Speaker 1: Also media, Join.
Speaker 2: Sancus sixteen.
Speaker 3: Six six. Welcome back to sixteenth Minute, the podcast where
Speaker 3: we take a look at the Internet's main character and
Speaker 3: see what their moment says about us and the Internet.
Speaker 3: And I'm your little host Jamie Loftus taking a little
Speaker 3: bit of a bonus victory lap here after we wrapped
Speaker 3: our recent series on Haley Welch aka the Hawk to
Speaker 3: a Girl. And with these longer series there usually ends
Speaker 3: up being a few interviews or sections that end up
Speaker 3: getting cut for time, but there are some interviews that
Speaker 3: are simply too special to leave. And when it came
Speaker 3: to understanding the hawkcoin crypto scam, I needed all the
Speaker 3: help I could get, and thankfully my pals who know
Speaker 3: about it were right there for me. So today a
Speaker 3: little bonus a conversation with Cool Zone's own ed Zitron.
Speaker 3: Hopefully you know who Ed is already. He's the host
Speaker 3: of the wonderful tech podcast Better Offline and the mind
Speaker 3: behind the popular Where's Your ed At? Newsletter. He's also
Speaker 3: one of the funniest people I know, and I delighted
Speaker 3: in torturing him into telling me what crypto scams mean.
Speaker 3: Here's my conversation with.
Speaker 2: Ed, Well, I'm at Zichron. I'm the host of Better Offline,
Speaker 2: the Cool Zone media tech podcast. I have watched so
Speaker 2: many crypto scams happen. One time, a friend of mine
Speaker 2: was working on a paper for law school about rug
Speaker 2: pulse and said to me, Ed, if you've seen a
Speaker 2: rug pool recently? I said, I'm watching one right now.
Speaker 3: Do you remember which one it was?
Speaker 2: It was called ape coin and it was on the
Speaker 2: Polygon blockchain.
Speaker 3: Molly and I were talking about. She was like, this
Speaker 3: is a very straightforward rug pull. The only reason we're
Speaker 3: talking about it is because it's hac Ta girl and
Speaker 3: everyone thinks she's funny that.
Speaker 2: And also it was fairly egregious. The market cap, and
Speaker 2: the term market cap, as I'm sure Molly's been over,
Speaker 2: is kind of a misnumber. It just means the value
Speaker 2: of the coin times the amount of tokens that are available.
Speaker 2: So at one point it was like half a billion
Speaker 2: dollars value, and then it crashed after the rug pull happened.
Speaker 2: But yeah, the only remarkable thing is that this person
Speaker 2: is famous. There is somebody that has now had to
Speaker 2: say to their wife, Hey, honey, I've got some bad news,
Speaker 2: and it's about our four oh one k and about
Speaker 2: hawk tour. It's such a weird world we live in
Speaker 2: because there is some romanticization of someone like this, the
Speaker 2: a regular person who was kind of vilified for just
Speaker 2: making a regular garden, gross thing that people say all
Speaker 2: the time on the internet. With someone who will talking
Speaker 2: about a hawk toing on that thing. Yeah, yeah, she
Speaker 2: once said once.
Speaker 3: But is she hear get in the accent?
Speaker 2: Yes, it's that's how you say it. I think someone
Speaker 2: made a really good comment on Twitter about it, saying
Speaker 2: that if Ellen was still around, Ellen would have taken
Speaker 2: this woman down in fifth. She'd got fifteen minutes of
Speaker 2: fame on The Ellen Show and then done for all.
Speaker 3: Of Ellen's crimes. She really did make sure that the
Speaker 3: fame remained contained.
Speaker 2: I think that the hawk tour thing is a wider
Speaker 2: phenomenon as well. You're seeing it with the horrifying cost
Speaker 2: co children as well, where just everything everyone is so desperate,
Speaker 2: Like I have some empathy for these people as well.
Speaker 2: Everyone's so desperate to try and find any because just
Speaker 2: working a regular job is not sufficient enough to like
Speaker 2: rent a house, let alone buy one, and many metros.
Speaker 2: So they of course will see this opportunity and they'll
Speaker 2: juice it as much as they can, but at some
Speaker 2: point there are other people who would like to juice
Speaker 2: it too, And I think that's how we got to
Speaker 2: hawk Coin. Just Jesus Christ, I think what.
Speaker 3: Is kind of surprising me about not just this story,
Speaker 3: but a lot like it is sort of the inherent
Speaker 3: cynicism that there is to these schemes. Yeah, of like, yes,
Speaker 3: you're obviously being grifted, but if you get it on
Speaker 3: the ground floor of this grift, you can grift others just.
