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South Korea Says North Korea Agrees to Talks on January 9; White House Expose Releasing Four Days Early; Attorney General Rescinds Obama-Era Marijuana Rules
Aired January 5, 2018 - 0000 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[00:00:18] SARA SIDNER, CNN ANCHOR: We begin with breaking news out of South Korea.
North Korea has agreed to hold official talks on January 9th, that according to the South Korean Unification Ministry. The meeting will be the first high level contact between the two countries since 2015.
Now within the past three days, North Korea reactivated a dormant hotline with South Korea and has used it to test it several times.
Our Will Ripley is joining us now from the South Korean capital. What is likely to be said in these talks between the North and South? We understand that they will probably be talking about the Olympic Games and potentially North Korea taking part in those games? But anything more we're expecting?
WILL RIPLEY, CNN CORRESPONDENT: Well, inter-Korean relations is going to be the main focus and how to improve inter-Korean relations and of course, the most immediate way from the North and South Korean perspective to do that would be to send a North Korean delegation to the Winter Games in Pyeongchang which is just over a month away.
Other topics could include the joint military exercises which the United States and South Korea agreed to suspend until after the Olympics. That news was announced after a phone call between President Donald Trump and South Korea's president Moon Jae-In last night here in Seoul, local time.
And it may be that the suspension of those military drills was the impetus that the North Koreans needed to agree to have these discussions.
As you mentioned, these are the first talks that will be happening since December of 2015, a very tense period -- really a low point for North and South relations when South Korea's former president Park Geun-Hye pulled the plug on the last remaining joint business venture between the North and the South, the Kaesong Industrial Complex. Since then we've seen North Korea rapidly accelerate its nuclear program, test scores of missiles. But now, at least here in Seoul, government officials are hoping that this could be potentially some sort of a break through.
What we don't know, Sara, how long the talks will last. Sometimes the talks have lasted upwards of 10 hours; other times they chat for an hour and agree to meet at a later date.
And again, this has happened before so this is certainly not unprecedented. But given the tension in the region and the escalating nuclear crisis certainly welcome news for many people here who are hoping that this can lead to something positive for this Korean Peninsula.
SIDNER: Will -- you had mentioned, you know, we've been seeing these missile tests. We've seen the nuclear tests as well and those have increased. Is there any sense that the fiery rhetoric between Donald Trump and Kim Jong-Un had anything to do with North Korea suddenly saying, I'm going to reach out to the South and try to do some things diplomatically?
RIPLEY: Well, I was chatting with North Korean officials late last year about this, so less than a month ago. And there were indications back then that this was a possibility. And they told me at that point that we needed to listen to Kim Jong-Un's New Year's address to see if he talked about trying to improve the situation on the Korean Peninsula including possibly sending a delegation to the Olympics.
Kim Jong-Un also mentioned in that New Year's speech that North Korea has rounded off its nuclear program. He felt that their intercontinental ballistic missile test -- the latest test that they conducted may be the proof to the world that they have this capability and might give the North Koreans leverage to sit down at the negotiating table from a position of strength.
The issue here though is that what North Koreans want eventually is a direct dialogue with the United States. And they want assurances from the United States that their government is safe. That the United States will not invade, will not attempt so-called regime change.
The problem though is that what the United States and its allies want is complete, total, verifiable denuclearization of the Korean Peninsula. They want North Korea to give up the nuclear weapons that they've been developing.
And every discussion I've had with North Korean officials over the last several years, as recently as just within the last month, they are certainly not willing to do that. They said the nuclear weapons are not on the negotiating table.
So what would they have to offer? Well, potentially suspending more ballistic missile tests, potentially suspending nuclear tests in exchange for lifting of sanctions, in exchange for the U.S. and South Korea further delaying those joint military drills.
But we don't have any indication that they're willing to do that. They're just postponing the drill but they say the drills are a necessary defensive measure even though the North says, Sara, they're a dress rehearsal for an invasion.
So we just have to see where this all goes from here.
