Zeke Faux
Appearances
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah, I mean, I obviously think it's pretty interesting. I'm with you.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
earlier so even within the crypto world tethers had kind of a dodgy reputation for years it had to settle a lawsuit with new york's attorney general who had alleged that tether had lied about the dollars that were backing the coin and Because of this, Tether had a lot of trouble finding anyone to hold this giant pile of money, which is a key part of the business.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
You need someone who has access to like the American financial system to hold your money. But Tether was based like nowhere in the world. It's one of those sort of stateless companies. And it was having issues with this. So Lutnick, who runs like a reputable New York investment bank called Cantor Fitzgerald, he stepped up and he offered to hold Tether's money.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Definitely. I mean, the crypto guys are very good at making it seem like they have a lot of jargon. They make it seem like there's some sort of really complicated and important technology that we're talking about. And it makes you think in the back of your mind, if you don't know that much about this, or even if you do, you're like, it can't possibly be as dumb as it sounds, could it?
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And without that backing, it would have been a lot harder for Tether to keep growing and be as successful as it's been. And like we were saying before, this is a cryptocurrency company whose product has become really popular with criminals around the world. So what we've learned since that recently is that LUTNIC, as part of
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
agreeing to hold tether's money he also was able to purchase a stake in the company which is a big deal because tether it's incredibly profitable the company has like 100 employees and it makes more money than blackrock i think it made 13 billion dollars last year i mean this is a company that was dreamed up by a child actor from the mighty ducks which character from the mighty ducks
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So not a main character. In the beginning, Gordon Bombay has a flashback and he plays like young Gordon Bombay who misses the penalty shot. Okay, young Gordon Bombay. All right. And it's run by this Italian guy who's a former plastic surgeon. who has never given an interview.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
The guy who until recently was the CEO was so elusive that when I started looking into Tether a couple of years ago, people told me they thought the CEO didn't really exist. I tracked him down and he is real. This is like a very weird company that was really legitimized by Lutnik. And Lutnik started vouching for them publicly. He gave a
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
an interview to Bloomberg from Davos where he was like, hey, Tether, I've seen their money. They got the money. You can trust them, something like that. And that also was really helpful. So it was kind of controversial at his confirmation hearing. He got asked a lot of questions about his relationship with Tether and what he thinks about... It's used for money laundering.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And he kind of repeated his defense of the company and said, hey, Tether works with law enforcement. They're against crime. They want to stop it. You know, I've helped them improve their compliance. He just got confirmed. So he'll be the Commerce Secretary.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
His crypto czar, David Sachs, is an investor in Solana, which is like the network that the meme coins run on. So with these meme coins, right, it seems pretty weird. Like, is the government going to do anything about this? It's like a question you might ask.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
More or less. And he's come out and said, these are collectibles. These are digital collectibles, which is code for they should be unregulated.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah, the Bitcoin Reserve is one of the craziest policies that has been put on the table here. And I saw Trump propose this at the Bitcoin conference in Nashville last year. And I was just shocked that he was repeating so many of the industry's talking points. And yeah, one Republican senator has sort of spelled out some details for this.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And she would have the US government spend $100 billion to buy... Bitcoin. And as I explained before, people are not using Bitcoin for anything. So the pitch now that Bitcoiners have is that this is digital gold. The idea with the Bitcoin Reserve is that The price of Bitcoin will inevitably go up. And therefore, if the government should get in early and make money by trading it.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And the thing to me is that this is a handout to anybody who already has Bitcoin. No one has any reason to buy Bitcoin like it's not used. You don't need it for anything. The point of Bitcoin now is the price going up. And so at this point, the price is very high. So like you or I buying Bitcoin is not going to do anything for the price. They need bigger like pools of money.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
