all kinds, prosecutors as well as IRS and independent investigators and just people who just love this stuff. What is the new follow the money in a world of crypto, especially when obviously this technology is going to evolve and innovate, and there's always going to be those cyberpunk libertarians who are trying to worm their way out of any sort of traceability and accountability. What is the new follow the money?
Andy Greenberg (43:57):
Well, as I was saying, the traceability of Bitcoin is now really well established. I don't think there are many people who think that they can use Bitcoin, which is still by far the biggest core technology in the cryptocurrency world, that they can use it with privacy or anonymity. There are these alternative, newer cryptocurrencies that are harder to trace, like Monero or impossible to trace, like one called Zcash that uses newfangled crypto techniques to create a kind of fully untraceable anonymous digital cache like the kind of Bitcoin was thought to be when it first arrives. But those are not getting nearly the kind of adoption that their users would like. The vast majority of cryptocurrency is still extremely traceable. What we lack currently is the will to enforce laws to go after the corrupt uses of this technology, both in countries that are well beyond Western control, but also now in our own country. I mean, we're seeing a blind eye being turned, I think, to a lot of forms of crypto corruption, if not crypto crime in the United States.
Andrea Chalupa (45:04):
Wow. And what troubles you the most out of what you're seeing?
Andy Greenberg (45:07):
Well, aside from this conversation, I'm not somebody who focuses on politics. I'm not somebody who writes day to day about economics either, and the ways that the rich are getting richer in this country, that is something that deeply troubles me. But I am somebody who writes about cyber crime. I'm a crime and cybersecurity and hacking reporter. And to be honest, this has been a conversation about domestic politics to a large degree. But I do really worry about Russia, about the Putin regime empowering itself with these tools about the inability to sanction rogue governments. I worry about North Korea, a country that keeps hundreds of thousands of people in slave labor camps supporting itself, making billions and billions of dollars from crypto. This is not just a US story. We see how crypto is helping to power a kind of growing us oligarchy, but there is already a world of authoritarians out there who are enjoying the use of this technology.
(46:06):
And I will say that the thing that bothers me most of all, like we haven't talked about this much, but I mentioned it earlier, is that there are entire crypto scam compounds in Southeast Asia that are employing thousands and thousands of slave labor scammers, people who are trafficked, human trafficking victims, who are then forced to carry out scams all day long. The texts that you get on your phone trying to start conversations that turn into romance scams, that then turn into investment scams, when the beautiful rich woman you're talking to starts to mention how you can make money like she has, and she sends you a fake investment website and you pay, in many cases, people are losing hundreds of thousands of dollars to these fake crypto investment schemes. Those are being carried out by human trafficking victims in Southeast Asia, absolutely tragic circumstances, lawless parts of Laos, the Golden Triangle region, Cambodia, Myanmar, and yes, the Trump administration has enabled this too by destroying USAID, which was part of the eyes and ears that we have in those countries to help human trafficking victims to have visibility on the ground for the most vulnerable people in those countries and other countries who are tricked into they're tricked with fake job offers and to going to Cambodia or Myanmar or Laos, and then enslaved essentially and turned into scammers.
(47:22):
But the result too is that Americans are losing tens of billions of dollars a year. The FBI said that the US victims are losing about 10 billion a year, but globally it's tens of billions of dollars, the biggest form of cybercrime in the world. This too is enabled by crypto, and it's growing so quickly that these parts of Southeast Asia are being taken over by transnational criminal groups that are funding themselves through crypto scams and through human trafficking. So yes, so I guess you asked me what I'm most worried about of all globally. It's probably that particular epidemic in Southeast Asia.
Andrea Chalupa (47:57):
And with USAID gone, that's just going to flourish and empower and give rise to a new class of oligarchs.
Andy Greenberg (48:05):
Right? It's worse than oligarchs. It's the Chinese Diaspora Mafia in these countries that is running these compounds. And American isolationism is allowing that to happen, like the destruction of USAID in a hundred ways that the current regime in the US has shown that it doesn't care about the rest of the world, doesn't care about human trafficking victims doesn't really even care enough about the victims of these scammers in the US who are being bankrupted. I mean, this is a tragedy on both sides of this money funnel that crosses the entire world. So yes, I mean, absolutely. Our current political environment domestically is helping to enable this. We are not doing nearly enough to try to stop these criminal organizations or to stop the tech companies that include not just crypto technologies, but also Telegram, where a ton of the marketplace of this occurs. The kind of new Chinese speaking Darknet is on Telegram, allows this to flourish billion dollar markets that are occurring run by scammers on Telegram, and they don't seem to care. Meta, which runs a lot of the messaging platforms where these scams begin also needs to step up. I mean, there are a lot of ways that we in the west can affect pressure points to affect this and we're not. So that is probably the biggest problem that I'm focused on today.
Andrea Chalupa (49:22):
Final question for you. In all the research that went into your book, what surprised you the most?
Andy Greenberg (49:28):
The story of this book begins with me. I wrote the first article about Bitcoin for Forbes magazine where I used to work, please forgive me in 2011, and believed that it was an untraceable currency and that was a dangerous thing, that it would unlock this vast world of financial crime, that anonymous digital cash for the internet was going to create all sorts of terrorist financing and black markets for all kinds of contraband. And that all was true. That all came to pass. What I didn't foresee a decade later was that Bitcoin would turn out to be fully traceable, and that it happened that there was this group of detectives that had figured this out before me and completely flipped the game. I mean, that was a massive surprise to me. It took me years to understand how wrong I had been about Bitcoin. That is the kind of fundamental surprise of the book and the surprise for everyone who attempted to use Bitcoin in a private way, including all of these criminals who thought that they were operating in the dark, on the dark web invisibly.
(50:26):
So that's the kind of central surprise of the book. But I have been surprised too, I should say that I dunno, this is maybe a second twist in the story, that after that became fully apparent that Bitcoin was traceable and after it was used to just completely demolish certain forms of crime in extradition countries and in the US, that it has continued to thrive, not only globally in non extradition countries, but that we now, I mean, this is maybe the most appalling thing as we've been talking about, that we now see crypto used in corrupt ways in the US in full public view, for example, in these pardons. And that you don't need to use some interesting tracing technology that it's like the brazenness of it, the public nature of it, this kind of F you to everybody who can see it happening in plain sight. That is almost like the power of the Trump administration, like the sort of dare anyone to try to stop them as they do it fully in public view.
Andrea Chalupa (51:28):
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