Transferring money through a third party can add substantial fees and using cryptocurrency bypasses those. However, does the emerging technology invite additional risks?
Today’s guest is Erica Stanford. Erica is founder of the Crypto Curry Club, UK’s number one rated networking educational event for blockchain, digital currency, crypto payments AI, and tech for sustainability. She is the author of Crypto Wars: Faked Deaths, Missing Billions, and Industry Disruption. Erica is a public speaker, crypto currier, and conducts blockchain industry reviews.“If you have a device and access to the internet, you can send and receive money basically instantly and basically for free.” - Erica Stanford Click To Tweet
- [1:02] – Erica shares what began her interest in cryptocurrency.
- [2:11] – After being mugged while overseas, Erica explains how she could only access money from a Western Union with high fees.
- [4:25] – This experience opened Erica’s eyes to how many people in the world live without access to money and she learned about cryptocurrency.
- [5:06] – The Crypto Curry Club started off as a way for Erica to meet other people in the industry through events.
- [7:17] – Cryptocurrency is digital currency; money that is secured by encryption and blockchain.
- [9:05] – Prior to crypto, going through a third party was the only way to make a digital exchange. Erica explains what could happen if the third party disappears.
- [10:50] – Erica explains how blockchain works.
- [11:56] – The best part of transferring money through cryptocurrency, it is usually free of charge with absolutely no fee.
- [12:59] – Some businesses would have a minimum transaction amount due to the price they pay in fees. Crypto bypasses that.
- [14:40] – It is digital money and very volatile. People have started taking advantage of this.
- [16:02] – There’s a lot of hype around cryptocurrency which means it can also get a lot of scammers creating their own currency.
- [18:22] – Even in cases where the cryptocurrency business is terrible, they still brought in millions of dollars because of the hype.
- [20:17] – There have been scams where celebrities have been hacked or a fake profile has been created stating to send them money and they’ll double it for you.
- [21:05] – Erica describes recent Ponzi Schemes, networking marketing, and multi-level marketing using cryptocurrency.
- [22:22] – Cryptocurrency is created through a process called mining.
- [24:31] – In a recent Ponzi Scheme, good people invested everything they had and lost it. Some people knew it was happening but many were victims.
- [26:09] – A cryptocurrency business recently shut down. Erica discusses red flags.
- [27:51] – Erica explains “staking.”
- [28:46] – Some red flags are claims of working with huge companies as customers and partnerships. Scammers can be very brazen.
- [30:00] – If you see one single thing that is fake or dishonest, you have to assume that there are more things that are untrue.
- [30:40] – Erica explains why she decided to write the book Crypto Wars.
- [31:53] – A huge scam that is still shockingly going on inspired Erica to get more information and start her research.
- [34:23] – That one event and the fact that Erica already had an audience and community, she was asked to write the book.
- [35:14] – Erica shares a discount code for the book when it is released this month.
- [36:11] – There have even been faked deaths and Erica tells the story of the scammer behind Quadriga.
- [38:40] – Some of these shocking stories are really happening and possible with cryptocurrency.
- [40:16] – There could be ways to track everything, but if someone has been planning a scam, Erica explains how they can get around that.
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Can you give us a little background on how you got involved in the crypto space?
Yeah. I first heard about crypto in early 2017, started having a look at it and playing around, and then saw just how easy it was to just send and receive money. What had sparked my interest before then, I'd lived in Buenos Aires during the economic crash, by chance, as a year abroad from uni around the 2008 period. This was a time of just crazy economic uncertainty and people just didn't trust banks, didn't trust governments. People walking around the streets banging pots and pans protesting about the situation there.
The key learning from that is everybody I met—my friends—they take you into their houses and they don't keep money in banks.
The first thing they did when they got paid—they got paid in pesos—was cashed it out, convert it straightaway into euros and dollars, and kept the banknotes in safes in their houses because you don't keep money in liquid currency, you don't keep money in banks, and that had stayed with me.
