Kanye West, who legally changed his name to Yee a few years ago
but is also known by the nicknames Yeezy, Yeezus, Louis
Vuitton, Don and St. Pablo, announced earlier this
month on Twitter, which legally changed its name to X but is
also known by the nicknames This Hell Side, The Bird Side and the
Everything app that he had rejected a $2,000,000 offer to
scam his followers with a fraudulent crypto promotion.
He included in his tweet a screenshot showing how the scam
would work. He would receive an upfront
payment of $750,000 to tweet about a fake Yi currency.
He would have to keep that tweet live for 8 hours, after which he
could delete it, claim his account had been hacked, and say
that he didn't write the post. He would then receive an
additional $1.25 million payout. The message he shared went on to
explain that the company asking you to do this will be scamming
the public out of 10s of millions of dollars.
Now. Kanye didn't agree to this.
He has a reputation to preserve. He's a rapper after all, not a
politician. He instead went on a bit of a
Nazi rant before deleting his Everything app account.
About a week later, the Argentinian president Havier
Malay promoted a crypto token on Twitter too.
This one was called Libra and it started trading just minutes
before his tweet. His tweet said that the project
would be dedicated to encouraging the growth of the
Argentine economy by funding small Argentine businesses and
start-ups. Over the next hour, more than
44,000 wallet addresses bought the token.
The price spiked from around $0.22 to more than $5, pushing
the token's overall market value to four and a half billion
dollars before it collapsed in value.
As insiders began dumping their tokens, concern quickly spread
in Argentina that Malay's Everything app account had been
hacked. A few hours later, he deleted
his tweet saying that he had not been aware of the fine details
of the project, and after becoming aware of it, he decided
to stop spreading the word. By the time his tweet was
deleted, the token had already fallen 97% from its peak value
and buyers were accusing the coins.
Creators of a rug pull a type of pump and dump scheme where the
promoters draw in buyers only to stop trading activity and make
off. With the money raised from sales
on chain, analysts pinned the price collapse on insiders,
cashing out almost $100 million malaise.
Political opponents filed dozens of lawsuits accusing him of
ethics violations, while the main left wing Peronist
opposition bloc said that they would launch impeachment
proceedings and accused him of participation in a crypto fraud.
On Monday, Milay surprisingly retweeted a guide on how to
purchase Libra tokens, causing the price to nearly double in
minutes. Shortly afterwards, that retweet
was deleted too. In a television interview later
that Monday, Milay denied any wrongdoing, claiming that he
didn't promote it, he just shared it.
He said that he's a techno optimist and that the coin was
proposed to him as an instrument to help fund Argentine Project.
He went on to say it's true that in trying to help out those
Argentines, I took a slap in the face.
He claimed that neither the state lost money nor did
Argentinians, saying that the vast majority of investors were
American and Chinese. Argentine lawyers have filed
fraud complaints against Malay, and a judge will soon determine
if the president should face criminal fraud charges.
According to Reuters, 8 crypto wallets withdrew roughly $99
million from the tokens liquidity pool, and analysis
shows that the addresses that withdrew this money are closely
related to the Libra Creator team, as those addresses were
funded directly from the Libra Token Creator account.
So far, there's no evidence that Malay directly profited from the
meme coin, but in a best case scenario, the scandal still
shows that he was foolish enough to allow a 26 year old crypto
bro to make $100 million off his name.
One of the biggest scandals to come out from the Libra Rogue
poll is that blockchain investigators have shown that
the same wallets involved in the Libra scandal were also involved
in the launch of Melania Trump's meme coin.
OK, so first up, what is a meme coin?
Well, the first cryptocurrency, Bitcoin, was unveiled about 16
years ago, and it was supposed to be a new technology for
making online payments that didn't rely on the existing
financial system. With Bitcoin, the Ledger showing
ownership would be decentralized and payments could be made
pseudonymously. That never really worked out.
For a variety of reasons, people don't use Bitcoin in the real
world for much of anything other than to gamble on its price.
They do use stable coins, an idea that came later for
transactions, and these are usually pegged to the US dollar
and are supposed to be backed by real dollars, but they avoid the
banking system so are quite useful for illegal transactions.
