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Chelsea gets candid about how crypto has invaded — and, in some cases, ethically compromised — the personal finance media landscape, from celebrities shilling for stablecoins to trusted creators making their own crypto brands.

Line Goes Up: The Problem with NFTs:

Full crypto demographics breakdown:

FTX collapse timeline:

Sam Bankman-Fried trial details:

The impact on Bitcoin:

Luna/Terra collapse details:

Celebrities involved in the scheme:

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Hey, guys.

It's me, Chelsea, from The Financial Diet. And this week's video is sponsored by

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Schedule a free consultation call with today at and never make another financial decision alone. And today, we are going to be doing a little bit of a callout video, which is not something I do very frequently on this channel because I'm classy. But hopefully, we'll do it with a little bit more grace and nuance and data than is common in the genre.

Also I'm joined here by a very despondent Mona and her new toy and sweater today. She is a colitis queen. So she occasionally has flareups.

And she's going through one right now. And unfortunately, her last stuffed animal, her last beloved one, was victim to said colitis. So she got a whole little makeover here.

But she's very tired. She's got her meds, though, so she's going to be on the up and up very soon. And she's fine.

But thank you for being worried about her if you were. Airing out all her dirty laundry. I'm just airing her business out, putting it on Front Street.

Also look at how sweet this little sweater is. It's very When Harry Met Sally. Anyway, so today I really want to talk about the crypto meltdown and specifically kind of call out my own community, the personal finance community, for being, in many cases, very complicit, if not actively predatory, during the heyday of pushing crypto on unsuspecting investors.

So I do take a little bit of pride, if I'm being honest, that TFD has kind of always been on the right side of history when it comes to crypto. We actually turned down several clients who came to us looking to work with their crypto products. And that's come at a serious cost, and especially during these pandemic years.

It was really, really hard to say no to any business. But it was very important for us that we not cross that ethical boundary. We even had an educational event that was scheduled last year, where we were just like doing an explainer on crypto, basically.

And that we actually also had to cancel over ethical concerns. I really don't want to get into too much detail about it because I don't want to kind of sell anyone up the river, but it just wasn't meeting our ethical standard, even as a purely educational event. So we scrapped that as well.

And I do have to shout out my husband here, who works in the tech space, and was very, very adamant with me from day one. When he heard that we were doing even a purely educational event on the topic, he was very upset. He was like, unless you're speaking of it like an MLM/Ponzi scheme, you really shouldn't be legitimizing it at all.

And I fear that this will add some legitimacy. So that was also a consideration in scrapping the event, so shout out to my husband, never on the wrong side of history either. But he's totally right.

We know enough now about the crypto meltdown, and if you want a deeper dive into some of these parallels, I'm linking a few videos in the description that go into it in more detail. But looking at cryptocurrency through the frame of an MLM-like structure is the most accurate way to read it. I think most people just didn't read it that way for two main reasons.

One, it had that very thin veneer of being a financial product. But two, it was mostly pushed by and pushed onto men, who historically are not the people usually targeted by MLMs. Right now, we are dealing with a lot of people who have lost a lot of money, in many cases, their entire life savings.

And they weren't just sold into a pyramid scheme. They were sold into one specifically thinking that it was the future of financial instruments. It's almost like an extra layer of deception from just getting a person to buy a bunch of leggings that they have to keep in their garage.

It was predicated on telling primarily young men that they get to understand something about the world economy and about financial markets that the average person doesn't, that this wasn't just about making a quick buck. It was about understanding economics and getting ahead of the curve when it comes the investment market. And again, it's really in that specific perception that you can see just how damaging the financial media and financial influencers endorsement and normalization of these products actually was in practice.

And demographically, the cryptocurrency user, especially its most active user, is a quite gendered portrait. However, while the overall group is majority white, other ethnicities are actually proportionally more likely to participate in cryptocurrency than whites, possibly due to their higher levels of economic disenfranchisement and lower net worths on average, as well as lack of generational wealth. So over 70% of crypto users are male. 62% of crypto users are white, whereas 24% of crypto users are Hispanic, who only represents 16% of the population overall.