The summer before that, I used to spend summers just traveling around, burning up my student loan. But the summer before that, I'd spent traveling around Guatemala and got mugged, I think four times in a row quite early on. I was a little blonde thing traveling around by myself. I was left with no cards, no traveler's checks, and none of the ways I'd brought with me that enabled me to get money out.
I remember those years stranded in a little village and rainforest-type area, just no cards, nothing left. The only way I could get money was I had to walk to the local Western Union, which was a walk of several miles away and quite a long walk through probably the less safe area, and call my dad in the UK who kindly sent me money. Then it took three days to arrive.
I had to go back three days later, and they charged 14%. That was the only way in Guatemala you could get money without a bank card. I remember even then thinking, “This is crazy.” It's OK for me because I was there in the summer, but that is regular life for a lot of people. You have people working abroad or working remotely and you look at it, you've got a third of the world's population that don't have access to banking.
You've got 2.5 billion people around the world who don't have access to banking because they don't earn enough basically so that banks don't deem it economically viable, or basically worth their while to give them banking facilities. That's people who can't send money digitally or save money and so forth, and literally have to rely on these remittance companies who charge up to 30% but charge an average of 7%.
The poorest people around the world—people who earn often less than $1, but certainly less than $10 typically a day—giving up to basically a third of their total earnings just to these remittance companies to be able to send money home to their families to be able to eat. In many cases, that's the difference between do you eat or not, does your kid eat or not, or does your kid get to go to school or not? It's an enormous amount of money.
That had really stuck with me and just thinking how crazy the system was. It's fine when you're in the US or in London and you can pay for everything with your card or with your iPhone, but that isn't the reality for a lot of the world.
When I heard about crypto and you start playing around with it, you can send money basically instantly, basically for free, tiny, tiny, tiny amounts of money that you just can't do with government currency. And anybody can do that as long as you've got access to the internet or through a smartphone, anybody can send money like that basically for free and instantly. That had really stuck with me.
I was really interested in use cases, started playing around, started looking into it, read everything I could about it, and then just wanted to meet more people in the space. That's how the Crypto Curry Club started.
That's awesome. What is the Crypto Curry Club?
The Crypto Curry Club, we've now got the main crypto blockchain and emerging tech community in the UK. It started off—I wanted to meet more people in this space, I wanted to meet more people and understand more. At the time, there was no real community and there were some events. But either they were super dry and technical, or mostly they were sales pitches or scams. It was really hard to meet other people.
Crypto Curry Club—curry is the national food in the UK, everybody loves curry. Traditionally, in the UK, you have lots of events where you've got a Christmas curry or a curry get-together where you get together with a group and share food with people. We started doing this before the crypto and blockchain industry.
Effectively until lockdown, we have a week or so at the end events. We'd hire out a restaurant and get people together—invite-only. But we had all of the leaders, founders of the main crypto, blockchain, and tech companies in the UK. We had the C-suite from many of the world's biggest organizations. Everything from the biggest search browsers, people from Google, Apple, Facebook came to the UN, to the police, to the law firms, to the universities, to the media, to the newspapers wanting to find out what was happening, to all of the startups and exciting companies working in this space, getting together, all sharing about what they were up to, what they were working on. Asking you for ideas, talking about the future, and really brainstorming together.
In a really safe close […] environment with lots of everybody's favorite food and drink all together. It's really, really fun events, but really fun events with the biggest minds and the people really driving away in crypto and blockchain in the UK. We've built up the main community in the UK, which for the last roughly a year-and-a-half now has been fully virtual because we're still in lockdown.
For the audience, in two minutes or so, what is a cryptocurrency and what is blockchain? We'll leave tokenization out of this conversation.
