Crypto bro’s, NFT’s and the lords of the libertarian flies

In previous posts I’ve talked about the many problems with crypto, not too mention the outright scams such as Onecoin. Well what’s happened since then has been a sort of lord of the flies like social experiment. What would happen if we lived in a world run according to libertarian principles? Well, you end up with instability, scams galore, massive market crashes and an inevitable government crackdown, as the grown ups have to come in and clean up the mess.

Now to be clear, I’m not ruling out the possibility that cryptocurrencies will have some role to play in the future. However, that is only going to happen when they are well regulated and thus crypto assets are safe for the majority of people to use (without fear of a rug pull). We are a long way from that. And if anything the antics of many in the crypto space makes this harder to achieve.

Firstly we have seen large volatility as well as a massive price crash across most crypto currencies over the last few months. Bitcoin for example is now down 75% and Etherum 70%, with more than $2 trillion wiped off the value of all crypto assets since the start of the so-called Crypto winter. This is on a scale of market crash not seen in regular commodities since the great depression. Yes the crypto bro’s are making bankers look honest and competent!

And to if you are HODL’ing Bitcoin, well at least its still worth something. Many crypto currencies, some subject to marketing by celebrities, have essentially been wiped out completely, with tens of billions of losses (then again, should you really be taking financial advice from Kim Kardashian!). Some of these were outright scams from the beginning. I mean when the term “rug pull” enters the language, you know its bad and its something you should run a mile from. Especially given how frequently those doing the rug pulling were getting away with it over and over again. Only online investigators and concerned citizens seeming to take any notice.

However some crypto projects might not have started out as scams. But inevitably when the going got tough and things started to go south, often times those behind the coin (with no regulator to stop them) went rogue (not surprising as many libertarians subscribe to objectivism), as they sought to enrich themselves at the expense of the investors. The downfall of the the “stablecoins” Luna and Celsius being good examples.

But why do these stable coins keep on failing? Why can’t they compete with the US dollar or Euro? Well for the very reasons that libertarians hate national currencies. They are backed by a government who can and will do whatever it takes to protect the value of their currency (with the possible exception of the Tory party, although for now the Bank of England has control). They will raise or lower taxes/interest rates, run the money printer, buy back bonds, cease private gold reserves (libertarian gold bugs tend to ignore this one) and even start wars. Whatever it takes (not saying this is a good thing, but its the reality of the world we live in). No crypto can compete with that.

Speaking of which, as mentioned in a prior post, El Salvador has made Bitcoin its official currency. How’d that work out? Well actually better than I expected…..in that the entire economy hasn’t completely collapsed. Although that seems to be more down to the fact the bulk of citizens just ignored their crypto-bro president and kept using dollars. Even so it’s resulted in huge losses for such a small country, which is going to cause all sorts of problems long term.

NFT’s – Non flushable turd’s

Then we have NFT’s (and the above is one of the more polite definitions I’ve heard). Now these do have some purpose, in that they allow digital artists (and I mean actual ones, not the ones hawking ugly pictures of apes) to sell their wares and commissions online. However, inevitably the crypto hype train showed up and does what it does to any good idea – blow it out of all proportions and create an unsustainable bubble of outright scams. Which inevitably pops and results in billions in losses.

Firstly, there are some major questions as to the legality of NFT’s. Quite simply put, its far from proven in law that they represent a legally enforceable contract. All you are essentially buying with an NFT is a html link. So if the website the other end disappears, you are kind of screwed. Now this might not be a problem for an established digital artist, selling digital artworks and commissions (3d images, paintings, etc.) to clients for a few thousand (as the NFT is really just a receipt). But its kind of important if you are engaging in speculative trade of crude bitmaps for hundreds of thousands.

For example, some people are going around, right clicking and saving NFT’s. Which is making those buying them rather upset, as in calling for the FBI to do something (the irony of libertarians calling for the big bad government to save them being lost on them). Well, even if we ignore the legal issues earlier, that’s not how copyright law works. Its sort of the job of the copyright holder to track down any violators and sue them in court.