SIDNER: All right. Thank you very much. That is our Will Ripley, who was live for us in South Korea.
We have some political breaking news back here in the United States. The "New York Times" is reporting that U.S. President Donald Trump ordered the top White House lawyer to stop Attorney General Jeff Sessions from recusing himself from the Russia investigation. Sources also telling "The Times" an aide to Sessions tried to dig up dirt on FBI director James Comey just days before President Trump fired him.
[00:04:59] These new revelations are just the latest in a flurry of damaging reports for the Trump administration and its efforts to end the Russia probe. They come as a salacious new tell-all book about the Trump campaign and the White House is being released.
Late Thursday the President tweeted this. "I authorized zero access to White House; actually turned him down many times for author of phony book. I never spoke to him for book -- full of lies, misrepresentations and sources that don't exist. Look at this guy's past and watch what happens to him and fluffy Steve" -- referring to Steve Bannon.
And we get more now from CNN's Jeff Zeleny.
JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: As the White House tried getting back to business and focusing on its 2018 agenda, the explosive criticism from Steve Bannon still consumed the West Wing.
UNIDENTIFIED FEMALE: Did Steve Bannon betray you -- Mr. President?
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Thank you very.
UNIDENTIFIED FEMALE: Any words about Steve Bannon.
TRUMP: I don't know. He called me a great man last night. So, you know, he obviously changed his tune pretty quick.
In the Roosevelt room today, that was all President Trump wanted to say about Steve Bannon, his former chief strategist. Yet behind the scenes the extraordinary feud raged on.
The President's lawyers attempted blocking publication of "Fire and Fury: Inside the Trump White House", the new book featuring Bannon's blistering criticism about the2 Trump family and the Russia investigation. Today the President insisted he's no longer in contact with Bannon -- a long-time friend and advisor he fired after eight months on the job.
TRUMP: I don't talk to him. I don't talk to him. I don't talk to him. That's just a misnomer.
UNIDENTIFIED FEMALE: Thank you.
TRUMP: Thank you.
SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: Good afternoon. ZELENY: At the White House briefing today, press secretary Sarah Sanders took it one step further, falsely attempting to diminish Bannon's role.
SANDERS: I'm not aware that they were ever particularly close. I would certainly say that they have spoken a few times since he left the White House but it's not like there were regularly scheduled calls or -- and certainly no meetings between the two of them.
ZELENY: That's hardly how the President described Bannon only two months after he fired him.
TRUMP: We have a good relationship, as you know, with Steve Bannon. Steve has been a friend of mine for a long time. I like Steve a lot.
ZELENY: The President's allies rushed to his defense today, pushing back against Bannon suggesting that a 2016 meeting between Donald Trump, Jr., Jared Kushner, Paul Manafort and a Russian lawyer was treasonous and unpatriotic.
ANTHONY SCARAMUCCI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: Donald Trump Jr. is a very patriotic guy. He's a very honest guy. And so I would bet my life savings on the fact that he's done absolutely nothing treasonous.
ZELENY: Chris Ruddy (ph) -- another friend of the President's said Bannon had an exaggerated opinion of himself.
CHRIS RUDDY, CEO, NEWSMAX MEDIA: I'm disappointed that Steve sais some of the things he did. You have to remember this interview for the book probably took place a month or two after Steve was fired by the President and the White House. He probably had very raw emotions.
ZELENY: All this as the White House is now banning the use of personal cell phones for staffers and visitors to the West Wing. Sanders said the new policy starting next week was not in response to the book.
SANDERS: Absolutely not. That's a ridiculous characterization. This is about the security and the integrity of the technology systems here at the White House.
ZELENY: Now, there is some skepticism here among some White House aides that this policy is not related to the book. Sarah sanders said it's not. But some aides tell us privately that they hoped that this policy would not have been enacted. They like to talk to their family members. They work long 12-hour days here at the White House, often longer.
One person this ban does not apply to -- that's the President who often talks on his cell phone as well.
Jeff Zeleny, CNN -- the White House.
