Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall
By Zeke Faux

The crime:

In 2022 the cryptocurrency exchange FTX (short for “Futures Exchange”) went bankrupt, after having hit a peak valuation of $32 billion just weeks earlier. The founder and CEO Sam Bankman-Fried (popularly designated SBF) was later convicted of fraud, conspiracy, and money laundering.

The book:

The FTX story is only the best known part of the crypto chronicle Zeke Faux tells here. There’s a funny image of an SBF coin on the cover with the latin tag “Nihil Valet” (No Value), but this is really a more general look at, as the subtitle has it, the rise and fall of cryptocurrency. In fact, the main target of Faux’s suspicions throughout is the “stablecoin” Tether, which turns into a kind of crypto white whale that he never lands. Nevertheless, Money Go Up is a great read: tart, funny, and filled with telling anecdotes from a journalist who circled the globe, apparently several times, to get the story. I burned through it in a day.

It’s not the whole story of crypto, or, for that matter, of FTX. For example, Faux deliberately eschews going into much detail about how cryptocurrencies works. This is something I can’t fault him for though, as I’ve consumed a number of explainers on the subject and come away with only the fuzziest notion of how the system operates. In my personal experience, however, I’ve found I know more than most people who’ve dabbled in cryptocurrency (including many obnoxious true believers mixed in with the merely crypto-curious), and there are several times in Faux’s narrative where he has crypto insiders admit that they don’t know much more.

Of course, being opaque has always been a feature and not a bug when it comes to crypto. As its name suggests, this is a currency whose whole point is to slam the door on transparency. And it is this character that, in turn, has made crypto the currency of choice for all kinds of criminal activity: Internet scams, tax evasion, human trafficking, and (most of all) money laundering. As a lawyer I knew told me back when this stuff just started taking off: there’s a reason why they want to keep it secret. And as I wrote here several years ago:

As with anything involving a lot of tech, a lot of money, and a lot of secrecy, I am suspicious of all of this. “Cutting out the middleman” and facilitating faster financial transactions may be of some value, but they don’t seem like really pressing needs for anyone. Meanwhile, avoiding any oversight is the kind of thing mostly bad actors want to take advantage of.

What’s the point of crypto anyway? As Faux entertainingly makes clear, it is not a convenience. The middlemen aren’t cut out, and indeed they take an even bigger piece of the crypto action than the much-despised banks do with regular (fiat) currency. When, strictly for journalistic purposes, Faux purchases and then sells a mutant ape NFT he names Doctor Scum the process is described as “excruciating” and confusing (the NFT is actually sold hours before he knows about it, which he accounts “some of the worst hours of my life”). Then there are the extra costs involved (and keep in mind this was only a $20,000 sale):

Had I been trading in U.S. dollars, I would have lost about $800. But in crypto, there’s a fee associated with every transaction. I ended up wasting at least another $1,160: $36 to Coinbase, $497 to Yuga Labs for their 2.5 percent cut on all ape sales, another $497 to the NFT marketplace, $90 to Bank of America, and about $40 in Ethereum fees.

Convenience? Getting rid of the middle man? Lower fees and transaction costs? Not likely. When Faux travels around the world trying to use crypto, even in states where its use is encouraged by the government, all it leaves him with is

a new appreciation for my Visa card. It worked instantly, with just a tap, charged no fees, and never asked me to memorize long strings of numbers, or to bury codes in my backyard. It even gave me airline miles. When my wife’s account was hacked and used to book an Airbnb, we were given a full refund with just a phone call.

Say what you want about the inconvenience of dealing with your bank, and I could say a lot, when it comes to customer service for your cryptocash account the bottom line, as relayed by one artist profiled here, is “SORRY YOU’RE FUCKED.”

The inconvenience of actually using crypto for anything leads to some funny stories, but they underline that question I asked earlier: What’s the point of crypto? Some of its popularity seems to be driven by the kind of thing that in politics is referred to as negative or affective polarization. A good example of this comes when Faux attends a crypto conference in the Bahamas (a “giant volcano of crypto bullshit”) where SBF was interviewed on stage by business author Michael Lewis. Now at the time Lewis was writing a book on Bankman-Fried (Going Infinite), which is always a bad sign. A very bad sign. Faux describes him as “lavishing praise” on big tech’s latest wunderkind, and asking questions “so fawning, they seemed inappropriate for a journalist.” But aside from that, it’s interesting to note some other things.