Speaker 2: Like exactly, you can ride this grift, because I'm sure
Speaker 2: that's what most people thought. Her whole thing is that
Speaker 2: she is clearly doing a grift. We all know it's
Speaker 2: a grift, but by joining the grift, we too could
Speaker 2: grift with others. But then we become the grift e
Speaker 2: and it's it's a sex society, but it really is
Speaker 2: a sign of a sex society because in a functional
Speaker 2: society this would not be possible. But also so this
Speaker 2: would be immediately like people would just be like, I'm
Speaker 2: not touching this. People knew and still did. It's rough where.
Speaker 3: They're like, no, I'm fine with scams. I just didn't
Speaker 3: think I was going to be the victim of this one,
Speaker 3: and now I'm mad.
Speaker 2: You're like, okay, yeah, exactly like I thought I was
Speaker 2: smarter than the people that I was conning by proxy.
Speaker 3: When did this style of grift start?
Speaker 2: I mean which kind? Because are you talking about the
Speaker 2: celebrity one or just the crypto rug pull one.
Speaker 3: Let's just start with the rug pull.
Speaker 2: So it goes back to the mid twenty tens when
Speaker 2: you had something called an ICO and initial coin offering,
Speaker 2: which just means, hey, I am going to build a company.
Speaker 2: I'm going to start by selling a token, and there
Speaker 2: will be a certain amount of tokens that go out
Speaker 2: and you can buy in at the pre sale level
Speaker 2: and you will get the lowest price, and then when
Speaker 2: it hits exchanges, so a place you can sell or
Speaker 2: buy cryptocurrency really referring to the big ones Finance at
Speaker 2: the time, FDx at the time, and of course coinbase,
Speaker 2: et OL. The goal is that you get in early.
Speaker 2: It was initially sold as some sort of noble thing,
Speaker 2: some part of decentralized software. There was a famous one
Speaker 2: called file coin, for example, where ostensibly you would be
Speaker 2: investing in the early token that would allow you to
Speaker 2: use the decentralized drop box. You may be thinking, I
Speaker 2: already have dropbox, Why would I need this, And the
Speaker 2: answer is I don't know. Now, the ICO craze was
Speaker 2: very big because it was an easy way of getting
Speaker 2: in low and selling high for the people that were
Speaker 2: inside of trading. However, this was the genus of the
Speaker 2: drug ball. I'm sure that there are other ones before it,
Speaker 2: but the Ico craze is one that was very big.
Speaker 2: And then the bottom fell out of the crypto market
Speaker 2: twenty seventeen twenty eight and that kind of went away.
Speaker 2: Now at that point we'd seen the growth of decentralized exchanges.
Speaker 2: So instead of it being I am selling into a
Speaker 2: market controlled by a big party that's sustensibly trustworthy, I
Speaker 2: am now selling to another person. And there are all
Speaker 2: sorts of bots involved in this as well. So you
Speaker 2: started to get at the classic rug pool, which would
Speaker 2: be I have put together a white paper, which is
Speaker 2: just a very long document that claims that the token
Speaker 2: will work like this, and this is how these tokens
Speaker 2: will eventually operate within a company, and then you invest
Speaker 2: in this much like an ICO, and then when we
Speaker 2: put it on an exchange, it will sell for lots
Speaker 2: of money and blah blah blah. The goal of these
Speaker 2: platforms is very rarely to build anything. It's to get
Speaker 2: a bunch of money, and then the owners start selling
Speaker 2: off the tokens. People became more aware of this, so
Speaker 2: people started watching the blockchain and saying, well, wait, you're
Speaker 2: selling all the tokens. So over time rug pools became
Speaker 2: a little less easy to pull off because there are
Speaker 2: really insanely clever people watching. It's a very simple system,
Speaker 2: which is we we as an entity, promise to sell
Speaker 2: you tokens at this low rate, saying we will build
Speaker 2: this company that will grow value, and because of the
Speaker 2: company's growing value, token number will go up. And then
Speaker 2: you just never do the second part with the value creation.
Speaker 2: And also very rare. Is there ever a connection between
Speaker 2: a company and the token. These things don't really exist
Speaker 2: in concert, and indeed, combining them is borderline impossible.
Speaker 3: Because for a while I was like, why do people
Speaker 3: keep falling for this? But it seems like it's more
Speaker 3: that people keep falling for the idea that they could
Speaker 3: potentially get in on the ground floor of a grift
Speaker 3: like this.
Speaker 2: Yes, and I also think that there is a lot
Speaker 2: of people out there who truly believe that this is
Speaker 2: like investing in the stock market. Yeah, and they're desperate.