Companies will spend tens of millions or more per year on lawyers and private investigators defending their intellectual property. So all you are buying with an NFT is some bragging rights and the hefty cost of defending those bragging rights in court…forever! And regular companies are careful to pick the battles they are going to fight (e.g. the time record companies tried to sue people for downloading mp3’s and just made the problem worse). Then there is the issue of fair use. While it is a bit anti-social to be copying NFT’s, then emailing the owner and calling him an idiot. But it is technically a form of commentary or criticism and thus falls under fair use.

Part of the problem here is that NFT’s are being sold as an alternative to fine art. But that’s a very different thing. Yes some billionaires are buying fine art works for investment purposes. But a lot of them are doing it because they have lots of cash and, well why not? You can’t hang a billion dollars worth of bills on your bathroom wall. But even those that do invest in fine art are doing so as part of a strategy of diversification. Its not so much that they think fine art prices will keep rising. Its that they are worried that if they leave it all in assets like property or, say the UK pound or shares, what if those fall in value (and all three of those in the UK are currently falling in value at the same time). In short its a hedge.

Of course art prices are getting a bit silly these days, given that there are no grand masters around to make new paintings and demand is outstripping supply. A bubble bursting and the prices dropping in the future is a possibility. This won’t effect billionaires much, as they will only record a loss if the prices fall below the price they bought at. And only if they actually sell the painting (and its easier to just sit on it and wait for prices to recover). A Monet is still a Monet, it might not be worth the funny money people are now paying for it, but it will always be worth tens of millions of pounds. Plus, billionaires have a get out clause – they just donate the painting to charity and write it off against their taxes.

This is not the case for ordinary punters buying NFT’s. Here there is no mechanism to restrict supply (and every incentive to saturate the market and make off like bandits), most investors don’t have the deep pockets of billionaires and hence the price can go all the way down to zero. Its actually quite a high risk an high maintenance investment. And again, as with crypto prices, NFT’s have fallen a cumulative +90% since the bubble burst back in 2021. with no sign of these drops easing up.

The end result of all of this has been that literally trillions of dollars has gone up in smoke, which is the sort of sums that is going to get government worried. After all, if someone loses their life savings on crypto, guess who has to pay for their retirement instead. And we are seeing organised criminal gangs and even rogue governments (such as North Korea or Russia) getting involved in crypto. So as you can imagine, the crackdown is coming.

Firstly governments have begun to ask the obvious question, do crypto assets count as securities? That is too say do people primarily buy them for investment purposes. Given that the bulk of the actual exchange of crypto assets (not linked to crime), are for investment purposes, its hard to avoid the conclusion that yes they are securities. If so, then they risk falling under government regulation. This would mean registering with regulators, such as the SEC, filing regular reports, complying with rules and guidelines, which by the way would include complying with laws prohibiting insider trading, as well as regulating the transfer of assets between countries.

The other side of the crackdown is law enforcement going after the crypto bro’s themselves. Namely those doing the rug pulls or other unethical and illegal practices. They may have thought they were safe from arrest, but it turns out that stealing still counts as stealing and federal persecutors in several countries have begun to go after them. While initially this has focused more on the more obvious targets e.g. the flashy ones who posted on Instagram pictures of themselves in private jets and with fast cars or the ones who went around posting rap videos (not sure if they were arrested for crypto scams or the terrible singing). But they are working their way up the food chain. For example, the developers of Tornado cash, a literal money laundering app have been arrested. I mean you have to ask, what did they think was going to happen? It reminds me of the time in Glasgow someone tried to rob a taxi….outside a police station! (I concluded after living next to a cop shop for a year or two there’s a reason criminals choose crime as a career, they’d ain’t smart enough to do anything else!).

