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Joe Rogan Experience #1951 - Coffeezilla

Stephen Findeisen, also known as Coffeezilla, is a YouTuber whose channel focuses on exposing scammers, fraudsters, fake gurus, and their deceptive financial schemes. www.youtube.com/@Coffeezilla

Joe RoganhostStephen Findeisen (Coffeezilla)guestGuest (unidentified, brief third voice)guest
Jun 27, 20243h 4mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 15:00

    (drumbeats) Joe Rogan podcast.…

    1. NA

      (drumbeats) Joe Rogan podcast. Check it out. The Joe Rogan Experience. Train by day, Joe Rogan podcast by night. All day. (instrumental music)

    2. JR

      Nice to meet you, man.

    3. S(

      Hey, thanks a lot, man.

    4. JR

      I appreciate what you do. What you do is a very valuable service 'cause you go so deep on some of these scammers. It's like, it's so important, 'cause there's so many people that just, they don't really understand what's going... Like, the FTX thing, for example, the best one, 'cause I was so in the dark about this thing. I was like, "What is happening?" Like, "What are they doing?" Try to break it down for us. Like, what... First of all, what is a... It's a crypto exchange, right?

    5. S(

      Yeah, that's right.

    6. JR

      So how does, how does that work?

    7. S(

      So the first question is when you get in, when you learn about crypto, you're like, "It's this magic internet money."

    8. JR

      Magic.

    9. S(

      How do you get some of that? How do you get some of that magic-

    10. JR

      (laughs) Right.

    11. S(

      ... internet money? Uh, well, you have to go somewhere to buy it. And so it's a crypto exchange is where you kinda go. You put your f- fiat on, your dollars or whatever, euros or whatever, and you put it into this crypto exchange. They have a bank and they work with that bank. Then they exchange that money for some type of crypto token. There's a lot of different tokens out there. And-

    12. JR

      Explain tokens 'cause I don't understand tokens. I know there's crypto and there's tokens. Like, what is the difference between the two?

    13. S(

      Yeah. Tokens like is the individual, you can think of currency, right? So it's like the individual-

    14. JR

      Okay.

    15. S(

      So Bitcoin is, you know, you have Bitcoin. Then you have... It's one of the cryptocurrencies. You have Ethereum. You have Dogecoin. You have Safemoon. You have FTT, which is what FTX was using as their native token. So a lot of these guys, you'll start a crypto exchange, and then you'll launch your own token that people can invest in, sort of like they're investing almost in your crypto exchange. And so that was actually one of the ways that FTX really perpetuated their fraud. I, I, I can break it down. How much do you know about the FTX situation?

    16. JR

      Let's break it down for people that don't know about it.

    17. S(

      Yeah.

    18. JR

      So...

    19. S(

      Let's do it.

    20. JR

      Okay.

    21. S(

      So FTX was this, uh, crypto exchange located out in the Bahamas, which is a great place to put your, uh-

    22. JR

      Why do they do it in the Bahamas?

    23. S(

      Because it's unregulated. So the problem with doing stuff in the United States or, you know, some, m- something like Europe or something like that is you're, you are subject to all these regulations which require you to be a little more careful.

    24. JR

      Oh, those are pesky.

    25. S(

      Yeah. They're-

    26. JR

      Get those out of the way.

    27. S(

      ... they're annoying. So like-

    28. JR

      We don't need that.

    29. S(

      ... like the famous example is like, Coinbase is in America and they have to file all these forms. They have to be... They're a regulated entity. They're a publicly traded company so they have to report everything. So if you're offshore, you can kinda not do any of that. You can play fast and loose and, you know, for some people, they think that's better. They can offer, let's say, like, 100X leverage. Like, you have a dollar, I'll let you trade with $100. And that's, that's gonna be, like, one reason you come to my offshore exchange because I can offer you more leverage than the guys who are, like, you know, Coinbase or something like that.

    30. JR

      Right.

  2. 15:00 – 30:00

    Well, he wasn't saying…

    1. S(

      fly.

    2. JR

      Well, he wasn't saying that, "I played the video games-

    3. S(

      Yeah, yeah, yeah.

    4. JR

      ... and that's why I lost the money."