And Asian and Black populations are also proportionally more likely to have participated in crypto than their white counterparts. And we'll link to a full breakdown on that. And it's also not shocking that as these same historically disenfranchised and marginalized groups who have been locked out of a lot of generational wealth were targeted the hardest by this narrative that crypto was going to be a generation-defining paradigm upending way for people to earn massive amounts of wealth in a short amount of time, those are also statistically the people who have been left holding the bag.

When we look at the people who have lost biggest on crypto, it tends to fall along those same socioeconomic and ethnic breakdowns, whereas the people who benefited from crypto are disproportionately white and already wealthy, which again, falls pretty neatly in line with how most MLMs tend to work out. And I really want to talk about the complete lack of accountability I'm seeing for the extent to which a lot of the personal finance community was itself responsible for not just pushing, but especially legitimizing and normalizing these really predatory products. I went back and forth for a while about this.

And I ultimately decided that I don't want to name specific names here, A, because I think that can sometimes undermine the actual points that you're making and become more about really petty drama. And even though it's algorithmically juicy to be talking about specific YouTubers or creators or influencers, I just don't think it's worth the headache that it will cause and the extent that it could be a distraction to the point. But I'm sure many of you guys know who some of these people are if you follow the PF community at all.

Some of these people have even been on TFD in the past, obviously well before they were shilling these products. But you don't have to look far to find a lot of these examples. TFD's audience is overwhelmingly women, which is extremely unusual in the personal finance space.

Most of the personal finance influencers are speaking to an audience of predominantly men, who are, as we discussed, the people primarily targeted by these products, although there were also endless pushes to girlbossify crypto, which is its own nightmare we can get into another time. But let's start by establishing the current situation. So let's just go through a little highlight reel here.

So the first thing that we need to address is the SBF, or Sam Bankman-Fried, saga, which I'm sure you guys have been hearing a lot about. So Sam was the founder of FTX, a former platform for buying and selling crypto and was thought to be the wunderkind of crypto. FTX was even endorsed by many celebrities, including Larry David, Tom Brady, and Steph Curry, among others.

But we'll get into them later. In 2022, customer and SEC concerns started initially because of an article published on CoinDesk, a crypto news platform, that found a significant portion of Sam Bankman-Fried's crypto hedge fund, Alameda Research's, assets consisted of FTT, a token created by FTX that allows users of the exchange to access discounted trading fees. Because FTT cannot be easily exchanged for cash the report stoked fears about the capital reserves at Alameda Research and thus FTX.

Concerns of financial instability at FTX triggered a wave of customer withdrawals totaling billions of dollars. But FTX lacks sufficient funds to pay sellers, instead imposing a halt on withdrawals altogether. And some traders on the platform have not and likely will not ever be able to get their money back.

The article also triggered crypto heavyweight Changpeng Zhao, founder of rival exchange Binance, to sell all of his company's holdings of FTT, which triggered what was essentially a bank run of users selling their holdings, leaving FTX essentially unable to pay out customers and having to suddenly halt their customer withdrawals. And by this time, the SEC and the Justice Department had begun investigating FTX's collapse. And that's the basic gist.

And there have been more developments. But it all led to this. Bankman-Fried just recently pled not guilty to eight criminal charges, including wire fraud, conspiracy to commit money laundering, and conspiracy to misuse customer funds.

And the date for his trial is set for October of this year. And his former colleagues will also be working against him in his trial to save their own asses. Now, the basic lesson here is that you should never be trusting financial institutions, which are extremely unvetted, unregulated, and lack transparency.

And it seems pretty obvious in hindsight. But again, it's worth remembering the extent to which institutions like FTX and SBF as a person were being propped up by both the celebrities and influencers being paid to shill for them, but also they're legitimizing on things like the corporate speaking set. You can look at parallels with things like Elizabeth Holmes Theranos, who was being interviewed on stage by Bill Clinton and gracing the cover of Forbes.

