"At the top of the MLM pyramid, Greenwood is said to have earned $21 million per month." An eye-watering amount if true.
Also (as per usual) The Register includes this tongue-in-cheek comment
"For information that leads to her [Dr. Ruja Ignatova's] arrest, the US Federal Bureau of Investigation is offering a reward of $100,000 – in fiat currency".
Also worthwhile taking a read of the (linked in article ) links to
Crypto is "just a tool!" the same way crack cocaine is "purely recreational". It might be possible in theory, and there's that rare individual that can pull it off, but the reality is most people eventually end up in rehab or dead from an overdose, and the industry attracts the worst kind of people to run it.
I know a lot more people who use cryptocurrency as a tool instead of as a venue for fraud.
I also know a lot more people who use cocaine (in any form) recreationally than are addicts.
> most people eventually end up in rehab or dead from an overdose
This is factually false. I think perhaps you are going off of selection set/survivorship bias. A lot of people have smoked crack. A minority of them destroyed their lives as a result.
Only about 1 in 5 people who use cocaine become addicted to it [1]. It also looks like it's pretty hard to overdose from cocaine alone. Overdoses seem to happen due to impurities mixed into the drug.
I think a lot of people who don’t use drugs at all and don’t associate with those who do underestimate the number of high-functioning regular members of society partake with minimal detriment to themselves. That applies even to the use of amphetamines and opioids. It should be obvious, when most drinkers manage to avoid alcoholism. I am curious if there are studies that have tried to estimate the ratio of casual users to abusers for various compounds.
I can believe that the percentage of people who tried /used drugs occasionally without visible detriments is much higher than those who got their lives destroyed.
I can also believe that the absolute numbers of a victims of using drugs, alcohol, smoking is very high and so are the direct and collateral damage costs to society.
> I can also believe that the absolute numbers of a victims of using drugs, alcohol, smoking is very high and so are the direct and collateral damage costs to society.
But is that relevant to the discussion in any way?
Rough estimates are $100 billion per year revenues for illegal drugs, compared to $350 billion per year for prescription drugs. About 50% of Americans use prescription drugs, so let's say 15% use illegal drugs.
Can you meaningfully compare revenues for an illegal class of products to a legal one? It also doesn't follow that the money spent on either class is evenly distributed across the population.
Who the fuck are those people overdosing on crack cocaine, and how? This is literally one of the most difficult drugs to dangerously OD on.
You can't snort crack, you can't IV crack. You can only smoke crack, the onset is super fast and doesn't encourage you to rapidly redose. Dosage tends to be limited by your lung capacity.
Maybe with some very impressive lung capacity?
It's easy to overdose on Cocaine HCl using any of the popular RoAs. Insufflated, the onset is very slow, enabling you to take way too much before you actually start to feel the effects. Intravenously, your dosage is not limited by your lung capacity as it would be while smoking crack.
Ironically people make the same mistake about both due to hearing about the worst examples more. In reality it's only a small minority of cocaine (crack or not) users that end up in rehab or overdose, it's just that those are the ones you see in movies or news reports so you think they are the majority.
> Greenwood and his co-conspirators, including fugitive Ruja Ignatova, conned unsuspecting victims out of billions of dollars, claiming that OneCoin would be the 'Bitcoin killer.' In fact, OneCoins were entirely worthless."
People who think that all crypto is worthless may be confused by this. The actual reason was far more silly. They blatantly admitted to the scam in writing making it an open and shut case:
> OneCoin was a multi-level marketing (MLM) pyramid scheme
> As Ignatova allegedly put it in an email to Greenwood, "We are not mining actually – but telling people shit."
> OneCoin's value, according to the Feds, was simply set by those managing the company – they manipulated the OneCoin exchange to simulate trading volatility but the price of OneCoin always closed higher than it opened.
> Ignatova allegedly told Greenwood that one of the goals for the OneCoin trade exchange was "always close on a high price end of day open day with high price, build confidence – better manipulation so they are happy
> Email correspondence between Greenwood and Ignatova, as cited by the Justice Department, describes how the defendants referred to OneCoin privately as "trashy coin." And in an August 9, 2014 email exchange with Greenwood, Ignatova's first option on a list of possible exit strategies is said to have been, "Take the money and run and blame someone else for this…"
It's sad that the only reason this case was prosecuted is because the founders were stupid enough to admit to fraud in writing. How many blatant scams are out there where the founders are using purely euphemistic language & making sure to have short data retention periods (~1 yr is standard in businesses).
> People who think that all crypto is worthless may be confused by this. The actual reason was far more silly. They blatantly admitted to the scam in writing making it an open and shut case
Wait so crypto is only worthless if you prescribe it worthlessness in writing first?
We pretending miners and exchanges can't be legislated out of existence at a scale that would render use of said coin virtually impossible? Edit: Apparently someone is, in fact, pretending just that. Nifty.
> We pretending miners and exchanges can't be legislated out of existence
Yes? I am assuming you are either not very technical, or do not know a lot about how cryptocurrencies work.
Disclaimer: I am not a proponent of cryptocurrency, I don't own any cryptocurrency, and I am only arguing the technical issue.
If you're talking about banning the hardware, it's probably possible to essentially stop the production and sale of ASIC miners since they have no other purpose, but that's only one type of hardware. People would still be able to use regular CPUs and GPUs to mine.
If you're talking about completely banning the participation in a blockchain, this would be impossible to detect as long as the traffic is encrypted -- if you constantly look for IP addresses and keep a blocklist up to date, you could essentially null-route them (breaking DNS is not enough).
If you do all of the above, which is a lot of work and already completely untenable to sort out on an international level, you still haven't solved the issue of darknets, like Tor or any similar solution.