(END VIDEOTAPE) SIDNER: Joining me now: CNN political commentator, Democratic strategist Dave Jacobson plus CNN political commentator and Trump supporter, John Phillips. You also do a radio show as well. They join us now -- lots to talk about here as usual.
Let us begin with the "New York Times" reporting that came out just a couple of hours ago that says that their source is telling them the President told his chief legal guy to say to Sessions, no, we do not want you to recuse yourself, don't do that. Is this obstruction of justice?
DAVE JACOBSON, CNN POLITICAL COMMENTATOR: Looks like it. Looks like another gut punch to the Trump argument and narrative that there's nothing there, there. And it's not quite as bad as firing Jim Comey and then telling Lester Holt on NBC that he fired the FBI director because of the Russia thing but it's almost as bad. And it just adds to the argument for obstruction of justice.
We'll see whether or not Mueller moves forward on this and how he does it. But I do think it's not good for the Trump White House.
SIDNER: John -- if true, what other explanation could there be for saying I want the guy who I think is loyal to me to still be in a position to know what's going on with the Russian investigation which Sessions did -- there was a lot of reporting around Trump being very angry that Sessions did eventually recuse himself.
JOHN PHILLIPS, CNN POLITICAL COMMENTATOR: He should be angry. And this is a position that Trump has been very consistent on from the very beginning. He never thought Sessions should have recused himself.
[00:09:51] And if you go back to the beginning of the campaign, Jeff Sessions was the first U.S. senator to endorse Donald Trump when he ran. Donald Trump was an unconventional candidate, didn't have a lot of institutional support, didn't have a lot of establishment support. Jeff Sessions was one of the first guys that signed on.
So when he won the election he had to get paid back. He had to get something big. He wanted to be Attorney General so he got the job.
But you don't appoint someone to a very sensitive position like attorney general running the Department of Justice so they could then turn around and recuse themselves on the most important issue facing the department and have Rod Rosenstein is the guy who's making all the calls.
I think what Trump did is totally legitimate and consistent with what he's been saying.
SIDNER: There are a lot of people that would disagree with that point because loyalty -- you cannot ask for the same thing he tried with Mr. Comey. You can't ask for loyalty. There are things in place to have checks and balances, correct?
I mean wouldn't it look terrible if Sessions was in that position knowing that he is or has been appointed by the President.
PHILLIPS: Well, you appoint a guy and the Senate confirms the guy because you think that they're best guy to make the calls. If you appoint someone to make sensitive decisions and then suddenly they say, oh no, no, no, no, no -- I can't do it in this particular issue, someone else has to do it. Well then you should have appointed someone else. And that's kind of the way he feels.
JACOBSON: Well, let's not like forget like during the confirmation hearings with the United States Senate, Jeff Sessions lied during his confirmation hearing. He said he had no interactions with the Russians.
We know that he met with the Russian ambassador. So theoretically he potentially he committed perjury. And look this is why the -- overwhelmingly the American people are frustrated with Donald Trump and his handling of Russia.
CNN put out a poll just before the New Year, back in December; 47 percent of Americans approve of Bob Mueller's handling of the Russia investigation, only 32 percent in terms of Donald Trump's handling of the Russia investigation.
SIDNER: All right. We're going to move on to now some of the details that are coming out about the Trump White House in the first year, a book written by Michael Wolff. There are lots of excerpts that are out there.
We should also mention that Michael Wolff himself has said that some of these things were very hard to report out journalistically. Some things may be untrue because they are said by people who have an agenda. So we should that point out that some things have been proven to be true; other things not so much.
This is one of the bombshells from the book. The President -- this is an excerpt -- insisted that the meeting in Trump Tower was purely and simply Russian adoption policy. That's what was discussed -- period. Even though it was likely if not certain that 'The Times' had the incriminating e-mail chain.
In fact, it was quite possible that Jared and Ivanka and the lawyers knew "The Times" had this e-mail chain, the President ordered that no one should let on to the more problematic discussions about Hillary Clinton."