Either way it does look like the crypto party is sort of over for now. Like I said, I’m not against the idea of cryptocurrencies. But only when the serve a useful purpose for society, rather than another mechanism for exploitation and help criminals evade the law. These issues with crypto are nothing new, they’ve been around for years, but the crypto community refused to acknowledge these issues. Now they are having to face up to a very hefty dose of reality bites.

The danger of scamcoins

I’ve talked quite a lot about online scams as well as cryptocurrencies recently. So what happens when they collide? You get the mother of all ponzi schemes! And unfortunately there are now several examples of fake cryptocurrencies doing the rounds, from Bitconnect, Plus token, USI tech, Qoin, and the daddy of them all Onecoin.

The BBC recently did a fairly deep dive into Onecoin and its missing Cryptoqueen Dr Ruja Ignatova, who was recently found guilty of fraud (in absentia) by a US court. While I’d recommend you listen to the full BBC podcast, I’ll do a quick summary of events (alternatively, here’s a video on the topic from cold fusion).

In 2014, in middle of all the hype about bitcoin, Dr Ruja, a Bulgarian previously convicted of fraud in Germany, set up her own cryptocurrency called Onecoin. The marketing was very successful, in no small part due to the usage of MLM sales methods. They also employed a lot of the rhetoric of crypto advocates, about the evils of big banks, the govmint printing money, etc. They promised that Onecoin was better than Bitcoin and that it would soon overtake it.

And this marketing was highly successful, largely by using cult like tactics to seduce potential investors. The marketing relied a lot on FOMO (fear of missing out). After all, everyone had heard the stories of those who got in on bitcoin back in the early days and were now millionaires, so this made sense, right? Its estimated that they managed to steal well over $4 billion, although some sources say it might be as high as $8 billion.

There was just one problem Onecoin didn’t have any blockchain, nor a white paper, which is sort of like trying to sell a car without an engine, drivetrain or even wheels! Its an immediate red flag as any crypto coin lives and dies by its blockchain. As early as September 2014 behind MLM (an anti-MLM website) was asking awkward questions about Onecoin. In 2015 the Bulgarian financial regulator was issuing warnings. In 2016 a cryptocoin expert by the name of Bjorn Bjercke began ringing the alarm bells, as they’d apparently tried to recruit him to write a blockchain for Onecoin (again, that’s like selling a few million cars and then hiring a single engineer to design and build the drivetrain the day before they are due to ship!) And in fairness he wasn’t alone, cryptocurrency advocates were very quick to start pointing to the red flags as regards Onecoin.

Financial regulators and consumer advice agencies across Europe started to take notice and in early 2016 began issuing advisory notices to the public that it was likely a pyramid scheme as well as starting to take legal action against Onecoin. Then in July 2017, Dr Ruja disappeared. Her brother, another key player in Onecoin, tried to keep the scam going, but was arrested shortly afterwards in the US and has since turned state witnesss. The ponzi scheme’s lawyer Mark Scott was convicted of fraud in 2019 as was Sebastian Greenwood, another of the schemes co-founders (who had previous from another fake crypto scam called Bigcoin).

What is insidious about all of this is how these scammers targeted their victims and how they manipulated them. For example setting up Onelife, a sort of social club to help coerce and lovebomb victims into giving Onecoin yet more money. And most of the victims were on low to middle income, many of them in the Asia and Africa. In other words, the sort of people who’d be losing money they can’t afford to lose.

Religious organisations, such as the megachurches in Africa appeared to have been a key target for these scammers. You’ve probably heard about those sleazy US televangelists who con their congregations into buying them a private jet. Well they are small time street hustlers next to their African equivalents, who can fill hangar sized churches with up to a million people per sitting. This lot will pull the sort of scams you won’t believe could happen in the 21st century. Such as selling fake healing potions or performing fake miracles. And its perhaps no surprise to learn, they are big into the prosperity gospel (give me money for Jesus, cos we all remember how Jesus rode around in a golden chariot and really liked rich people).

