Ormeus Coin founder charged with securities fraud for misrepresenting cryptomining operations and other assets
John Barksdale, part of the sibling duo behind Ormeus Coin, was charged with conspiracy, securities fraud, and wire fraud for his role in selling the Ormeus Coin token. He allegedly falsely represented the mining assets controlled by the company, claiming a mining operation that would have been one of the largest in the world, if his representations were true. The company also claimed to have reserves of Bitcoin backing their currency, when in reality these "reserves" belonged to a completely different entity. Through these misrepresentations, which were widely published including in a Times Square billboard, Barksdale drew $70 million in investment from around 12,000 individuals. The various charges Barksdale is facing involve maximum sentences between 5 and 20 years in prison. The SEC also filed a parallel civil action against the Barksdales.
- "John Barksdale Charged With Cryptocurrency Securities Fraud In Connection With Sale Of Ormeus Coin", U.S. Attorney’s Office, Southern District of New York
- SEC v. Barksdale
Founders of several 2017 cryptocurrency companies indicted for alleged theft of more than $40 million
Four individuals who owned and operated EmpowerCoin, ECoinPlus, and Jet-Coin were indicted on wire fraud, money laundering, and obstruction of justice charges. They allegedly "engaged in a sophisticated scheme that preyed on unsuspecting investors nationwide with false promises of guaranteed returns and virtual currency trading opportunities", then tried to destroy evidence and obfuscate what they'd done after everything fell apart even before any actual trading happened. The group allegedly defrauded investors of more than $40 million over the four months in 2017 that the three companies were active, and they now face up to 20 years in prison if convicted.
- "Owners and Operators of Online Cryptocurrency Companies Indicted for Defrauding Investors", U.S. Attorney’s Office, Eastern District of New York
Over 10,000 NFTs of photographs by August Sander are delisted from OpenSea after being created without permission
An NFT project called the August Sander 10K Collection launched on February 11, offering NFTs of all 10,700 photographs by German portrait and documentary photographer August Sander (1876–1964). The project website described a "groundbreaking partnership between Fellowship and the August Sander family estate", apparently referring to their partnership with August Sander's great-grandson Julian. The NFTs were all distributed for free to the Fellowship community, which the project website boasted "speaks volumes about the commitment of both Fellowship and the August Sander family estate to creating a new standard of visibility and public access to large photography collections, an issue that has historically burdened museums". The website does not appear to mention that they take a 10% cut of all secondary sales, which so far appears to have netted them around 7 ETH ($20,000).
The problem with this whole scheme is that Julian Sanders does not actually control the Sander estate — it was sold in 1992 by Gerd Sander (August's grandson, and Julian's father) to the Cultural Foundation of the Stadtsparkasse Cologne. That group was surprised to see all of Sander's work suddenly being sold as NFTs without their permission, and submitted a legal notice to have it taken down from OpenSea. OpenSea complied with the request on March 7. After almost two weeks of stalling and deflecting questions about the delisting without even acknowledging the cause, Fellowship and Julian Sander finally released a statement on the issue on March 18. Sander wrote that "a third party... claims to have certain rights in August Sanders' photographs" but that he "believe[s] the complaint is not valid" and would be working with his lawyers to have the collection reinstated. As best as I can tell, it seems that Sander is trying to argue he is entitled to sell his great-grandfather's work as NFTs because he physically possesses the negatives, despite the fact that the Cultural Foundation owns the usage rights to all of Sander's work.
Influencer Jake Paul alleged to be repeatedly promoting projects without disclosing his financial involvement
Jake Paul, who is already in hot water after being named in the class-action lawsuit against SafeMoon, has now been implicated by YouTube detective CoffeeZilla in $2.2 million worth of undisclosed promotions for multiple different projects. Influencers are required by the FTC to disclose when they financially benefit from promoting a project, though the crypto space seems rife with celebrities deciding that rule just doesn't apply.
Paul allegedly tried to cover his steps by creating a new crypto wallet to receive payments for each promotion, but then transferred the money a wallet he controlled to cash out. Oops. Some of the projects that Paul hyped in his undisclosed promotions included League of Sacred Devils, $MILF, and $YUMMY.
- "Exposing Jake Paul's Scams", YouTube video by CoffeeZilla
Andre Cronje and Anton Nell suddenly ditch their 20+ defi projects
Andre Cronje and Anton Nell, the prolific developers of around 25 defi projects including yearn.fi and the new Solidly exchange, suddenly announced on Twitter that they would be quitting defi and shutting down their projects. "Unlike previous 'building in defi sucks' rage quits, this is not a knee jerk reaction to the hate received from releasing a project, but a decision that has been coming for a while now", wrote Nell. The sudden announcement caused several tokens associated with the projects to plunge in value. Some people were quite upset with the two developers, with one Twitter user writing, "People lock up billions of dollars for 4 years and dev announces it's being terminated in a month. Defi truly is the future of finance." Others were confused by the statement that the decision was a long time coming, when one of their projects, Solidly, had launched only a month before.