I'm going to start with you -- John. How damaging is this, if true?
PHILLIPS: I think when it's all said and done there's going to be more truth to Dick Blumenthal's Vietnam War stories than some of the quotes attributed in this book.
I mean you look at some of the allegations that he makes, it's contradictory. He said for example that Trump watches TV nonstop. He watches TV several hours a day.
Then also in the book we hear that when Roger Ailes suggested that John Boehner should be the chief of staff, Trump had no idea who John Boehner was. Well, how do you watch cable news for six hours a day and have no idea who the Speaker of the House is?
SIDNER: And President Trump had tweeted about him many times, you know.
SIDNER: But to the point of him trying to tell people, do not bring this up, again are we talking about something that could be used in the Russia investigation?
JACOBSON: I think for sure. And like, let's not forget, Donald Trump is delusional. He's living in fantasy land. The "New York Times" reported in November that Donald Trump was questioning the authenticity of the "Access: Hollywood" tape. He was questioning whether or not Barack Obama was born in the United States after he admitted or at least acknowledged during the 2016 campaign that in fact President Obama was born in the United States.
He's losing it. The guy is totally unhinged.
SIDNER: And we will talk about that issue, coming up. There has -- that has been brought up in Congress amongst congressional leaders.
Let me ask you about this. One of the things about this reporting is there are people coming out some saying, ok I didn't say that or that isn't right.
PHILLIPS: Numerous people.
SIDNER: But there are others. There are others that are saying look I was at that dinner. And I heard Rupert Murdoch and you know, Donald Trump. I heard all this go down. And it is all true.
There is reporting from Axios that Michael Wolff has some recordings of all of this, hours and hours of recordings. So is that why you think Steve Bannon, who is quoted numerous times in this book with some very salacious details, has not disputed a word of it yet -- John?
PHILLIPS: I think that this book is most likely Steve Bannon's autobiography. And for one, I'm glad that we don't have to defend Steve Bannon anymore because Steve Bannon has given people on my side a very bad name for a long time.
PHILLIPS: When I say he's given my people a bad name, I don't mean Republicans, I mean alcoholics.
[00:15:00] But look, Steve Bannon is a guy who is one of these people who was leaking information from the White House from the very beginning.
When he was brought on to the Trump campaign, he's been described as a long time friend of the President -- not true.
He was brought on by the Mercer family when Trump was 12 points behind in the presidential campaign. And the campaign wanted Trump to write a $50 million check to keep that thing going. And he said he wasn't going to do it.
The Mercers came in and said we'll write the $50 million check but you need to hire Bannon and you need to hir5e Kellyanne Conway. Those two came on. They thought that they were going to lose. They ended up winning the election. He moved on to the White House.
When they moved on to the White House it was Trump and then right below him it was Reince Priebus, it was Jared Kushner and it was Steve Bannon. And Steve Bannon lost and he's bitter and the bitterness is manifesting itself into what you're seeing play out in this book.
SIDNER: Bitterness may be true. But he's not the only one quoted in this book, a; and b, he certainly was a part of this administration. I mean you can't separate yourself completely. He had a very high level position.
I want to go to one of the other quotes in the book that has struck a lot of people. It is talking about the Paris accords and the fact that President Trump's daughter, Ivanka Trump really did not want him to leave the Paris Climate Accords.
This is Bannon talking about that situation because eventually he did and she felt like she was defeated on that issue. This is Bannon quoted in the book saying, "It was likewise that move that Ivanka Trump had campaigned hardest against in the White House. Score," said Bannon, "the b (expletive) is dead."
What does that tell you about the relationships and the power structure in the White House?
JACOBSON: It was extraordinarily toxic. But we already know that. Going back to your point real quick though in terms of Donald Trump's relationship with Steve Bannon, when he went up on the podium and he was sitting next to or standing next to Mitch McConnell after they had that civil war exchange over the summer it was Donald Trump who said Steve Bannon is a good friend and a long-time friend.
Nobody else put those words in his mouth. That was Donald Trump to camera. And so I don't think there's any denying that there's a long existing relationship prior to the campaign.