So inevitably, when these pastors heard about Onecoin, they were quick to let their congregations get fleeced (so long as they got their cut I assume!). The Onecoin promoters went a bit mad in Africa, literally fleecing some of the poorest people in the world out of their live savings. In some cases entire villages got cleaned out. They even set up their own church of Onecoin and came up with their own promotional song.

While some governments were quick to take action, others did nothing or even actively helped the scammers. As noted the Bulgarian financial regulators were quick to spot the scam, but the Bulgarian government took very little action, not until late 2018 (after most of the major players had been arrested and likely only acting under pressure from the US and EU). Which is not a huge surprise when you learn that the then Bulgarian PM had links to organised crime.

However there’s another country whose inaction helped the scammers – the UK. London was the other key hub for Onecoin‘s operations, as is not uncommon when it comes to many frauds and online scams. As with Bulgaria, the UK’s FCA was quick to spot the red flags and issued a warning notice on its website warning against investing in Onecoin. However, under threat of a lawsuit by the infamous UK law firm Carter Ruck Fuck, they took down this notice. This removal of the notice was seized on by Onecoin as proof that its legal troubles were behind it and billions more were poured into the scam.

Now the idea that the FCA would yield to scammers just because they threatened a lawsuit sounds dubious (in many respects this is in the FCA’s own interests, if the scammers want to prove in court they are conmen, while likely perjuring themselves in the process, bring it on!). So it only makes sense if there was political pressure, likely from the old boys network getting involved (and several key players in Onecoin where ex-public school boys). And we have the nerve to call other countries corrupt.

And the worst part? Lots of those who lost money still haven’t accepted Onecoin was a scam. Go looking online you’ll find many who are still clinging to hope that it all just a big conspiracy (even issuing death threats against other victims who have spoken out about the scam), that Dr Ruja will resurface and everything will be ok. Well I’m doubting it. Some say she’s alive and living in secret somewhere. My guess is she’s been “taken care” of. The Bulgarian mafia (who were almost certainly involved in this) aren’t exactly slow to eliminate anyone who has outlived their usefulness. It would also explain why her brother was so quick to turn canary once the Fed’s busted him.

And while some of the big players in Onecoin did go to jail, many of them have gone unpunished. They just took their money and climbed on to another scamcoin bandwagon, such as Dagcoin, the aforementioned Qoin or Solidus.

So, what is to be learnt from this sorry tale? Firstly, it highlights the dangers of MLM’s, many of which are just pyramid schemes. And as soon as such scams fall apart in one country or region, they simply move on and start again under a new name somewhere else. In fact sometimes they don’t even bother changing the name. For example, there is the MMM ponzi scheme, which started off in Russia in the 2000’s, which has repeatedly popped up worldwide under the same or similar name over the last two decades. And, as with Onecoin, its generally targeted people in developing countries, often robbing them of their life savings.

Law enforcement needs to be a lot more aggressive in identifying these organisations as scams and shutting them down quickly. Which of course requires them to be free from political pressure. Which is why voting for populist politicians like Trump (who was in on a number of MLM scams), or chums of those who help launder the money (such as the Tories) isn’t a good idea. It also goes to show that crime has gone global and is increasingly done online. We need better co-operation between law enforcement in different countries, as individual agencies can quickly find themselves out of their depth when faced with a fraud on this scale. Its for these reasons I’d argue for a European version of the FBI, but specifically targeted at MLM’s, cybercrime and frauds (and when I say Europe I don’t just mean the EU).

It also raises questions about crypto. As I mentioned, the crypto community were very quick to call out Onecoin. But the scam was only successful because it used much of the same language and propaganda that they themselves have used to promote crypto. And ironically for a bunch of libertarians, they had to rely on the big bad govmint to step in and deal with the mess. In fact, the scary thing about Onecoin is that it was cooked up by people who knew nothing about crypto, which made it easier to spot. Had they actually had some knowledge of how cryptocurrencies worked they could have kept the scam going for a lot longer.