Lewis said he knew next to nothing about cryptocurrency. But he seemed quite confident that it was great. The writer said that, contrary to popular opinion, crypto was not well suited for crime. He posited that U.S. regulators were hostile to the industry because they’d been brainwashed or bought off by established Wall Street banks. I wondered if he simply hadn’t heard about the countless crypto scams, but the thought seemed preposterous.

“You look at the existing financial system, then you look at what’s been built outside the existing financial system by crypto, and the crypto version is better,” Lewis said.

Better? In what way? Michael Lewis is no dummy. So why, aside from the fact that he was being given access to SBF in order to write his book, was he so deep in the tank for crypto? One part of it, I think, is that negative polarization I mentioned. Crypto is obviously shady, but the government, the “established Wall Street banks,” “the existing financial system” and the elites running it, they are the enemy that needs to be destroyed. The hate, amplified by media and social media, becomes such a powerful drug that even successful elites become willing to cut off their nose to spite their face.

Another draw for crypto is that it is, effectively, a form of gambling, with supposed insiders and people who know the system making piles of money off of the suckers. At several points Faux even likens the crypto exchanges as being a casino. Meanwhile, time and again he tries to think of some real world use for cryptocurrency and comes up with nothing, aside from (obviously) enabling and concealing criminal activity. And, I suppose, letting rich kids play at being crypto bros, happy to give their money to bored billionaires rather than having to do anything so déclassé as paying taxes. Bored billionaires who, in turn, don’t give a damn about consumer protections or safeguards and are just squirreling their money away in offshore boltholes while running schemes many of them openly acknowledge to be fraudulent. One crypto executive thought his job title should be “Ponzi Consultant.” Another “happily” described his business as a “never-ending Ponzi scheme . . . what I call Ponzinomics.”

One thing that struck me is how brief a run FTX enjoyed. The exchange was only founded in 2019, took just a couple of years to reach stratospheric valuations, and was then kaput by 2022. The rise and fall of crypto (and at this point we can only pray that crypto won’t make a comeback, at least to the kind of hysterical levels described here) didn’t take very long. J. P. Morgan CEO Jamie Dimon compared it to a pet rock, and I don’t think NFTs lasted any longer than that iconic fad from from the 1970s. Do we even remember the bored ape NFTs anymore? Or Razzlekhan, the self-styled rapper who was one half of the biggest heist in history? If not, at least we won’t have to explain them to future generations.

That said, crypto is still with us, and all the terrible shit that comes with it. As Annie Lowrey recently reported in The Atlantic:

The FBI reports that cyper-investment scams cost Americans $4.6 billion in 2023 [remember: FTX collapsed in 2022], up 38 percent from the year before, and 1,700 percent over the previous five years. That’s more than ransomware scams, fake tech-support swindles, web extortion schemes, phishing attacks, malware breaches, and nonpayment and nondelivery frauds combined. And it is an undercount, given that it includes only complaints made to law enforcement; most folks don’t bother making a police report in an attempt to get their bitcoin back, knowing it is hopeless.

So why does crypto persist? Because people, greedy people looking to make a very quick and very easy million, or billion, want to believe in it. It’s basically a cult, and Faux isn’t under any illusions that it will be going away anytime soon.

I didn’t think the prices of all of the cryptocurrencies were about to go to zero, or that we’d never see another hot new coin mint overnight billionaires. On the stock market, pump-and-dump scams have persisted for hundreds of years, and yet there are still new suckers willing to buy shares in some shell company that claims to have struck gold.

The one coin I especially wouldn’t bet against is Bitcoin. It’s not that it’s useful – if anything, it’s more unwieldy than the others. But Bitcoin’s true believers are so convinced that it’s hard to imagine anything will change their minds. To them, whatever the question, the answer is “buy Bitcoin.” Everything they see is evidence Bitcoin will rise, like the members of a cult certain that the apocalypse – and their salvation – is just around the corner.

