Why Everything Is A Scam (Except For Scams)

Summary

The video script delves into the paradox of financial fraud in an era of heightened awareness, where scams are sophisticated and prevalent. It discusses how the allure of quick riches and the influence of celebrities and influencers contribute to the success of fraudulent schemes. The script also touches on the role of technology, desperation among the public, and the decline of journalism in facilitating and obscuring the reality of scams.

Takeaways

• 🚨 Financial fraud awareness is high, yet scams are prevalent due to heightened suspicion leading to more sophisticated schemes.
• 💔 The impact of dating scams can be devastating, as illustrated by the loss of life savings by the speaker.
• 🎯 Growing scams are targeting people's money through deceptive means, including fake cryptocurrency investments.
• 🌐 Society's fascination with con artists is evident in the celebration of convicted fraudsters, reflecting a complex relationship with scam culture.
• 📈 The venture capital industry has been complicit in fraud, with some firms encouraging founders to exaggerate to secure investments.
• 🤔 Honesty in business is often overshadowed by the success of fraudulent companies that can attract more investment due to their audacious claims.
• 📊 Lack of due diligence and regulatory oversight allows fraud to thrive, with whistleblowers becoming key in uncovering scams.
• 💡 The paradox of widespread scam skepticism coexisting with successful fraudulent schemes highlights the public's complex perception of scams.
• ☕️ The script includes a sponsored segment for Trade coffee, emphasizing the value of genuine products and services amidst scam culture.
• 👴 The most common victims of financial fraud are not just the elderly, but anyone who may not have the resources to vet offers thoroughly.
• 📈 Influencers and celebrities are increasingly involved in promoting potentially fraudulent schemes, exploiting their audience's trust for quick gains.

Q & A

Why is financial fraud at an all-time high despite increased awareness?

Financial fraud is at an all-time high because the heightened suspicion of scams has paradoxically made it easier for fraudsters to operate. People are more likely to fall for sophisticated scams that exploit their cautious nature and the lack of due diligence by investors and regulatory bodies.

How do dating scams involving cryptocurrency investments work?

Dating scams involving cryptocurrency investments involve fraudsters convincing people to put their money into fake cryptocurrency schemes. These scams exploit the victim's trust and the allure of high returns in the volatile cryptocurrency market.

What societal trend contributes to the celebration of con artists?

Society's fascination with con artists is fueled by the celebration of wealth and excess, often glamorized in movies and media. This leads to a paradox where people celebrate the conviction of fraudsters like Sam Bakman while also being drawn to the allure of get-rich-quick schemes.

How have venture capital firms contributed to the rise of fraudulent companies?

Some venture capital firms, in their pursuit of growth at all costs, have encouraged founders to exaggerate their numbers to secure investments. This has led to a culture where dishonesty is rewarded, and fraudulent companies can thrive by perpetuating lies to attract more investment.

What role do whistleblowers play in the prosecution of financial fraud?

Whistleblowers have become crucial in the prosecution of financial fraud due to the limited resources of regulatory bodies like the SEC. They provide valuable information that helps uncover and prosecute pump and dump schemes, securities manipulation, and insider trading.

How have low interest rates and the popularity of SPACs contributed to fraud?

Low interest rates and the growing popularity of SPACs have led to an influx of investor money seeking high returns. This has created a competitive environment where companies, even those with questionable ethics, can attract investment by making bold, often false, claims about their potential.

Why are regular people more susceptible to financial fraud than sophisticated investors?

Regular people are more susceptible to financial fraud because they often lack the time and resources to thoroughly vet every offer. The cost of scams on a larger population has become more lucrative as fraudsters target those who are less equipped to identify and avoid scams.

What is the impact of influencers on the prevalence of financial fraud?

Influencers, seeking fame and fortune, can contribute to the prevalence of financial fraud by promoting get-rich-quick schemes or endorsing products and services that are not as advertised. Their influence and the trust of their audience make it easier for fraudulent activities to succeed.

How do new technologies like cryptocurrencies and AI contribute to the rise of fraud?

New technologies provide a golden opportunity for fraudsters who exploit the hype and lack of understanding around these technologies. They promise to reveal secrets to making money using these technologies, often through guides or courses that claim to provide a path to profit.

Why are people more willing to believe in scams rather than legitimate opportunities?

People are more willing to believe in scams because they are desperate for a way out of their financial struggles. The promise of a quick fix or a shortcut to wealth can be very appealing, especially when traditional avenues for financial success seem out of reach.

What role does sensationalism in the media play in the acceptance of fraudulent activities?

