Tag: crypto

$ALCX: Alchemix Cannot Turn Lead to Gold

~ Bennett Tomlin ~ Leave a comment

There is a brand new DeFi protocol that lets you immediately take out a loan for half your collateral and the protocol will automatically pay back your loan. Financial magic, involving transmuting one coin, into another, while depositing one in a pool, magically you can get a loan and have no risk of liquidations (not really but that’s what people are claiming [1, 2, 3, 4, 5, 6, and the coup de grace their website (archive)]). I think this protocol is flawed. You can find the whitepaper here. (Archive) (My copy)

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A Conversation about the Future of Finance

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This story was inspired by this tweet.

“Bro, you gotta get in on this. I think I have discovered the future of finance.”

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What is Crypto Capital Corp?

~ Bennett Tomlin ~ 2 Comments

Crypto Capital Corp is a licensed (in Panama (archive) [for one of the corporations]), unlicensed (My copy) (just about everywhere else) money transmitter and payment processor. They partnered with a variety of cryptocurrency companies including: Kraken, Bitfinex, Quadriga, Bitmex, Coinapault, and more. They are implicated in wire fraud, bank fraud, embezzlement, and hundreds of millions of dollars worth of money laundering for the Colombian cartels.

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Raphael Nicolle and the Founding of Bitfinex

~ Bennett Tomlin ~ 2 Comments

Raphael Nicolle is the founder of Bitfinex. Before that he had an interesting path.

By day a helpdesk technician, during his free time Raphael became active under the account ‘unclescrooge‘ on BitcoinTalk. From this account he makes some interesting posts, including occasional climate change denialism, saying he would invest in illegal businesses, and at least one joke about underage prostitution to make bitcoin. First he got into pyramid schemes, schemes that were not legally registered, and then he got really into pyramid schemes, and then he started defending a pyramid scheme scammer (repeatedly), and then he lost all the bitcoins he gave that scammer.

Shortly after this, Raphael decides he will start his own OTC desk and his own lending program. People will lend him Bitcoin and he will guarantee them a 2% return per week. To make this money he said he would be performing arbitrage, which he described as ‘buy low and sell high’. (Astute readers will note that this at best an extraordinarily simplified definition of what arbitrage is.) This program appears to not have taken off, perhaps due to questions from other forum members about his advocacy for pyramid schemes in the past. The text of the post was later deleted.

After this Bitfinex launched! (Though Raphy could be found still trying to do what look like OTC trades.) Bitfinex was a brand new ‘Meta-Exchange’ that would allow people to trade at either Mt. Gox or at Bitstamp through the BitFinex interface. They also had their own exchange that was based on stolen Bitcoinica code. Bitcoinica was an exchange that was rife with security issues that had recently shut down. The unique feature for Bitfinex that made it attractive (besides the ability to aggregate liquidity across multiple exchanges) was the fact that they had margin and lending integrated into the platform. However, the fact that it was built on stolen code with a multitude of issues in the early months. However, eventually they started to even out. However, there were still some interesting posts including at one point Raphael even made sure to point out that his exchange was a bucket shop. (This was a fact that Vitalik Buterin had warned about in Bitcoin Magazine.)

Raphael gradually took a less and less public role in Bitfinex until (according to his LinkedIn) left his role as CTO the same month that the Bitfinex hot wallet was hacked. He is now interested in anti-aging and looking for an executive producer (he should get in touch with the chairman of Deltec).

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My Appearance on The Blockchain Debate podcast with Larry Cermak and Patrick McKenzie

~ Bennett Tomlin ~ 1 Comment

You can find it here.

I had a ton of fun recording this podcast, however, due to time constraints I was not able to get to all my notes on whether or not Tether acts in good faith. I would like to summarize a few of the things I was not able to get to here:

  1. Bitfinex has used the bank accounts of friends and family of Bitfinex in order to service withdrawals.
  2. The firm who provided Tether’s last attestation is no longer operational, and Freeh, one of the lawyer behind it UPDATE: is no longer a lawyer is no longer practicing law, but may still be licensed.
  3. Tether advertised no KYC swaps between Bitcoin and Tether.
  4. Tether held tens of millions of dollars in the bank account of their General Counsel.
  5. The founder of Bitfinex was promoting ponzis right up until he announced Bitfinex.
  6. The founder of Bitfinex once described his own exchange as a bucket shop.