Take the Silk Road for example, probably one of the most famous darkweb marketplaces for illicit drugs ever. We can only guess how much money and time the FBI spent building a case, and even when they managed to find him by bending every opsec weakness they could find, they still had to ambush him in a library and catch him with his laptop unlocked.
My point here is that nobody claims darknets will protect you completely, but it raises the bar immensely for the amount of necessary work to catch you. If blockchains (currencies) were made illegal globally, it's a pretty safe bet this would accelerate technology for doing the exact same things as before, just in an anonymized fashion.
Then what? Do you illegalize writing code that facilitates cryptocurrency? Illegalize darknets?
Just saying "make it illegal" is naive. It chooses to ignore the massive violations of our rights that would have to be made to not even succeed, but create the appearance of succeeding.
If you have a concrete proposal on how it would be technically possible to ban miners and exchanges, without also banning encryption and anonymity online, I'm listening.
Sad news friend. I am extremely technical and was mining btc 18 months before Starbucks would let you buy a cup of coffee with it so yeah I know how it works. What modern internet funbux aficionados consistently fail to grasp is there isn't a coin in existence that cannot be trivially decoupled from the larger economy through nothing more complicated than removing market-makers incentives to accept them as value tokens. Go meditate on the xkcd where a crypto geek gets worked over with a wrench for his password until enlightenment is achieved.
Crypto people should just call it a religion and get 1st amendment protections. The general pop already call it a cult anyway.
Wild people think mathematics, cryptography, OSS, and free markets should be banned. No one is forcing anyone to buy/sell/hold crypto. It is completely voluntary.
> saying Free and Open Source Software should be banned
Nobody is proposing banning blockchains. Cryptocurrency, however, is clearly more than just software in the way missile-targeting system is more than ones and zeroes.
> Nobody is proposing banning blockchains. Cryptocurrency, however, is clearly more than just software
The block reward is the incentive for miners/stakers to operate a decentralized network. It is not a separate concept. The actual value of each reward is emergent. It is the result of resources being used to operate the network, and how we value that network. If we don't value the network enough, the value of the block reward will drop below the resources required to maintain it. I don't see why any external party should dictate how we may value that block reward or network.
> the way missile-targeting system is more than ones and zeroes.
This is an irrelevant comparison attempting to moralize software by comparing it to a weapon.
> block reward is the incentive for miners/stakers to operate a decentralized network. It is not a separate concept
The moment that reward becomes a currency, and is traded for U.S. dollars, it leaves the domain of just being software. Banning that is quite different from banning the software per se.
> an irrelevant comparison attempting to moralize software by comparing it to a weapon
Comparing Bitcoin to free software seems similarly disingenuous.
If your position is that digital assets should be banned, you're a little late for that. Digital assets are defined in the US as property by the IRS since about 2014, and a commodity by the CFTC.
Furthermore, giving someone US dollars for something doesn't make that thing a "currency."
> Comparing Bitcoin to free software seems similarly disingenuous.
> The moment that reward becomes a currency, and is traded for U.S. dollars, it leaves the domain of just being software. Banning that is quite different from banning the software per se.
That would make Eve online, Second Life, and other games illegal since people trade their digital assets all the time
>Comparing Bitcoin to free software seems similarly disingenuous.
So I create "bullshitCoin2023" and trade it amongst my friends and myself. We also mine it via proof of work. We all work hard to see who can out do each other to mine the most coin with same fixed amount of computational input.
Some guy in Nigeria I don't know starts swapping it for Zimbabwe dollars. Now I'm not writing software anymore?
> They are downvoting you because your comment is low quality and overly aggressive.
I don't believe that it is. Certainly not to the point where it would be worthy of depromoting. It was a worthy discussion point. It could have easily just been left alone. My edit was highlighting that it was the typical outcome.
> Downvotes and upvotes on HN should reflect the quality of the comment and not agreement/disagreement.
Keyword: "Should"
You must know that it's often not how it works out. I frequently see thoughtful or otherwise harmless comments downvoted. Yet, rude and vapid, anti-crypto comments remain or are boosted. Downvotes are especially common when it's a reply to an older account with lots of internet points. They rule these threads.
EDIT:
I'm not able to reply again because I am disallowed from posting too many times within an unspecified time. Probably also a consequence of not having enough internet points. I've already lost 5 of my precious points so faR!
As the other comment points out, a founder of the site thinks differently than you.
I obviously disagree with you. As PG suggests, I should downvote you to make sure that nobody else has the chance to agree with you. But then HN doesn't allow me to disagree with you, so your comment will remain.
My downvoted comments will also be grayed out to warn others of HN disagreements like a colorful snake that warns against danger. Stay back!
Sure, it does happen. But I think in this case the downvoted comment is obviously going off in a way unwarranted by the comment they are responding to and that tends to get you downvoted even faster than people just disagreeing with you.
> The advancements in AI are as incredible as they are overstated. AI is nowhere near making human coders obsolete.
Already grayed out. No replies. Bottom of all comments at the moment.
Abrassive? Rude? Unwarranted? Let me know what was wrong with that one. Or did multiple people disagree with you? Does it make you want to continue offering your comment on a topic? Seems like people can downvote for any reason they like. Well.. they can if HN bestows that honor on them.
This is how echo chambers form.
Surely you disagree with this comment as well, so feel free to take away more of my internet points.
I can't downvote you as you're replying to me. Not that I would anyway since I'm the one arguing people shouldn't be voting based on agreement or disagreement.
I will, however, stop responding to you because your comments are not constructive.