These are always the hardest questions, of course. Cryptocurrency is basically digital currency where you've got money that's secured by encryption that can be sent on the blockchain. What that basically means is you've got a permanent sort of record of every time currencies are sent. What crypto enables is the ability for one person to send money to another without needing to trust a third party. That's really the first time that's been able to happen.What crypto enables is the ability for one person to send money to another without needing to trust a third party. -Erica Stanford Click To Tweet
Before you had crypto, with government currency, unless you're physically with somebody—if I'm physically with you and I want to buy a hat from you. You've got a hat, I've got £10 or a $10 note. We can exchange one for the other and feel relatively secure that yes, I've seen the hat, yes, you've been able to expect the $10 and see that it's not a fake one. I can see the hat is good and we can swap one for the other. I trust that you can't run faster than I can't run away with the hat before we do a fair exchange.
That hasn't been possible, digitally. Digitally, you always have to trust a third party. That might be a card provider, it might be a payment processor, it might be a bank, it might be something like Amazon or eBay whereby effectively, you send money to them, somebody sends the product to them, and they have an escrow system whereby you have to trust the third party to do the exchange.
That mostly works well, whereby the third party is trusted, but it's happened multiple times now, where the third party has disappeared or the third party goes bankrupt. Even if you're trusting your money to banks, it's happened where there's been effectively bank runs where people haven't been able to withdraw your cash because if you keep money in a bank, if you have $100 in the bank, that doesn't mean you have the $100 physically in a personalized physical department for you.
In actual fact, they might keep 10 of those dollars and then lend the others out. If enough of those people want to get their $100, or all of their money in their accounts all in one go, they don't have that money, so people can't get their money out.
Crypto was created in 2009 with Bitcoin, but it's still a new technology that enables anybody to send money directly to another person, and you can see exactly every stage of that transaction. You can see what addresses sent it. You can see that it's been received. You can have sort of checks on it to see how it's been checked and that it's arrived.
You've got a full level of transparency with crypto that hadn't been possible previously. Now, of course, you've got a more private cryptocurrency to avoid that, but the core tech is that you've got this transparency that you wouldn't otherwise have. Because you're bypassing a lot of these third parties and it's a different technology to government fiat currency, you can send absolute micro amounts.
You can send 1¢ basically free of charge instantly. You can send money abroad basically free of charge instantly, but securely. It's just a whole new way of sending money securely. That way, you've got much more transparency than you would with government currency.
Blockchain is effectively a system that cryptocurrency is built on and it's basically a ledger. It's a way to store information or to store money, and that information is added to in a time-sequential manner.
What you've got with blockchain, because it's effectively impossible to go back and erase information that's added, you can't go back and erase information that has been added or go back and change information that has been added, you can add on additional information. How blockchain works as a core, you've got full transparency of who has added information, who has sent what data, who has said what, and at what time points.
What blockchain brings is a way to store information securely. For example, in an Excel spreadsheet, information can just be changed or edited and you can go back and delete things; you can't do that with blockchain. Blockchain just brings a lot more transparency and accountability to a lot of industries now, including finance.
With cryptocurrency, one of the big things is that these transactions are often fee-free, without fees.
When you're talking about Western Union or these small money transfer places charging up to 30%, someone not having to pay that 30%, that's a huge difference in their life.
Totally, and with cryptocurrencies as cryptocurrencies, and some of the older ones are more expensive to send. You've got some instances where you've got relatively high transaction fees, but then you've got other cryptocurrencies that are much, much lighter where you can literally send 1¢, basically free of charge. You simply can't send 1¢ digitally if it's government money, there's a cost to doing so. It will cost roughly 30¢–50¢ to send such a small transaction.
You often used to see—at least in the UK, this was back a few years maybe, but before lockdown—shops would have signs saying that they weren't to accept less than £5 or less than £10, and maybe you had the same in the States because it costs them too much money for the transaction to do so. They lose out too much money for doing so.
Whereas you have crypto that can bypass a lot of that. On the other side of crypto, there was a transaction recently where $1 billion was sent and that costs $7 to send. It's easy to think that that's easy, but that just doesn't happen in government currency.