    5. S(

      But, but after the fact, he's like loo- like, he's pl- still playing video games, and you're like, "Can you have the decency to get off the video game and talk to people?"

    6. JR

      So bizarre. It's, it's just so bizarre that so many people got duped, and I felt the same way about Bernie Madoff. You know, I'm not a, a f- financially aware person. I'm not, I'm not into the market. I don't, I don't follow these things. So, when I see something like that go down, I'm like, how did he get Steven Spielberg? You know, how did, how does someone like a Bernie Madoff or a Sam Bankman-Fried, how does he get these people to do this? And in the FTX case, how much of it was getting celebrities to endorse the platform?

    7. S(

      Huge. This is what I wanted to say, like, the more I study this stuff, and you start to have repeat occurrences. Like, I just cover stuff all the time, and, and you see echoes of the same thing. I just had somebody just a couple days ago, I was interviewing for this, for this news scheme we're looking at, and he said, "You know, I never understood how Bernie Madoff got people, 'cause it seems so preposterous, and then I fell for something very similar." And what I notice with all of these things, the thread is you believe... You know it's kind of too good to be true, but the social proof is overwhelming and it overwhelms your kind of, like, alarm bells. So, the social proof is a combination of things. So, first of all, it's like, it's this guy who drives a Toyota. So, you go like, "Well, why does he need to scam me if he's driving a Toyota?" Right? Then it's like, uh, which Sam Bankman-Fried did. Then it's like, okay, Tom Brady backs him. Well, Tom Brady's gotta have some guys who are looking into this. And then it's like, well, BlackRock backed him. Well, BlackRock definitely had some guys who looked into it.

    8. JR

      Right.

    9. S(

      And Sequoia Capital, they said he was, uh... Might be one of the first, like, trillionaires or whatever, like, like he's such a great entrepreneur, they think he's such a genius. I actually, it might've been one of the A1Z guys, or, uh... I'm blanking on the name right now. But-

    10. JR

      A1Z? What is that?

    11. S(

      No, no, no. I'm sorry. Uh, I, I'm blanking on... It's this famous... (laughs) I've gotta remember it right aft- after I get out of here. It's one of the famous, um, like, uh, investment funds. They invested in a bunch of NFT projects. Marc Andreessen, I think, is the guy who runs it.

    12. JR

      Hmm. Jamie's looking it up. I thought I knew it off the top of my head, and now I don't wanna say the wrong one. A16Z.

    13. S(

      A16... A1Z. A16Z. I can't... It was one of those. Sequoia or A616Z. One of them wrote this glowing review of Sam, basically saying he's gonna be one of the first trillionaires. Um, so all these guys basically, a lot of these people backed Sam with the highest endorsements. And so if you're just an average person, you're thinking, "Well, how much more due diligence can I do than all these other guys? All these other guys buy into him."

    14. JR

      Right.

    15. S(

      And like, and then they themselves are kind of also looking at each other being like, "Well, that guy did it." Like, what... It's the hottest deal around, right? Uh, Kevin O'Leary is in. So, so you kind of think you're swimming safely with, like, other savvy investors, and that's what ultimately gets you to buy in. Bernie Madoff is very similar. I mean, he was, uh, you know...... really well-regarded in Wall Street. So, when people invested with him, they didn't... They knew the, like, returns were insane, but it wasn't like he was some random fly-by-night guy. He was well-respected in the Wall Street space. People thought he might take over the SEC after, like, the current person had stepped down, they thought he was gonna take it over.

    16. JR

      Whoa.

    17. S(

      Like, he's one of the leaders at the NASDAQ. I mean, he was one of the go-to guys. And so you thought, "Well, I invest with Bernie, like, I can't lose." It's like almost, you know, betting on the house, like, 'cause the house always wins, right? So, when FDX was taking off, it just seemed like everyone who was a someone was backing him. So, then it was okay, and then I think a lot of these people deferred to their other friends. They're all saying, "It's okay. Let me put money in." And it's just a huge case study that just because other people fall for something doesn't mean you're safe. Like, you have to do... I hate to say "do your own research" 'cause that's such an-

    18. JR

      Moo. (laughs)

    19. S(

      ... overused, like, scammy phrase. It's actually such, like, a phrase, like, that, you know, it, it's almost useless.