Speaker 2: I don't think that people realize how desperate the average
Speaker 2: person is in America. In other countries too, you get
Speaker 2: a lot of people in the Global South with this
Speaker 2: who are desperate to get in on this so that
Speaker 2: they can turn their local currency into a US dollar
Speaker 2: or a tokenized version like tether, which is heavily connected
Speaker 2: to money laundering, which is great all other good things
Speaker 2: about this. I think it's really easy and fair, especially
Speaker 2: in the case of Hawktua, to judge everyone who invests
Speaker 2: as kind of a knowing participant in a grift, when
Speaker 2: I think more realistically, you could say half of them were,
Speaker 2: and half of them were just like, God, damn it,
Speaker 2: I just want a fucking chance to do something. I
Speaker 2: just want to. I can't. It's not like you can
Speaker 2: invest in the stock market really make money. You can,
Speaker 2: but day trading is a hell art populated by goblins,
Speaker 2: and it's very difficult to do. I believe it's all desperation.
Speaker 2: I believe it's because most people cannot accumulate wealth, and
Speaker 2: so they see these things that grow in these arbitrary ways,
Speaker 2: and perhaps they know deep down this is broken somehow,
Speaker 2: this is kind of a scam. Maybe, but you know what,
Speaker 2: maybe I can get up, I can get on the
Speaker 2: board through this, I can pull the right levers and
Speaker 2: then some money will come out, because tons of people
Speaker 2: have made money on things like this. Though not specifically this,
Speaker 2: I will say the hawk Doer thing is such an
Speaker 2: egregious rug pull. Even ape chain took a day or two.
Speaker 2: Usually this is the kind of rug pool you see
Speaker 2: someone do a couple of hours on a meme coin
Speaker 2: where everyone knows it's a scam. It used to do
Speaker 2: a few years ago. You'd watch people like launch elon
Speaker 2: rocket coin and go up and it goes down, and
Speaker 2: no one would be really angry because everyone was basically
Speaker 2: playing catch the knife. In this case, it was marketed
Speaker 2: in such a way that I'm pretty sure she violated
Speaker 2: sec rules. If they even slightly suggest, which they absolutely did,
Speaker 2: that this was a thing that you buy into to
Speaker 2: make money, they have violated securities law. And honestly, I
Speaker 2: really hope they get done for it, not just for
Speaker 2: the justice, but because it will be very funny. It'd
Speaker 2: be very very funny but they'll settle. You just have
Speaker 2: this carved out piece of the Internet where people just
Speaker 2: get scammed all the time.
Speaker 3: It seems like there is very little legal repercussion.
Speaker 2: Why is that Because it's quite tough to find the people,
Speaker 2: because it costs a lot of money to litigate these things,
Speaker 2: and because the law is fairly new. The actual Matt
Speaker 2: Levine of Bloomberg said a while ago that basically all
Speaker 2: crypto exchanges that are illegal, they're all illegal, but it's
Speaker 2: such vague law and the SEC is taking so long
Speaker 2: to kind of work out what it is they do,
Speaker 2: it's kind of hard to say what's illegal or not.
Speaker 2: They still are dinging people, and they're dinging them in
Speaker 2: this very arbitrary way. That's kind of fueling these crypto people,
Speaker 2: and it pisses me off because I wish that they
Speaker 2: just have said something. And now we're going into the
Speaker 2: Trump administration, so they'll probably just put a goose and
Speaker 2: a hat as the head of you. And it's also
Speaker 2: very tough to legislate, and there's so much money from
Speaker 2: overseas intermingled with it as well. So many of these
Speaker 2: rug pulls come out of the Global South, and again
Speaker 2: it's a condition of desperation, a symptom of desperation. Even
Speaker 2: it's just the sign that you talk about on this show,
Speaker 2: these magical moments and then the arbitrary and sometimes quite
Speaker 2: aggressive and harmful effects of the attention you get of
Speaker 2: being online. Imagine a million little versions of that all
Speaker 2: the time, with these little celebrities that get people's hopes
Speaker 2: up and steal money from them and then spend their
Speaker 2: lives trying to hide. And now there's other little micro
Speaker 2: wars that happen where people docks them and find them.
Speaker 2: They wouldn't be surprised if someone was killed. But also
Speaker 2: it gets to the core of your show as well,
Speaker 2: where it's like these people become micro celebrities at a
Speaker 2: time when people feel lonely and isolated and insa you
Speaker 2: can become famous and people can rely on you, and
Speaker 2: if you actually make these people money, they will love
Speaker 2: you forever, not a petty king among them.