If anybody remembers sending money abroad, traditionally, companies have added on huge extra fees, partly because there is a cost to doing so, partly because they could because they had the monopoly. Crypto bypasses that and just makes it easier and cheaper for anybody to send the money, however small it is. This opens up a whole new world of opportunities where you can just send $1 home a day to your family because that's what you've earned and you're working abroad. You could pay for content, pay somebody who likes your show, pay for rewards, attendance, or loyalty points—1¢ here, 1¢ there, which just isn't always possible.
Yeah, and I suppose with emerging unregulated tech, it leads to scams coming out of the woodwork, I assume.
Yeah, exactly. That has been a huge problem in crypto. Unlike with any emerging technology, I mean, we had the same with the dot-com era. It's happened before several times. I think where scams have gotten so much worse in crypto than in any other industry sectors or other new industry sectors is because you've got this new emerging technology that people don't really understand. It's new and it's a shiny new toy, and people are taking advantage of that.
Plus, because it's digital money, and it's very volatile digital money, some of these earlier cryptocurrencies shot up hugely in value and people have seen that. Other ones have been so volatile that people have made huge amounts of money by trading them.
Where, I think, crypto has been bad and people got caught up in an obsession with this as the trading volatile bubble is that such huge amounts of money have been made and potentially could be made. That the scams have taken advantage of that and taken advantage of people's need for money, greed, desperation, or whatever that is, and take advantage of their vulnerabilities and promised all of these get-rich-quick schemes.
You've had all of these scams promising, “Just send us your money and we've got this trading algorithm, so we'll double it for you.” “Send us your money, we've got these mining machines that mine crypto, so we'll give you X percent return.” “Send us your money and because it's crypto, it's just going to magically go up in value and you'll get X percent returns.”
They don't quite say it's magical. They say, “Well, we've got this amazing new cryptocurrency, this amazing new project, or this amazing technology, which can do X, Y, Z. The problem was because in crypto, there's so much hype around it, particularly around 2016–2018, what was known as sort of an ICO era—initial coin offering era—where people realized how easy it is to create a new cryptocurrency out of thin air.
What happened in that time, you've got the original cryptocurrencies. Ethereum is the main one that was used for this, and that's a very good, legitimate, useful blockchain, and useful currency that many people have faith in. But with Ethereum, it's open-source, so anybody can copy the code and create a new, effectively, copycat cryptocurrency.
You could create a cryptocurrency, you could copy the code, create a new cryptocurrency out of thin air. The problem was that you had all these freelancers popping up as crypto experts on all the gig sites. Anybody could pay very, very little amounts of money, you'd get the code copied, and then you could give it a name.
You could say, “I've got Chriscoin,” and you decide how many new coins you're going to have. You could say, “I'm going to have 10 billion Chris tokens,” and then you pay a freelancer who will just copy someone else's website. Get a template of a website, copy that, create a logo for you, and they'd create some wording around that or create a whitepaper to say what your Chriscoin project is going to do.
Often, they were copied and then you'd want to have a team to show that you've got other people working at Chriscoin. They'd fake a few profiles, use a few famous people or a few people active in the space that use their profile, not necessarily tell them that they were going to put them on their websites.
One famously used Ryan Gosling, a photo of the famous actor Ryan Gosling. They said, “Well this our graphic designer; give him some other name.” Totally brazen, but it costs so little money. For a couple of $100, you could have your own Chriscoin created and you could have 10 billion Chriscoins created. You can get them listed on a listing site and list it, and then you can sell your Chriscoins.
You can say, “Well, my Chriscoins are going to be worth X amount each and because of blah, blah, blah reason, they're going to go up in value. If you buy your Chriscoins now, they'll be up in value,” and people bought them.
Some of these projects that were literally awful ideas that had no business value, nothing behind them, no use case whatsoever raised millions, and some raised billions, but they sometimes raised huge amounts of money just caught up in this hype cycle. It's easy to be disparaging of ICO projects.
The actual concept of the initial coin offering as a way of raising money is great, innovative, and enables projects to raise money without having to go to banks for loans or having to go to VCs. They could effectively crowdfund raises, which is great. There are some really, really good projects that came out of that that are still going today and have done really well for their investors. But there were a lot of opportunities that took advantage of the space.