People don't use them for buying a book on Amazon, however, as
they're still significantly less convenient than using a debit or
credit card. Almost as soon as Bitcoin was
created, people began making fun of it by coming up with joke
coins like Dogecoin, which was probably the first meme coin, or
at least the first one to get any traction.
There was no earnest promise that Dogecoin would be the
future of finance. It was just a cryptocurrency
whose logo was a picture of a dog that had become a bit of an
Internet joke or meme in 2013. Its creators didn't expect
anyone to take it seriously. The idea was that it was a bit
funny, and if you think it's funny, you can buy it, just like
Bitcoin. Additionally, if other people
find it funny, maybe they'll buy it too and the price will go up.
It's important to note that none of these meme coins are actually
funny. I don't think that anyone other
than maybe Elon Musk has ever actually laughed at one.
People just come up with something that could
theoretically be funny and hope that someone else will agree
that someone else might find it funny and thus might actually
buy it it. It's sort of like the Greater
Fool theory, but for bad jokes. If you Google around, you'll
find crypto influencers, usually on their own podcasts, having
earnest conversations about how these things could be considered
funny or culturally important and thus take on some sort of
value. I wouldn't recommend listening
to too many of these conversations as you'll quickly
lose the will to live. Anyhow.
This idea of meme coins has been around for quite a while.
It got a bit big during the pandemic, along with NFTS and
the idea of the electric pickup truck.
Over the last year or so, it picked up again as the crypto
industry became increasingly cynical and decided that if
there was no claim of actual value or use case for a coin, it
couldn't be regulated. The feeling was that the issuer
couldn't be sued for fraud either, if they could claim that
it it was all a joke. And that's how bad jokes became
weaponized by fraudsters. Over the last few years, there's
been an explosion in the number of new meme coins, somewhat
names like Fartcoin, others backed by zealous celebrities
like the Hawk to a Girl. Many were just versions of
Dogecoin, but with a slightly different name, but always the
same dog. The goal with almost all of
these tokens is to get people on the Internet to think that they
are funny, or at least to think that other people might think
that the coin is funny and invest in it.
Usually there's a group of insiders who launch the coin,
own almost all of them, and try to promote it online with the
goal of selling them to the public and making money.
Of course, whatever money they make, their audience loses.
It used to require some basic coding skills to come up with a
new cryptocurrency, but today there are websites like Pump dot
Fun where you can type in a token name, a ticker symbol, and
upload an image which you're supposed to own the rights to.
But no one who does this actually does, and you can then
launch your own meme coin. Then you have to go on Twitter
and pretend that it's funny or interesting and hope that
someone will buy it. Looking at the website, these
things are mostly Elon Musk, dog or Trump themed with a few
Havier Malay chainsaw images thrown into the mix.
To be clear, these people are greedy, not creative.
Now. For a long time, politicians
around the world kept their distance from the crypto
industry. There were a few exceptions,
like El Salvador's failed experiment in making Bitcoin
legal tender and Rishi Sunak's plans for Auk.
Government backed NFTI think he was trying to appeal to a youth
audience. Donald Trump initially called
all crypto a scam. Last year, the crypto industry
made a big coordinated effort to donate money to politicians on
both the left and on the right to win influence within
government, and this was really successful.
I made a video about it a few months ago.
Trump had dipped his toes in crypto already by selling NFTS,
which are basically hyperlinks to bad art.
He did this a few years ago, but made big commitments to the
crypto industry at a Bitcoin conference in the run up to the
election. Around this time last year, the
Trump family backed AD 5 company, a type of crypto
trading platform called World Liberty Financial, which he and
his sons promoted quite actively online.
While the Son ones are allegedly very knowledgeable about crypto,
they partnered with a guy called Chase Harrow who uses the alias
the Dirtbag of the Internet to launch their platform.
I guess you hire the best people that you can find.
Here's a clip of Chase, or Mr. Bag as I prefer to call him,
explaining crypto on a now deleted podcast episode back in
2018. This space is run by a bunch of
middle-aged men. You know like the third mid mid
30 men who who understand the power of social media and you
can literally sell shit in a can wrapped in piss covered in human
skin for a billion dollars if the story's right.
Because people will buy. It and that is what is going on
in the crypto space. Now Chase is not really being
truthful in that clip. You don't actually get any of
the revolting items that he mentioned.