    20. JR

      Chemtrails.

    21. S(

      But let me, let me say this: if it's too good to be true, if they're offering market returns that you wanna believe in, you go, "Man, I wanna believe this is real," don't invest. Like, that's a bad idea.

    22. JR

      People were calling bullshit, though. Just like there were calling... there were, there was a few people-

    23. S(

      Yeah.

    24. JR

      ... that were wary, that were calling bullshit on Bernie Madoff, and there was, there was a few people that were standing out and saying, "This- none of this makes sense."

    25. S(

      Right.

    26. JR

      And who were those people?

    27. S(

      So, there were a few people. Um, there was a Matt Levine interview with, uh, Sam Bankman-Fried. He didn't call him a fraud outright, but he's like, "Hey, it seems like you're in the Ponzi business, and business is good."

    28. JR

      Whoa. And what did he say to that?

    29. S(

      He's like, "Well, you know, like, think of it like a box." And, you know, you tell a bunch of investors, you know, "Hey, if you put money in this box, we can get some money out. We can give th- you this yield." He starts explaining, like, this thing that sounds exactly like a Ponzi scheme. And so ultimately, Matt Levine is like, "Uh, yeah, this doesn't really make a lot of sense." But again, it stops short of, "This is a fraud," because, you know, no one knew. There's a bunch of backing. So, I made a video at the time being like, "This crypto CEO just def- describes a Ponzi scheme." And that video has aged so well because it's like, people are like, "Oh, it was all true!" Um, but, like, but people were outright calling it a fraud, like Mark Cohodes. He's a famous short seller. Um, he was calling that a fraud early. I have a buddy of mine, um, he goes by Dirty Bubble Media on Twitter. He's like one of the A- Anon Twitter accounts. He was calling it a fraud. You know, there were things that were coming out, like, questions about, you know, "Okay, they say have- they have all this money. Where? Where on chain is it?" So like, the blockchain, everything's publicly, you can see it, right? It's all at some address. And so people were asking like, "Where's... You say you have all this Bitcoin, where's the Bitcoin? You say you have all this Ethereum, where's the Ethereum? And why are s- why is so much of your balance sheet made up of your own tokens?" It's a big question. So, one of the things that FTX had done, and a lot of companies were doing at the time but FDX was sort of the worst offender, is... Let's say I give you a l- like, let's say I give you a loan, Joe. So, an unsecured loan would be I give you a million dollars and I don't ask for anything. So, if you default on that loan, I'm out a- out a million. Another way is I ask for, "Okay, I'll take some equity in the studio if something goes wrong," right? So I cover my butt if, if you default on it. Now, this is what was going on in crypto. They're called collateralized loans. But what FTX was doing was they were saying, "Hey, like, we'll take a million dollars from you, but instead of giving you collateral like dollars, or like, or like a, like some asset, we'll give you FTT tokens," which is their own invented coin. And that should have value if anything goes wrong. And people were accepting that as value. But the problem is when at- the exact moment FTX can't pay you back is the exact moment that FTT becomes worthless.

    30. JR

      Mm-hmm.

  3. 30:00 – 45:00

    Mm. …

    1. S(

      funneling money through a personal investor, that I think is the problem. They're actually- campaign finance laws, I've heard, are pretty weak. I forget the name of the law, but it was passed in like the early 2000s, uh, 2010s maybe, where it actually became very easy to donate dark where it's like you can donate through super PACs, political action committees, and you can donate as much as you want and you don't have to be... Your name has to appear nowhere. And so that's actually what he said in one of the interviews. He goes, "No one believes me when I said I donated dark because no one believes anyone would be... Like, everyone wants the credit for donating."

    2. JR

      Mm.

    3. S(

      "No one believes that I just...... do it on the sly. And that, that's ultimately what he was doing. But it also looks like he was donating through some of his executives. And I mean, the whole thing was shady all the way down. Like, I, th- so, it, the person's not named in the report who was donating to, um, Democrats. We know the one republic donating to Republicans was Ryan Salame. Um, but that person eventually said, "Well hey, can we restructure all this money that went through me like a loan so that we can, you know, say that I took a loan out and I was donating, so we didn't violate any laws?" They never ended up doing that. But like, it was very clear the internal conversations were they knew they were committing fraud. They knew they were doing things wrong, and this idea was, "Well, no one's gonna catch us." Right? "Nobody's ultimately gonna find out, um, what we're doing here."