Then the scam got into that and there was this whole ecosystem built up where people realized how easy it was for people to make money in crypto. Just a lot of opportunities to realize how easy it was to separate people from their money.
The thing with crypto is once you've sent it to somebody, it's not like a bank where you can call them and go, “I've been scammed. Can you try and get it back for me?” You don’t have that third party so you're effectively responsible for your money. They worked out that if they could just get people to send them their crypto, buy some fake promises and fake partnerships, and whatever, you know, people made huge amounts of money and then effectively just disappeared.
What are some of the scams that you've seen in the crypto space? I think within the last year, there was the Twitter hack where a bunch of well-known Twitter accounts were used to post, “Hey, I'm feeling happy today. Send me $1000 in Bitcoin and I'll double it and send it back to you.” Obviously, that was a scam.
Or, “So-and-so celebrity feels really bad because of the coronavirus pandemic, so send us your money, we'll send you back double.” That's one of the common ones. Sometimes it was even celebrities’ and influencers' profiles that got hacked, so it made it look as if they're actually sending that.
Also, scammers are so good now. They're really advanced and sophisticated. They can make websites, Twitter accounts, and email addresses that will look very, very similar to the original. If you're not expecting to be scammed, it could be hard to tell that it's not necessarily Elon Musk offering to double your Bitcoin or whatever […] it was. That was one of them.
One of the biggest forms of scams that we've seen the most often that's probably affected the most people are these Ponzi schemes. These pyramid schemes—and there's been a number of them—that have raked $10 billion apiece in many cases.
You've got these Ponzi schemes, which work on a sort of pyramid structure, and they use what's called multi-level marketing or network marketing. Unlike a standard sales practice whereby if you sell something, then it's just you selling it. They've got this really, really clever and highly incentivized reward structure, whereby if you sell something to somebody, you get rewarded for bringing them in. Then if they sell something to somebody else, you also get rewarded, get a share of that going down multiple levels.
You had these Ponzi schemes whereby they'd say that they've got this new trading algorithm, which will trade Bitcoin for you. If you just send them your Bitcoin, send them your money, they'll trade it, and you'll get back X percent a day. The algorithm never existed, the trading software never existed. It was a Ponzi scheme. They paid out early on to get more and more people to put in and then eventually it collapsed. Or there are some about mining.
Bitcoin and cryptocurrency are traditionally created with a process called mining whereby you've got these computer hardware devices that use energy—in Bitcoin's case—to solve algorithms. If your hardware is the one that solves the algorithms and you win Bitcoin, that can be relatively lucrative, but it's hard and it's complicated. You've got to have lots of expensive equipment; it releases lots of heat.
There are lots of reasons why you don't particularly want to open a Bitcoin mining farm in your house; it's not efficient to do it on that scale. You had these Ponzi schemes, which claimed to be these Bitcoin mining operations. “Don't worry about the volatility of crypto, don't worry about mining Bitcoin, just send us your Bitcoin. Look at us, we've got all these mining rigs. We'll do all of the work for you, and then we'll send you this guaranteed return.”
Then, of course, they never actually had any mining equipment. Again, it was just a Ponzi scheme where they say, “Well, we'll create this new cryptocurrency, or we've got whatever it is offered. Just send us your money and you'll get double back because we've got this cryptocurrency. You'll get more than that, we'll send you more, or it'll go up in value.”
They used all of these schemes to entice people to send their money. All of them involved targeting vulnerable people who perhaps didn't research, didn't know better, or trusted the system, and promised easy money. Of course, they paid out to the first few people. Why they got so bad is that the people that got involved, they got their money back initially, they saw it working, and they saw it making a profit. They went to their friends, their families, their communities.
Yes, some of these people knew exactly what was happening and just wanted to get the rewards for bringing other people in. A lot of people were innocently involved because they saw it, they believed, and they saw initially that they were getting their money back, so they then went to their friends, their families, and their communities. Then it got so entrenched that by the time they found out that it was a scam, they're too entrenched because they've brought everyone they knew in.
