Number Go Up: Inside Crypto's Wild Rise and Staggering Fall

by Zeke Faux

it does make economic sense to run tons of computers to guess random numbers in hopes of winning the Bitcoin reward. As one person famously put it on Twitter, “Imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin.”

By some estimates, Bitcoin mining consumed as much energy as the entire country of Argentina, population 46 million.

But running a stock scam is a lot of work. It requires crooked lawyers, brokers, and bankers to draft reams of securities paperwork, even if all the information in them is false. And that leaves a paper trail that pretty much inevitably leads to the scammers getting busted. Crypto didn’t require any of that. All it takes is some rudimentary programming, which can be done by freelancers hired online, and some posts by a social media influencer.

One group of researchers would later estimate that 80 percent of ICOs were fraudulent.

Tether’s website assured users: “Every Tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equal to one USD.” But after the meeting, the site’s wording was changed to read: “Every Tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.” In other words, Tether’s reserves could be anything it wanted.

They sent over papers documenting a $900 million line of credit from Tether to Bitfinex. Signing on behalf of Tether was Giancarlo Devasini. And on behalf of Bitfinex: Giancarlo Devasini.

When Prohibition ended, the Bay Street Boys started helping Americans avoid another law: income taxes. Island lawyers set up so many sham “personal holding corporations” for American tax dodgers that some office buildings were covered with nameplates from foundation to roof. When the Mafia abandoned Cuba after Fidel Castro’s revolution, the Bay Street Boys helped gangster Meyer Lansky develop casinos in the Bahamas. Lansky paid the island’s finance minister to adopt new rules restricting local firms from sharing financial information, even with criminal investigators, making it a more attractive destination for money launderers.

Prosecutors in Washington, D.C., said they’d tracked down the people who’d gotten their hands on the Bitcoins that were stolen from Devasini’s exchange, Bitfinex, back in 2016. Because the price of Bitcoin had climbed so much since the hack, the stolen coins were now worth $4.5 billion, making the heist the largest of any kind in history.

The stolen billions were traced to a couple in their early thirties who lived in downtown Manhattan, not far from my place in Brooklyn. Their names were Ilya Lichtenstein and Heather Morgan. Judging from social media, the two didn’t exactly appear to be criminal geniuses.

In 2021, a total of $3.2 billion in cryptocurrency was stolen from exchanges and decentralized finance (or DeFi) apps, in which crypto traders make deals directly with one another. That’s a hundred times more than the total stolen in all bank robberies in an average year in the United States.

It reminded me of a maxim called the “bullshit asymmetry principle,” coined by an Italian programmer. He was describing the challenge of debunking falsehoods in the internet age. “The amount of energy needed to refute bullshit is an order of magnitude bigger than to produce it,” the programmer, Alberto Brandolini, wrote in 2013.

What a Bored Ape buyer pays hundreds of thousands of dollars for is not a digital ape cartoon—it’s the ability to prove they are the one who paid hundreds of thousands of dollars for a digital ape cartoon.