    4. JR

      How many more of these are out there in the world?

    5. S(

      As big as FDX? Uh, we don't know. I mean, there's only a few that are bigger. Like, there's Binance, very opaque company. We don't exactly know-

    6. JR

      And what has happened to Binance since FDX went down? Because it seems like they received a- additional scrutiny, right? 'Cause now people are starting to look at it, and I saw that their value went down considerably.

    7. S(

      Yeah, Elizabeth Warren, uh, wrote a letter to them. They're, they're being looked at much more closely. I mean, ultimately all of these things are so opaque, eh, in the sense that y- you can know their assets. So, it's like a big thing recently in crypto. They'll say, "Hey, we're gonna show you proof of reserves." What does that mean? They mean, "We'll show you on chain all our assets. You can check yourself." Like, "I have a billion dollars in USDC." Well, that's great, but it doesn't matter if I have a billion dollars in crypto, Bitcoin, whatever, if I owe $2 billion.

    8. JR

      Right.

    9. S(

      That's what ultimately matters, is how much do you have in deposits that you owe out? And so with Binance, we don't really know. The only one we have a little bit more of a look into is Coinbase. It seems like they are, you know, legitimate. But, um, o- so much of the problem with crypto is we don't know how much of this stuff is money laundering. We don't know how much of this stuff is, like, outright the proceeds of criminals. I mean, we know that these criminals do launder their money through a lot of these crypto exchanges, uh, through mixers. It's just sort of this big mess right now, and we're waiting for regulators to figure it out. Finally, regulators have stepped on the scene, but, um, you know, right now it's just this kind of wild, wild west of you're just having to trust these shady offshore entities that they're telling the truth. Binance says they're fine. They show proof of reserves, but what are their liabilities, you know? It's hard to know. Um, so people really just take you at face value, and they, they have to trust that, like, "Oh, other people are invested, so I guess I'll jump in too."

    10. JR

      And that's why the celebrities are important, and that's why-

    11. S(

      Huge part of it.

    12. JR

      ... the connection to BlackRock is important.

    13. S(

      Huge part, yes, because they're the legitimacy that says, "Hey, I'm, you know, I too am safe because Tom Brady's got his money there, so I can put money there."

    14. JR

      So, is, the lure is like how Bitcoin used to be worth very little, and then one time it was, with the high of Bitcoin. It was like 70,000 or something like that?

    15. S(

      60 plus, yeah, yeah.

    16. JR

      So, that, that's the lure. The lure is you buy in for pennies, and one day you're insanely rich. I'm sure you know about that one guy who lost a hard drive and who's, uh, paying people to go through a landfill-

    17. S(

      Yeah.

    18. JR

      ... to try to find his hard drive 'cause there's billions of dollars worth of Bitcoin on that hard drive.

    19. S(

      Yeah, people lose, people lose their crypto keys all the time. I mean, it's kind of an interesting idea where you go, "I'm gonna get in before everyone else," but a lot of people found out about crypto the same time the mainstream media, everyone else did. So, by the time they're actually investing-

    20. JR

      It's too late.

    21. S(

      ... it's, it's too late. Um, I think the, like, most fair case you could make about crypto is sometimes national currencies aren't a great idea and you want an alternative. So like Turk- look at the Turkish lira, right? The inflation rate, I think, is like 75% or something like that. Like, it's like, it's an unimaginable, it's just out of control inflation, and if you hold onto your Turkish lira, you're in for a bad time, because every day it's getting less valuable. So, the question is what do you do if you're in that country making money? If you wanna store your money somewhere else, how do you store it?

    22. JR

      Hmm.

    23. S(

      So, there's this idea of, like, these alternative currencies that are kind of interesting, um, and then there's some arguments that, like, hey, if you're someone like me, I have, um, two employees, and both of them are overseas. Like, one of them is in London. One of them is in Ukraine. And so for me, I have to pay them, and you know, I have to do this wire transfer, and it's kind of expensive to do these, like, you pay all these fees for wire transfers. So, the idea is like, okay, well if you have crypto, those wire fees can go down, and instead of taking, you know, maybe a day or something, it'll take, like, five minutes or three minutes.