If you hand over a billion dollars, you just get your
account number recorded in an overly complicated online
database showing that you paid him a billion dollars.
If you actually wanted the disgusting can that Mister Bag
described, there are cheaper and more efficient ways of acquiring
1. So along with the launch of
World Liberty Financial, the business, the Trump family and
the dirtbag of the Internet sold a World Liberty coin, which,
while not a meme coin, didn't offer investors very much.
It was described at the time as a bunch of nonsense and a
terrible investment opportunity. While investors could buy this
coin, they couldn't sell it. It didn't guarantee any share in
the profits of the World Liberty Financial business either, and
75% of the proceeds went straight to the Trump family.
The coin launch didn't go particularly well because of the
terrible investment terms. It's hard to understand why
crypto investors would buy a coin that can't be resold.
But then Justin Son, the guy in the oddly fitting suit here,
stepped in and bought $75 million worth of these coins,
which, according to friend of the show Zeke Fox, generated a
payout of $56,000,000 to the Trump's.
It's hard to know what Justin saw in this coin, but Zach
Folkman, one of the founders at World Liberty, said that Justin
saw that regardless of the outcome, this project is a
monumental move forward for the entire crypto community.
So maybe that's what he saw. Now, Justin is not necessarily
known for his careful spending. Two months ago, he spent $6.2
million on a banana, and he likely also paid for that suit.
If you're wondering where his massive fruit budget came from,
he is the founder of a crypto firm called Tron, and he's
facing charges of fraud and market manipulation from the
SEC. Some have argued that Sun made
this World Liberty financial token investment to influence
the outcome of this lawsuit. When asked about the conflict of
interest, Trump's spokeswoman told the BBC that unlike most
politicians, President Trump didn't get into politics for
profit. He's fighting because he loves
the people of this country and wants to make America great
again. I'll allow you, the viewer, to
decide what to make of this, but hopefully you can see how a
politician selling worthless tokens for 10s of millions of
dollars to people who are facing criminal charges could open them
up to accusations of corruption. World Liberty Financial was
announced two months before the US election and raised at least
$300 million, according to Reuters.
The cost of setting up a crypto company like this is negligible.
You can hire a dirtbike to advise you and 75% of the money
then goes to the Trump family. The World Liberty Financial
token is not considered a meme coin though, as it gives
investors a vote on decisions about product features and
marketing, for whatever that's worth.
The crypto industry, you might be surprised to hear, are not
uniformly delighted with Trump's forays into their space.
Many had hoped that he would support the coins that they
already owned rather than releasing his own ones and
competing with them. They hope that he might bring
their industry legitimacy, but now worried that the Trump
family's coins could instead harm the industry as they just
look like money grabs and the fact that they've tanked in
value further discredits the industry.
On top of this, some worry that his involvement will make crypto
partisan and tied to political affiliation.
Meme coins, as I said earlier, are a little bit different to
utility tokens. Not that there's much utility to
many of these tokens, but a meme coin makes no promise of
usefulness. They're just a new way for
celebrities to monetize their brands and a form of gambling
which is entirely rigged in favour of whoever launched the
coin or whichever influencers they work with to publicize the
launch. The issuer of the coin can make
money in a few ways. The first is just by selling
these tokens that cost nothing to create to investors.
The second is from trading as the creators of the meme coin
often receive a share of the trading fees from the exchange
they're listed on. Often when a coin is launched,
the team will recruit crypto influencers, which they call
Kols, which stands for key Opinion leaders, who will be
allocated a share of the coins, often for free.
And their job is to build hype around the launch by tweeting
about the coin or discussing it on their ghastly podcasts.
Then when the coin goes live, they are able to dump them into
the price spike. To call all of this gambling
would be to give gambling a bad name as at least with games of
chance, players have a chance of winning.
In a recent interview on the Coffeezilla YouTube channel,
Hayden Davis, the man behind the Libra token launch and also the
Melania Trump meme coin, described how retail have no
chance of winning. To defend his actions in
withdrawing $100 million from the Libra liquidity pool, he
settled on the idea during the interview that he was like a a
bank owner who decided to rob his own bank to prevent other
people from robbing it. If you get a chance, you should
watch that interview at the admissions in it are quite wild.