What surprised me, after finishing Number Go Up, was how little I ended up caring about SBF. Perhaps it’s just because that, while a crook, he was far from the worst crook in an industry rife with scammers. But I also couldn’t help feeling that he didn’t care all that much either way about the money. To be sure, he was no altruist, effective or any other kind. But the impression I had was that he knew all along FTX was a joke, a funhouse ride filled with smoke and mirrors, and he was just waiting for the inevitable collapse in his 12,000-square-foot Bahamian penthouse, eating junk food and playing videogames until the Feds came calling. Faux registers surprise at how blasé he appeared when the whole house of cards came crashing down, which for some reason made me think of the response the chief weapons investigator had when he informed George W. Bush that Iraq didn’t have any weapons of mass destruction. He was struck by how uninterested the president seemed. Did he believe they did? Or did he just not care? That’s the thing about bullshit, as defined by Harry Frankfurt. It’s not a lie if you don’t care if it’s true or not. I think SBF was living in an entire ecosystem of bullshit, unconcerned over whether any of it was real.

This is part of what makes Number Go Up such an entertaining and even downright funny a book. But that would be the wrong takeaway. Yes, there are plenty of freaks and geeks to amuse us, like the “laughably weird founders” of Tether. The crypto world is one, Faux tells us, “where a lack of experience or competence has never been a barrier to fame and fortune.” So much for the meritocracy! But dig a little deeper, as Faux does, and you see beyond the great fortunes to the destroyed lives and violent crimes that are such a big part of the crypto story. The book gets progressively darker, finally taking us to a slave-labour cyber-scam camp in Cambodia. It’s a horrifying vision of a world we rarely get to see, and the worst part of it is that it’s probably not even the smallest or most evil part of what’s really going on.

Noted in passing:

What does money buy?

Alex Mashinsky was co-founder and CEO of the crypto lending network Celsius, a company whose business model never seemed to make the slightest bit of sense. When we last see Mashinsky it’s in a Manhattan courtroom, as part of a hearing into a dispute between Celsius and a former employee after Celsius’s bankruptcy (Mashinsky himself would later be arrested and tried for fraud). But when Faux interviewed him at a smoothie shop he was still riding high.

The interview doesn’t go well. Mashinsky blows a bunch of smoke at Faux about Celsius being a five-legged stool or a candy shop, but then gets distracted by his disintegrating paper straw which requires him to order his public relations representative to bring him another one. I’m sure it’s just me, but I would hope that if I ever get to be really rich I’ll never ask someone to fetch me a straw. I’ll get my own.

Things get worse though when Mashinsky gets annoyed at the noise of the smoothie shop’s blender (something I would have thought very much part of the atmosphere in such a joint). “Can we get out of here? It’s just driving me crazy!” he yells. Retreating to his $8.7 million apartment the interview continues as picks “at a tray of fruit brought by another assistant.”

Why do people want to be rich? For some of them it’s just so they can be like this.

Takeaways:

You don’t really invest in cryptocurrency. Investment means buying shares in a company which then does things in a real economy, like employ people and make things. At best, cryptocurrency is a form of gambling. As Faux concludes, the promises made about crypto have proven empty, while “the benefits of crypto to the rest of the world seemed to be limited to enabling a zero-sum gambling mania.” And gambling is always odious and profoundly damaging to society and individuals.

And, just to repeat: it’s only gambling at best. It can be a lot of other things that are worse.

True Crime Files

The Doomsday Mother: Lori Vallow, Chad Daybell, and the End of an American Family
By John Glatt

The crime:

Lori Vallow was living with her fourth husband, Charles Vallow, when she met Chad Daybell, a Mormon author of religious-themed end-time books who was married at the time to Tammy, with whom he had had five children. Vallow had a young daughter, Tylee, by a previous marriage and had adopted an autistic grandnephew of Charles named J.J.