PHILLIPS: He's a salesman. He thinks that Chuck Schumer and Nancy Pelosi are his friends, too.
SIDNER: Just tonight, somebody who is very close with Donald Trump, one of his closest advisors had said, yes, look we reached out to Steve Bannon when he was doing his work with his online publication. And you know, so there has been a longer relationship than just the moment when he entered the administration.
PHILLIPS: Let me say this -- it is over for Steve Bannon. Steve Bannon has been dropped by the Mercers who were his sugar daddy and sugar momma. He's going to be dropped by his supporters because if he thinks for one second that they're going to support him over Donald Trump he's drunker than I think he is.
And then the third thing is that Steve Bannon has lost the President. He's lost the guy who's in charge of the executive branch of government.
It is over. He's done. There is no Act Two. There is no Plan B. He's finished.
JACOBSON: And now, he's going to get steamrolled by the establishment. We saw immediately after Donald Trump's comments yesterday about Steve Bannon --
JACOBSON: -- Mitch McConnell put up this Facebook meme with him smiling all over the place so they're delighted obviously.
PHILLIPS: Right. Well, he cost him the Alabama senate seat.
SIDNER: We will potentially talk about what Steve Bannon may be thinking about doing next. We'll get to that when we come back with you -- gentlemen.
Now on to some other news: he once declared good people don't smoke marijuana. So no huge surprise that U.S. Attorney General Jeff Sessions is cracking down. His move and the reaction to it, coming up next.
[00:18:31] (COMMERCIAL BREAK)
SIDNER: The U.S. Department of Justice is changing its approach to marijuana. The federal government considers the drug illegal while a number of states have legalized marijuana in recent years.
Under the Obama administration, the policy became one of non- interference with those laws but Attorney General Jeff Sessions is rescinding those memos after years of decrying the dangers of marijuana.
And one Republican senator said Sessions misled him and he is angry about it.
(BEGIN VIDEO CLIP)
SENATOR CORY GARDNER (R), COLORADO: I will be putting today a hold on every single nomination from the Department of Justice until Attorney General Jeff Sessions lives up to the commitment that he made to me in my confirmation -- in my pre-confirmation meeting with him. The conversation we had that was specifically about this issue of states rights in Colorado.
(END VIDEO CLIP) SIDNER: So you're hearing from a Colorado senator and the reason why he was so fiery in part, you could argue, is because of the marijuana legislation that was passed there.
Let's bring in Aaron Smith now. He is California policy director of the Marijuana Policy Project.
California has also just started being able to sell legally for recreational use here just, what a couple days ago.
What do you think about the Trump administration rescinding the Obama- era memos, for example, that allowed the federal government to basically kind of look the other way as states went forward with the laws in each different state?
AARON SMITH, CALIFORNIA POLICY DIRECTOR, MARIJUANA POLICY PROJECT: Well, you know, while I don't welcome the news, you know, with great enthusiasm by any means I actually, you know, want to impress upon folks that this is not time to panic.
And the memo being rescinded does not necessarily signal a major shift in policy. The Department of Justice has been using prosecutorial discretion in their enforcement of marijuana cases in states where some form of marijuana is legal. And I think that they will continue to do so.
And we're already seeing that, where the U.S. Attorney here in Colorado already put out a statement stating that the enforcement priorities will not change and that they will focus on illegal and dangerous enterprises. And that's a Trump administration appointee.
SIDNER: Do you think though that we may see in some places, federal raids for example in states where, you know, finding huge amounts of marijuana is easy because it is legal. I mean how do you think this might play out beyond the legal issues but with for example the feds going in and cracking down on some of these small businesses?
SMITH: Well, you know, what's really clear here is that regulating marijuana is working. And you know, you just played a clip of Senator Cory Gardner, Republican from Colorado standing up to support his state.
And that's because putting marijuana behind a regulated market is undercutting the criminal enterprises that formerly had control of the supply. And instead of enriching drug cartels it's enriching the tax coffers here in Colorado.