I think where some of these Ponzi schemes got really bad and were really sad is you had religious leaders and community leaders promoting the scams and promoting these projects. People were buying from people they trusted. So many people from all around, particularly people who really can't afford to lose money were trusting their communities, trusting their religious leader, and so forth and sending their money in.
You hear with all these stories now where people literally sold everything—sold the houses, sold their livestock, took loans out to invest—because they thought, “This is our one chance to have an easier life.” And they've lost all of that money.
The problem is it’s a bit gray because some people knew exactly what they were doing and were just scamming people. Other people were…yes, they brought more people in, but they were also victims to it because they believed in it and initially thought they were going to get their own money back as well. It is quite a gray area with who was scamming and who was innocently bringing other people in.
With the Ponzi schemes, you've talked specifically about a reward structure for bringing other people into the program. To me, that's one of those giveaways that something is amiss.
“I'm going to pay you to bring people into our product.” It's like, “OK, that should be a red flag.” What are some of the other red flags about those scams?
It's a massive red flag and multi-level marketing is gray with products, but dubious at best. The other red flag is that a lot of them would promise things that are just too good to be true. For example, there was a crypto exchange that recently disappeared in Turkey with $2.2 billion worth of user money. They promised that you'd be able to buy Dogecoin, which is a meme cryptocurrency, which at the time was being pumped and really hyped largely due to Elon Musk and others tweeting about it.
They were promoting that you could buy this meme cryptocurrency cheaper on the exchange. They managed to get people to put $2.2 billion onto their exchange just because you could buy it cheaper there, and assuming that's one of the themes of crypto exchanges. There are ways that you can store crypto securely. There are institutional-grade crypto custody and crypto storage solutions where you can, in fact, store cryptocurrency very, very securely if you want, or if that's what the exchange wants.
There are other exchanges that, rather than using any of that security, just use an exchange as a way to centrally amass all of everybody's crypto. Once they've decided they've got enough, they've got that all in one address instead of storing it individually and do a runner. That's happened a few times.
If there are any promises for getting anything too cheap, for example. Then other scams will offer all of these promises or guarantees that, “If you send us your money, we'll guarantee that you get X percent interest every day or X percent return every day.” Anything that says that, it's illegal to guarantee things like that, but it's also impossible.
The problem is now you've got some of these DeFi or decentralized finance protocols where they've got this concept called staking, where effectively you leave your money there, and then by holding it there, they pay you interest. That works slightly differently and isn't by nature a scam. Any project that promises or claims guarantees that you'll get X percent return in interest, it isn't possible to do that.
If you look a little bit outside, banks, trading funds, and so forth have the best infrastructure in the world. They can get the best traders and the best trading software. Money isn't an object when it comes to these funds, and they can guarantee those returns. When you've got a little startup claiming huge returns, go on the assumption it isn't possible.
Then the other red flag is the scams would make these huge claims. They'd say they've got this partnership with Visa, with MasterCard, with this payment provider, with banks, governments, or regulators and they'd claim to have these partnerships. They'd list companies that they had as customers, people that were working on part of their team or advisors, and people who maybe were famous or experts in their space.
The problem of the scams is that they're so brazen in the fact that they don't actually have those partnerships, don't actually have that regulation, or don't actually have those customers. That these people have never heard of the project and certainly wouldn't be promoting it. It isn't a problem. It's really easy to look at some of the scam websites and think it looks good because of the claims that they make. I would say for anything in this space, in general, there's so much fraud and dishonesty going on there. You really have to double, triple check everything that is said.
If somebody is held to be an advisor or be a partner, check it, is it on their social media? Is it on their profile? Maybe reach out to some of the companies or see if there is any other evidence that they are in fact working together or a customer? I would say as soon as you find one thing to be dishonest, one person who isn't actually working there, one partnership that isn't actually the case, go on the assumption that the rest are probably not as honest also.
That's a good thought process. If you find out something that's not true, there's going to be other things that are not true that you just haven't found out yet.