The downvotes are literally because you built an absurd strawman argument, hung it around my neck, and then tore it down. That’s bad HN etiquette.
A) please point where in my post I even came close to suggesting bitcoin should be banned.
B) even if I had said bitcoin should be banned, did I suggest anywhere that distribution of the software be banned?
For example, let’s accept the extremely problematic premise that I somehow said bitcoin should be banned. What that could mean is that I think the US (and other governments) should regulate any marketplaces that are currency on and off ramps for customers. Stable coins claiming to be backed by US dollars can be banned outright (easy) or that you have to register and the US government establishes an audit process to verify the claimed reserves / the software you’re using to control the stable coins (eg Tether is a highly suspect stable coin that’s likely another huge fraud). The US controls a lot of the world’s banking (not all) but they can also say that those banks aren’t allowed to support such systems and it’s citizens aren’t allowed to engage with unregulated stable coins. Correct me if I’m wrong but that’s an example of something the US could do to regulate / ban the coins without touching the software. That also doesn’t touch distribution of FOSS but places a significantly regulatory burden on the networks themselves. Additionally, by placing sanctions on these coins, the US currency is so ingrained they could theoretically ban coins from most of the western world. Finally, if they wanted to (and there may be national security reasons to not do it), they could also deploy meaningful compute resources to do a nation level attack to further undermine such networks by raising the transaction costs too high or doing 51% attacks (there’s no evidence that these networks are immune to 51% attacks from a nation state like the US). I think you’re really underestimating the power the US could wield to take down the running network (production instance) vs needing to ban the source code (much harder and not worth anyone’s time since I imagine the government learned their lesson with the war in the 90s about cryptography + the free speech implications it has).
So, in summary. You put words in my mouth I never said and then used that to draw the most absurd and weakest possible position from there. That’s the reason for the downvotes. My suggestion is figure out what got in your way of reflecting and figuring out what was wrong with your post (eg maybe in the future before reread the post you’re replying to to make sure they actually said what you think they said and if it’s ambiguous asking questions rather than making an assumption).
Your second edit makes it clear you failed to do that because you kept claiming that any down voters were supporting a position no one claimed around banning distribution of the bitcoin source code (or even binaries) and demanding that they provide support for an absurd position that was only voiced by you in the first place.
anything where mining is inflationary (or at least disinflationary where the rate of inflation outpaces the rate of "lost" coins).
Monero/XMR kind-of-sort-of falls into the second category, with "fresh" coin minting being a part of the mining process, although probably not at a rate that outpaces regular rot/deflation.
the mindset of securities trade, even when they have some external utility, will always be "getting in before it gets big". this is the idea behind essentially all analytical stock trading, yet the NYSE never seems to get called a ponzi scheme.
Onecoin was one of the first shitcoins to have its chain yanked. The others crashed sometime during the ICO craze or again during the NFT craze. But the story remains the same, when placed under the least bit of scrutiny most never seem to hold up. The stable coins that are backed by USD are rarely backed by USD. The altcoins that back NFTs rarely have are as valuable as they state, even the trading price ends up being a wash amongst friends.
> It's sad that the only reason this case was prosecuted is because the founders were stupid enough to admit to fraud in writing.
A prosecutor worth their salt will never have one damning piece of evidence. They got a warrant to get access to their suspects emails and electronic files based on other evidence sent to a judge.
What I'm suggesting is that if they hadn't written it in such obvious ways & just used business euphemisms, the case for the prosecutor would be such that it might not get prosecuted. After all, MLM scams are pretty healthy in the normal market. Amway makes ~$8B/year without any FBI scrutiny and the DeVos family is politically extremely powerful (Secretary of Education + Erik Prince running a security company that's been given political cover for the crimes against humanity that they've committed).
I see crypto terms like ICO and NFT. OneCoin was not a "shitcoin" simply because no coin ever existed. There was no chain yanked because there was no chain. They literally just took people's money and then gave them a login to a website where it would show them more and more cash by the day.
This reminds me of the NYTimes article showing that cumulative stock returns from 1993-2018 were flat if you only looked at daytime trading hours. Most of the stock gains actually occurred when markets were closed, and the alpha is sucked up by extended hours traders (mostly non-retail):
A similar thing is happening now with private equity.
The common case these days is to keep a company private for as long as possible, relying on private investment to grow huge. Only once you've maxed out rapid growth do you go public. Rather than going public being something you do to raise capital and keep growing, it's primarily something you do cash out and dump your shares on the plebs who are left holding the bag on a stalled out or even potentially a dying company. As in the off hour trading, insiders and rich people capture most of the gains.
This is why actively trading to try to beat the market as a part time hustle is purely a suckers game. The game is entirely rigged against retail traders.
This may be happening, but the reason it is happening is that Sarbanes Oxley made it such a burden to run a public company that companies that otherwise would have gone public began to seek capital in the private markets instead.
Regulation protects retail from making money as much as it protects retail from loosing money.
> and the alpha is sucked up by extended hours traders
That's a bizarre claim. If I buy and hold for weeks/months/years, no alpha was sucked from me.
If I day-trade, well, I get what I deserve if I have no edge or don't understand how the market works.
And extended hours trading has minimal liquidity, just because AAPL jumped 10% in after hours doesn't mean someone made billions entering/exiting during this interval, because it's just the market makers repricing minimal volumes.
That’s exactly the opposite way I read the article.
“Simply holding shares while you sleep will do it. So for buy-and-hold investors, these findings are particularly encouraging: Get your rest, ignore the temptation to trade and you can do just fine.”