There are many more, but I just wanted to give you a taste of some of the stuff we ran out of time to get to.

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Predictions and Outcomes

~ Bennett Tomlin ~ Leave a comment

At one point I tried to learn about a token called Kimchi. That token no longer has any volume or value to speak of.

I decided to summarize some facts about the failed crypto entrepreneur Jacob Kostecki. Today, the class action lawsuit against him has entered default judgement.

I wrote about a deeply exploitive scam called The Billion Coins. Unfortunately, that coin is still active and is still taking advantage of people. They have tried to rebrand to make themselves look more official, but are still the same group of scum.

I once wrote about a worthless token called slidebits. Now the creator himself removed the blockchain from his app.

I wrote an article presenting a bearish case for a token when I was applying to a crypto hedge fund. That token has a market cap 1/10 of it’s all time high. Though I must admit, it has not seemed to be affected by any of the issues I pointed out. Sometimes things just break your way.

I wrote an article taking an in-depth look at the Basis Protocol. In that article I suggested both that part of the system could be a security. Basis shut down to avoid securities scrutiny.

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A List of Funds/Companies who Fundraised Through Havelock Investments

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NOTE: THIS MAY BE UPDATED OR CHANGED AS I DEVELOP A BETTER PICTURE OF OWNERSHIP OF THESE COMPANIES, UPDATES WILL BE LABELED AS SUCH.

Havelock Investments was an early platform in the cryptocurrency space that allowed for a variety of companies to fundraise.

Havelock Investments was purchased by the Panama Fund, S.A. in 2013. The CEO was Daniel Tsai. (archive)

ASICMINER – Asicminer was described as a leader in the bitcoin mining space. Creating mining equipment and running their own mining farm. You can find details about it here. (Archive)

HAVELOCK INVESTMENTS MINING FUND – Havelock Investments Mining Fund was Havelock’s fund investing in Bitcoin mining.

KORB AND CO. INVESTMENTS MINING FUND – This is another fund that was meant for purchasing Bitcoin mining rigs. You can find the most recent copy of their website here.

SATOSHI DICE – Satoshi Dice was a game started by Eric Voorhees (archive). Satoshi Dice was a gambling service where you could send a Bitcoin transaction to a specified address and could potentially receive significantly more in response. Eric Voorhees was charged with offering unregistered securities for these sales of ownership in SatoshiDICE and FeedZeBirds. (archive)

VIRTEX – CAVirtEx was an early Canadian Bitcoin Exchange. Stuart Hoegner (archive), the General Counsel for Bitfinex and Tether, was the lead attorney when Coinsetter acquired CAVirtEx.

CRYPTO CAPITAL CORP – Crypto Capital Corp is a payment processor, infamously used by Bitfinex, and with the principals under US indictment. Crypto Capital claimed that a significant portion of their assets are being held in Poland, Bitfinex’s lawyers claim to not believe this.

LABCOIN – Labcoin was a company that claimed to be working on Bitcoin ASIC mining technology.

SANDSTORM – Sandstorm was an ‘investment fund’ which claimed to use the Bitcoins invested in it to make more money. It appears to have likely been an unsustainable high yield investment. You can find public copies of their ‘financials’ here. (archive)

THE MINISTRY OF GAMES – This was a company that ostensibly was focused on game development and publishing.

XBOND – XBond was issued by ThickAsThieves and was intended to be a perpetual fixed yield bond paid by the Bitcoin holdings of ThickAsThieves. (archive)

CASINOBITCO.IN – CasinoBitco.in [public files can be found here (
1. Prospectus (archive)

2. PR Release (archive)

3. Bitcoin Gaming Market Analysis (archive)

4. 2nd Press Release (archive))] was a Bitcoin casino that later rebranded to Monster Byte.

[1. Q3 2017 Financials (archive)

2. Q4 2017 Financials (archive)

3. Q1 2018 Financials (archive)

4. Q2 2018 Financials (archive)

5. Q3 2018 Financials (archive)] They now do white label cryptocurrency casinos. They are linked to Nessie (formerly at nessie.io (archive), now redirecting to crypto.eu) and MoneyPot (archive from when MonsterByte owned it) (domain now sold). I think it is valuable to remember that Stuart Hoegner (archive), the General Counsel for Bitfinex and Tether, is a “lead attorney to major bitcoin and altcoin poker brands”. It is unknown whether or not BitcoinRush/CasinoBitco.in/Monster Byte is among them.

