Complex Systems with Patrick McKenzie (patio11)

Stablecoins and shenanigans, with Zeke Faux

Feb 13, 2025

Delve into the murky waters of stablecoins as Zeke Faux reveals Tether's dubious history and the implications of the forthcoming GENIUS Act. The discussion highlights Tether's struggles with transparency and trust, drawing intriguing parallels to major players in crypto. Explore the challenges of financial privacy versus accountability in a landscape rife with scams. The narrative weaves personal anecdotes that bring to life the complexities and ethical dilemmas of cryptocurrency, while underscoring the urgent need for regulation in this rapidly evolving sector.

01:27:03

Creator website

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The Genius Act aims to regulate stablecoin issuers by ensuring they maintain safe assets and conduct regular audits to enhance transparency.

Tether has faced substantial scrutiny for its lack of audits and reliance on questionable assets, contrasting sharply with compliant stablecoin USDC.

The alarming rise of cryptocurrency scams, particularly 'pig butchering,' underscores the urgent need for effective consumer protection in the crypto space.

Deep dives

Bipartisan Stablecoin Legislation

Recent discussions are underway regarding a bipartisan stablecoin bill known as the Genius Act, which aims to regulate stablecoins in the US. The main focus of this legislation is to ensure that stablecoin issuers hold safe assets and undergo regular audits. Popular stablecoins like Tether and USDC are mentioned, highlighting their differing compliance with potential regulations, particularly Tether's longstanding failure to provide substantial audits despite claiming compliance. This legislative effort signifies growing recognition of the importance of regulation in the cryptocurrency space, particularly concerning the economic implications tied to stablecoins.

Intro

3min

Unpacking Tether: Trust, Transparency, and Turmoil

16min

Intricacies of Cryptocurrency Finance and Trust Dynamics

4min

Tether: Controversies and Connections

21min

The Paradox of Privacy in Cryptocurrency

2min

Cryptocurrency Dreams and Disillusionment

13min

Trust, Regulation, and the Crypto Landscape

13min

A Personal Journey Through Cryptocurrency Narratives

3min

Navigating Journalism in the Crypto Landscape

13min

In this episode, Patrick McKenzie (@patio11) is joined by Zeke Faux, investigative reporter at Bloomberg and author of Number Go Up, to discuss stablecoins and crypto fraud. They dive into Tether's controversial history, the senate’s emerging GENIUS act, and how crypto enables various types of financial crime. The conversation explores how Tether went from a “quilted collection of red flags” to becoming crypto's dominant stablecoin, its noteworthy relationship with Sam Bankman-Fried's FTX, and its current political maneuvering. They also discuss the societal value of financial regulation versus laissez-faire approaches to consumer protection.
–

Full transcript available here: www.complexsystemspodcast.com/zeke-faux-stablecoins-tether/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Recommended in this episode:

Number Go Up: https://zekefaux.com/
Anyone Seen Tether’s Billions? Zeke Faux, Bloomberg Businessweek: https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether
Patrick’s review of Number Go Up: https://www.bitsaboutmoney.com/archive/a-review-of-number-go-up-on-crypto-shenanigans/
Doesn't Matter, That's Reg E: https://suno.com/song/173bbd67-92f7-4868-930f-efeca4b373c0

–
Twitter:
@zekefaux
@patio11
–

Timestamps:
(00:00) Intro
(00:45) The GENIUS act of 2025
(02:28) Tether's audit controversy
(05:49) The origins and impact of Tether
(08:17) Investigative reporting and red flags
(12:58) Tether's shady business practices
(19:23) Tether meets SBF
(21:40) Sponsor: Check
(22:51) New anecdotes in the Number Go Up paperback
(28:53) The role of stable coins in crime
(38:20) The importance of AML and KYC rules
(44:21) Financial privacy
(45:18) Sam Bankman-Fried's conference in the Bahamas
(47:14) Loot NFTs
(49:34) Axie Infinity: a case study
(52:30) Crypto's real-world consequences
(58:15) Regulation and financial safety
(01:05:40) Stablecoin bill and ownership limits
(01:06:50) Political realignment and crypto
(01:14:40) Citizen journalists and the crypto-skeptic community
(01:20:36) The abilities and limitations of institutional journalists
(01:26:00) Wrap

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Complex Systems with Patrick McKenzie (patio11)

Stablecoins and shenanigans, with Zeke Faux