The growth of crypto—decentralized digital currency that doesn’t rely on the backing of a bank or government—is one of the most transformative financial developments of the 21st century. And yet cryptocurrencies still baffle so many. How risky of an investment is it? Where do I buy it? And, wait, what is crypto again?
On this week’s More To The Story, host Al Letson sits down with independent journalist Molly White for some answers. She examines the growth of cryptocurrency in the US, how digital currencies have begun permeating American politics, and the extreme risks and rewards of investing in crypto as the Trump administration is deregulating the industry.
“We see these crypto bubbles happen over and over again, where crypto companies get very high, cryptocurrency companies proliferate, and everyday people are being increasingly brought into crypto,” White says. “And then things get out of hand because there’s very little oversight and bad behavior is very common. And at a certain point, things get untenable.”
White also recounts the epic rise and fall of FTX, the cryptocurrency exchange started by Sam Bankman-Fried, who was convicted of fraud in 2023. FTX’s collapse and ensuing bankruptcy is the focus of Reveal’s new two-part series, The Secret Story of FTX’s Rise and Ruin.
This following interview was edited for length and clarity. More To The Story transcripts are produced by a third-party transcription service and may contain errors.
So before we get too deep, I’d love to start off with the fundamentals, so what exactly is cryptocurrency and Bitcoin?
So cryptocurrency is a digital asset, meaning that it exists entirely in the digital world, there’s no physical representation of the asset, and people trade these assets, like Bitcoin or various other crypto assets, to try to speculate on the price, hoping that these very volatile assets will increase in price. They were created in 2009 or so with the advent of Bitcoin, which was the first cryptocurrency, but now there are thousands and thousands of them that people trade back and forth in hopes of earning a profit typically.
And so, what exactly is a blockchain and how does that relate to cryptocurrency?
The blockchain is the ledger on which all of these transactions are recorded. So this is basically a distributed, decentralized record of every transaction that happens, say, with a Bitcoin. And so, there is this system in which anyone can run one of these computers and contribute to maintaining this digital ledger, without, say, a centralized entity, like a bank, keeping track of every transaction or acting as a middleman in those transactions.
Okay, I think I grasp all of that. It’s a way of keeping big institutions, banks, out of the mix, so to speak.
Right. The idea is that a ton of different people will all contribute to maintaining this ledger, but no single person or entity controls that ledger, and so there is no bank telling you, “Oh, sorry, you can’t make that transaction,” for whatever reason, that was the original design of cryptocurrencies. Since then, it has evolved quite a lot, and so now there actually are a lot of intermediaries in the crypto world, but the fundamental design was to cut them out of the mix.
So right now, we’re in the middle of reporting on the collapse of the cryptocurrency exchange FTX, which at one time was valued at more than $30 billion. You’ve also done a lot of reporting about FTX, including about the way customers were paid out as part of the bankruptcy. Can you talk some about that?
Yeah. So this has been a bone of contention in a number of crypto bankruptcies, where instead of having their assets returned to them in the form that they had been holding them, people are being repaid with the dollar equivalent of those assets based on the time at which the company went bankrupt, and for FTX, this was an all-time low in crypto prices, there had been a very tumultuous year in the crypto industry, and so Bitcoin prices were low, other crypto asset prices were low. And now, years later, as creditors are being repaid, they would much rather get their Bitcoin back because those Bitcoins are worth many times what they were worth at the time of bankruptcy, but instead they’re being repaid in dollars, which means that they’ve lost a significant amount of value than if they had managed to hold onto their crypto assets for that time. But this is the risk that people take when they get involved in crypto, when they store assets on exchanges like FTX, is that there really aren’t protections that are ensuring that people get the outcome that they wish when catastrophes happen.
If the US had a better system in place, could that have prevented things like FTX crumbling?
Yeah. I think that there were regulatory failures that contributed to both FTX’s business operations, that were extremely high risk, that were very much out of the norm for a traditional financial institution, and issues that led to creditors not being repaid in ways that they maybe expected.
There has been very limited oversight of crypto firms like FTX, in part because FTX was based offshore, and so although they did have a branch of the company that was serving US customers, much of the company and its operations were not necessarily subject to US oversight, and there were very little regulations, like you see in traditional finance, that would aim to prevent the types of conflicts of interest that happened with FTX and its sister trading firm, which was called Alameda Research. Typically, you wouldn’t want a company that is holding customer funds to also be engaging in trading activities that could potentially be trading against those very same customers, you would want a very significant firewall around customer assets so that a company could not misuse those assets for their own expenditures or trading purposes, and those types of protections really were not in place, they did not prevent FTX from doing exactly that, which I think contributed to its downfall.