And an attack through raids and enforcement actions against state legal businesses would not be an attack on cannabis. People will continue to use cannabis as they have for decades.
What it would be, would be an attack on state sovereignty and the tens of thousands of jobs that are dependent on this industry; two issues, by the way, that President Trump campaigned on in his campaign.
SIDNER: Yes. The Colorado senator there brought up that he had talked to Sessions and that he was promised by Sessions that this -- the states would have their rights and they would let them go forward with however the way the voters decided to go and in Colorado clearly that was to legalize marijuana.
Are you worried at all thought that if there is a shift in the way this is dealt with in states like Colorado and California that it could kill the legal -- state legal at least -- booming marijuana industry?
SMITH: Not at all. This industry has been through all sorts of hardships. I mean if you think about it, the industry actually was born during the Bush administration when it was a very small industry and there were raids and enforcement actions happening on a near daily basis in California.
[00:24:59] Yet it continued to grow. And it's now the fastest growing industry and it's super tightly-regulated in all of the states where it operates. And again, cracking down on legal marijuana doesn't do any service to anybody except for the criminal drug cartels that would take back the supply.
SIDNER: Lastly, I'm just curious if you think this is going to affect -- because it's already difficult, I understand it, for some of the businesses to deal with banking and the issues they have with how to deal with money since it is not legal federally but it is on the state level. Is this going to impact that potentially as well, do you think?
SMITH: Well, you know, I'm sure that there's some banks and financial institutions that this has caused some pause today as they reviewed the risks of reviewing the new guidance.
But you know, really what needs to happen, is Congress needs to finally change federal law and bring it into alignment with the will of the voters, which nearly two-thirds support legalizing marijuana. And the states, it's in 29 states, that have some form of legal marijuana so that they can bank and put their money in a safe financial institution like any other business.
And everybody, no matter where you land on the issue of marijuana policy, everybody supports the idea that this industry, a now nearly $10 billion a year industry, should not be operating in a cash only basis.
SMITH: So I'm hopeful that we will continue to move forward.
SIDNER: All right. We appreciate your time, Aaron Smith there, talking about the issue that -- the issues that have come up after Sessions has tried to change old rules to try and squelch the marijuana -- legal marijuana business in several states. Thank you so much for being with us.
Coming up, the U.S. President has this to celebrate. Less than a week in 2018, and it's already a banner year for the stock market -- the Dow at record highs. Why that's a good thing for the rest of the world, too.
Plus, bitcoin is slowly entering the mainstream but the Wolf of Wall Street warning us about cryptocurrency -- why? We'll have his take coming up.
SIDNER: You're watching CNN NEWSROOM live from Los Angeles. I'm Sara Sidner.
The headlines for you at this hour --
North Korea has agreed to hold official talks with South Korea next week, according to the South Korea's Unification Ministry. The two sides will meet January 9th at Peace House on the South Korean side of Panmunjom. It follows the reactivation of a hotline between the two Koreas.
A new tell-all book about the Trump White House is coming out four days early. The publisher of "Fire and Fury" by Michael Wolff says it will be release the book Friday morning. It is causing quite a stir in the United States.
The White House though calls the book complete fantasy. And President Trump's lawyers are threatening legal action.
The U.N. Security Council is set to meet in the coming hours to discuss the situation in Iran. Anti-government protests broke out in that country. It lasted about a week and led to the deaths of at least 21 people. The U.S. supports the demonstrations and called for the Security Council meeting.
[00:30:05] And the U.S. stock market is bringing its record-breaking hot streak into the new year. The Dow shot up past the 25,000 mark for the first time on Thursday. It is a sign of a roaring U.S. economy with the lowest unemployment in 17 years.
Enormous corporate profits and investors willing to take some risks. And the rest of the world is feeling the financial upswing, too. Our Richard Quest breaks it down for us.