> People who think that all crypto is worthless may be confused by this. The actual reason was far more silly. They blatantly admitted to the scam in writing making it an open and shut case:
Its worse than that, they didn't issue a cryptocurrency at all. They didn't deliver the product they said they were giving people, thats the reason this is fraud.
All they had to do was create any token on any blockchain - including a new blockchain - and didn't.
> How many blatant scams are out there where the founders are using purely euphemistic language & making sure to have short data retention periods (~1 yr is standard in businesses.)
Our entire society is running on scams where nobody writes anything down, and any inadvertent records are destroyed through very short retention policies. I worked at an agency whose primary reason for revising a data retention policy was to keep things hidden that FOIA requests threatened to reveal. While that goal was mentioned constantly, it was never put in email or any meeting minutes.
If only there were a way. Some sort of permaweb, to store important data on an immutable ledger...
But alas, the mainstream is busy buying into Bitconnect, Onecoin, Potcoin, PonziCoin (yes, that was a real coin and people lost money when the operator - you won't believe this now - exit scammed them and ran off with the money). And trades them on FTX.
It's not about preventing lies or making fraud impossible. It's about leaving a clear record of it for use cases where accountability is paramount. The current trust-based system in finance does not work and only aids scammers. Because of all the scams we have auditing and then it's found the auditing firms are fraudulent/corrupt as well. It's fraud all the way down, there is no way to change this because who audits the auditors?
I think OP is right. Cryptocurrencies / distributed ledgers / merkle trees literally solve 0 problems of confirming things said in meat space were actually said or done. Additionally, a ledger of facts doesn’t give you the bigger picture of what’s happening. Eg if I’m saying as a CEO that our retention policy is now 3 months, how are you going to use facts to prove that I’m doing this for FOIA? Additionally, even if you think there’s some kind of path where recordings go into the ledge, with deep fakes, that’s a losing proposition.
How do you solve this problem? Checks and balances and strong institutions that actively work to remove moral hazards from society AND themselves. Sure, if you weaken institutions and then claim they’re ineffective, you’re just creating self-fulfilling prophecies. In a well-designed system, you don’t need to audit the auditors. Make sure that the auditors are secret and that randomly chosen (ie there’s no incentive to collude with the entity being audited). Provide strong incentives (training, compensatory, social, rewards) and protection (ie people with power going after them / their reputation) for both rooting out corruption/scams and that when they say a business isn’t a scam then it’s most likely not (eg clawbacks on money, prestige, recognition, etc).
Additionally, the FBI, IRS and other state and federal law enforcement agencies should be proactively auditing the largest businesses OR outsourcing to very trusted auditors (ie ones for whom the cancellation of the contract would be a death sentence which is easy to enforce by requiring that 100% of revenue for the outsourced agency comes from the federal government and there’s N such agencies that all split the pie so that if one fails and gets corrupt the others take over (the FBI is authorized to have wiretaps and secretly monitor the auditors to ensure there’s no kind of collusion communication happening between auditing agencies (ie we allow leadership in these trusted position to require that you give up more of your rights to be in it and we publish job-relevant details from ~5 years ago without any FOIA battles allowed - only personal details can be omitted and only on-the job details are revealed so no marital secrets). Additionally, anyone caught leaking or losing these records before they are released to the public is punished by getting fired and criminal charges being mandatory. If an audit of the FBI reveals the director is asleep / didn’t properly establish best practices to keep the data in control, the president fires them.
Anyway these are all obvious wildly radical ideas and not necessarily possible to implement due to various laws / there may be flaws in the specific details. My overall point still stands. It’s fraud because we let it exist, not because it’s impossible due to human nature / the way society works.
I get your point, we're talking about different things though. I'm strictly talking about money movements on chain, in areas where there is sufficient public interest to mandate it. That isn't a radical idea for government finance and central banking as an example, why should this be hidden from the public? The current system is opaque and encourages corruption/fraud.
It was in reply to the above comment saying our entire society is run on scams, which is true. We can start cleaning it up from the top, which is the smart way to go about it instead of tilting at legal windmills. In the current system, you're more likely to get caught and punished as a petty criminal than someone who siphons off millions. Yes, some fraud will always be possible in free societies but it doesn't have to be the way it currently works. More transparency and better record keeping are a positive thing. Even if we take your example of someone inputting wrong data, they're more likely to be found than if there is no data at all and thus nothing to scrutinize. People who falsify data make mistakes just like anyone does.
> People who think that all crypto is worthless may be confused by this. The actual reason was far more silly.
It's precisely because crypto is worthless that where ever crypto is, there is only scams.
People point to FTX and say "see it's not crypto that's the cause, it's classic corruption!" but that misses the point critics of crypto are making.
Because crypto has no real practical value, its only function is as a tool for traditional scams and corruption.
Critics of crypto generally don't believe that crypto itself is a tool that creates fraud, but because it is a useless tool, when you see it being "used" what you must be seeing is fraud.
I think it gets lost in the messaging when people say "crypto is a scam". I think they mean to say precisely what you did, but when people yell "cryto is a scam" it makes the random Coinbase user who bought .0001 BTC wonder how the hell they are scamming people. It doesn't make them think - huh, maybe Coinbase (or more importantly, Celsius, or BlockFi or FTX, etc.) itself is the scam, and I'm being scammed.
I agree that it makes no sense to discuss this as if it was a cryptocurrency, as it was only co-opting the language of cryptocurrencies to push a scam. No coin or blockchain ever existed, and nothing could really be traded, so it makes no sense to treat this as a shitcoin crash or an exchange collapse. It is much, much simpler and dumber than that.
However, on a different level... how is this really any different from all the cryptocurrencies that are also only co-opting the language of cryptocurrencies to push a scam, but that go the extra mile to make the grift realistic by creating a cryptocurrency in the process?