As near as can be reconstructed, Lori talked her brother Alex into killing Charles. (Alex would not be prosecuted for killing Charles, arguing he had shot him in self-defence. Then Alex would die, apparently of natural causes, before the later trials involving Lori and Chad, though he was complicit in those murders as well.) Both Tylee and J.J. disappeared and were found to have been murdered and buried on Chad’s property at his home in Idaho. Chad is thought to have then killed Tammy. Chad and Lori, cashing in on the deaths, flew to Hawaii where they married. That is also where they were later arrested. At trial after being returned back to Idaho, Chad was found guilty of the first-degree murder of Tammy, Tylee, and J.J. and sentenced to death. Lori was found guilty of the murder of Tylee and J.J. and conspiracy to murder Tammy. She was sentenced to life imprisonment.

The book:

While the story of the Vallow-Daybell doomsday murders (as they came to be known in the media) is a singular and horrifying one, it also hits on a lot of themes that readers of the True Crime Files will be very familiar with. For example, in two previous books by John Glatt (Love Her to Death and Tangled Vines) I’ve noted how bad an idea it is for women to meet up with their exes, or soon-to-be-exes, on their own. In both those books the wives in question ended up being murdered. In this book it’s slightly different in that it was Lori wanting to meet with Charles. He had a bad feeling about this, and even mentioned to Lori’s (normal) brother Adam some misgivings. He ended up being shot to death by Alex.

Charles should have also paid more attention to what were clear red flags. Actually, calling them red flags at this point would be putting it mildly. When she met Charles, Lori had already been divorced three times, with two kids by two different fathers. All by the age of 32. That’s not a red flag, it’s a klaxon. By the time of the fatal visit Lori was clearly a madwoman, and Charles had even arranged to have her committed. After all, in the days just proceeding their fatal meet-up she’d (1) cleaned out his bank accounts and then changed the numbers on them so he couldn’t access them (because he ran a business this meant he couldn’t make payroll); (2) was clearly interested in another man; (3) changed the locks on their house; (4) stole his truck, and (5) accused him of being possessed by an evil demon.

But he still “loved her to death” (his death, as it turned out). Alas, as I’ve had occasion to remark several times in these case files, there’s just no talking to a guy who’s in love.

You’d think any man would have to be crazy to take up with Lori after all this, but then crazy came along. Chad not only knew all about Lori’s history before getting involved with her but took notes on her previous relationships and family connections. To be sure, Chad was messed up himself, but it’s also true that some women just have a poisonous “it.”

Another familiar story worth flagging (because, as I’ve long maintained, we’re supposed to be taking notes and learning something from all this) is the significance of life insurance policies. Just before his wife’s death Chad “made ‘significant increases’ on several life insurance policies he had taken out on Tammy, bringing them to the maximum legal payout allowed.” And yet this wasn’t any kind of tip-off to the underwriters or police when Tammy just suddenly died. Meanwhile, I did get a bit of a kick out of how upset Lori was that Charles had made his sister the beneficiary of his policy just before he was killed. If she wanted that money I guess she should have moved a little faster.

In ways like this, and I’m being selective, what we have here then is a fairly standard murder story: married man meets married woman and they have to get rid of spouses and children to enjoy their new lives together. There are two twists that give it special interest though. The first is the apocalyptic belief system and “prepper” culture that Chad and Lori were immersed in. In fact, Chad could be described as the leader of a mini-cult that separated people out in the usual way (the saved and the damned, the sons of light and the spawn of darkness) in anticipation of the Rapture. Like a lot of modern cults, there also seemed to be some heavy drawing from pop culture. This goes back at least as far as L. Ron Hubbard and the roots of Scientology in C-list science fiction stories. Here’s something I took note of in my review of Steven Singular’s book Killer Cults that I think is relevant:

What is the link between cults and the products of pop culture? Charles Manson thought the song “Helter Skelter” from The Beatles’ White Album contained a hidden message about a coming race war. Adolfo Constanzo based his brutal crime cult on a 1987 flick called The Believers starring Martin Sheen and Jimmy Smits that I have only the vaguest recollection of today. The Heaven’s Gate cult took its lead from Star Trek mythology, with its members thinking of themselves as parts of an “Away Team” as they killed themselves. Why do so many people put so much faith, or even find any meaning, in such crap? I know that’s a question every outsider asks of any belief system, but Star Trek? I guess fandom and cult membership have to be plotted on a spectrum.