Sensationalism in the media contributes to the acceptance of fraudulent activities by normalizing and even glamorizing them. This can lead to a culture where dishonesty and the pursuit of quick profits are seen as acceptable or even admirable.

Outlines

00:00

🚨 The Paradox of Financial Fraud Awareness and Sophistication

This paragraph discusses the heightened awareness of financial fraud in society, yet paradoxically, this very awareness leads to an increase in scams due to people's constant suspicion. The speaker shares a personal experience of losing life savings to a dating scam and highlights the sophistication of modern scams, especially in the cryptocurrency space. The paragraph also touches on societal fascination with con artists, referencing examples like Sam Bankman-Fried and the Wolf of Wall Street. It delves into the venture capital world, where inflated numbers and fake businesses are common, and the pressure on founders to lie to secure investment. The speaker criticizes the Silicon Valley mantra of 'growth at all costs,' which often overlooks the reality of fraudulent activities. The paragraph concludes by listing five reasons why fraud is more successful than honesty, starting with the lack of due diligence and regulatory oversight.

05:05

🎁 The Influence of Influencers and the Prevalence of Scams

The second paragraph focuses on the role of influencers in perpetrating financial fraud. It points out that the modern culture celebrates making money, even through dubious means, and how this has merged with get-rich-quick schemes. The speaker discusses the FTC's findings that a majority of fraud contacts are initiated on social media, emphasizing the danger influencers pose due to their large followings and the trust placed in them. The paragraph also addresses the issue of sensationalism in content creation, where influencers capitalize on attention-grabbing tactics to promote potentially fraudulent opportunities. The speaker criticizes the lack of consequences for influencers who promote scams and highlights the impact of this on society's perception of scams, suggesting that the allure of quick wealth often overshadows the reality of hard work and diligent savings.

10:09

🤖 The Role of Technology and Desperation in Fraud Proliferation

The final paragraph examines how new technologies, such as cryptocurrencies and AI, are exploited by fraudsters to create scams. It discusses the speed at which these technologies are adopted for fraudulent purposes, often outpacing the understanding and regulatory response of society. The speaker points out that the desperation of people to improve their financial situation makes them susceptible to scams that promise quick fixes. The paragraph also criticizes the sensationalism in media and journalism, which contributes to the public's confusion about what is genuine and what is a scam. The speaker concludes by discussing their intention to write an article on fraud culture from a former investment banker's perspective and encourages viewers to sign up for a newsletter to continue learning about finance.

Keywords

💡Financial Fraud

Financial fraud refers to the intentional deception for personal gain or to damage another individual or business, in the context of finance or business. In the video, the theme revolves around the prevalence of financial fraud, especially in the era of cryptocurrency and online scams. The script mentions the high alertness of people to such scams and the unfortunate reality that the suspicion of everything being a scam contributes to the rise in financial fraud incidents.

💡Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. The script discusses how fraudsters convince people to invest in fake cryptocurrency investments, which is a growing scam tactic. It also touches on the collapse of FTX, a cryptocurrency exchange, which resulted in significant financial losses for crypto enthusiasts.

💡Dating Scams

Dating scams involve individuals establishing a relationship with the intent of deceiving the other person, often for financial gain. The video script includes a personal account of losing life savings in a dating scam, illustrating the emotional and financial impact of such schemes and how they exploit trust and vulnerability.

💡Venture Capital

Venture capital is financing that investors provide to start-ups in exchange for equity or a stake in the company. The script highlights how some venture capital firms encouraged founders to exaggerate their numbers to secure investment, leading to a culture where dishonesty can be more profitable than honesty, especially when the firms prioritize growth over due diligence.

💡Pump and Dump Schemes

A pump and dump scheme is a type of investment scam where the value of a stock is artificially inflated ('pump') so that the scammers can sell their shares at a high price before the value crashes ('dump'). The script mentions that the SEC is now relying on whistleblowers to prosecute such schemes, indicating the challenges in regulating market activities.

💡Influencers

Influencers are individuals who have the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with their audience. The video discusses how influencers can exploit their audience's trust to promote get-rich-quick schemes or products that may not deliver on their promises, contributing to the perception that everything is a scam except for the scams themselves.

💡Due Diligence

Due diligence refers to the research and analysis of a company or investment to verify its value and legitimacy. The script criticizes the lack of due diligence by both venture capitalists and individual investors, which allows fraudulent companies and schemes to thrive by making exaggerated claims without being properly scrutinized.

💡Regulation

Regulation in the financial context refers to the rules and oversight provided by governing bodies to ensure fair practices and protect investors. The video script points out that regulatory bodies like the SEC, FDIC, and FTC are underfunded and under-resourced, leading to a reliance on whistleblowers and a lack of effective market oversight.