Sam Bankman-Fried had a very similar trajectory, hitting a lot of those same milestones. And because finances, especially at that scale, can often be difficult to understand, in the way health care technology often is, there is a kind of assumption on the part of a lot of laypeople that these people must know something that the average person like you or I don't. In the case of FTX, and in the case of Theranos, the emperor had no clothes.

But financial media for the past several years has been happy to cover cryptocurrency as if it should be treated like a legitimate financial instrument. And the collapse of FTX had a massive impact on Bitcoin specifically, which is perhaps the most wide reaching example. And though we have been seeing a very meager rallying since last November, if you look at just the very tip of the chart here, when you look at a long enough time scale, you can see just how much of a hit this, quote, currency has taken.

But it's important to remember that the entire concept of cryptocurrency as a currency, performing the functions of a currency, is in and of itself ludicrous and totally at odds with the idea that it could also be an investment that can yield huge returns on a relatively short time scale. Check out our interview with Dan Olson, the famed creator of The Problem with NFTs video, where we deep dive into all of this on an episode of TFC. I'll link that in the description too.

But just to quickly address the November low that Bitcoin hit last year, it fell to a two-year low of $15,480 and tumbled nearly 18% in November alone. Beyond the sudden collapse of FTX, one of the world's biggest crypto exchanges, analysts warn of a potential domino effect that could knock over other major players in the sector, as Voyager Digital and Celsius Network have already filed for bankruptcy this year. The chaos reignited calls in Washington for tighter government regulation of the crypto market, further shadowing the investor sentiment.

And the landscape is not getting any better for cryptocurrencies, as we continue to learn more about the fallout from the FTX collapse. And lastly, when we look at the overall collapse, which is leading so many people to be feeling rightfully so bitter, we also need to quickly touch on the Luna/Terra collapse. And to do this quick explainer, I'm going to be heavily quoting from this Wired article that is also linked in the description.

Shout out to them. So to quickly go through it, Luna was the largest, quote, stablecoin in the world at one point. But it quickly dropped to nearly worthless, wiping out billions of dollars of value, considered the largest crypto crash ever.

Luna's sister asset, Terra, or UST, is a, quote, stablecoin whose price equivalence to the dollar is underpinned by algorithms and game theory, rather than cash or collateral. That sounds legitimate. Whoever creates a stablecoin pegged against the dollar should theoretically keep an equivalent amount of dollars in a vault somewhere or other collateral, including crypto, except UST is an algorithmic stablecoin and has none of that.

So it is fully shielded from the real world and takes pride in it. That's how they put it. By May of last year, UST lost its peg to the dollar and fell to $0.58 on crypto exchanges and Luna fell to just $0.02 after being worth $82 the week prior.

And as the article puts it, with Terra, we are witnessing the crumbling of a project predicated on the notion that you can create money and assign it a specific value if people are willing to go along with the pretense that money has the value that crypto companies assign it, akin to role playing in a video game. A small subsection of hardline crypto believers would retort that in the age of post-gold-standard fiat money, most currencies are indeed just a collective delusion. But the fact that there is no government, central bank, economy, or actual usage underpinning Tara matters.

As Frank Muci, a policy fellow at the London School of Economics Growth Lab Research Collaboration puts it, it is similar to a bank run, except it's a run on nothing. And it's difficult not to view this as a Ponzi scheme. When you pay money for nothing and stash your nothing in a protocol with the expectation that it will give you a 20% yield, all you end up with is 20% of nothing.

So there were other aspects of the crypto meltdown over the past year that could be their entire own videos to go into. But those three things really give a big illustration of just how much was lost and the extent to which the entire operation from the get go was built on an imaginary level of stability and technological advancement in replace for the absolute minimum, most basic level of financial regulation or oversight. I think when most people look at the entire ecosystem of crypto, what it is conceptually, the purpose and role that it serves, the way it sells itself versus the way it's actually used in practice, it would be very easy to identify it as a scam from inception.

