Welcome back. Everybody, I'm Caspian Sea and I
am here as usual, my partner in crime Bennett Tomlin.
Today, we are going over my article that I wrote a few years
ago. Now, that is about a time.
I went to Hong Kong to try to find it FedEx and tether, it's
my favorite story that I've ever written.
It's what I love to do the most, which is go and try to find
things out on the ground. I'm looking forward to talking
about it and describing it. It so Cass.
Why did you fly to Hong Kong looking for bitfenix?
So bitfenix and tether and their Associated companies are a
global conglomeration of of nonsense, right?
These guys exist in the British Virgin Islands, they exist in
Taiwan, they exist in Hong Kong, they exist in Switzerland and
London and a million places, but the harder we looked you me bit
for next. Eight coin, the more it Has
revealed that all of these companies.
The one thing they had in common was that they had an address in
Hong Kong. So my best bet if I was going to
try to find them, was to go to the place where all of their
offices existed, I don't know if it's important to explain to
people what tether and bitfenix mean to me and you and us, it
started us on this Venture into cryptocurrency and fraud and
scams and exit scams and hacks. They are Why I'm so obsessed
with this. Now tether is a 60 billion
dollar, stable coin now. And bitfenix is one of the
exchange leaders. It's dropped off big big time
over the past several years, but it's one of the bigger exchanges
and I just wanted to find them. That's the shorter answer.
So you fly to Hong Kong looking for these incredibly important
companies to the cryptocurrency space.
You head off. First looking for the offices of
I Phenix. One of the companies that
operates the bitfenix. Platform and of course you found
it. Well staffed by competent
professionals who are running a massive exchange of course.
Yeah, the first place that my friend and I Griff went to was a
place in a very well-known Tower in Hong Kong called the Bank of
America tower. It's this very central location,
within the financial district of Hong Kong a bunch of walkways
flow into and out of it. It's just A hub of activity.
During the normal work day, it was really easy for us to get
past all the guards and we went to the appropriate floor and
when we got there. Yeah.
No it wasn't professionals. It was a construction site.
There was no one there and that was it.
Well, I'm sure when you headed out to one of their other
addresses to find like we're bit for next technology was
headquartered. Of course, they are.
You would find the expected like JL V, DV the CEO of bitfenix had
to be in the office when you went to That out to be honest by
this time, I was I went to Hong Kong under the suspicion that I
wasn't going to find anything. So I was pretty sure that I
would walk away empty-handed. I wasn't very concerned that I
would actually StumbleUpon anything until my friend Griffin
was like, so what are you going to ask them if they're there and
it just dawned on me like oh man, I don't know what I'm going
to ask and I don't even know how I'm going to react if we
actually stumble into bitfenix headquarters.
Thankfully that's not what we Old into what we found on the
other side of the door for J & K Holdings Limited.
I think was the name of the company was to Chinese women who
knew English. And when I asked them, if anyone
worked there from bitfenix, if anyone worked there from tether,
she said, no. And then I asked if they worked
with them and she said, they send us paperwork from time to
time. This certainly was not the
place. If you were say a customer who
feels like you've gotten screwed, And need your support
ticket answered. It is not the place you would go
to. Okay, fine.
So bitfenix doesn't have any offices in Hong Kong, and you've
checked out these two buildings already, but there was, of
course, the third address for tether and you had to finish out
the loop and that one was surprising.
Well, yeah, it wasn't, but it was a beautiful building.
It was this 1980s kind of chic Marine, green, blue building.
And there was a guard Manning the station, and he asked us
questions before he let us through and it just felt like,
oh man, maybe this could actually be the place, but when
we got up there, the woman made it clear that she was
uncomfortable with the questions that I was proposing and the
more I tried to ask. So I started with the same kind
of questions, like, is this tether headquarters?
It's listed as tether headquarters.
No. Okay.
Have you ever worked with Heather?
And it became these kind of awkward pauses of like Um,
they're not here. I wasn't sure.
It felt like she knew more than she was letting on but I don't
know what that means. It certainly wasn't the tether
headquarters and so this one would have been the sign that
said proxy management, Consultants limited.
So let's talk about now for people.
Why does bitfenix into other have so many addresses yet?
No, employees at any of them? Yeah.
Well these aren't these obviously aren't branches or
headquarters what these all are. Are the Hong Kong version of a
p.o. box where you have these people accepting mail on behalf
of you? The business has incorporated on
behalf of you. You can skirt a lot of rules and
regulations in Hong Kong. There's a lot of places like
this, and you'll see it's a common occurrence in corporate
culture in general, but I think it's extra common.
When it comes to cryptocurrency and we do see them do very
specific, things like they are. Often located in British Virgin
Islands. The Caymans Panama places that
are known for being shelters for money laundering and tax Haven
tax evasion Havens. All these addresses, you went to
check out. We're never really bitfenix
offices or addresses or places of business in any meaningful
sense in the same way that coinbase is not headquartered in
Delaware, where their corporation was created, but the
opposite while coin basis, suggesting they don't have a
headquarters. Ders.