💡Fraud Culture

Fraud culture refers to the societal acceptance or normalization of fraudulent behavior, especially in the pursuit of financial gain. The script suggests that the current environment encourages dishonesty and fraud, with high-profile cases of fraud being celebrated rather than condemned, and a lack of consequences for fraudulent actions.

💡Investment Scams

Investment scams are fraudulent schemes that promise high returns with little or no risk, often involving the sale of fake or worthless securities. The video script discusses the sophistication of modern investment scams, which can be more subtle and harder to detect, leading to significant financial losses for unsuspecting investors.

💡Scams

Scams are fraudulent schemes designed to deceive individuals or businesses for personal gain. The script uses the term 'scams' repeatedly to emphasize the ubiquity and sophistication of modern scams, which have become so prevalent that they are affecting people's trust in everything except for the scams themselves.

Highlights

People are more aware of financial fraud than ever before, yet this heightened suspicion paradoxically contributes to the prevalence of scams.

The sophistication of scams has increased, with fraudsters using fake cryptocurrency investments in dating scams as a lure.

Society's fascination with con artists is highlighted by the celebration of convicted fraudsters, indicating a complex relationship with financial deception.

The创投 industry's encouragement of inflated numbers by founders for investment opportunities has led to a culture of dishonesty.

Fraudulent companies like Charlie Javis's Frank and Abraham Shafi's IRL have raised significant capital based on false user numbers.

Fraud often outperforms honesty due to lax regulation and the ease with which scammers can exaggerate their business prospects.

Government regulators like the SEC are underfunded and rely heavily on whistleblowers, indicating a lack of oversight in financial markets.

The private sector's failure to conduct due diligence, as seen with FTX and WeWork, has contributed to the success of fraudulent schemes.

Influencer-driven scams are becoming more prevalent, with 61% of fraud contacts initiated on social media and websites.

The paradox of the grift suggests that while people are wary of scams, they are still drawn to fraudulent opportunities.

The influence of celebrities and influencers on financial fraud is significant, as they leverage their fame to promote risky investments.

The allure of quick wealth through fraudulent means is more enticing than the reality of steady, diligent savings.

Influencers capitalize on new technologies, such as cryptocurrencies and AI, to sell get-rich-quick schemes to their audience.

The desperation of people in dire financial situations makes them more susceptible to fraudulent promises of wealth.

The decline of journalism and the rise of sensationalism have contributed to the spread of fraudulent narratives.

The speaker's personal experience as an investment banker provides insight into the culture of dishonesty in finance.

An upcoming article on fraud culture in finance will explore the issue further from the perspective of a former investment banker.

Transcripts

people are more aware of financial fraud than  ever before from crypto influencers to suspicious  

looking text messages we are all trained to be on  the high alert about everything unfortunately the  

fact that we now suspect everything is a scam is  a big reason why financial fraud is at an alltime  

high I lost the majority of my life savings in a  dating scam well you're tightening the belt this  

year and saving money but there are a handful  of growing scams that are designed to steal  

your money dating scams where fraudsters convince  people to put their money into fake cryptocurrency  

Investments but in 2023 the scams are a lot more  sophisticated than you may have realized Society  

loves con artists don't believe me think about  this we are all celebrating Sam bakman freed being  

convicted of defrauding millions of investors out  of billions of dollars for now but the same crypto  

Enthusiast that lost money when FTX collapsed  probably at one point or another celebrated  

the wealth and excess of the Wolf of Wall Street  another convicted fraudster who stillo millions  

of dollars from investors the future is clear  in 40 years the insufferable hustle Bros will  

be liking inspirational quotes pasted over the top  of s SPF okay that might be funny to think about  

but it happens all the time the reporter Aaron  Griffith with the New York Times wrote about the  

hundreds of fake companies with fake business  plans and fake users being created to attract  

venture capital investment firms like Sequoia  and dreon horowits and Excel had so much money  

that they couldn't invest into new ideas fast  enough they started to encourage Founders to  

fudge their numbers a bit to get a life-changing  investment there were companies that used that  

money and did build out a real business but there  were other companies that had to keep on lying as  

more and more investors piled in if you were a  company founder trying to be completely honest  

about your business you would have found it much  harder to get an audience with these investors to  

pitch your idea because you were competing with  other Founders who weren't afraid to stretch the  

truth or flat out lie to tell investors what  they wanted to hear the Venture Capital firms  

that lived by the Silicon Valley Mantra of growth  at all costs didn't even care because even if the  

companies they were invested in never made a  profit they could hype them up enough to sell  

them to strategic investors or dump their trash  on the general public through a spack cases like  