What's the biggest pool of money? The government. So that's like the Bitcoiners. It's been actually their plan for a couple of years. It seemed very far fetched. But ever since they got El Salvador on board, they were a lot of Bitcoiners were like, hey, I think we can get other countries in on this, too.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And they didn't have much luck until they came across Trump, who hasn't done it yet, to be fair.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah, I think that's right. And some of them are mad, but I think the madness is balanced with this idea that it's a pretty helpful conflict of interest. It's like, wow, Trump might actually follow through on deregulating crypto. He's doing it himself. He kind of needs to. A lot of them have been complaining about the scams, but I think it's a little self-serving.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
With Malay, I thought it was interesting. I mean, this wasn't so different than Trump's meme coin. You know, he tweeted about a coin. It went up. Then it went down. People lost money. Other people made some money. And Millay had said, you know, he said it's not a scam. It's not his coin. And there's no crying in the casino. There's no crying in the casino.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah. Yeah. But it's weird, like the opposition's calling for him to be impeached. And this one seems to have been a real scandal. Like within crypto world, people seem pretty upset about this compared to the kind of muted reaction to Trump having a meme coin, which also went up a lot and then down quite a lot.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So the original idea for Bitcoin, the first cryptocurrency, was that this would be a alternative to regular currencies like the dollar or the yen. And the big innovation was that instead of being tracked by a central counterparty like a bank, there would be this decentralized network of computers that would keep track of this new currency. Now, that was 15 years ago.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Bitcoin is as old as WhatsApp or Uber. And this idea of it becoming an alternative currency is largely dead. No one's really using it for that. But instead, there's been this proliferation of other cryptocurrencies. And at this point... Most of them are not meant to be like dollars. They represent all sorts of different things.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So some of them are kind of like stocks where if you buy a share of this, you buy a coin, you're almost like buying a share of some sort of company. Other times, it's like a new...
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
network like ethereum or solana where it's like a place where people are creating other crypto things and when you buy one of those coins you're kind of buying into the network and you get a share of its profits so that's almost like buying into like a crypto bank kind of right like it's like it's like investing in a stock for a bit or an exchange or a bank essentially
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah, some of them are a lot like that. Like Sam Bankman Freed had one that was called FTT. That was basically just stock in his crooked exchange FTX. But at the silliest end, we have, and which is one of the most popular things in crypto right now, are meme coins. And the first one of these was called Dogecoin. And it's also like...
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
more than 10 years old, it was created as kind of a parody of Bitcoin. And it was saying, we're going to copy Bitcoin, we're going to change the name, we're going to put a picture of a dog on it. And It turned out that, I don't know if you think this is a funny joke, but it turned out enough people did think this was kind of interesting that they started to buy it.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Unlike a stock or unlike one of these ones where you're buying into a network that generates fees with Dogecoin or other meme coins, there's no way for it to ever generate any money. You're purely buying it on the idea that somebody else might buy it. also for no reason, driving the price up higher. It's kind of like a new form of gambling game. And in the last couple of years,
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Thousands of these meme coins, maybe even hundreds of thousands of these meme coins have been created. People are just pumping them out. And there are all these traders that are kind of have they've made it a game to chase like the new meme coin. And if you get in early, the goal is to get in before the masses and then profit when the price spikes and sell it before it inevitably collapses.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Well, true. I think the kind of twist is that In your classic pump and dump, like Jordan Belfort, more of the people that Belfort... When he was calling people, he was saying, hey, this stock is hot. They just discovered gold in Bolivia. It's going to go up. And so there was this element of lying about the prospects of this company. So people were being defrauded that way.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
In this case, you've got people like... Dave Portnoy from Barstool Sports being like, hey, I just created this dumb coin. It does not do anything. It'll probably collapse eventually. Do you want to buy some? And people have sort of organized themselves into this kind of pack of degenerate gamblers who move from meme coin to meme coin and try to make money on it.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yes. So it's kind of funny, but The cryptocurrencies that have actually found the most widespread use are ones that are backed by dollars. And this is because in my book, Number Go Up, I was really focused on this one called Tether. It's the biggest stable coin. It's gotten so large that... There's something like $130 billion worth of it outstanding.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
