The Ledger: Ethereum and Litecoins’ Round Trip, Bitcoin Trading at Citi and Morgan Stanley, New Crypto Crackdowns
Imitation may be the sincerest form of flattery in some cases, but in cryptocurrency, it’s generally the surest sign of a scam.
It was from the director of the enforcement division of the Texas State Securities Board—the state’s market regulator—alerting me to a video published by Coins Miner Investment Ltd. “that purports to depict you discussing bitcoin/cryptocurrencies.” Uh oh.
The email went on, “Can you please confirm that you are not a senior writer for Coins Miner and that you did not authorize Coins Miner to use the video on its website?”
This, I hoped, should have been obvious. The video, posted three weeks ago on YouTube and embedded on Coins Miner’s website, is a corrupted version of a short explanatory clip I filmed more than a year ago for Fortune, where I am a senior writer.
Ironically, the original title of my video, which is available both on Fortune.com and YouTube, is, “The Risks of Investing in Cryptocurrency.” Coins Miner had taken it, mashed it up with their own promotional materials, and superimposed their own logo over the Fortune watermark in the video. Check out the following screenshots:
Can you spot the difference?
At this point, I am confident that Coins Miner is not only risky, but almost certainly a fraud. Of course, there are red flags screaming scam all over the company’s website, such as its “about us” section, which reads, “Welcome To Coins Miner( The No.1 Leading Crypto Trading And Mining Platform). We Started Coins Miner Two Years Ago And We Have Been Paying Our Investors With Peace And Unity.” Now, it also seems likely that the authorities will shut it down.
I’m not, however, shocked by this scheme. Back in October, I got a LinkedIn message from someone asking if I was affiliated with the now-defunct Coinsminer.org, which was using my video on its homepage, and had uploaded it to the video hosting site Vimeo. At the time, someone in our video department had made a copyright complaint to Vimeo, which promptly removed the material.
False impersonations abound in the scammy underbelly of the cryptocurrency industry. Remember the U.S. Securities and Exchange Commission’s public service announcement in the form of a spoof ICO website about “HoweyCoins?” That came after crypto sites started listing actor Ryan Gosling as one of their team members.
A few weeks ago, I also received a Facebook message from someone asking if I work at Nexusonemarkets. “The reason is because I have been investing in this blockchain platform and the assistant operation manager named Jen Wieczner has been attending to me and collected $10,900 so far from me,” the person wrote.
By the time I read the message, the Nexusonemarkets website was already suspended by its hosting provider. But I suspect they were pulling off a similar con using my name. (It’s exceedingly unlikely that this was an innocent case of mistaken identity. My last name, which originates in Poland, isn’t common—even with the proliferation of global social media platforms, I’ve never come across anyone else in the world with my exact name.)
The real irony, though, is that blockchain technology is supposed to enable us to gain control over our own identities; I can use a cryptographic signature to prove I am really me. Theoretically, I should be able to use the same methods to protect my copyrighted material—if YouTube had a blockchain on which my videos lived, the only way someone could gain access to my content would be if I authorized it.
Clearly, there’s a lot of work to be done before that will be possible. In the meantime, if you see me or my name attached to anything other than Fortune or The Ledger, stay away.
THE LEDGER'S LATEST
Cryptocurrency Goes to Washington With a New D.C. Lobbying Group by Lucas Laursen
How Crypto Will Grow Into an Institutional Asset Class by Salil Deshpande
Crowdfunding Site Republic Announces Token Sale by Jeff John Roberts
To the moon... Citigroup has come up with a new way to trade crypto. A British soap opera has a cryptocurrency rags-to-riches plot line. The World Economic Forum thinks blockchains could create an extra $1 trillion in trade finance. Morgan Stanley is reportedly diving into a form of Bitcoin trading. Neymar's soccer team is launching a cryptocurrency. Dogecoin is the only cryptocurrency up over the past month.
....Rekt: U.S. securities fraud laws definitely apply to ICOs, judge rules. The crypto crash is now worse than the dot-com bust by some measures. A onetime CEO of a crypto mining firm is going to jail for almost two years. Yet another US regulator is cracking down on crypto. The SEC temporarily suspended trading in two cryptocurrency-tracking securities.
BALANCING THE LEDGER
Kendrick Nguyen, the co-founder and CEO of Republic, joined this week's Balancing The Ledger to discuss how the equity crowdfunding site—a sister company to AngelList—is working with cryptocurrency, not only by helping several crypto projects raise money, but also with a planned token sale of its own.
A long, strange trip. What a difference a year makes? Sometimes, not so much. This week marked (besides the 10th anniversary of the financial crisis) one year since JPMorgan Chase CEO Jamie Dimon first called Bitcoin "a fraud." Those comments set off a frenzy of Wall Street attention on cryptocurrency that sparked soaring prices—particularly in Bitcoin, Ethereum and Litecoin—over the subsequent months.
Now, some of those prices have made a complete round trip, returning to just about where they were a year ago (or lower):
Price on 9/15/18: $224
Price on 9/15/17: $238
All-time high: $1,339 (on Jan. 13, 2018)
Price on 9/16/18: $55
Price on 9/16/17: $53
All-time high: $339 (on Dec. 19, 2017)
MEMES AND MUMBLES
3-D Printed Crypto? It started when the official Twitter account for MiracleWhip—the mayo-like dressing brand—tweeted, "Thinking about an Initial Condiment Offering...What do our new #crypto friends think about #WhipCoin?
At least one person took this seriously—or seriously enough to put MiracleWhip's WhipCoin mockup through a 3-D printer. You can see all the stages of the process in this thread.
The condiment brand responded by offering to give the coin away to John Legend as a gift after the musician won an Emmy award, completing his "EGOT" honors.
Needless to say, as far as the joke went, it didn't come close to resembling anything with an actual blockchain. Still, WhipCoin joins a growing family of fake cryptocurrencies that also includes McDonald's MacCoin and Oscar Mayer's Bacoin. Or, as you might call them, a sandwich.
FOMO NO MO'
Don't miss out: Olaf Carlson-Wee, the wunderkind manager of cryptocurrency hedge fund Polychain Capital, was profiled in The Wall Street Journal this week. The story chronicles the ups and downs on the investor's supposed quest to "prove he isn’t a one-hit wonder," despite more than 30% losses in the fund this year, following 2303% gains in 2017. Vivid anecdotes illustrate how last year's Bitcoin euphoria led to good times at Polychain, such as when employees, on a retreat in Mexico last fall, "skipped an iPhone back-and-forth across the pool as they debated whether the device was waterproof." (It wasn't.) That's in contrast to the withdrawals and lawsuit Polychain is now facing—not that Carlson-Wee seems too worried:
In interviews, he compared his relationship with cryptocurrency to romantic love, and likened the current investment opportunity to the early days of the internet.
Through each dip downward, he has continued buying, particularly stakes in businesses tied to bitcoin rivals such as the cryptocurrency ether. He manages Polychain’s roughly $650 million flagship fund—the world’s biggest in crypto—from an Apple laptop surrounded by vintage boom boxes in undisclosed, secret San Francisco warehouse offices.
“I want to emphasize how long I’ve been doing this,” says Mr. Carlson-Wee, who turned 29 last month. “This is really just like breathing in and out for me.”