    24. JR

      Hmm.

    25. S(

      So, so I don't wanna give off the idea that, like, there's nothing here, but the problem is, is that with the lack of regulation and the ability to send peer-to-peer, which means, like, you and I can just send money to each other directly, no middle man, there's also a really huge opportunity for fraud, scams, and basically, like, you know, shell, shell games-

    26. JR

      Hmm.

    27. S(

      ... where you're hiding the money.

    28. JR

      Yeah.

    29. S(

      You're saying, "Oh, invest in this. This is gonna become valuable later," but you actually own a bunch of that token. Then you sell it off, and then the plot- price plummets. So, you thought you had a bunch of money, but actually it's worth nothing. Like, there's all these new scams that have emerged as a result of people getting interested in this idea of an alternative money system. Um, I mean, yeah, e- e- especially in our modern age, I mean, it seems like you can understand where they're coming from, the average person. They're like, "Look, I've been screwed by the banks every time the, the government's printing a bunch of money."... where do I go, right? You can understand the appeal, but it's just like, you went from the, you know, the arms of one huckster to another. Like, it's just like-

    30. JR

      Hmm.

  4. 45:00 – 1:00:00

    But Binance hasn't had…

    1. S(

      warning people, "Hey, this is probably insolvent. Get your money out." But CZ ultimately was the big like, he was the most notorious and like, uh, well-respected person in the space to where people thought, "Okay. Well, if he's saying it..." You know, he's a guy who only says positive things about crypto 'cause he's a crypto exe- you know, executive. So, if he's saying there might be problems, there's probably some problems.

    2. JR

      But Binance hasn't had similar problems?

    3. S(

      No, they've had a few runs, and they've covered withdrawals. I mean, so- it's just that- it's- the problem is, a lot of it's a black box. I mean, so it's like things are good for now.

    4. JR

      You can't look in.

    5. S(

      Yeah.

    6. JR

      Yeah, you don't know.

    7. S(

      That was the problem with, uh, with the Beha- uh, FTX. Like, they had hidden all their numbers. Like, th- Sam had literally had a $10 billion account that he mislabeled with Alameda Research.

    8. JR

      Mislabeled?

    9. S(

      Yeah, he sa- he called it "Fiat @ FTX." But it was a $10 billion hole.

    10. JR

      Uh, what does- what do you mean by "mislabeled"?

    11. S(

      Well, it was on a spreadsheet, Joe. So, he, he was on a sp- he put it on a spreadsheet for their balance sheet, and he mislabeled the account "Fiat @ FTX." And so what prosecutors are now arguing is he knew, of course what it was. He deliberately, uh, obscured what that was to hide it from people who were trying to take a look at his books. But it's just- that's what I mean by black box. You never know what games these guys are playing. Like, they say, "Oh, here's sort of like a- the rough estimate of our balances, but oops, did I tell you about this $10 billion account? Like, I forgot."

    12. JR

      (sighs)

    13. S(

      (laughs) It's so silly. It's- y- you find out like, there were just no adults in that room, and like, the few adults that there were, were like, you know, they had like, a criminal lawyer. Uh, well, anyway. I, I don't think he's actually been convicted of anything. I shouldn't say that. They had this guy, Dan Friedberg.

    14. JR

      Shady.

    15. S(

      Shady, shady. This guy, Dan-

    16. JR

      Allegedly shady.

    17. S(

      Dan Friedberg. No, he's definitely shady.

    18. JR

      (laughs)

    19. S(

      I'll say that.