Think of, for example, Helium, which goes as far as to have a realistic-sounding business model behind it (it certainly fooled me) but in practice is just funnelling money from investors into their pump-and-dump shitcoin, and from miners into their expensive certified devices that they take a cut from.
Is Helium any less of a scam, or did they just put more effort into their scam?
EuroPol's reward for info on Ignatova: 5,000 euros! ;) They really can't do better than that? I mean, that seems more of an insult; why even offer anything to begin with!
Not sure if it applies here, but I recall reading that when they were hunting for prominent members of Saddam Hussein's regime people didn't believe the large rewards would ever be paid. For a lot of people who might come across a fugitive, like low-level service workers and low-level criminals, $5k might seem more tempting that $5m because the former seems like a familiar sum of money to them.
The BBC have had a podcast called "The Missing Cryptoqueen", digging into OneCoin and searching for Ruja Ignatova, since September 2019. It's a fascinating listen.
If you're new to the world of crypto scams, it's really amazing how prevalent and blatant many of them are.
I've really enjoyed Coffeezilla's YouTube account [1] that does in-depth investigations of them, and Molly White's site [2] that tracks the scams + aggregate total losses (>$12B)
I must admit - I really love the delivery of CoffeeZilla’s videos, really interesting coverage of a lot of this kind of thing, something that traditional media tends to gloss over.
There's a great BBC podcast on this coin ("The Missing Cryptoqueen") in which they interview an engineer who was offered the job of creating a blockchain, despite the fact that the coin was already in circulation and being sold as a blockchain-based cryptocurrency.
The developer also alluded to getting shot, if I recall correctly, an incident that the podcast did not explain or return to. The whole thing was a scam thunk up by smart but criminal MLM pros whose success had clearly already attracted the attention and involvement of Eastern European organized crime.
In this case OnceCoin was literally fraudulent, they did not actually have a crypto currency or a blockchain, just lied about it. Even at the worst it's the difference between printing worthless money and just lying and saying you are printing worthless money.
I remember when OneCoin rolled around, it was one of the many obvious scams. But this was just around the first real "public" crypto bull-run, so most buyers probably didn't know what or how to purchase real crypto anyway.
IIRC, it was basically just a website where you could purchase OneCoins - and your account would show a balance. If you tried to withdraw funds, you'd get stuck in some limbo.
Like most MLM scams, they targeted people with extremely little knowledge. One hallmark of these scams, from that period, shared the aesthetics and strategy of old-school MLM scams: Hold some lavish show at the local conference room/hall, trick all the villagers and rural folks to these shows, and shower them in big hopes and dreams. Parade some successful "early investor" at the shows, wearing expensive suit and arriving in a rented lambo. Make him/her tell the crowd some emotional testimony on how to turn $1k into $1M, how it transformed their life.
The person is of course not some early investor, but an accomplice.
That's how these people went about it. They trawled countries in Asia, East-Europe, South America, etc. and went straight for the life savings of uninformed and naïve country folk.
It should also be mentioned that many of the scammers around that time came directly from the previous MLM scams. Sometimes they changed their names, often times they all knew each others. Think of it as some kind of grifters network that spanned across EU and North-America. Before Crypto they were shilling BS membership programs, MLM products, timesharing flats, consumer product subscriptions, and what not.
95 comments
[ 3464 ms ] story [ 2571 ms ] threadAlso (as per usual) The Register includes this tongue-in-cheek comment
"For information that leads to her [Dr. Ruja Ignatova's] arrest, the US Federal Bureau of Investigation is offering a reward of $100,000 – in fiat currency".
Also worthwhile taking a read of the (linked in article ) links to
https://www.justice.gov/usao-sdny/pr/co-founder-multi-billio...
And
https://www.justice.gov/usao-sdny/press-release/file/1558436...
I also know a lot more people who use cocaine (in any form) recreationally than are addicts.
> most people eventually end up in rehab or dead from an overdose
This is factually false. I think perhaps you are going off of selection set/survivorship bias. A lot of people have smoked crack. A minority of them destroyed their lives as a result.
I'm not sure this comparison holds up.
[1] https://www.michiganpsychologicalassociation.org/index.php?o...
I can also believe that the absolute numbers of a victims of using drugs, alcohol, smoking is very high and so are the direct and collateral damage costs to society.
But is that relevant to the discussion in any way?
You can't snort crack, you can't IV crack. You can only smoke crack, the onset is super fast and doesn't encourage you to rapidly redose. Dosage tends to be limited by your lung capacity.
Maybe with some very impressive lung capacity?
It's easy to overdose on Cocaine HCl using any of the popular RoAs. Insufflated, the onset is very slow, enabling you to take way too much before you actually start to feel the effects. Intravenously, your dosage is not limited by your lung capacity as it would be while smoking crack.
People who think that all crypto is worthless may be confused by this. The actual reason was far more silly. They blatantly admitted to the scam in writing making it an open and shut case:
> OneCoin was a multi-level marketing (MLM) pyramid scheme
> As Ignatova allegedly put it in an email to Greenwood, "We are not mining actually – but telling people shit."
> OneCoin's value, according to the Feds, was simply set by those managing the company – they manipulated the OneCoin exchange to simulate trading volatility but the price of OneCoin always closed higher than it opened.