Since the collapse of FTX, how has crypto entered the bloodstream of American finance and investment?
Well, it’s been a pretty remarkable turnaround, I think, in the crypto world. After FTX, I think people were very disillusioned with cryptocurrency, especially the everyday person rather than the crypto enthusiast, they saw crypto as very high risk, not worth getting involved in, they saw FTX as a cautionary tale. But over the couple of years since then, crypto has really re-emerged in the American system as a major portion of the financial world, where we’re seeing big companies, traditional financial companies, embracing crypto. There are companies like Fidelity that have issued crypto ETFs, which are a way for people to essentially gain exposure to crypto assets through a traditional brokerage. We’ve seen a massive embrace of cryptocurrency from the President and the President’s administration, where the crypto industry has become very, very close with not only the President, but also the regulatory structure, and has exerted quite a lot of influence over upcoming legislation over the regulatory approach. And so, crypto has really reinserted itself, I would say, into the American consciousness as crypto prices have come back up and there has been this embrace of cryptocurrency from the political administration.
So if I wanted to buy crypto today, how risky of an investment is it?
Well, crypto is still a very risky investment for a couple of reasons. For one, it’s risky in the sense that crypto is extremely volatile, and so there are these huge swings in price, even in some of the most established cryptocurrencies. We see Bitcoin, for example, dramatically changing in price, both up and down. And so, there is risk in that sense, that you might put a lot of money into Bitcoin, and then the price goes down and you lose a considerable portion of your original investment.
But there are also risks in the crypto worlds that people are maybe not as used to from more traditional institutions, where you can actually lose all of your crypto assets, they can be stolen from you, or companies can go under and your assets may not be returned to you ever, or if they are returned, it can be much, much later or in a different form, and those risks, I think, are still fairly significant, even as companies try to present themselves as more legitimate versions of exchanges, like FTX.
When FTX was still doing business, they very much branded themselves as the safe and easy place to trade crypto. They tried to portray themselves as a place where you didn’t have to worry about the custody of your crypto assets, you could just log on to the exchange and they’d be right there. They tried to create trust among their customers that they were the legitimate, above board way of trading crypto, because FTX was not the first catastrophe in the crypto world, people had grown concerned about the legitimacy of these exchanges even prior to FTX.
And so nowadays, we’re seeing other cryptocurrency exchanges doing the same thing, where they claim that, “Okay, for real this time, we’re the place where we will actually take care of your assets and protect you,” but without much oversight still, and as the crypto industry is actually being deregulated rather than regulated, I remain very skeptical and cautious about those types of companies, because we see these catastrophes happening again and again and again, and without some sort of external force or oversight to stop that pattern, I think it will just repeat.
So Molly, another part of your research and reporting is the influence of cryptocurrency in politics, how did crypto affect the 2024 elections?
The crypto industry became incredibly politically active in 2024, and this had been happening over a period of a couple of years, where crypto firms, including FTX, actually, were becoming very politically active and trying to influence legislation and regulators so that they would have a more friendly environment under which to operate. But they really went into overdrive in 2024, where a coalition of cryptocurrency companies and executives raised over $100 million, they spent something like $130 million on congressional elections in the United States to either support candidates that they believed would be pro-crypto and who would support the legislation that the crypto industry wanted to see put into place.
But also to oppose candidates that they saw as threats to the crypto industry, people like Katie Porter in California, who lost her primary race for the California Senate seat, she was viewed as a ally of Elizabeth Warren, as someone who was maybe going to be skeptical of the crypto industry’s promises and its plans for a much looser regulatory regime. And so, they spent millions of dollars to unseat people like her, or Sherrod Brown in Ohio, and instead replace them with politicians who would be much friendlier to the crypto industry and would vote for legislation that they essentially drafted.
What kind of influence is crypto having on the upcoming midterms?
Well, we saw an incredible degree of crypto spending in the 2024 elections, and I think we are poised to see that again in 2026. The cryptocurrency Super PACs have already raised a significant amount of money, rivaling what they raised in 2024, and they’re continuing to accumulate funds to spend in the midterms. There’s already been some spending happening in special elections and other races that have happened a little bit earlier, and I think we will continue to see that even more so into the midterms as the crypto industry continues to exert influence.
The strategy last time was essentially to show force against candidates who might be skeptical of cryptocurrency or even just unwilling to sign on to the crypto industry agenda and essentially threaten them and say, “We will spend you out of office. We will support your opponents, and we will make sure that they are elected rather than you, unless get on board with our agenda.” And so, some people decided to acquiesce, they embraced cryptocurrency. Others were indeed up against huge spending, where their opponents were backed by the crypto industry because the industry didn’t want to see a skeptic or someone who is more focused on consumer protection put into office. So I think we’re going to see that pattern again, where candidates are being strong armed into at least going along with the crypto industry’s agenda, if not outwardly embracing it, in hopes of earning potentially millions and millions of dollars in campaign support.
