Cold Wallet, Inspired by QuadrigaCX

A lot of defrauded crypto investors would like to get their hands on Sam Bankman-Fried or Gerald Cotten (founder of the defunct QuadrigaCX), whom many suspect of faking his own death. Transparently inspired by Cotten, Charles Hegel (like the philosopher and not to be confused with Chuck Hagel, Obama’s Defense Secretary) comes face-to-face with a trio of disgruntled home-invading crypto investors who want their money back. However, getting access to Hegel’s ill-gotten funds will be a tricky business in Cutter Hodierne’s Cold Wallet, which releases Friday in theaters and on digital.

Billy was the world’s biggest evangelist for Tulip until the exchange crashed. With his frozen account in free-fall, his hopes of regaining joint-custody of his daughter appear dashed. However, his fellow crypto reddit buddy Eva somehow learns Hegel, the man behind Tulip, faked his death and has holed-up in his remote country estate.

Together with Eva and Dom, the gym-owner he convinced to invest in Tulip, decide to confront Hegel and extract the money he swindled from investors. Of course, it is not that simple. All Hegel’s funds are safeguarded in cold wallets, access to which require pass-phrases he keeps off site. Thus begins a battle of wits between the captive and his aggrieved captors.

Unfortunately, it is not exactly a battle royale. For the most part, Cold Wallet plays like a warmed over A Simple Plan, as the three home invaders give bizarre credence to the words of the man they hate the most. Frankly, it is hard to fathom why Steven Soderbergh lent the film his “presented by” imprimatur. All that really distinguishes John Hibey’s screenplay is Hegel’s dialogue that supposedly lays bare the truth of so-called “predatory capitalism.” Yet, many of the Sam Bankman-Frieds of the world are actually self-styled social justice warriors.

The Highest of Stakes

Richard Heart (real-name Richard J. Schueler) is either a financial prophet, if you ask his allegedly cult-like investors, or a fraudster, if you ask the SEC, who filed suit against Heart four days ago for defrauding investors with unregistered securities. That development is far too recent to appear in this documentary. It is certainly a dramatic coda, but it probably did not surprise his detractors or his loyalists. You would not expect to find much middle ground when it comes to appraising Heart/Schueler, but directors Patrick Moreau and Grant Peelle manage to find it in The Highest of Stakes, which opens tomorrow in New York.

Heart is a flashy guy character who parlayed his success predicting crypto booms and busts into the launch of his Hex Token. Unlike other tokens, Hex also acted as a sort of savings certificate, allowing investors to “lock in” their tokens for a pre-set period, for a varying rate of return. However, like pyramid schemes, earlier investors earn a greater return than newer arrivals, which Heart transparently admits. However, the constitution of the so-called “Origin Account,” which takes the lion’s share of fees and penalties, remains a little murky.

The thing is Hex performed really well, at least until Mikey, the film’s representative retail investor, jumped in with both feet. Then it starts to tumble, giving Mikey’s wife Ramey ample opportunity to say “I told you so.”

Frankly, the first forty-five minutes or so play like a Hex infomercial. However, Moreau & Peele enlist two academics, Kelly Richmond Pope the forensic accountant and Lamont Black the currency futurist, start pulling at the threads of the Hex story. Black turns out to be more skeptical than Black, which makes them sort of a good cop-bad cop tandem.

Tribeca ’14: The Rise and Rise of Bitcoin

In the near-ish future, hyperinflation, Gresham’s Law, and even central banking as we know it might become relics of the past. We are not there yet, but the silver bullet might already be out there in cyberspace. It is called Bitcoin and it is not just for Libertarian eggheads anymore. Nicholas Mross documents the genesis and prodigious growth of the digital currency in The Rise and Rise of Bitcoin (trailer here), which screens tomorrow as part of the special Tribeca Talks series at the 2014 Tribeca Film Festival.

Presumably writing under a pseudonym, “Satoshi Nakamoto” sketched out the principles of the decentralized Bitcoin infrastructure, integrating pre-existing technologies in revolutionary ways. Finite in number, Bitcoins would be “mined” by those who lend their computing resources to process Bitcoin transactions. Mross’s brother Daniel was one such early adopter, whose Bitcoin evangelism provided the impetus for Rise.

As director and co-writer, Mross provides a lucid explanation of the Bitcoin system and an authoritative history of its formative years. However, he spends a disproportionate amount of time chronicling the Bitcoin mining experiences of his brother, who seems like a really nice guy, but will probably mostly be remembered in the Bitcoin history books for inspiring the currency’s first feature documentary.

Unfortunately, the news cycle did not do Mross any favors either. He was able to tack on an epilogue addressing several late breaking developments that bear quite directly on the Bitcoin narrative, but it is clearly a rushed job that lacks the depth of the prior segments. You cannot blame anyone, it is just a documentarian’s worst fears realized.

There is still good history and analysis in Rise, but one wishes he had gotten even more fundamental, by measuring Bitcoins against Jevons’ textbook functions of money: a medium of exchange, a measure of value, a standard of deferred payments, and a store of value. Although not universally accepted, you could probably use Bitcoins for all your daily shopping in certain New York and Bay Area neighborhoods, so yes, it increasingly serves as a medium of exchange. Bitcoins are commonly listed in most market reports, so they can technically serve as a measure of value, but the extreme volatility Mross chronicles makes this slightly problematic in practice.

Clearly, the store of value question remains the thorniest and will continue to be so long as Bitcoin holdings are vulnerable to hacking or the collapse of exchanges (as happened in the notorious Mt. Gox case, which factors prominently in the third act). Without that sense of security, it is hard to envision widespread acceptance of Bitcoins as a means of deferred payments.

According Mross’s creation story, the first recorded Bitcoin transaction was 10,000 Bitcoins in exchange for two Papa John’s pizzas. One would think Mross would have revisited the relative price of those pies to illustrate Bitcoin’s dramatic increase in value, but evidently that was too gimmicky for him. There is a great deal of food for thought in Rise, but ultimately Mross strives too hard to humanize the tale. Recommended as a primer on digital currency, The Rise and Rise of Bitcoin screens tomorrow (4/23) as part of the Tribeca Film Festival’s Tribeca Talks programming. Given the stop-press addendum, there should be plenty discuss.