RICHARD QUEST, CNNMONEY EDITOR AT LARGE: The third trading day of the year and second day of record gains for the Dow Jones industrials, taking it to record highs. In fact, all the three major indices, the Dow, the S&P and the Nasdaq closed at record highs. And there are solid reasons for these gains. The tax cut for U.S. corporations, which will pay dividends both to shareholders and for corporate profitability later down the year. Low unemployment, low inflation and reasonably strong economic growth has created an environment that investors find extremely pleasing and that's what we're seeing in the market.
But it's not only the U.S. markets that are going to record highs. The London FTSE also hit an all-time high and that despite the worries and pressures over Brexit. In fact, all the major markets around the world are rising on the back of this buoyant New York market and U.S. economy.
So you have Paris up 1.5 percent, you have Tokyo, up 3.25 percent. Perhaps the only laggard, the Chinese market just gaining some half a percent but China has its own individual economic problems.
How long can this last?
That is, of course, the multibillion-dollar question. But as everything I've heard and what the analysts say, as long as the profits keep coming in and the growth remains strong, the gains should continue -- Richard Quest, CNN, New York.
SIDNER: You've probably heard of bitcoin by now. If you're not sure what it does, you're not alone. It's a source of confusion for many folks. But in short, bitcoin is a form of currency like dollars or euros or yen which you can trade digitally. It's been rising in popularity and has captured the attention of wealthy investors and small businesses alike but it also has become a haven for criminals seeking to do shady transactions.
For payments in bitcoin, some computer hackers attempt to offer things like drugs, clone credit cards, counterfeit money and create passports. Some even go as far as offering chilling services like paying to destroy a business or paying to ruin a person's life.
But now, as bitcoin rises in value, it's also become too mainstream for some of those sophisticated criminals. Instead, they're turning to new and obscure cryptocurrencies that only a former criminal would know how to manipulate best.
Joining us now to talk us through this, Jordan Belfort. He spent 22 months in prison after pleading guilty to fraud and other crimes related to stock market manipulation. He is also the man behind the infamous title, "Wolf of Wall Street," which became a movie and is now motivational speaker.
Belfort is now warning people about this currency.
What is your warning about bitcoin and other cryptocurrencies?
JORDAN BELFORT, MOTIVATIONAL SPEAKER: Well, bitcoin, the technology behind bitcoin, bitcoin itself, it's not that it's a scam but it's being essentially used by many, many people as a scam.
SIDNER: How so?
How are they manipulating it?
BELFORT: Well, different phases of bitcoin's existence was used by different people. You cited some, sometimes it was used by criminals who were laundering money, guns, ammunition. It was used for drugs on Silk Road, right.
But what happened is, at a certain point in time, as it gets -- this is true of all things going into a bubble, they get manipulated right. As some people (INAUDIBLE) said, wait a second, this story is actually a really hot story we can get out there.
And some legitimate people got involved, like the Winklevoss twins for one, right, and it's starting to get a little bit of air of credibility around it and such time (ph) it's breakout into mainstream.
Once that happened, it crossed over into an area, where you had a situation where the bulk of the coins were held by very few people and massive demands started coming in.
So while you may have a very large market cap, say it's worth $200 billion or whatever, only a small fraction of that is actually trading publicly. So a little bit of buying, it goes shooting up. OK, that's how all manipulations basically work.
So there's two things involved. Number one, you need create massive demand and, two, withhold supply. Supply is withheld by the people who hold it right now. There's large blocks held by a few people.
Demand is created by a viral campaign on the Internet, it's all over right now.
BELFORT: And everyone now is starting to buy in, you get this -- two things, you call it the fear of missing out, they'll get in. They just say, I don't want to miss this; people are getting rich, I have got to get in.
SIDNER: Right and everyone says you have to get in on the ground, with the bottom up.
BELFORT: The ground is gone.
SIDNER: One bitcoin --
SIDNER: -- is worth what?
BELFORT: It fluctuates from moment to moment. But my mind, one bitcoin is probably worth zero in terms of what the fundamental value is. That's a different story because right now it's worth what it's worth today at this moment. Right.