And we have tons of videos on the subject that break that down in detail, as do other creators. And like I said, we have a lot linked here. But the Theranos example, or like an MLM that's putting one of the top 0.05% girlies on stage at the conference or hire celebrities to come speak at their retreats, it's all about giving that veneer of legitimacy.

Looking at it from the perspective of a financial content creator who has seen this whole thing rise, become seemingly ubiquitous, and then crash and burn the way it has with as many people have been left holding the bag, it's really hard not to become just a little bit resentful at how easily. So many people took this money. Now, I mentioned earlier that a lot of celebrities were shilling crypto over the past few years.

And it is worth just quickly noting that a lot of those people are now getting their asses sued, which is muah, a chef's kiss, love to see it. Hot cryptocurrency exchange FTX dove headfirst into bankruptcy, dragging all of its celebrity promoters down with it. Larry David, Tom Brady, Gisele Bundchen, Shaquille O'Neal, Steph Curry, and others have been named in a class action lawsuit accusing the exchange, which lost $32 billion in the crash, and its famous mouthpieces of using deceptive means to entice customers to invest in the company, per documents obtained by Variety.

FTX and its former CEO Sam Bankman-Fried are accused of using celebrities to lure unsophisticated investors in a so-called Ponzi scheme to keep the company running. According to the filing, part of the scheme employed by the FTX entities involved utilizing some of the biggest names in sports and entertainment to raise funds and drive American consumers to invest in FTX's yield-bearing accounts. The suit claims the FTC's collapse resulted in a consumer loss of more than $11 billion and seeks monetary damages.

Now, since then, other suits have been filed. People are getting fined. The [BLEEP] is hitting the fan for a lot of celebrities who are pushing this stuff.

And it's satisfying to see that. That needs to happen more often in all areas of advertising. I'm sorry.

We need to get some truth in advertising going for all of these beauty products and skin care lines being done by celebrities, who have a full time staff of makeup artists and Photoshop every single one of their pictures. But especially when you are dealing with the extent of financial devastation that these crypto schemes have caused, it's worth reminding ourselves just how heavily these very campaigns were targeting the people who could least afford to lose money on it and how now those same people are the ones who are left holding the bag. And shout out to celebrities like Ben McKenzie, King of the OC, king of our hearts, who has been shouting this [BLEEP] down from day one.

It is just all-time icon behavior. We love him. Ben McKenzie, come on TFC Challenge, is what I say.

But this all brings me to what is ultimately the point of this very long winded video, which is that I think there needs to be more of an active conversation around the extent to which the personal finance community and financial media were part of this normalization, because while there is obviously satisfaction to be had in watching Tom Brady and Gisele Bundchen just rack up as many Ls as humanly possible in a single year and followed by a massive lawsuit for shilling crypto, I actually think there should be a lot more backlash and many more consequences coming to the people who speak from a position of financial authority. I don't mean to judge, but if you are taking your investment advice from Matt Damon, it kind of feels like a scam was going to get you one way or the other. So I'm sorry.

But so many of the creators that I have worked with in this space, that I know personally in this space, that I watch their content, or at least I'm very familiar with them, they were shilling this stuff. They were taking the ad dollars. They were hosting the crypto influencers and grifters on their shows, on their podcasts.

They were legitimizing this. They were fundamentally portraying this as a viable financial instrument and positioning it as akin to or sometimes even better than things like, I don't know, tax advantaged retirement accounts or well-diversified index funds, investments that are, don't get me, wrong imperfect, but are also backed by 100 years of market history and an enormous amount of regulation and government oversight, even if it's still insufficient. It really blows my mind that, for example, people who hold titles, like CPA and CFP, people who are investment advisors, people who have real certifications and ostensibly on some level some sort of code of ethics to adhere to, were able to promote this stuff.