> Ignatova allegedly told Greenwood that one of the goals for the OneCoin trade exchange was "always close on a high price end of day open day with high price, build confidence – better manipulation so they are happy
> Email correspondence between Greenwood and Ignatova, as cited by the Justice Department, describes how the defendants referred to OneCoin privately as "trashy coin." And in an August 9, 2014 email exchange with Greenwood, Ignatova's first option on a list of possible exit strategies is said to have been, "Take the money and run and blame someone else for this…"
It's sad that the only reason this case was prosecuted is because the founders were stupid enough to admit to fraud in writing. How many blatant scams are out there where the founders are using purely euphemistic language & making sure to have short data retention periods (~1 yr is standard in businesses).
Wait so crypto is only worthless if you prescribe it worthlessness in writing first?
There wasn’t any cryptocurrency in OneCoin. They didn’t even literally have any cryptocurrency. It was all completely 100% MLM.
That’s different from, say, BitConnect, that was a MLM with some sort of cryptocurrency. Or of course all the “DeFi” that’s MLM but with more steps.
But yeah OneCoin had literally nothing to do with any cryptocurrency. They said they are planning one one day.
A good definition for "real" cryptocurrency is whether or not it's possible for it to be banned.
Yes? I am assuming you are either not very technical, or do not know a lot about how cryptocurrencies work.
Disclaimer: I am not a proponent of cryptocurrency, I don't own any cryptocurrency, and I am only arguing the technical issue.
If you're talking about banning the hardware, it's probably possible to essentially stop the production and sale of ASIC miners since they have no other purpose, but that's only one type of hardware. People would still be able to use regular CPUs and GPUs to mine.
If you're talking about completely banning the participation in a blockchain, this would be impossible to detect as long as the traffic is encrypted -- if you constantly look for IP addresses and keep a blocklist up to date, you could essentially null-route them (breaking DNS is not enough).
If you do all of the above, which is a lot of work and already completely untenable to sort out on an international level, you still haven't solved the issue of darknets, like Tor or any similar solution.
Take the Silk Road for example, probably one of the most famous darkweb marketplaces for illicit drugs ever. We can only guess how much money and time the FBI spent building a case, and even when they managed to find him by bending every opsec weakness they could find, they still had to ambush him in a library and catch him with his laptop unlocked.
My point here is that nobody claims darknets will protect you completely, but it raises the bar immensely for the amount of necessary work to catch you. If blockchains (currencies) were made illegal globally, it's a pretty safe bet this would accelerate technology for doing the exact same things as before, just in an anonymized fashion.
Then what? Do you illegalize writing code that facilitates cryptocurrency? Illegalize darknets?
Just saying "make it illegal" is naive. It chooses to ignore the massive violations of our rights that would have to be made to not even succeed, but create the appearance of succeeding.
If you have a concrete proposal on how it would be technically possible to ban miners and exchanges, without also banning encryption and anonymity online, I'm listening.
Wild people think mathematics, cryptography, OSS, and free markets should be banned. No one is forcing anyone to buy/sell/hold crypto. It is completely voluntary.
Nobody is proposing banning blockchains. Cryptocurrency, however, is clearly more than just software in the way missile-targeting system is more than ones and zeroes.
The block reward is the incentive for miners/stakers to operate a decentralized network. It is not a separate concept. The actual value of each reward is emergent. It is the result of resources being used to operate the network, and how we value that network. If we don't value the network enough, the value of the block reward will drop below the resources required to maintain it. I don't see why any external party should dictate how we may value that block reward or network.
> the way missile-targeting system is more than ones and zeroes.
This is an irrelevant comparison attempting to moralize software by comparing it to a weapon.
The moment that reward becomes a currency, and is traded for U.S. dollars, it leaves the domain of just being software. Banning that is quite different from banning the software per se.
> an irrelevant comparison attempting to moralize software by comparing it to a weapon
Comparing Bitcoin to free software seems similarly disingenuous.
Furthermore, giving someone US dollars for something doesn't make that thing a "currency."
> Comparing Bitcoin to free software seems similarly disingenuous.
Bitcoin is literally FOSS.
https://github.com/bitcoin/bitcoin
That would make Eve online, Second Life, and other games illegal since people trade their digital assets all the time
>Comparing Bitcoin to free software seems similarly disingenuous.
Bitcoin is free software. https://github.com/bitcoin/bitcoin
Some guy in Nigeria I don't know starts swapping it for Zimbabwe dollars. Now I'm not writing software anymore?
Downvotes and upvotes on HN should reflect the quality of the comment and not agreement/disagreement.
I don't believe that it is. Certainly not to the point where it would be worthy of depromoting. It was a worthy discussion point. It could have easily just been left alone. My edit was highlighting that it was the typical outcome.
> Downvotes and upvotes on HN should reflect the quality of the comment and not agreement/disagreement.
Keyword: "Should"
You must know that it's often not how it works out. I frequently see thoughtful or otherwise harmless comments downvoted. Yet, rude and vapid, anti-crypto comments remain or are boosted. Downvotes are especially common when it's a reply to an older account with lots of internet points. They rule these threads.
EDIT: I'm not able to reply again because I am disallowed from posting too many times within an unspecified time. Probably also a consequence of not having enough internet points. I've already lost 5 of my precious points so faR!
As the other comment points out, a founder of the site thinks differently than you.
I obviously disagree with you. As PG suggests, I should downvote you to make sure that nobody else has the chance to agree with you. But then HN doesn't allow me to disagree with you, so your comment will remain.
My downvoted comments will also be grayed out to warn others of HN disagreements like a colorful snake that warns against danger. Stay back!
https://news.ycombinator.com/item?id=34068318
> The advancements in AI are as incredible as they are overstated. AI is nowhere near making human coders obsolete.
Already grayed out. No replies. Bottom of all comments at the moment.
Abrassive? Rude? Unwarranted? Let me know what was wrong with that one. Or did multiple people disagree with you? Does it make you want to continue offering your comment on a topic? Seems like people can downvote for any reason they like. Well.. they can if HN bestows that honor on them.