The thing is that what's happening right now is that we're in phase two, which is -- and I went through this. Listen, I'm not proud of this. But what I was doing back in the day, I started with one stop and all of my buying power, all of my recommendations for people to buy with one stop.
It's very easy to support one stop, when you have demand, for one thing. But now that all the cryptocurrencies are coming in, demand is from a multiple cryptocurrencies. So you're seeing now bitcoin might have leveled off and others are starting to rise up right now. This is stage two of the manipulation, right.
So you have to find out what the insiders are doing, so if I was going to do this myself, and I won't do it, OK, I'd be looking -- I don't care what it's trading at, the question is the people who are really running this whole thing, bunch of people who are running all these cryptocurrencies, the insiders. I want to know what they're buying and what they're selling. Because what they're selling is over and what they're buying is about to start going up.
Like for instance, if I just hear that someone just unloaded bitcoin (INAUDIBLE) that's what I want to be buying. (INAUDIBLE) because it's not about value, it's about what they're saying is going up next, that's the key.
SIDNER: How are people turning this into stuff, like buying a car or house?
Is that happening?
BELFORT: Yes, you can exchange bitcoin for cash. It takes some time. And here's another problem, because part of also trading, of manipulating a situation like this is that you need to be able to get out. It's not very easy to get out.
You can get yourself into cash. But I promise you this, that when the day comes, and it will come, when the thing just goes, whoop, and drops back down some ridiculously low, right, you won't be able to sell or get your money out. The exchange will be frozen and shut down for too much volume and you will not be able to get your money back.
So there's an old saying on Wall Street, bulls make money, bears make money and pigs get slaughtered. Don't try to catch the top of this thing. If you feel compelled to invest, try to catch a bit of the wave and get out and don't put in more than you can afford to lose because this thing is going to end up badly for everybody who gets stuck at the end. There's going to be no chairs left when the music stops.
SIDNER: I noticed that some of this bitcoin, there are groups of people, there are hate groups out there, there are -- the criminal element out there that are trading right in this right now.
How much concern is there that this element is using and manipulating the currency?
BELFORT: A reason this will never be -- I want to just distinguish because the difference between bitcoin and Blockchain technology. So I believe Blockchain technology actually is actually really, really cool and has a great place in the financial system and it will take hold.
But it doesn't have anything with the value of -- they don't need bitcoin to use Blockchain technology. They can use Blockchain technology by itself. So even though I believe the mainstream is going to be -- adopt the technology, these coins -- it's all elusive, it's all crap basically right and it's a bubble and it's going to burst. I'm begging you, every (INAUDIBLE) your life and all I can say is, if you feel compelled to invest, anybody, just please be -- A, you need to have your exit ramp planned out really early.
SIDNER: And also be willing to lose money.
BELFORT: Listen, if you try to stay in this too long, you will lose everything. There's no guarantees. (INAUDIBLE) telling you this. Anybody who knows anything about financial institutions, instruments and institutions, there's too many things that are just blatantly red flags.
And if it looks like something, it smells like something, it probably is that something and this is that something.
SIDNER: We will leave it there, the "Wolf of Wall Street" talking about the dangers of getting involved with bitcoin, at least at this point.
Just had this week's massive winter storm is producing record high tides, flooded streets and blinding snow along the U.S. Eastern Seaboard and Canada. Meteorologist Derek Van Dam will have more on the story after the break.
SIDNER: This is rough. Check out this home, surrounded by icy floodwaters in Massachusetts. You have to feel for the homeowners there. My goodness. These images are from a town southeast of Boston, where water breached a seawall and flooded the nearby area on Thursday.
And we received this video of a car submerged in icy floodwaters, also near Boston, this is just one of many U.S. areas along the U.S. East Coast, where flooding has occurred. It's the result of this week's winter storm, pounding the region with record high tides and snow.
(WEATHER REPORT) SIDNER: Thank you for watching CNN NEWSROOM, live from Los Angeles. I'm Sara Sidner. "WORLD SPORT" is coming up next. You are watching CNN.