Insofar as Chad was starting his own cult he seems to have borrowed from the same range of sources. We’re told he believed, for example, that the spells and curses in the Harry Potter books actually existed but required “great focused will to use.” Indeed, Chad even described himself to Lori as “a grown-up version of Harry Potter.” Meanwhile, one observer “felt like many of them [the cult’s beliefs] were ripped out of a Dungeons & Dragons manual. Between the stats, accounts of dark and light weapons . . . it sounded like someone had created a tabletop [Book of Mormon game] based on the Bible.”

It wasn’t clear to me from the evidence Glatt presents just how much of the stuff about light and dark spiritual possession and people turning into zombies Chad, as opposed to his followers, really believed. But this aspect of the case is gone into in more depth in Leah Sottile’s book When the Moon Turns to Blood so I won’t say more about it here.

The other thing that makes the story interesting is that we don’t really know that much about how Charles, Tylee, J.J., and Tammy were killed. By that I don’t just mean the actual causes of death, but how their murders might have been planned and arranged or who was directly involved. Clearly, however, Chad and Lori were responsible. This leads, however, to the deeper question of who was the dominant partner in their relationship.

As Glatt remarks in his postscript, despite all the coverage that the case received none of the accounts “have explained how the seemingly mild-mannered end-times author Chad Daybell managed to lead the glamorous grandmother into homicidal madness. But the real question is, what came first, the Lori chicken or the Chad egg?” Did Chad really lead Lori along, or was she leading him?

Let’s look at both sides.

The case for Lori being led by Chad was put by Special Prosecutor Rob Wood, who called what Chad did “spiritual abuse” and “spiritual manipulation”:

“I’m so torn. It’s such a conflicting feeling to know that this person’s been good her whole life, and then made this error in judgment and got sucked into this vortex of this man [Chad]. I feel for her. I just have so much compassion towards her because I know that’s not what she would have ever done on her own. And I hate her for that.”

Now Wood was talking to Lori’s sister at the time he said this, so not all of it may have been sincere. Lori had hardly been good “her whole life.” Not even close. But it does seem clear that she took a swerve for the worse when Chad entered in her life. Her marriage with Charles seemed to have been working, enough for him to have risked everything to save it. And even J.J.’s grandparents thought she’d been great with J.J. up until she met Chad. “You couldn’t ask for a better mother,” said J.J.’s grandfather. “She loved J.J. She loved Charles, and I don’t know what caused this conversion. You don’t go from being the mother of the year of a special needs [boy] to the person that won’t even tell you where they are. That just doesn’t happen.”

If you buy into the idea of Chad as cult leader you also find support for this notion of him leading Lori on. It’s telling in this regard that after their arrest Chad did talk her out of cooperating with the police and making a plea deal with prosecutors. One cult expert interviewed by Glatt says Chad was “still manipulating his new wife, even while she was behind bars” with his daily calls and scripture readings.  “He continued the marination of her mind.” Another expert interviewed by Sottile says Chad used “classic grooming techniques” on Lori. This strongly suggests someone very much in control.

On the other hand . . .

I don’t think Lori was ever normal. There seem to have been mental health issues running in her family.  Her father waged a quixotic life-long legal campaign against the government, claiming that he didn’t have to pay any taxes. Her brother Alex, who shot Charles, probably killed Tylee and J.J., and who attempted to kill the husband of Lori’s niece, may have had improper relations with Lori when they were both kids. Her sister Stacey went crazy starving herself to death, fearing that all food was poison. Stacey’s husband would liken the family to “a psychological hornet’s nest,” and that may have been selling it short. I don’t like the overuse of the excuse of mental illness when it comes to a lot of criminal cases, but it’s clear that Lori was sick.