I'll put a link to it in the description.
It used to be that Stephen had to investigate online scams, but
now the perpetrator seemed to come to him to confess.
They're not confessing, they're bragging.
There's a long list of celebrities who've launched meme
coins. I've been involved in promoting
them. I googled for a list of them,
but rather than read it out and get sued, I'll allow you to
Google it for yourself. I haven't heard of most of them,
but the ones I did know I wouldn't consider at all
respectable. And that's really the whole
problem for people like Havior Malay or any other politician
who might be considering getting involved in this space.
You might be able to convince yourself that you're
experimenting in in a new field of finance, and that if people
lose money, it's their own fault.
But it takes a lifetime to build a good reputation and just
moments to destroy it. If you don't understand how
something works, or if the people you're dealing with don't
seem trustworthy, you probably shouldn't lend your name to it.
Trump didn't just issue the World Liberty Financial token
days before his inauguration, he launched his own meme coin too,
which spiked in value and then crater, just like the token
Malay promoted did too. A big difference is that Trump
clearly profited from this token, as 80% of the Trump token
supply is owned by Fight Fight Fight and CIC Digital, an
affiliate of the Trump Organization.
Reports show that at least fifty of the largest investors in the
coin, who received allocations before the coin was hyped, made
profits in excess of $10 million each, while 200,000 crypto
wallets, most with small holdings, lost money on the
coin. This is just the way these
things work. On top of this, the creators of
the Trump meme coin receive a share of the trading fees from
the exchange on which it was listed, which, according to
Reuters, came to between $86 million and $100 million in
trading fees in January alone. On Inauguration Day, Melania
Trump announced that she was releasing her own Hamburglar
themed meme coin. Both of these Trump family
linked coins are down about 80% from their launch day highs.
Hayden Davis, the 26 year old crypto developer who helped
launch the Libra token, admitted that he was also involved in the
launch of the Melania meme coin. He made some claims in the
Coffee Zilla interview that there had been a private event
in Washington, DC, too, where people were given special access
to buying the Trump meme coin. Before it's launch, it's
difficult to know if any of that is true.
In recent years, a lot of the crypto hype has been coming from
Silicon Valley VC firms whose websites tell you that crypto is
so much more than a financial innovation.
It's a social, cultural and technological innovation too.
If all of these tokens are useless, why are VC so excited
about them? My friend James Johnny argued in
a video two years ago that VC firms used to invest in start up
firms where most fail but some succeed and make a lot of money.
He pointed out that this process can take years, in some cases
decades, before they finally get to cash out with crypto.
The VCs worked out that they can invest in the start up stage of
crypto or Web 3 projects, hyped them up by talking about their
huge potential, and cash out in weeks by dumping the tokens on
retail as soon as they're made publicly available.
This is all unregulated, and despite all of the claims of
innovation, almost none of the projects ever come to anything.
The VCs then get to boast about how much money they made on
their podcasts. Zeke Fox points out in his book
Number Go Up that crypto has been around for 16 years now,
and despite all of the claims that it's a technological
breakthrough equivalent to the Internet, no real use case has
been found for it other than gambling, illegal activity and
monkey jpegs masquerading as art.
The Internet, on the other hand, first became available to the
public in 1993. Sixteen years later, we had
Amazon, YouTube, Wikipedia, Spotify, online banking and
brokerage social networks, and we're on the iPhone three.
If crypto is going to be as useful as the Internet, it's a
bit surprising that so few real use cases have been found for it
over the last 16 years. Despite people telling you that
meme coins are just fun or gambling, that's not at all
accurate as at least if you go to a casino you know what the
odds are and you might get a free drink.
Meme coins are set up where the people hyping the projects have
all of the coins and when retail come in to buy them they are
dumped. You have no chance of winning
unless you are allocated tokens before the official launch.
A few months ago, the Hoktua girl got all sorts of abuse for
launching a meme coin for her audience, lost all of their
money, and as rotten as what she did was, the only difference
between her meme coin and all of the others is that there was an
actual meme at the heart of it. To be clear, I'm not saying that
what she did was acceptable. She should be condemned.
Her behaviour was entirely presidential.
One of the side scandals of the Malay linked meme coin was that
a well known crypto influencer and pizza reviewer bought in
with his own money and lost $5,000,000.