    20. JR

      What-

    21. S(

      This guy-

    22. JR

      What was his- I remember, but what was his, his-

    23. S(

      His, his whole thing was he, he did this thing with Ultimate Bet. So, he was, uh, one of the lawyers. So, there's this poker site called Ultimate Bet, and he got caught in this scandal where they had enabled this thing called "God Mode" on Ultimate Bet-

    24. JR

      (laughs)

    25. S(

      ... where the se- the CEO could see everybody's hands and play on the site, seeing everybody's hands. So, he just-

    26. JR

      (sighs)

    27. S(

      ... he cleaned up on all his own, like, his own, uh, customers. Just basically taking their money. Like, "Oh, I know exactly when to fold, I know exactly when to bet." So, he had God Mode enabled, and then they found out. Somebody found out about this God Mode. And so the lawyer's like, "How do we basically cover this up?" Dan Friedberg's like, "How do we, you know, uh, you know- what do you want me to do?" And he's like, "Hey, just make this problem go away." This is the CEO. Like, "Go blame it on somebody else. Go blame it on some like, you know, third party that got access to our, our website." Say it was like, a glitch or something. And so that, that is the experience of the lawyer that FTX then hires, is like, being complicit on a private call- leaked private call, trying to cover up this God Mode scam. That is his background. And so I asked, you know, Sam, I was like, you know, "What does it say if this is your chief regulatory officer?" This guy who enabled God- or who, who helped cover up God Mode. And he's like, "Well, I don't wanna comment on other, you know, people," or- it's just like, it-

    28. JR

      Well, how does he skate on that? Like, how, how does a guy like that not wind up getting indicted?

    29. S(

      (sighs) I ask myself that every day.

    30. JR

      (laughs)

  5. 1:00:00 – 1:15:00

    No. (laughs) …

    1. S(

      two things. Eggs is NFT, and then there's a coin aspect to it called ZOO tokens. Okay? So you can buy these ZOO tokens to buy the eggs, and the idea is the eggs will then hatch into animals that will earn passive ZOO tokens. So you're, you can buy eggs with ZOO tokens and then the eggs will passively earn you ZOO tokens. Does that make sense?

    2. JR

      No. (laughs)

    3. S(

      Well, don't worry. You're, you're kind of actually caught up. Uh, so the ZOO tokens-

    4. JR

      (laughs)

    5. S(

      ... were basically this passive income, you know. You basically invest up front and then you're sort of getting the tokens back out, which you can then sell, I guess. So that was the idea pitched to people, and people immediately buy in. They, $3 million in NFT sales, tens of millions of dollars in the tokens itself, the ZOO tokens. People are so excited about it 'cause it's Logan Paul. And he says this is his project. He's putting his name behind it, his backing behind it, and he's a great marketer. I mean, you gotta give the guy credit where credit is due. He's a tremendous marketer. So people ge- get all excited.... all of a sudden, the da- the hatch day comes when you're supposed to hatch these eggs, and half the hatching doesn't work.

    6. JR

      How does the hatching work? Is it on a computer model?

    7. S(

      It was on-

    8. JR

      Like, what is it?

    9. S(

      ... it was on the blockchain, so you could like, you could, your NFTs would turn into different NFTs, like they would like, they would transform into the animals. They'd go from an egg to an animal.

    10. JR

      How?

    11. S(

      Uh, it's just blockchain coding. I mean, it's just, it's just-

    12. JR

      But how do they... Is it, is it predetermined?

    13. S(

      Yeah. Yeah, it's ba-

    14. JR

      Like how does your egg become an ostrich?

    15. S(

      It's just, it's just random. It's like, it's supposed to be randomly generated, uh, animals. So you-

    16. JR

      And so you might get a rhino-

    17. S(

      ... when you hatch it, you might get, yeah.

    18. JR

      ... you might get a chicken.

    19. S(

      Exactly. And then you could like, crossbreed your rhino with like, a chicken and get like a-

    20. JR

      Wow.

    21. S(

      ... a ricken or something.

    22. JR

      (laughs)

    23. S(

      And, and get even more tokens. But uh-

    24. JR

      Is this it?

    25. S(

      Yeah, there, there it is.

    26. JR

      Jamie, or BearShark.

    27. GV

      BearShark. (laughs)

    28. S(

      You get like, BearShark. So like-

    29. GV

      Oil panda.

    30. S(

      So people start to like-

  6. 1:15:00 – 1:15:06

    Section 6

    1. S(

      that Andrew Tate launched it, and you thought, you were sort of like, "Andrew Tate's going after my brand."

Episode duration: 3:04:16

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