Charlie Javis who faked millions of users on  her app Frank before selling it to JP Morgan  

for $75 million or Abraham shafi's IRL another  app that had millions of daily users that raised  

$150 million at a$1 billion valuation before an  investigation by the board found that 95% of its  

users were also completely fake from just these  two fake apps that is a total of $325 million that  

could have been invested in real startups but  there are five reasons why fraud beats honesty  

almost every time the first reason that fraud has  done so well even though people are more aware of  

it than ever is because nobody bothers checking  anymore while good honest companies and people are  

held down with honesty and regulations scammers  and frauders can just lie about how great their  

business is the reason that they can get away with  this for so long today is because fewer people are  

checking according to the remarks of their own  administrators organizations like the Securities  

and Exchange Commission Federal Deposit Insurance  Corporation and the Federal Trade Commission don't  

have enough resources to regulate Market activity  according to the SEC enforcement results from 2022  

the agency is now relying mostly on whistleblowers  to prosecute pump and dump schemes Securities  

manipulation and insider trading now you all know  about government Regulators being underfunded  

but the private sector also failed as well FTX  Theos and we work all rais billions of dollars  

from sophisticated investors that did very little  due diligence to verify the lofty claims of the  

founders low interest rates a hype around Venture  Capital investing and the growing popularity of  

spaxs meant that there was a lot of investor money  looking for the next big thing Ecentric Founders  

had the luxury of shopping around for investors  who were all desperate to get their money into  

whatever company was generating the most buzz  and the companies that could generate the most  

Buzz were the ones that could just lie about doing  something that could change the world if only it  

were true from my personal experience working as  an investment Banker in the healthcare space less  

exciting companies that are honest about their  realistic objectives are drowned in due diligence  

by more experienced private Equity professionals  while companies making wild claims about changing  

the landscape of the medical world are waved  through by Venture capitalists that think they  

are much smarter than they really are now big  companies are getting ripped off by founders  

with questionable attire but that's not where most  of the fraud is happening most fraud is targeted  

at regular people and even if they don't make any  dumb mistakes themselves off floating the cost of  

scams on a people has become more lucrative than  ever thanks to two other concerning Trends so it's  

time to learn how money Works to find out why the  world thinks everything is a scam except for scams  

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sophisticated investors knew the risks of doing  no due diligence and investing hype is finally  

shifting away from firms promising to be the Uber  of in-office Kombucha Taps but people suspecting  

everything of being a scam apart from scams the  Paradox of the grift if you will does a lot more  

harm to normal people who don't have the time  or resources to thoroughly vet every offer they  

are given the people being hurt the most by these  smaller scale frauds are not who you would expect  

the most common victim of financial fraud is not  elderly people with deteriorating mental capacity  

getting targeted by scam callers claiming to be  the IRS according to data by the FTC these scams  

do fool millions of people every year and more  should be done about that to educate and protect  

people at risk it sucks that every single email  text message and phone call needs to be analyzed  

for sketchy links and it can be exhausting but  at least it's possible with a bit of attention  

to stay on the right side of these scams but the  fastest growing category of financial fraud is  

much harder to protect yourself against and to  show you why we need to talk about influencers  

seeking fame and fortune is nothing new and people  running get-rich quick schemes on Late Night cable  

are nothing new either but technological and  cultural changes have allowed these people to  

merge into one I don't want to reveal my age  here too much but back in my day celebrities  

were afraid of being labeled as sellouts they had  to be very tactful about promoting their merch or  

their fans would turn on them today selling out  is the goal modern celebrities and influencers  

are celebrated for launching a new product line  and go on interviews where they talk extensively  

about how much money they make there is nothing  wrong with celebrities making money and some  

influencer businesses sell great products but a  lot don't and a lot get much worse according to  

a 2021 survey conducted by the FTC on consumer  losses through scams 61 % of all fraud contacts  

initiated on social media and websites email  online ads phone calls and text messages were  

all fighting for whatever was left the people you  watch and Trust online are by far the most likely  

to scam you influencers know that their influence  won't last forever tastes change their audience  

will outgrow their content or they could be caught  up in controversies that gets them kicked out of  

their respective platform that show business  but the problem for the new age of celebrity  

is that the Antics that they self-publish onto the  internet would make it imp possible for a lot of  

them to get a real job afterwards so they need  to make enough money in their few years of Fame  

to fund their lavish lifestyle forever it's not  impossible to do legitimately but it's much easier  

to do by jumping on the latest trends if you  are an influencer and you know your audience is  