The reality is that if there's an exit scam and all of the
funds on coinbase disappear, everyone knows they can go to
San Francisco where all of the employees for coinbase who
aren't remote work. So the idea that there isn't a
headquarters for coinbase, that's booked it man and the
same for any of these things. Like, if Gemini exit scam
tomorrow, you can go to New York.
Go find me. Fitbit for necks and tether.
They walk away with all of your money.
Where you going? How are you getting it back?
I mean, We'd probably have to go somewhere in jails probably
still over in what Hong Kong or Singapore.
Juan Carlos somewhere in France. Maybe Paulo might be in France
or in Italy. I honestly don't even know where
they are and I followed the stuff obsessively.
Yeah. Yeah.
Which is wild. These are these are the
executives of the, some of the largest cryptocurrency companies
in the world and people just don't even know where they
exist. At the end of the day, you know,
they argued that Matter. And I guess there's a truth to
that because there is no headquarters, there's no place
to go and love level a complaint against them.
I guess you can bring a lawsuit in the British Virgin Islands.
Everything is purposely opaque. Yeah.
And we've talked about this before about how a lot of
cryptocurrency businesses rely on this kind of almost
regulatory obscurity and Arbitrage, where they're trying
to set up different parts of their business.
Through these various thin shell companies across as many
jurisdictions as One to make it hard to bring a suit to to take
advantage of any little Advantage.
They can get in those places and three, because they don't want a
single place where you can point to and say that's bitfenix,
that's coinbase. That's whoever which obviously,
I like for some company, like, coin based that just doesn't
work, but when you're buying ants and CD is obviously King,
you can say there's no offices or headquarters, but I guess if
they just catch CZ that kind of, does it, doesn't it?
Yeah, it's easy gets compromised.
I can't imagine finances in a great position which is
honestly, probably part of the reason why jlb TV maintains such
a low profile because he does live in a politically
contentious area with rapidly changing rules and regulations,
surrounding finance and cryptocurrencies in general.
So it's probably to his advantage that he's very rarely
seen in public and almost never makes statements or things like
that. Yeah.
And I don't know. One Carlos deal, is he used to
be heard from all the time to like, one Carlo used to be the
customer support on bitcoin talk.
It would only sometimes call his customers morons.
I think it's all just trying to craft a narrative that bitfenix
in tether are a modern financial company.
The idea of having an office full of employees is last
century. We can be so much more efficient
by recruiting around the globe for the best possible talent.
And so they create this story. Right.
That this is the best way to run their business.
When in reality the reason they're doing this way is so
they can set up these different shell corporations so they can
take advantage of these different regulations and try to
enact that. And so the story they're telling
the narrative about decentralization is both.
It's meant to cover up. The fact that they're trying to
take advantage of looser Financial regulations without
something like the Panama papers in a crypto form or something.
I just don't know how you put a stop to that because These
people can churn up a hundred different shell corporations and
dissolve them the next week and we would it would take us years
to catch up. Yeah, it does.
That was part of the way crypto Capital core survived.
As long as it did is they just kept creating new shell
corporations and they were willing to continually lie to
Banks and say, what do you mean this is a real estate company.
What do you mean? This is a mining company.
Sure, these transactions look like they're from crypto
currency exchanges, but we're real estate company owned.
Oh, there goes that. Account.
Luckily we've got two more. We started this week and there's
always going to be somebody who's willing to do that for
them. And there's, we've talked about
ways to shut down tether and bitfenix before.
So we don't need to rehash that, but I do think that offshore
incorporation and Offshore Banking is probably more useful
and more dangerous for criminals than cryptocurrency.
Could possibly ever be? It's less easily, traceable.
Then like, the major cryptocurrencies, right?
Like you and I have tracked me You're important events on the
Bitcoin, in the theory and black Jean and we could see them
happening because you can see the transactions, you shovel
money through three shell corporations across four across
three different countries. Several different banks, we lose
the ability to track that to have any insight into that and
you need subpoena power and you need subpoena power across
multiple jurisdictions. Yeah.
I mean I even the Enron guy Loop hi.
Who's one of the only ones who didn't get charged?
I've been looking into him and he has the loop High foundation
in Isis, which I can't legally acquire any information about a
501 c 3, there's no way for me to acquire how much money gets
donated to them every year by whom and for what, but it is a
registered charity and foundation and it is 501, c 3,
which is just, that's America, man.
You don't have to go across the globe to find the exact kind of
thing that's happening. Now, that's happening before in
Hong Kong and And British Virgin Islands happening.
Now in places like Nevada and Delaware Montana Texas, Wyoming,
right? All of these places.
Now are actually adopting the system of offshore incorporation
and Offshore Banking. While it's not obviously
offshore, I'm just saying it's like yeah, it just changes the
dynamic fully individuals can choose whether or not they went
to provide money. Me or whatever to corporations
that use these kind of techniques but shell
corporations and using stuff like that to launder.