Is all of this what led you to write your book?
No. How we got on to the sort of crypto scams book—there was a podcast series in the UK—it was called The Missing Cryptoqueen series. It was about the OneCoin scam, which has now transpired to have stolen about $25 billion estimated from people—so huge, huge scam. Some of the founders are sitting in US jails at the moment. The FBI, SEC, and so forth are hunting down the others. The founder has been on the run from the FBI for several years now.
Law enforcement is on it and it's been officially shut down, yet it's still ongoing. This is such a huge scam. If you type OneCoin into LinkedIn, for example, I can find over 100 people who are still actively promoting it on their profiles. There are still people who haven't quite somehow got the memo that it's a scam and that it is being shut down. There are still people promoting it.
The point is that it's such a huge scam and they got totally out of control. The BBC did this incredible podcast series about this scam—The Missing Cryptoqueen—where she's gone, and trying to hunt her down, and what actually happened behind the scenes.
In late 2019, I was sent a link to this podcast series and was just instantly hooked. It's just very well done. I listened to the whole thing and sent a message to the guy, Jamie Bartlett, who had hosted it asking if he might be willing to perhaps speak at one of our Crypto Curry Club events. I didn't for a minute expect that he'd actually reply or say yes, but he said yes and that he'd love to.
He came and spoke at one of our events. We had about 60 people from the community there asking all sorts of questions. It was an incredible day. He told us some of the stories that they couldn't necessarily share on the podcast, some of these behind-the-scenes stories about tracking down and researching this scam.
Because our community—the Crypto Curry Club—a lot of people in it are founders of a lot of the crypto projects and companies, but they are people that have been in the space often since the earliest days. Quite a few people from that event came up to me during the event or afterward and said they'd witnessed such-and-such other scams. They'd seen such-and-such scam, had tried to stop it, tried to contact the authorities, and tried to raise awareness about it.
Some of them had had death threats and they told me their stories because it's organized crime in many cases running these scams. They told me their stories of what they'd seen early on, what they tried to do to stop it, how it happened, and so forth, and got me into all of these different social media chat groups run by the scams. You've got the scams blatantly promoting scams and scammers actively targeting people in these groups and just scamming each other right in front of your eyes on these Facebook groups, on these social media chat groups that anybody can effectively be asked to be added to.
I was added to these groups and it just opens up this whole world where you really see how good at marketing they are, how persuasive they are, how good the people who they employ to be able to drive this community, this belief, and this almost cult-like following of a lot of them.
I've been brought into that world through hosting that event. You start hearing people and start seeing everything that's actively still going on and how blatant these scams are. Then a publisher asked me if I'd want to do it. They had this idea to do this book called Crypto Wars about all the biggest crypto scams and asked if I would like to write it, because I had the community, if I had any idea. I just got back to them with an outline of what I thought the biggest scams were. They thought it sounded good, so I started writing.
It really happened from that event and from having the community. The good thing with having the community is not only you got access to the founders of all of the good projects, but all of the founders of the good projects and people that have been in the space early on know a lot of people that had been researching scams. I was introduced to an incredible variety of people to speak to.
That's awesome, and the book is called Crypto Wars: Faked Deaths, Missing Billions and Industry Disruption, correct?
That's the one, yeah.
That's awesome, and it's coming out in late July available anywhere you can get a book?
That's right. It's on Amazon. It's at independent booksellers. It's available by the publisher, koganpage.com. We've got a 20% discount code there. I think its CryptoWars20 is the discount code. But yeah, Amazon or anywhere else, it's available.
That's awesome. If anyone wants to find out more about the Crypto Curry Club or you, how can they find you online?
We're at the Crypto Curry Club. That's cryptocurryclub.com. Also at Twitter, LinkedIn, and so forth. You can email [email protected] Follow us on Twitter, follow us on LinkedIn, and get the book, and read up about the biggest hacks, scams, and crimes in crypto.
I'm really interested to read. Before we wrap up, can you start with fake deaths? What is one of the fake deaths involved in the crypto scam?