"NFT mortgage lender" Bacon Protocol is hacked for $1 million
Bacon Protocol, a defi project seeking to provide NFT mortgage liens (yes, really) was hacked. A reentrancy bug in their smart contract enabled attackers to get more lending credits than they should have been allowed, and was exploited for a total loss to Bacon Protocol of around $1 million.
BattleCatsArena apparently rug pulls several weeks after launch
The NFT project BattleCatsArena appears to have rug pulled on March 5, about three weeks after its launch. The project had been announced late last year, with a post from its creator danvee.eth explaining, "After seeing lots of projects with zero utility and surviving 2 rug pulls I decided that it's time to build a real product that will deliver value to its holders from day one." The project had an ambitious roadmap, featuring NFTs, cat shelter donations, and of course a game with several play modes. Minting began on February 16, though the launch was somewhat disappointing — only around 400 of the 500 available BattleCats were minted in the three weeks following launch, and trading volume was low. On March 6, the project apparently deleted its Twitter account, and danvee.eth claimed the Discord had been hacked. All told, the project earned almost 21 ETH ($55,000). danvee.eth wrote on Twitter that he would try to refund people who wished to be refunded (so long as they were nice to him); as of that day no refunds had been sent from addresses associated with the project.
- Tweet by danvee.eth
- BattleCats Arena OG on OpenSea
- Contract address on Etherscan
NeosVR virtual reality project jettisons its crypto component after a team blow-up
NeosVR, a virtual reality project originally released in 2018, introduced "Neos Credits" (NCR) in 2018 with the idea that it could enable in-game transactions. The crypto component was primarily managed by Karel Hulec, one of the project's team members. After cryptocurrencies and metaverse projects experienced a boom in 2021, crypto enthusiasts flooded into the project and drove up the value of the token. Some project members described the influx of people from the crypto community as having a strongly negative effect on the community, with one person writing they brought "all of its true slur-lovin' pepe-wearing glory to Neos". After some discontent within the team about the crypto side of operations, members of the team traded public statements with allegations about other members. On March 4, after Hulec released an updated whitepaper fraudulently (but perhaps mistakenly) "signed" by the rest of the team, the project creator and developer announced a proposal to allow Hulec to operate the cryptocurrency "on top of our work, but as a 3rd party solution, under a company solely under his ownership and direction", and for the primary team to cease involvement with the crypto component of the project.
Tai Lopez releases an exorbitantly-priced NFT project where people can buy access to him
The entrepreneur and motivational speaker Tai Lopez, of "here in my garage, just bought this new Lamborghini" fame, announced a new NFT project. The NFTs feature staggering list prices and promise "value" that all largely center around access to Lopez. Some of the highest-tier "Black Card" NFTs include, "1 on 1 Shadow Tai in Person at His Office" (2–3 hours, travel & accommodation not included), "1 on 1 Whatsapp Access to Tai's Personal Number", "1 on 1 Watch a Movie With Tai" (2-hour movie, Lopez picks), and "1 on 1 $10,000 HORSE Basketball game with Tai", and were presented in a Dutch auction beginning at 80 ETH ($210,000).
Some people in the crypto community responded with disdain at the project, describing it as a "cash grab". One NFT influencer tweeted "Hey @tailopez legit question: Why Would I pay 30-40k to watch a movie with you? or 80-90k for your WhatsApp? Who u think u are? U def have a shady reputation and doing this only adds more fuel to the fire. I respect anyone wanting to add value to NFTs but this is not the way." Others were surprised at the project's smart contract, which not only automatically transfers any money out of the project and into the team members' wallets, but requires the NFT buyer to pay the gas fee for that transaction in addition to normal gas fees for minting.
Nemus Earth plans to buy and protect land in the rainforest... with Ethereum NFTs and a Brazil nut plantation
A project called Nemus Earth has emerged, offering to sell you an Ethereum NFT to become a "Guardian" of the Brazilian Amazon rainforest. The project has lofty plans to create a "protective belt" in the Brazilian Amazon to try to protect it from deforestation. The project's whitepaper goes on to explain that "economic activity is required" on the land that they will purchase, and outlines a plan to employ the Indigenous people in the area to farm Brazil nuts on an abandoned plantation the project intends to "revitalize". The project describes a "co-op" for the local people that will "unlock generational wealth for these communities", though there appear to be no plans for these people to actually join the community of "Guardians" or have any say in the project's governance. Other economic activity planned by the project apparently involves "sustainable forestry", "empower[ing] local police authorities", something involving drones, and of course generating carbon offsets for other projects.
The whitepaper also addresses that the project will be built on the Ethereum blockchain. There is a section about "pros & cons of Ethereum", which has one section: gas fees. Apparently the project based on environmental conservation has decided to simply gloss over the enormous energy consumption, emissions, and electronic waste stemming from the Ethereum blockchain.
The project opened its second round of minting on March 3, and is offering its NFTs for mint prices between 0.06 ETH and 19.44 ETH ($150 to $50,000).