Money is still an effective tactic used by criminals and
yeah and a lot of the stuff you go in there and all of these
companies are dissolved in gone. You can follow these guys only
as long as the trail is hot and as soon as it goes even I'll
never forget. That reviewed Yosef thing where
I tracked her and stupidly announced it that I was tracking
Her in Israel. And then I lost the trail
because I spoke about it publicly.
So I think it's really easy for researchers and journalists and
writers to be looking into something, be right there and
feel like you're so close to seeing how the ugly underbelly
of these industries work. And I think crypto is just like
so entwined with offshore incorporation and Offshore
Banking that underbelly is much even see deer than See, and it
has been really eye-opening for me my first time really looking
into the Panama papers in the paradise papers was when we were
first looking into bitfenix in tether, and we saw that Phil
Potter and Juan Carlo and all the Incorporated.
Both of these two companies down there, and it sits with me that
there's a whole bunch of information that you, and I
specifically have learned from those documents about crypto
Capital core about bitfenix about tether about these
important multi-billion. Other entities that we would not
have known if the most active, on sake of papers, and the app
will be papers. Hadn't been leaked the Panama
Paradise, papers hadn't come out.
People don't understand this. I think it's true.
People have no idea that to find out information on a Bahamas,
based company or a British Virgin Islands based company,
you have to pay money. Like you have to pay a
significant chunk of change. So these places make it so that
journalists and researchers and armchair detectives like Can't
possibly afford to actually find out all the information on your
company and it's all of them. It's Singapore.
It's British Virgin Islands its Puerto Rican like it's all of
them they do this on purpose. Yeah.
Hong Kong is a little bit better.
I've bought from Hong Kong before and there's her at least
a lot cheaper than British Virgin Islands, but you do need
to call up your credit card company first and go.
Hey I'm about to be processing several somewhat small
transactions. To this weird Hong kong-based
credit card processing company. That's intentional.
Don't freeze my card just as an aside.
Yeah, hopefully there's some I think armchair armchair
detectives can often provide a good resource even for
professionals, I think if you stumble upon something that's
really beautiful and amazing and it blows your mind, there's
nothing wrong with trying to share that with the right.
People who might be able to utilize it in a bigger way than
you or help you try to surface more information about it.
It can also be very dangerous. So like I want people to do that
kind of Fact-checking. Like if you stumble upon some
Hong Kong company that you think might be connected to something
that you're fascinated in. Don't just say it, is that you
have to take the time if you don't have the cash, save up the
cash to order those documents. Like I people need to start
incorporating those own journalistic, Discretions into
how they decipher what reality is.
I certainly agree and I think that's that's how you.
And I generally try and think when we find facts will try to
Sit verify it check into these things at least a little bit and
that's helped us. Then discover even more things
about the. Yeah, people try to rush out in
article as fast as possible because crypto currency moves
stupid fast way faster than any other industry I've ever seen.
And sometimes it helps to not have to be the one that's
breaking it. And if you can take the time to
do a much deeper dive, that is actually going to be a much more
valuable resource than the breaking news.
A lot of the time, that's generally My Philosophy.
I assume I'm not good enough to be the fastest, so I should
spend a little bit of extra time and make it better.
Totally agree. And I work this, I work the same
exact way as you. It's best to take those longer
form deep, Dives, just examine really what's going on
especially because there are people with the resources and
connections, who can kind of verify some of the stuff a lot
faster than we possibly could write or it could at least
verify it to the degree. They think it's Yeah, there's
certainly people with the network to understand this
Nuance. So we started with talking about
why you wanted to go and see if it connects into other of
offices. We've discussed why these
corporations both in cryptocurrency and more broadly
in the world of Shadow and criminal Finance.
Use these type of Corporations. Do you have any other closing
thoughts? Yeah.
I think that there's a huge value to on the ground
journalism and journalism. Lists or not journalists going
out, reporting on stuff and doing their best to report it in
the most professional manner as possible because we live in such
an online world. Now that yeah, like a lot of the
reporting can be done by just thoroughly, reading a court
document or going on open corporates and trying to shuffle
through names and officers and corporate entities.
No doubt most research. Nowadays doesn't need to be on
the ground. But I think there's a huge value
to that, especially since covid and all this other kit that
we've dealt with, for the past year.
I think that has largely been ignored and that it's time to
bring that back, especially with cryptocurrency where you have
billionaires refusing to be identified as like citizens of a
country. And we need people actually
fact-checking others and going and trying to find out what the
fuck is going on. I think that's a good place to
end it. All right, on that note.
Note. Join us next time when we
discuss. Who knows?
What? Probably some other
cryptocurrency fraud or scammer will talk to you guys soon.
Thanks for listening. Note.
Join us next time when we discuss.
Who knows? What?
Probably some other cryptocurrency fraud or scammer
will talk to you guys soon. Thanks for listening.