Yeah. When you’ve got a candidate like Trump, who I think it’s fair to say has made a lot of money off of crypto, versus a candidate who maybe is not doing as much for the cryptocurrency, it’s clear where their alliance is going to go.
I think so. There was this perception from the crypto industry that the Biden administration was very anti-crypto, that it was because of Biden that we saw more enforcement in the crypto world, and there was this belief, or certainly the crypto industry contributed to this belief, that Kamala Harris would be an extension of that, and so if you supported her, you would essentially be putting your crypto assets at risk. Whereas Trump very much positioned himself as an ally to the crypto industry, he was describing himself as the pro-crypto president, he was launching his own tokens, he was building businesses where he was personally profiting from cryptocurrency. And so, I think many executives in the crypto world saw him as the obvious choice, because he wants to get rich from cryptocurrency, and so he will support policies that will allow anyone to get rich from running a cryptocurrency business, and they very much threw their lot in with Donald Trump as a result of that.
What’s Trump’s involvement with World Liberty Financial? It seems like he and his family have made large investments and have their own family token.
Right. So the Trump family has a whole portfolio of cryptocurrency companies and crypto-related investments at this point. World Liberty Financial was one of the first ones, and this was a project that was launched by the Trump sons, in collaboration with a couple of other crypto entrepreneurs, and the whole selling point was that they were going to create their own cryptocurrency trading platform that would address what they describe as debanking that they’ve experienced personally.
So the Trump sons have said that in the past, they were denied banking services due to their political beliefs, due to their family associations, and they see crypto as the way to answer that, where no bank can deny you service because it’s decentralized and you can just set up an account and go about your business, and that was the ideology behind World Liberty Financial. Although, the company so far has not actually launched anything besides a token called WLFI, from which the Trump family has made hundreds of millions of dollars. They’ve also launched a stablecoin called USD1, which is, again, a crypto asset that is pegged to the US dollar, that has also been very lucrative for them. But so far, the actual promises of the platform have yet to be realized.
Before we move on, I’m still having a hard time understanding exactly what a meme coin is. So a meme coin is just digital currency that somebody creates based around a meme, and those can have dramatic swings in how much they’re worth, is that correct?
Yes, that’s absolutely correct. Meme coins often start at extremely low prices, and then as interest is drawn to them, people are always looking for the next new meme coin, and so if someone is able to get some attention on a meme coin, it can spike in price, even if we’re talking about many, many fractions of a penny to a penny, and because of that, people try to make huge returns on them, even though often those spikes are very short-lived and people often lose a substantial amount of money trying to speculate on the next big meme coin. That is the model of meme coins is to pick the right one early and then hopefully make a profit.
So it’s like pick the right one, get in early and get out early as well, make the money in balance?
Right. And the people who are a little bit late to that party are the people who lose a lot of money, because they allow those early purchasers to get out with their profits.
So is this the same type of thing that the Hawk Tuah girl, I have no idea what her real name is, the Hawk Tuah woman did, she created her own meme coin, is that what it was?
Yep, that’s exactly right.
So she created a meme coin, and everybody got mad at her because she made a lot of money, or the people that were working with her made a lot of money, but everybody that came later to it kind of got screwed?
Right. And that is actually the most common trajectory for a meme coin, is the insiders who launch the token are the ones who make money, and everyone who comes in later tends to lose money. And there’s very little oversight or regulations around how meme coins are supposed to work, but people still get very angry when they perceive that the person who launched or endorsed a meme coin did it in the wrong way that caused them to lose money.
So let me ask you a really basic question then, if that’s the way it goes, why invest in a meme coin? I don’t understand. If you know that it’s an inside job, why invest in it? I’m really truly trying to understand.
Yeah. I think a lot of crypto investing is really not terribly rational. There is a lot of hope that they’re going to be one of those early buyers and they’re going to be the ones who make the money and not the ones who are allowing the insiders to make the money. In reality, it’s often not the case, and oftentimes, especially with meme coins, they are set up in such a way that you could never make money off of them, because the insiders just have a structural advantage that is not available to everyday people who are coming in later to purchase these tokens. But I think people get really hopeful. They see stories about a person just picking the right token and suddenly they’re a millionaire overnight, and they think that could be me, I just have to pick the right one. And sometimes they lose over and over and over again, and they get very upset when that is not happening for them, even if it’s not an entirely rational behavior.