eventually going to get bored of you anyway it's  very tempting to make as much money as possible  

off them on the way out and that's the second  reason why people think everything is a scam apart  

from scams fraud is exciting reality is depressing  imagine you had 10 ,000 to spare and you are  

deciding where to put it a black rock broad  market exchange traded fund or a crypto token  

from a YouTuber I really hope you all watching  know what the right choice is on a different  

corner of the internet you will see people hyping  up very risky plays to an impressionable audience  

while making laser eye video thumbnails about  how Black Rock secretly rules the world one of  

the biggest business and finance influencers in  the world Patrick Bet David has made countless  

videos talking about the dangers of Vanguard  Black Rock and State Street while defending  

multi-level and Network marketing including  his own multi-level marketing life insurance  

company black rock is not a faultless business  but your money will be safer with them than it  

will be with the average influencer my friend  Richard over on the plane Bagel made a great  

video about why investing won't make you rich it  can only build wealth by accelerating diligent  

savings but that's boring and that kind of content  doesn't make as much money or perform as well with  

the algorithm as flashy displays of material  wealth and non-compliant claims about making  

money even influencers not pedaling get-rich quick  schemes need to over sensationalize everything to  

maximize engagement I know I pick on Graham a lot  but judging by his thumbnails this guy has been  

bankrupt four times this year alone influencers  are an easy target for ridicule and I understand  

as a now full-time YouTuber myself it's tempting  to use the flames and laser eyes but it all  

builds a culture of getting as much attention as  possible as quickly as possible and then trading  

that influence for cash the biggest problem is  that there appears to be very few consequences  

for doing this people like Logan Paul who at  the height of the cryptocurrency Mania promoted  

several pump and dump schemes has to date had no  problems with Regulators who are struggling to  

keep up in this area as well he also hasn't even  taken that much reputational damage and still has  

millions of fans watching his videos and buying  Prime energy drinks another friend of the channel  

Patrick Bole in an interview with Zeke Fox an  investigative reporter for Bloomberg an author of  

number go up said that the grift is not something  to be embarrassed about anymore it's now seen as  

high status because the most visibly High status  people are all doing it FOX also claimed that  

investigations into this matter almost don't make  sense anymore because the perpetrators of this  

kind of fraud are so unashamed and open about it  that an investigative journalist doing an expose  

on dink doink would be like a food critic writing  a review on Taco Bell and that's the third reason  

why we think everything is a scam apart from scams  fraud moves faster than we do new technologies  

like cryptocurrencies Ai and the internet all  may have legitimate marketable uses but it can  

take years for people to figure out what those use  cases are and and years more to build businesses  

around them it's Little Wonder then that the new  technologies are a golden opportunity for fraud by  

promising to know the secrets to using something  new to make lots of money grifters can Leverage  

The Natural hype of barely understood Tech to sell  a guide on how to use it for a profit the hustle  

Bros that were selling crypto trading guides  when Bitcoin was entering the mainstream are now  

telling you how to use chat GPT to make millions  by automating some vaguely legitimate sounding  

online business this problem hits every level  of Finance not just course Gamers The Venture  

Capital funds that were throwing investor money  at blockchain companies are now throwing investor  

money at anything that claims to use Ai and the  influencers that were crypto experts now know  

how to use chat GPT to make $300 a day the  rapid pace of new technologies that people  

are desperate to understand is behind the rapid  pace of new frauds pretending to know the answers  

the reason that people are so desperate for the  answers is also the fourth reason that they are  

so willing to convince themselves that a scam is  not a scam people are desperate I don't need to  

say too much about this one according to Lending  Club data 62% of Americans are living paycheck to  

paycheck nobody earning minimum wage can afford  to rent a basic two-bedroom apartment anywhere in  

the country people have to jump through up to  17 interviews to get a job interest rates are  

rising Basic Essentials are twice what they cost  5 years ago and most people don't think there is  

any hope of changing that the housing crisis  in the United States is real it is incredibly  

difficult for people to buy a home sad as 4 in  10 consumers consider themselves worse off than  

last year anything promising a way out of a no  hope situation looks good to a lot of people the  

fifth reason why we now think everything is a scam  apart from scams is because the outlets that were  

supposed to be keeping us informed about this  have also decided that there is more money in  

sensationalism go and watch the 200-year decline  of Journalism over on how history Works to find  

out how we let that happen I am also going  to be writing a full article on fraud culture  

in finance from the perspective of a former  investment banker so if you want to catch that  

other articles written by myself and some of the  best Finance creators make sure to sign up in my  

totally free email newsletter in the description  below to keep on learning how money works