The most famous fake death—and it is not yet known if it's a fake death. There was a Canadian crypto exchange called Quadriga, which has recently been ruled to have been a scam from the start, and the guys running it had previously been involved in other sorts of Ponzi schemes, then money laundering, and so forth. One had already been arrested for something related to fake identities.
It's recently been ruled to be a scam from the start. But at the time, it was Canada's biggest crypto exchange. It looked trustworthy, people trusted it, and put $250 million into this crypto exchange. Then the founder, somewhat mysteriously wrote a will, went on honeymoon to India, and died in inverted commas and various mysterious circumstances, which we go into more in-depth in the book.
I think the thing with that story is, I haven't yet met a single person in the crypto space who believes that this guy died, not a single one. It's possible that he actually died. It's possible in which case I was sad for him on his honeymoon and bad timing, but the majority of people in the space certainly don't believe he died. There's been this whole legal thing going through with lawyers and the police asking for his body to be exhumed to have some sort of proof.
The reality is you've got this crypto exchange where the founder either mysteriously disappeared or died, but he was the only one who had access to the private keys holding all of the people's crypto. That's still an ongoing mystery saga and maybe one day we'll find out. That's the fake death that we speak about in that book, at least.
I mean, I could definitely see whether that particular death is real or fake when you're talking about hundreds of millions or billions of dollars involved in scams—that’s a lot of opportunities and a lot of motivation for someone to fake their death.
Right, yeah. As we've seen with the OneCoin scenario, you've got Dr. Ruja, the founder, who disappeared in 2017, and who’s been hunted by the FBI ever since. It's, in my opinion, very likely that she's been killed. That says organized crime, there's Bulgarian mafia, there's multiple parties who would be incentivized to get rid of her because she knows a lot. If she's ever caught, she's never going to get out of jail. I think that's a safe assumption.
She knows a lot and she's only going to be motivated to talk because if there's anything that can get you out of a lifetime of jail, she's got the knowledge. My opinion is she's probably been bumped off. I say that without having vastly heard anything to the contrary or otherwise.
It's a very real reality. When you're really talking about it and looking into it, this woman's got billions of dollars most likely to her name that she's managed to get from it, and likes plastic surgery, can speak multiple languages, and is highly intelligent. It does make you wonder how one can hide. If you've got enough money, if you're happy to go through plastic surgery, use a different name, maybe not see your family again, the question is: how long can one hide or how successfully can one hide? There’s still a line of people thinking that she's absolutely living it up. Had a bit of plastic surgery, changed her appearance, changed the color of her hair, maybe speaking a different language, living under a different name. All of these things are possible with money.
Yeah, with those vast sums of money.
With such vast sums of money, for sure, yeah.
Isn't it the sort of thing where let's say—this is me asking technical questions here—don't they know what wallets were used to store some of the money when they see lack of transactions being a good indication that the person is not at least active?
This is an interesting thing with crypto, and yes, one can. If you’ve got a crypto wallet that you're monitoring and there's suddenly a transition, and especially if you think that crypto wallet can only be accessed by someone who's supposedly dead, then yes, alarm bells would ring, and yes, you've now got this incredible crypto tracing software and blockchain analytic software that enables you to track and see where the money is sent.
But if you're planning a scam, you know what you're doing is a scam, you know that crypto and Bitcoin can be tracked, and you have enough money at your disposal, there are also people that have cashed out in advance. It's expected that, for example, Gerald Cotten, the man behind Quadriga, there are rumors that people saw him with $50,000 in banknotes at a time.
If you’ve got this type of money at your disposal, and you're planning an escape where you think there might be an opportunity, then there is a possibility to cash out into maybe physical banknotes or into fine art, whatever that is. I think the reality is that these people, if that is the case, would have cashed out into assets that are less traceable than crypto.
Definitely sounds like an incredible read.
I hope so.
Erica, thank you so much for coming on the podcast. I look forward to getting the book and reading all these crazy stories.