This is how echo chambers form.
Surely you disagree with this comment as well, so feel free to take away more of my internet points.
I will, however, stop responding to you because your comments are not constructive.
https://news.ycombinator.com/item?id=117171
If people upvote/downvote for agree/disagree the comments and stories become a tedious hivemind.
I also stand by my original comment, people are mostly downvoting him because he is engaging in very silly hyperbole.
A) please point where in my post I even came close to suggesting bitcoin should be banned.
B) even if I had said bitcoin should be banned, did I suggest anywhere that distribution of the software be banned?
For example, let’s accept the extremely problematic premise that I somehow said bitcoin should be banned. What that could mean is that I think the US (and other governments) should regulate any marketplaces that are currency on and off ramps for customers. Stable coins claiming to be backed by US dollars can be banned outright (easy) or that you have to register and the US government establishes an audit process to verify the claimed reserves / the software you’re using to control the stable coins (eg Tether is a highly suspect stable coin that’s likely another huge fraud). The US controls a lot of the world’s banking (not all) but they can also say that those banks aren’t allowed to support such systems and it’s citizens aren’t allowed to engage with unregulated stable coins. Correct me if I’m wrong but that’s an example of something the US could do to regulate / ban the coins without touching the software. That also doesn’t touch distribution of FOSS but places a significantly regulatory burden on the networks themselves. Additionally, by placing sanctions on these coins, the US currency is so ingrained they could theoretically ban coins from most of the western world. Finally, if they wanted to (and there may be national security reasons to not do it), they could also deploy meaningful compute resources to do a nation level attack to further undermine such networks by raising the transaction costs too high or doing 51% attacks (there’s no evidence that these networks are immune to 51% attacks from a nation state like the US). I think you’re really underestimating the power the US could wield to take down the running network (production instance) vs needing to ban the source code (much harder and not worth anyone’s time since I imagine the government learned their lesson with the war in the 90s about cryptography + the free speech implications it has).
So, in summary. You put words in my mouth I never said and then used that to draw the most absurd and weakest possible position from there. That’s the reason for the downvotes. My suggestion is figure out what got in your way of reflecting and figuring out what was wrong with your post (eg maybe in the future before reread the post you’re replying to to make sure they actually said what you think they said and if it’s ambiguous asking questions rather than making an assumption).
Your second edit makes it clear you failed to do that because you kept claiming that any down voters were supporting a position no one claimed around banning distribution of the bitcoin source code (or even binaries) and demanding that they provide support for an absurd position that was only voiced by you in the first place.
I never replied to you.
> please point where in my post I even came close to suggesting bitcoin should be banned.
please point to where in my post I even came close to suggesting Bitcoin should NOT be banned? Re-read my comment.
I'm not reading any more of your totally un-hinged reply. Get help.
EDIT: I couldn't resist skimming the most absurd comment I've ever seen on HN, and saw this:
"..maybe in the future before reread the post you’re replying to to make sure they actually said what you think they said"
lol take some of your own medicine.
Any system that uses decentralized verification to wrap trading deals is DeFi.
The core quality of a MLM is that early adopters benefit more, which is totally unrelated.
Monero/XMR kind-of-sort-of falls into the second category, with "fresh" coin minting being a part of the mining process, although probably not at a rate that outpaces regular rot/deflation.
the mindset of securities trade, even when they have some external utility, will always be "getting in before it gets big". this is the idea behind essentially all analytical stock trading, yet the NYSE never seems to get called a ponzi scheme.
> It's sad that the only reason this case was prosecuted is because the founders were stupid enough to admit to fraud in writing.
A prosecutor worth their salt will never have one damning piece of evidence. They got a warrant to get access to their suspects emails and electronic files based on other evidence sent to a judge.
Incriminating files and emails don't necessarily exist when smart people who see each other in person all the time do crime.
We can't even say that its price crashed, because there was never a market for it. It's closer to Madoff's securities than it is to, say, Terra.
I'm all for hating on cryptocurrencies, but this doesn't even qualify as one.
https://coingeek.com/sam-bankman-fried-reveals-how-defi-work...
https://www.nytimes.com/2018/02/02/your-money/stock-market-a...
The common case these days is to keep a company private for as long as possible, relying on private investment to grow huge. Only once you've maxed out rapid growth do you go public. Rather than going public being something you do to raise capital and keep growing, it's primarily something you do cash out and dump your shares on the plebs who are left holding the bag on a stalled out or even potentially a dying company. As in the off hour trading, insiders and rich people capture most of the gains.
This is why actively trading to try to beat the market as a part time hustle is purely a suckers game. The game is entirely rigged against retail traders.
Regulation protects retail from making money as much as it protects retail from loosing money.
That's a bizarre claim. If I buy and hold for weeks/months/years, no alpha was sucked from me.
If I day-trade, well, I get what I deserve if I have no edge or don't understand how the market works.
And extended hours trading has minimal liquidity, just because AAPL jumped 10% in after hours doesn't mean someone made billions entering/exiting during this interval, because it's just the market makers repricing minimal volumes.
“Simply holding shares while you sleep will do it. So for buy-and-hold investors, these findings are particularly encouraging: Get your rest, ignore the temptation to trade and you can do just fine.”
https://archive.ph/fxMAt
Its worse than that, they didn't issue a cryptocurrency at all. They didn't deliver the product they said they were giving people, thats the reason this is fraud.
All they had to do was create any token on any blockchain - including a new blockchain - and didn't.