And the pitch is that a tether will always be worth a dollar because it's backed by real dollars that tether the company keeps in the bank somewhere.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Yeah, I mean, that's certainly one popular reason. Criminals all around the world are figuring out that this is very handy because you can keep Tether in like an anonymous wallet and you could zap an unlimited amount to somebody other side of the world into their anonymous wallet. And unless law enforcement is able to figure out what your secret wallet address is, they would have no idea.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Compare it to like a bank or a credit card company that's going to ask a lot of questions about your transfers. You've got like Russia using it to evade sanctions. Chinese gangsters in Cambodia are using it to run this massive fraud and human trafficking operation. And also just crypto traders use it.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Basically, whether you're a criminal or you're selling sneakers, you don't want your currency to go up or down 10% in a day. So the stable coin is more attractive.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So it's three days before inauguration. He writes on Truth Social that My new official Trump meme is here. It's time to celebrate. And honestly, a lot of people in this meme coin world were waiting for this moment because they knew if Trump ever did launch a meme coin, there'd be a lot of interest and it would go up a lot. And that becomes kind of a self-fulfilling prophecy.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So Trump coin shot up as high as $72. On paper, Trump had $57 billion worth of Trump coin at that price. It's since...
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
crashed it's down to uh i think like 17 bucks now now it's a bit complicated but the best estimates are that trump by selling this meme coin made about a hundred million dollars because his holdings on paper would be hard to turn into real money without like totally crashing the price but he did make a hundred million dollars of totally real money that's the estimate of selling this meme coin so it really beats like you know a new trump hotel or like
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Trump steaks, Trump vodka. This is like the best way to monetize your celebrity.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
I believe that actually Witkoff was the business partner on Trump's first cryptocurrency, not the Trump coin.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Now, I mean, if he didn't get in on Trump coin too, I'm sure he would be mad because that was like a great money making opportunity right there. But Trump had an earlier cryptocurrency deal. called World Liberty, where Witkoff and his son had a big role.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
One interesting part of that was this guy, Alexander Vinik, appeared to be just like a crypto criminal who ran an exchange that some people say was even set up to launder the proceeds of hacks. It's not immediately obvious to me why Russia would want him back or what he had done for Russia. So I was intrigued that he was their side of that trade.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So he runs a blockchain called Tron. He's been around for a while. And the SEC's case against him is that when he launched Tron and sold its new cryptocurrency, he engaged in manipulative trading and fraud activities. to make the price look like it was going up to help sell it to the public. Now, he denies this, but it's a serious case.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Now, so Trump's first crypto, World Liberty, was not an immediate success. And this was launched last year, around September, during the campaign. Now, Justin Sun, he's someone who I don't think would be allowed to donate to Trump's campaign. I'm not sure of his citizenship, but he doesn't regularly appear in the U.S., He bought initially $30 million of this World Liberty coin.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
Part of the reason the deal wasn't successful initially was that the terms of World Liberty are that if you buy the coin... 75% of all the money you put in just goes to the Trumps as a licensing fee. So Sun ended up putting in another $40 million. So that's him giving the Trumps $56 million. But they get a 20% licensing fee.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
He's fighting it and he's saying it should be dropped. Crypto reform and all these cases are kind of on the table, right? And now he's saying, hey, maybe you should really think extra hard about my case. Here's $56 million. Again, I should say he denies that he's trying to influence anything with his purchase. But... Who wouldn't tonight?
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
After he made the investment, he was named an advisor to World Liberty. So he's kind of in business with the Trumps now on this crypto. And just a couple weeks after he made the investment, he was at this crypto conference in Abu Dhabi. And at the conference, he was spotted meeting with Steve Witkoff, the envoy, and Eric Trump, who was there to give a speech about how Bitcoin was going to the moon.
The Bulwark Podcast
Jared Moskowitz and Zeke Faux: Scams Galore
So... It's pretty hard to believe that he would not take an opportunity to mention his case.