He then complained and seems to have been reimbursed by Hayden,
the guy who pulled $100 million out.
If you invest though, don't waste your time complaining as
you won't be reimbursed. I would argue that one of the
reasons crypto got so out of control over the last few years
where Ponzi schemes were being run in full public view with no
repercussions is that the SEC were asleep at the wheel.
Where Gary Gensler watched all of this madness and felt it made
sense to wait until new laws were passed for crypto.
Amusingly, the crypto industry felt that he was way too hard on
them. So now pro crypto executives
have been nominated to lead both the SEC and the Commerce
Department. David Sacks, AVC investor and
podcaster, has been appointed as the crypto Czar, whatever that
is. I'm not really sure that the US
government should be handing out Russian royal titles anyhow, but
this is the world we live in. Reign of terror against crypto
is over. A big problem with political
leaders launching crypto tokens is not only does it look like
they're scamming the public, but it also presents massive
conflicts of interest. Right now, Trump's new
appointees at the SEC are supposed to be working out what
kind of rules should be applied to crypto currencies.
It seems somewhat unlikely that they'll come up with rules that
make Trump's meme coins illegal. You would hope that they will
formulate rules based on what they think best protects
investors, rather than which cryptocurrency projects various
politicians are already involved in.
And I guess we'll have to wait and see how that works out.
In researching this video, I was surprised by how little coverage
these scandals are getting in the mainstream press.
It's possible that journalists view this as a small scale
problem and not worth their time, or that they don't want to
dig into it because crypto sounds more complicated and high
tech than it actually is. I did a search to see how
wealthy notorious criminals from the past became.
Al Capone was possibly worth as much as $100 million.
The the Cray brothers made about $2,000,000 in the 1960s, which
would be worth around $18 million today.
Whitey Bulger is estimated to have made around $30 million
before finding himself number one on the FBI's most wanted
list. Al Capone managed over 1000
employees and killed 200 people to make the kind of money that
was pulled out of the Libra token in just one day.
The scale of crypto fraud is huge and because of their
massive political donations these people now have
representation in government. Hayden Davis, the Co creator of
Libra is alleged to have bragged in text messages that he bought
influence over Havior Malay by sending money to his sister.
I've no way of knowing if this is true or not as this guy's not
exactly trustworthy. If it was true, Davis would
possibly be called to account under the Foreign Corrupt
Practices Act, which prohibits companies and individuals from
bribing foreign government officials to obtain or retain
business. That act, unfortunately, was
suspended a few weeks ago by the US government in the name of
economic competitiveness. So he's probably OK.
Cryptogate, which is what the press in Argentina are calling
the Libra token scandal, represents the first big scandal
of Malay's presidency. As I said earlier, there's no
evidence that Malay or his family profited from this token.
He was quite likely tricked and didn't understand how meme coins
work. I made two videos about Malay 1
before his election and a second reporting on his first year in
office. He's made remarkable progress so
far, but my last video concluded that the most difficult days lie
ahead for Argentina. And the Argentinian people need
to have faith in Malay if they're going to stick with the
path that he has chosen, which may be the best plan Argentina
has had in decades but involves extreme austerity.
Malay rose to prominence as an iconoclast who said that he
could tame Argentina's sky high inflation and eliminate
corruption among the political elite.
This scandal damages Malay's image both at home and amongst
foreign investors at a critical time when the Argentine
government is hoping to ease currency controls and negotiate
alone with the IMF. In my opinion, it's a mistake
for any politician to get involved in cryptocurrency
schemes which have a 16 year history of promising innovation
without delivering anything useful.
You can't reasonably expect to build an economy on nonsense
like this. You would hope that our elected
officials could meet the same moral standards that we've grown
accustomed to expect from Kanye West.
Oh wait, hold on. It seems that Kanye West might
now be launching his own coin. Look, I don't know what to tell
you. Maybe in the future we can all
print our own currencies and we'll all be rich without
working. Thanks for tuning into this
week's podcast, with particular thanks to my supporters on
Patreon whose support makes these podcasts possible.
If you'd like to support the channel while receiving next to
nothing in return, you can do so by clicking on the link in the
show notes. Have a great week and talk to
you again soon. Bye.