Our entire society is running on scams where nobody writes anything down, and any inadvertent records are destroyed through very short retention policies. I worked at an agency whose primary reason for revising a data retention policy was to keep things hidden that FOIA requests threatened to reveal. While that goal was mentioned constantly, it was never put in email or any meeting minutes.
But alas, the mainstream is busy buying into Bitconnect, Onecoin, Potcoin, PonziCoin (yes, that was a real coin and people lost money when the operator - you won't believe this now - exit scammed them and ran off with the money). And trades them on FTX.
How do you solve this problem? Checks and balances and strong institutions that actively work to remove moral hazards from society AND themselves. Sure, if you weaken institutions and then claim they’re ineffective, you’re just creating self-fulfilling prophecies. In a well-designed system, you don’t need to audit the auditors. Make sure that the auditors are secret and that randomly chosen (ie there’s no incentive to collude with the entity being audited). Provide strong incentives (training, compensatory, social, rewards) and protection (ie people with power going after them / their reputation) for both rooting out corruption/scams and that when they say a business isn’t a scam then it’s most likely not (eg clawbacks on money, prestige, recognition, etc).
Additionally, the FBI, IRS and other state and federal law enforcement agencies should be proactively auditing the largest businesses OR outsourcing to very trusted auditors (ie ones for whom the cancellation of the contract would be a death sentence which is easy to enforce by requiring that 100% of revenue for the outsourced agency comes from the federal government and there’s N such agencies that all split the pie so that if one fails and gets corrupt the others take over (the FBI is authorized to have wiretaps and secretly monitor the auditors to ensure there’s no kind of collusion communication happening between auditing agencies (ie we allow leadership in these trusted position to require that you give up more of your rights to be in it and we publish job-relevant details from ~5 years ago without any FOIA battles allowed - only personal details can be omitted and only on-the job details are revealed so no marital secrets). Additionally, anyone caught leaking or losing these records before they are released to the public is punished by getting fired and criminal charges being mandatory. If an audit of the FBI reveals the director is asleep / didn’t properly establish best practices to keep the data in control, the president fires them.
Anyway these are all obvious wildly radical ideas and not necessarily possible to implement due to various laws / there may be flaws in the specific details. My overall point still stands. It’s fraud because we let it exist, not because it’s impossible due to human nature / the way society works.
It was in reply to the above comment saying our entire society is run on scams, which is true. We can start cleaning it up from the top, which is the smart way to go about it instead of tilting at legal windmills. In the current system, you're more likely to get caught and punished as a petty criminal than someone who siphons off millions. Yes, some fraud will always be possible in free societies but it doesn't have to be the way it currently works. More transparency and better record keeping are a positive thing. Even if we take your example of someone inputting wrong data, they're more likely to be found than if there is no data at all and thus nothing to scrutinize. People who falsify data make mistakes just like anyone does.
It's precisely because crypto is worthless that where ever crypto is, there is only scams.
People point to FTX and say "see it's not crypto that's the cause, it's classic corruption!" but that misses the point critics of crypto are making.
Because crypto has no real practical value, its only function is as a tool for traditional scams and corruption.
Critics of crypto generally don't believe that crypto itself is a tool that creates fraud, but because it is a useless tool, when you see it being "used" what you must be seeing is fraud.
We've seen this borne out over and over again.
I think it is more likely that she bought a new look and identity as a rich widow and is living the life.
However, on a different level... how is this really any different from all the cryptocurrencies that are also only co-opting the language of cryptocurrencies to push a scam, but that go the extra mile to make the grift realistic by creating a cryptocurrency in the process?
Think of, for example, Helium, which goes as far as to have a realistic-sounding business model behind it (it certainly fooled me) but in practice is just funnelling money from investors into their pump-and-dump shitcoin, and from miners into their expensive certified devices that they take a cut from.
Is Helium any less of a scam, or did they just put more effort into their scam?
https://www.bbc.co.uk/sounds/brand/p07nkd84
I've really enjoyed Coffeezilla's YouTube account [1] that does in-depth investigations of them, and Molly White's site [2] that tracks the scams + aggregate total losses (>$12B)
[1] On Tether: https://www.youtube.com/watch?v=W4OdvcCfQlY
[2] https://web3isgoinggreat.com/
The developer also alluded to getting shot, if I recall correctly, an incident that the podcast did not explain or return to. The whole thing was a scam thunk up by smart but criminal MLM pros whose success had clearly already attracted the attention and involvement of Eastern European organized crime.
"In fact, OneCoins were entirely worthless"
What, the other imaginary digital currencies were somehow more 'real' and were not entirely worthless? That's a curious stance.
IIRC, it was basically just a website where you could purchase OneCoins - and your account would show a balance. If you tried to withdraw funds, you'd get stuck in some limbo.
Like most MLM scams, they targeted people with extremely little knowledge. One hallmark of these scams, from that period, shared the aesthetics and strategy of old-school MLM scams: Hold some lavish show at the local conference room/hall, trick all the villagers and rural folks to these shows, and shower them in big hopes and dreams. Parade some successful "early investor" at the shows, wearing expensive suit and arriving in a rented lambo. Make him/her tell the crowd some emotional testimony on how to turn $1k into $1M, how it transformed their life.
The person is of course not some early investor, but an accomplice.
That's how these people went about it. They trawled countries in Asia, East-Europe, South America, etc. and went straight for the life savings of uninformed and naïve country folk.
It should also be mentioned that many of the scammers around that time came directly from the previous MLM scams. Sometimes they changed their names, often times they all knew each others. Think of it as some kind of grifters network that spanned across EU and North-America. Before Crypto they were shilling BS membership programs, MLM products, timesharing flats, consumer product subscriptions, and what not.