Is there a safe strategy with crypto in general? I’m pulling out from meme coins, because it seems like what we’re saying with meme coins is it seems like it is the extreme Wild West, you’re almost playing the lottery, hoping that something will work out. Is there a crypto strategy that is a little bit more stable?
Well, staying out of it is certainly the safest option, I think.
That’s what I’m planning to do, I’ll just-
Yeah, that’s been my strategy as well.
My kid though is very much into crypto, so I’m just curious, is there another path?
Yeah, I think there are ways that people work to minimize risk. I think that some people view cryptocurrency as what it is, which is an extremely high risk investment choice, and they see that maybe there is some room in their portfolio for that type of asset, and so they allocate a small percentage of their investment strategy towards crypto, maybe they stick to some of the more mainstream coins, maybe they take custody of their assets personally so that they don’t have to worry about an exchange going under.
But ultimately, anyone who is involved in crypto speculation is taking on a significant amount of risk, both in the sense that it’s very volatile and it’s high risk in the sense that maybe high risk investments outside of crypto can be high risk. But there is also this additional layer of risk in crypto that people I think often don’t recognize, which is that, typically, if you buy a high risk stock, you can at least be sure that that stock is going to be in your brokerage account the next time you check, whereas in the crypto world, it is actually very common for companies to go under or for crypto exchanges to be hacked and have assets stolen. And so, that amount of risk is also a factor, and people maybe don’t recognize that quite as much.
You, like me, sound very skeptical about crypto. I would say I’m skeptical about crypto out of ignorance, I don’t know enough about this stuff, so I’m just like, yeah, I’ll keep my money. You sound skeptical about crypto with an abundance of knowledge. I’m curious though, what’s the flip side of it, why are there crypto enthusiasts, people who absolutely believe that this is the way of the future?
I would say it’s a mix of different ideologies that abound in crypto enthusiasts. Some of it is very ideological, and so it ties back to the early goals of crypto, which was to remove banks from the equation or make sure that governments were not even involved in issuing the asset. There are a lot of people who are digital equivalents of gold bugs, who think that we should have never left the gold standard, and they see Bitcoin as a similar asset class to gold because it has a limited supply, and so they think that it is a superior currency from a structural level.
There are a lot of people who love cryptocurrency because they think it’s their ticket to getting rich quick. There have been people who have made their fortunes in Bitcoin or other crypto assets because they got in early and they made a lot of money, and so people see those stories and they think, that could be me. And so, they get involved in crypto speculation, hoping for the same results. And then, I think there are people who have really bought into the idea that blockchains are a superior technology to the banking rails that we use today. That one, I think, I find the least convincing, just because the technological promises of blockchains have been fairly limited, and we’ve seen how little progress there has been towards making Bitcoin or some other crypto asset the currency of the future. But there are people who still believe that we just need a couple more years and it’ll be right around the corner.
What do you think is the future of regulation for cryptocurrency? Is it going to always be this lawless place?
Well, I think that remains to be seen. But we’ve certainly seen a lot of pressure in the United States to avoid regulations for the crypto industry, to even remove regulations that were in place, the few regulations that were being enforced prior to the Trump administration. And so, I think at least for the next couple of years, we’re going to see very little in the way of regulations, at least in the sense of regulations that protect consumers or prevent these businesses from engaging in abusive behaviors.
I think the regulations that are being put in place and that are coming out of the cryptocurrency industry, which often claims that it actually wants regulation, are solely regulations that benefit the cryptocurrency industry and the wealthy executives running these companies. They are not the types of protections that you would hope to see in financial institutions to ensure that they’re being fair and that customers are being protected. And so, I think that will be the trend, at least in the near future.
But I think we’ve also seen throughout history that what happens in the cryptocurrency world is that things get very, very inflated, we see these crypto bubbles happen over and over again, where crypto prices get very high, cryptocurrency companies proliferate and everyday people are being increasingly brought into crypto, and then things get out of hand, because there’s very little oversight and bad behavior is very common, and at a certain point, things get untenable. And so, we see catastrophes like we saw in 2022, when many, many, many companies collapsed, not just FTX, FTX was certainly the most high profile, but there were tons and tons of crypto companies that went under because they were engaging in very risky lending or they were outright frauds that eventually reached the end of their line. And so, a lot of people lost a ton of money, crypto prices came crashing back down. That is a cycle that we’ve seen over and over again in the cryptocurrency world, and I worry that it will only continue and become more dramatic as the sector continues to expand.
And so, I do think, unfortunately, there may be this natural boundary to the extent to which the crypto industry can grow under such a deregulated administration, and at some point, it will unfortunately self-correct in a way that is very, very painful for everyday people.
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This post has been syndicated from Mother Jones, where it was published under this address.