I’ve recently started a consulting business that specializes in blockchain technology and so far its been going quite well. There’s all the usual highs and lows of running a business: “this will never work”, “this is completely hopeless”, “we’re getting no customers”, “we got 1 million leads today” … to the more mundane stuff like the clients wants us to clone Google in 2 hours for a fraction of the cost of a cup of coffee. But today I noticed something more sinister show up: The Crypto Conman.
The Crypto Conman first contacted me about 2 days ago regarding a new blockchain project. The job was simple enough: he wanted us to modify an existing cryptocurrency to change a few parameters in the source code. Normally we hate jobs like this because there’s very little dev work involved so the job effectively amounts to some educated copy and pasting. But alas, such is the life of consulting sometimes and I thought that if we got it done fast enough that we could get back to doing some real work.
So I did the usual and coaxed out a list of requirements from the client, and then I was ready to give a quote. I estimated around 2 - 3 weeks for this project to take into account testing and deployment but the client seemed to think it should be done in 2 days. Not being one to be able to develop software through the strength of wishing alone, I carefully explained why I needed more time. At which point the client became visibly anxious.
The Crypto Conman then explained to me that now was the perfect time to IPO a new cryptocurrency because it coincides with favourable Bitcoin price movements … Which I do understand –- the market doesn’t need to wait for your boring deadlines, but its also not something I can change arbitrarily so eventually the client agreed to the deadline.
It wasn’t until we began to discuss the price that I started to think something was wrong. I had already given the client an estimate in previous emails and the preceding conversation was more to confirm those details, but somehow the client was under the impression that our hourly rate was a one time payment … You may be thinking this was an honest mistake but its not the kind of mistake that someone with a command of the English language tends to knowingly make. What follows that discussion can only be described as some of the best confidence scams I’ve ever seen.
The Crypto Conman began to showcase to me a psychological tour de force. At first it was flattery because why the hell not? You may think you’re not susceptible to this one but everyone has an ego so this is a conman’s bread and butter. Then there was the suggestion of profit, not an outright offer for such but more an allusion, this is known as “priming” in psychology textbooks and is designed to bias future judgements …
All of this was carefully leading up to a single moment: the client taking away the initial agreed upon offer, designed to induce a sense of desperation. You can imagine at this point a person becomes like putty and would be perfectly happy to accept just about anything … which is where The Crypto Conman decides to extend a life line (implied opportunity): the chance to profit after the IPO in exchange for being the currencies’ lead developer.
So to summarize where we’re now at, The Crypto Conman has managed to socially engineer a situation that:
In only a few hours The Crypto Conman has managed to cover a master class in confidence scamming, but you ain’t seen nothing yet. The next stage of the scam is to get investors involved or the conman won’t make a profit … Which is why its so essential to associate people with the project who have some kind of reputation in the Bitcoin space. News articles, open source projects, anything about you that might seem remotely impressive to investors is all fair game. So while its important to try sell the technology as much as possible, its still largely the team that experienced investors will look to invest in … hence the offer to be “lead developer.”
Now at this point, you may be thinking that I’m only paranoid. That this entire thing is mere speculation. But then I started asking around … and what I found out was quite disturbing. It turns out that one of my closest friends has already been taken in by a scam just like this one. So we’re really not talking about the typical criminal here. This individual is running a sophisticated operation and it was quite obvious to me that The Crypto Conman knew exactly how to work naive programmers to make a quick profit.
Everyone knows all about pump and dump scams but the other side of the story is what you don’t often hear about – which is the professional aftermath. You see, once The Crypto Conman has hyped up the new currency and pumped up the price the currency will then “IPO” and he’ll dump all the escrowed funds from the “community pool” for a quick profit, making anywhere from $100k - $1 million in a matter of minutes.
To do this: The Crypto Conman also needs to enlist the support of as many exchanges in this scam as possible in order to have the needed liquidity to be able to dump these toxic assets after the price surge – which would be impossible without a trustworthy lead developer.
And that’s when the investors realize what’s happened. They wake up in a cold panic to the sounds of their stop loss alarms going off but before they have a chance to sell it’s already too late. They’ve officially been had by a master troll and just lost their entire investment. And when you’re feeling that shitty you don’t stop to question whether the lead developer might be innocent. No, when money is on the line it’s not a trial but a witch hunt and the investors will lynch the most prominent public person to take the blame for this: the lead developer – the person who The Crypto Conman has already perfectly engineered as the fall guy for this situation.
So now The Crypto Conman has a fall guy who actually paid tens of thousands of dollars for the privilege of having his or her reputation ruined. I’m not going to list any names here but I know prominent developers who have had this happen to them and who can’t speak out about this without being publicly lynched by former investors (sometimes fake investors.)
It’s kind of hard to look innocent when you’re the only public face to the project and you’re crying about some big bad meanies that no-one else can see and who magically took all the money away … But never mind about that because today I met one of them and it’s definitely real.
So yes, today I learned that blockchain projects can seriously mess your life up if you’re not careful. How was your day, Internet?