COGNITIVE MINING – The listing on Havelock is not available. It appears to have been a way to invest in Bitcoin mining based on their archived site.

DEALCO.IN – The listing on Havelock is not available. The page (archive) currently directs to what seems to be LocalBitcoins but includes a feature where you talk to the person first.

NEO & BEE – The listing on Havelock is not available. You can see it on the right panel on various archives of Havelock. It appears to have ended due to misappropriation of funds. (archive)

MINTSPARE – The listing on Havelock is not available. Mintspare (archive) seems to be a way for people to trade in electronics for Bitcoin.

PetaMine CryptX – The listing on Havelock is not available. This appears to be another mining fund. They eventually shut down. (archive)

RENTAL STARTER – This was an investment into a real estate fund that was investing in Ohio but was operated by Full Power Asia Investment LTD.

SEEDCOIN FUND – This listing on Havelock is not available. Seedcoin (archive) was a crypto incubator out of Hong Kong. GoCoin the Brock Pierce cofounded company was incubated here.

BIG TREND CAPITAL INVESTMENT – The listing on Havelock is not available. It is unclear what they did.

ALCHEMINER – Alcheminer was a company that created ASIC mining hardware.

SEVENTH CONTINENT – Seventh Continent was trying to create a bitcoin denominated marketplace. Their website is still live here. (archive) They were in part funded by the Lifeboat Foundation’s Bitcoin Endowment. Stuart Hoegner (archive), the General Counsel for Tether and Bitfinex was a member of the Lifeboat Foundation. (Archive of a cache of his bio on the page)

A-ADS.COM – This company was a bitcoin online advertising network that claimed to not gather private information. They seem to still be open. (archive)

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An Introduction to the Tether/Bitfinex Controversy

Featured ~ Bennett Tomlin ~ 6 Comments

Bitfinex is one of the historically largest Bitcoin exchanges and Tether is by far the largest stablecoin. Each potentially has significant influence over the industry on their own, and their interconnectedness makes this more of a concern. However, since both were founded years ago and many of the events have happened and been in revealed in bits and spurts it can be difficult to understand their place in the cryptocurrency environment. This will hopefully serve as a basic introductory document that will then prompt further research.

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The Time Brock Pierce DMed Me

~ Bennett Tomlin ~ 1 Comment
Image of Brock Pierce DMing me with the following messages: "If you seriously want to short tether i can find the long", "Would have to be substantial to justify all costs to be compliant"

One of the best things about Twitter is all the different people that you get to meet and communicate with. For example, the founder of Tether (infamously sued for child sexual abuse and arrested in a house full of child pornography) would semi-regularly talk to several of us Tether skeptics in threads. In one he even told us that we knew more about Tether than he did (despite founding it):

Around this same time I received a direct message out of the blue from the one and only Brock Pierce who offered to help me short Tether, the ‘dollar-backed’ stablecoin that he had created. This was a very unexpected message, as I had never messaged with Brock before, and I had never before seen someone offer to help someone else short an asset they created.

My response to this was, “I am not an accredited investor, nor do I have enough funds to make the costs worth it”, but my internal monologue was more like, “what in the ever-loving fuck is going on.” I was a college student when this happened, and apparently Brock Pierce was under the impression that now only did I have a deep desire to short Tether, but enough money to make his own efforts in facilitating this trade worthwhile. Even more strange, is that his initial message seems to be responding to a point where I said that I would be interested in shorting Tether, but in reviewing my tweets I cannot seem to determine a single time that I have ever done that.

Zooming out from the batshit absurdity of this moment we are left wondering, what in the world motivated Brock to think this was a good idea? Who decides that the solution to the problems of the beleaguered asset of their own creation is more people shorting it? Who decides that the best person you should contact out of the blue is a college student who angrily yells at you on Twitter? Who decides to spontaneously ‘run’ for president? Who decides to promise to donate more money than they have ever had? Who decides it’s a good idea to hang out in a house filled with child pornography with a fugitive from the law? The answer to all of these is Brock Pierce.

(Important note: Brock Pierce was released from custody without charges being filed after his arrest and the child sexual abuse lawsuits against him were dropped. However, it is true that Pierce did go to Spain with Marc Collins-Rector after his (Marc’s) indictment.)

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