Speaker 3: I am curious about this lane of scam. I guess
Speaker 3: the influencer to crypto scammer. When did that become common
Speaker 3: practice because at this point I don't keep an eye
Speaker 3: on crypto at all, and I recognize this as common practice.
Speaker 2: So you had like Floyd Mayweather and a few other
Speaker 2: celebrities do it. That's what's kind of weird. Usually influencers,
Speaker 2: like actual influencers that regular people know, stayed out of
Speaker 2: this because they realized, oh, this is quasi criminal. You
Speaker 2: had a few celebrities do it. I can't think of
Speaker 2: another podcaster who has done it like this, because again,
Speaker 2: you want to avoid this, because suddenly your whole podcast
Speaker 2: becomes less trustworthy. I was really surprised when I saw
Speaker 2: this was happening, because it's like, why, what year is this?
Speaker 2: This isn't twenty twenty one or twenty twenty when this
Speaker 2: happened all the time and no one was watching because
Speaker 2: everyone was dying. No, it's like twenty twenty four when
Speaker 2: you're really which is probably already making a good amount
Speaker 2: of money on other stuff. I also can't The weirdest
Speaker 2: thing is usually these things have some sort of made
Speaker 2: up company attached, like a, oh, this token will let
Speaker 2: you on bling blanc. You'll be able to hire a
Speaker 2: plumb or on bling blanc, and this will be cheaper
Speaker 2: than dollars on bling blanc. But in this case it's
Speaker 2: just buy hawk token. It's usually an NFT of a
Speaker 2: song or a thing. There's usually a thing that's what's
Speaker 2: so weird here, just being like, oh, I'm gonna do
Speaker 2: a crypto currency that is some twenty seventeen shit.
Speaker 3: I think that the real red flag for me was
Speaker 3: all of a sudden, the proximity to the Paul brothers,
Speaker 3: who like are addicted to, who.
Speaker 2: Have already done there. There's the crypto zoo and all that.
Speaker 2: But actually that's a good point. So cryptozoo and I
Speaker 2: don't know it's super well even which one of those
Speaker 2: brothers did it? Forgive me whichever one of the Paul's
Speaker 2: two brothers one name they had like an animal, like
Speaker 2: a kind of a Pokemon situation, Like you buy into
Speaker 2: this thing. That's how these things traditionally work. You promise
Speaker 2: a bunch of stuff that you never do. That is
Speaker 2: the key part, because when people say where's my money, honey,
Speaker 2: you say, well, I'm putting it into the cryptozoo.
Speaker 3: That I say, it buys your time.
Speaker 2: Yeah, the grimbles, the grackles that you find in the cryptozoo,
Speaker 2: that's where it's going. I must feed them, or the
Speaker 2: developers that I have in a non specific place they
Speaker 2: are working on the grim busses that will grow in
Speaker 2: your crypto zoo, and then you can kind of lead
Speaker 2: them on and hope that they forget. The thing that
Speaker 2: people don't realize is the Internet never forgets. These psychos
Speaker 2: will follow you steal someone's money online. There are people
Speaker 2: who will follow you forever. Eventually you piss off someone smart,
Speaker 2: someone animated, and someone bought, and then they learn an
Speaker 2: entire kind of forensic accounting and then they follow you
Speaker 2: through the blockchain. Just to explain very basic blockchain thing,
Speaker 2: you have a crypto wallet where your money goes these companies.
Speaker 2: When you invest in a rug port, you send money
Speaker 2: to something called a smart contract that has rules coded
Speaker 2: into it that says, okay, this will give the person
Speaker 2: who sends me this much money this many things out
Speaker 2: of it, so very simple. One would be one cent
Speaker 2: is one hawk. I'm guessing here, so five dollars will
Speaker 2: get you five hundred hawk. Or if it's an NFT, okay,
Speaker 2: you've given me one etherorum, I will give you ten NFTs. Now,
Speaker 2: these contracts are then spitting the money to other wallets.
Speaker 2: Now teams will always say oh and indeed they did
Speaker 2: in the hawk to a thing. Well, the original team
Speaker 2: can't touch that. They can't touch that money. They obviously
Speaker 2: can touch the money. You can just do it. They
Speaker 2: claim that code is law, you can change code. That
Speaker 2: This is a quicker and easier theory theoretically way to
Speaker 2: make money. Money comes out of it way quicker and
Speaker 2: disappears even faster. And people have made tons of money
Speaker 2: on crypto. When was the last time anyone really like
Speaker 2: there was like stories about guy makes money honestly trading stock,
Speaker 2: Guy makes money honestly doing job. No, none of the
Speaker 2: stories in the media about people who have money are
Speaker 2: about them like, oh yeah, and I worked really hard
Speaker 2: and then I got one for it. Oh yeah, no,
Speaker 2: not even I would love to hear that if it
Speaker 2: was true, but it really is. So you hear these
Speaker 2: stories about these very irksome looking dickheads who have made
Speaker 2: millions off of crypto, and you're like, shit, I look
Speaker 2: more normal than this guy, Surely I could. Except just
Speaker 2: like every scam in America, those people already made their money,
Speaker 2: and they made it in a dishonest fashion, right.
