Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud
Includes the authors' own interview with Bankman-Fried.
Summary
McKenzie, an actor with an undergraduate economics degree, and Silverman, a journalist, wrote a sceptical account of the cryptocurrency industry during and after the 2021 to 2022 cycle. The book combines reporting trips, interviews with industry figures including Sam Bankman-Fried and Alex Mashinsky, and an argument about the sector's economics.
The central claim is that cryptocurrency has no cash flows and produces nothing, so returns to any participant must come from money contributed by later participants, which makes the structure a negative-sum transfer with trading and issuance costs subtracted. From this they argue that the industry's function is to move money from retail participants to insiders, exchanges and early holders, and that the marketing, celebrity endorsement and technological vocabulary exist to sustain that flow.
A substantial part concerns Tether, the largest stablecoin. The authors question whether its dollar reserves have ever been fully verified, note the New York Attorney General settlement over misrepresenting reserves, and argue that unbacked stablecoin issuance would allow the purchase of cryptocurrency with tokens created at no cost, inflating prices across the market. They cover the collapses of Terra and Luna, Celsius, Three Arrows Capital and FTX as evidence that the sector's apparent equity was largely circular.
The reporting on specific frauds is accurate and much of it was subsequently confirmed by prosecutions. The economic argument is stated more absolutely than the evidence supports: the claim that no cryptocurrency application has any value is a position rather than a finding, and the authors do not engage seriously with the arguments for permissionless settlement or with the use of stablecoins for payments in countries with capital controls or unstable currencies. McKenzie's persona as an actor investigating finance shapes the presentation and readers may find it distracting.
Key takeaways 7
- Cryptocurrency assets generate no cash flow, so any participant's gain must come from another participant's contribution.
- Trading fees and issuance costs make the aggregate a negative-sum transfer rather than a zero-sum one.
- Tether's dollar reserves have never been subject to a full audit, and the company settled with the New York Attorney General over misrepresenting them.
- Unbacked stablecoin issuance would allow purchases of cryptocurrency with tokens created at no cost, which would inflate prices market-wide.
- The 2022 collapses of Terra, Celsius, Three Arrows and FTX were connected through circular collateral and mutual exposure.
- Celebrity endorsement functions as the acquisition channel for retail participants who supply the money that earlier participants withdraw.
- Exchange balance sheets in this sector frequently counted self-issued tokens as assets, which made their reported equity fictional.
Who should read it
Investors who want the strongest sceptical case against cryptocurrency as an asset class, with the caveat that it argues one position and does not test the counterarguments.
Where it sits in the reference 3
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