There were even financial influencers creating their own cryptocurrencies and NFTs. And I want to be really-- I want to assume the best in humanity. So I'm going to phrase this delicately.

I think I can imagine that there's a world in which a financial professional or someone whose job it is to talk about finance could theoretically have thought that crypto was legitimate and something that they wanted to be pushing onto their audience or their clients for the past couple of years. And they weren't doing it out of just a complete cash grab because crypto was flooding our industry with ad dollars during that time and kickbacks and commissions and affiliates. Maybe there's a world in which there are financial professionals who genuinely thought it was a good call financially.

If that's the case, those people are completely unqualified to be financial professionals. Let's start there. You have to be so stupid, just from a purely logical financial standpoint, to have believed that was a genuinely good opportunity to be buying NFTs and that it was something that people should be building their financial foundation on.

So that's one side. And that's the generous reading that I'm giving to some of these people. Maybe you are just genuinely that incompetent that you thought that that was a good idea, and you're so easily snowed by the tech jargon babble of it all, most of which is either completely nonsensical or meaningless in the context of the actual function as a currency.

But maybe you were so snowed by the tech of it all that you're like, wow, this is the next thing. This is going to be the future of investing, something I heard quite frequently from some of these people. This is like, in a couple of years, everyone's going to be doing crypto.

You're not even going to use your wallet anymore. You're just going to look at someone, and there's chips in your eyes, and it's just going to take a Bitcoin out of your brain, and that's how you pay for it. There were some people who were genuinely hyped on that.

And again, to those people, I say, sorry that you have that brain. You have to leave the financial industry forever. But that's only a small fraction, I think, of the people who are promoting this shit.

And that's the generous reading. And the non-generous reading is that I think a lot of these people are genuinely predatory. And whether they actively were trying to get people and benefited from people kind of being in their downline, so to speak, with all kinds of kickbacks and sign up bonuses and affiliate revenue or whatever, they at minimum just didn't give a [BLEEP] about the fact that they knew that they were pushing what is at best an insanely unregulated and volatile security onto their audience.

In its best iteration, you are basically sending your audience to play the blackjack table and putting it next to 401(k) and comparing them. And if you're not just an actively malicious monster, then you just are a humongous opportunist, who only cares about your own personal enrichment and only cares about cashing those dollars because as we saw with all those celebrity endorsements, that industry was flooded with ad dollars. And I think that that makes up the majority of people who are shilling this [BLEEP].

I really do. Luckily, with rare exception, the majority of the sphere that was shilling crypto over the past couple of years is just not our vibe to begin with. We were not engaging with those people to begin with.

There was a little bit of overlap. There were some people I was severely disappointed by on a personal level. But for the most part, it's no loss from our end.

But I would just encourage you to, A, call it like it is. Do not give these people the benefit of the doubt. Maybe, I don't know, Larry David genuinely doesn't even know what a dollar is anymore because he's been so rich for so long, and he's like, crypto, I guess that's the new thing.

But if you are a financial professional, there's just no way that you didn't know what you were doing to some extent. So all of that is to say, call these people out, unsubscribe, divest from people who did this [BLEEP],, from people who pushed it, encourage their followers to hold them accountable, their communities to hold them accountable. Do not let them get away with this, to whatever extent that you can.

And again, as I said in the beginning, I don't want to talk about individual names here because I don't really think that helps the overall story. And I don't think it's necessary because this is a really widespread problem and a of people are guilty here. But just please do what you can to at least stop supporting people who did this and see them for who they are or actively put their [BLEEP] on blast.

I think that would be cool too. That's my little call out video for the day. I know it was long, but whatever.

We're here to chat. What else are we going to do? It's a Tuesday.

It's time to sit down and talk with Chelsea. So as always, guys, thank you for watching. Stay away from crypto.

Don't forget to hit the Subscribe and Join buttons. And I'll see you back every Monday, Tuesday and Thursday for new and awesome videos. Bye.