As far as her personal relationships go, Lori also seems to have been a dominant personality. A friend named Melanie was described by someone who knew them both as “almost subservient to Lori . . . a passenger on Lori’s bus.” “Lori was definitely running the show,” was how the friendship was characterized. This seems to chime with the powerful hold Lori had over her brother Alex, and makes one wonder about her relationship with Chad. According to the minister who presided over their beach wedding in Hawaii: “Lori was definitely more forward than Chad . . . She really did all the pushing on this. She was definitely wearing the pants that day.” Also: “There were a couple of times when he really manned up, but most of the time she was the pilot.” For what it’s worth, this is the same impression I got seeing the video of them together when they were ambushed by a reporter in Hawaii. Lori seems far more in charge, with Chad sort of trailing beside her like he’s on a leash. As reported in When the Moon Turns to Blood, the police who first called on Chad and Lori when doing a wellness check on J.J. were singularly unimpressed with the man of the house:

Daybell was a jowly, potbellied man with an awkward, quiet demeanor, who gave off the air of a person who was deeply unsure of himself. He wore too-large clothes and walked with a forward-leaning slant, and when he spoke, he mumbled sleepily, like his words were smooth river rocks dropping from his lips.

That image of rocks dropping from his lips is an odd one, but the picture is pretty clear. In the language of the manosphere, Chad, despite his archetypal alpha name, was a confirmed beta. Whenever Chad’s father phoned him as the case became public he tried to speak to him alone, but Chad would always click the call on to speaker so Lori could listen in. Again, this sounds like Lori was in control.

Having set out the two arguments I’ll conclude by sharing the blame. What seems most likely to be the case is that Lori and Chad were an instance of folie à deux, or shared madness. My hunch is that Lori was a stronger personality, that she was (pick your metaphor) driving the bus or piloting the plane, but for things to go so spectacularly bad they had to come together.

Glatt was once again writing a timely book here, that’s his métier, and went to press before either Chad or Lori had gone to trial. That said, this is a readable account of a series of terrible crimes and one that helps set the complicated story straight. In his postscript Glatt tells us that “In my many years of writing true crime books I have never seen another case as terrifying as that of Lori Vallow Daybell. It simply defies logic, lying somewhere between cold-blooded murder and wild religious science fiction – the very embodiment of the truth being stranger than fiction.” But was it really so strange? Chad and Lori were just kindred spirits, not so much for their shared heretical beliefs (both were excommunicated from the LDS Church, eventually) as for having arrived at a point in their lives where they just didn’t care about anyone or anything very much anymore aside from having a good time. And that level of indifference to others can result in incredible cruelty.

Noted in passing:

Lori liked to live large and spend a lot of money, something perhaps related to her being raised in privilege but her family having come down in the world due to her father’s legal problems. But after her third divorce, at the age of around 30, she apparently owed $724,000 to creditors. At the time she was working as a self-employed hairstylist. How do you burn through that kind of money?

“In September 2001, Chad won a Cedar Fort Publisher’ House Award for his Emma Trilogy, despite the conflict of interest as they had published it and just hired him.” Ha-ha. Oh, literary awards. How does anyone take them seriously?

A week after killing Tylee and burying her burned remains in what amounted to a pet cemetery, Chad and Lori did a podcast entitled “Chad Daybell Sharing Jesus’ Love.” You can see why so many people today are cynical about religion.

Joe Ryan, Lori’s third husband, died alone, his body only discovered three weeks later in his apartment, with “an open jar of spaghetti and dirty dishes in the sink.” A jar of spaghetti? Or a jar of spaghetti sauce? The latter seems far more likely.

Takeaways:

Apocalyptic beliefs usually have something nasty about them, viewing most of humanity as either damned or worthless, which in turn justifies seeing all the zombies sent straight off to hell. But such beliefs are also dangerous, because if you think the end of the world is coming soon then you don’t have to care much about the long-term consequences of your actions. If you meet someone who’s convinced the Rapture is imminent (as opposed to thinking that the world is sliding into a more secular sort of catastrophe at its own leisurely pace) I’d keep a polite distance.

True Crime Files