Speaker 3: And they would never be transparent about how.
Speaker 2: And they would also never make their money like this.
Speaker 2: They would never buy into someone else's scam. They'd make
Speaker 2: their own, and they'd make a better one.
Speaker 3: Do you think that there will be any meaningful consequence
Speaker 3: for this case?
Speaker 2: I actually do interesting.
Speaker 3: Okay, tell me more.
Speaker 2: It's a piss poor rug pull. First of all, this
Speaker 2: is shit scam. It's just a dog shit scam. In
Speaker 2: the event she ever mentioned this on the podcast, she
Speaker 2: is getting digged by the SEC. For sure. If she
Speaker 2: said anything about hawk to or coin on a podcast.
Speaker 2: She has now said, Hey, hey, look SEC, I'm doing
Speaker 2: an illicit security. This is an unregistered security. Check it out.
Speaker 2: That alone will get her in trouble. I don't know
Speaker 2: how harsh the penalties will be. It really comes down
Speaker 2: to how much money she made.
Speaker 3: One of the numbers I've seen is three point three
Speaker 3: milli in.
Speaker 2: Oh. She may actually she's getting class action suited. The reason,
Speaker 2: by the way that everyone so onerously tries to make
Speaker 2: sure that they don't say this is a cryptocurrency, it's
Speaker 2: a token that will be used in the system, is
Speaker 2: by saying it's a cryptocurrency that's used like a currency,
Speaker 2: you enter into the Howie test, which, as I mentioned previously,
Speaker 2: is the test the SEC uses to say, is this
Speaker 2: a security If you are selling unreached securities, that's bad,
Speaker 2: that's illegal. And on top of it, if you are
Speaker 2: marketing them, which is different than you are extra fucked
Speaker 2: because they the sec really doesn't like that. And also
Speaker 2: the sec very rarely gets open and shutcases. This is
Speaker 2: one of them. And just like every right wing grifter,
Speaker 2: she's going to assume that the right wing or protect her.
Speaker 2: Oh they won't. She was useful for now talking about
Speaker 2: spitting on that thing, so to speak to financial crimes,
Speaker 2: that's beautiful why this show exists. Also, this isn't a
Speaker 2: complex one. She's so stupid. The fact that it was
Speaker 2: just a coin is so dumb. She should have been like,
Speaker 2: this will let you into the Hawk two of verse,
Speaker 2: this will let you buy your own Hawk tours, and
Speaker 2: it could have been a series of Hawks. That feels
Speaker 2: like a very twenty twenty one idea, But this is
Speaker 2: twenty twenty four when all the magic and whimsy has
Speaker 2: been sucked out of the financial crimes. Most of these
Speaker 2: people will never see their money again, and if they do,
Speaker 2: it will take years and years, and there's not going
Speaker 2: to be the kind of media pressure that got FTX back.
Speaker 2: And also FTX was a very strange situation, so like
Speaker 2: many rug pulls, all of the victims will lose.
Speaker 3: Here well, I feel amazing.
Speaker 2: I feel great, like this has cheered me up.
Speaker 3: Thank you so much to ed Zitron. You can follow
Speaker 3: him everywhere at ed Zitron and listen to his podcast
Speaker 3: right here, right now on cool Zone Media better offline
Speaker 3: link in the description. And thank you sixteenth minute listener.
Speaker 3: I hope you've enjoyed this series and that all things considered,
Speaker 3: you're doing all right. Extra huge love to my trans listeners.
Speaker 3: I love you so much and we will be back
Speaker 3: next week. Sixteenth Minute is a production of fool Zone
Speaker 3: Media and iHeart Radiops. It is written, hosted, and produced
Speaker 3: by me. Jamie Rostis. Our executive producers are Sophie Lichterman
Speaker 3: and Robert Evans. The amazing Ian Johnson is our supervising
Speaker 3: producer and our editor. Our theme song is by Sad thirteen.
Speaker 3: Voice acting is from Brant Crater and Pet. Shout outs
Speaker 3: to our dog producer Anderson, my Kats Flee and Casper
Speaker 3: and my pet Rockbird who will outlive us all.
Speaker 2: Bye.