In the libertarian workers paradise, what happens when someone pulls something similar, but more elaborate? Likely you end up with a massive financial fraud that destroys most people wealth, leading to economic collapse and civil war, not unlike what happened to Albania in the 1990’s.

And these sorts of fake coin scams are nothing new. Before we had central banks, forging coins, or shaving the edges off gold and sliver coins, was a common problem. So crypto risks a return to those days. By its very nature a crypto world with no centralised government or financial system is one where the poor and the desperate will get fleeced, robbed and enslaved.

In short, for cryptocurrencies to ever work they will need regulation and law enforcement. Either they need to adapt to that reality or risk being eventually just shut down.

Internet gangs of the 2020’s

I did a post a couple of months back about contrepreneurs & fake gurus selling doggy courses or get-rich-quick schemes (which of course are just scams intended to rob you blind). But if anything, I barely scratched the surface. There are now literally hundreds of these post-truth grifters selling “courses” (even thought you can just join a MOOC, many of which are free and give you an actual qualification from a university)…likely because about the only useful thing you learn on these fake courses, is how to scam people out of their money!

And these are just one of a long list of scams being perpetrated online. Cybercrime has proliferated massively over the last year or so. With so many people in lockdown and a decline in paper money it seems criminals have now moved increasingly online. To the point where we are witnessing a full on crime wave. Online scammers are to the 2020’s what the mafia were to Chicago in the 1920’s.

Praying on the vulnerable

An insidious feature of these scammers is how they pray on the vulnerable, often targeting older people (on the assumption that they may lack the IT knowledge to spot a scam) or the recently unemployed, divorced or anybody down on their luck. Case in point Jim Browning, a NI based hackvist has documented scammers targeting someone with depression (whom the scammers knew had been scammed before). Or, another occasion, a blind woman. And in many cases the victims find themselves swindled out of thousands of pounds (sometimes their entire life savings).

More recently Jim Browning teamed up with Mark Rober (a former NASA engineer and inventor of the glitter bomb) to catch these scammers in action. During this investigation, they observed money mules working in the US on behalf of Indian based scammers to collect packages of cash worth tens of thousands of pounds (yes they managed to scam people into basically posting them their life savings). This is the scale of the operations we are talking about here.

A history lesson

One thing to realise is that a lot of these scams aren’t necessarily anything new, many are old fashioned hustler tricks that have been used since at least the roaring twenties, if not the middle ages (e.g. the pig in a poke scam, aka a fake goods or sale scam, has existed since the 16th century).

The only difference is that in times gone by, the scammers had limited means to distribute their scam. Generally limited to those they could physically meet (think of the old fashioned snake oil salesman at a county fair). Or later on, those they could contact via print media, then with late night infomercials. But now, thanks to the internet, you can fire off hundreds of millions of phishing lines or internet ads in a few clicks, vastly multiplying the potential reach of these scams.

Buzzword bingo

Of course in of itself this also creates a line of weakness, as it means that many of these scams follow a series of predictable patterns, which can be easily spotted. For example making unrealistic promises of high returns (if this was legitimately possible, why isn’t everyone else doing it and why is the scammer advertising this, allowing rivals to get in on the act and saturate the market). Or using high pressure sales tactics (as they want you to pay up before you’ve had a chance to think it through). Or appealing to people’s emotions (e.g. fake charity scams, which will offer to pay for medical treatment overseas…when in reality its just a variation on the Nigerian prince scam).

Sometimes the best way to stay safe is simply to watch out for certain buzzwords or terms, e.g. “legal loophole”, “sack your boss”, “passive income”, “xyz hates this trick”, “xyz has been ripping of customers for years”, “did you know that xyz, so if you give me your money”….you’ll never see it again! And of course be very suspicious of the word “free”.

I think you get the message. Hell, I didn’t realise the extent to which these scams have proliferated because some years ago I programmed my email to just automatically mark as spam any emails with certain known buzzwords or phrases scammers use. So just being aware of these scammy buzzwords (or if you know someone who is potentially vulnerable, making them aware of it) can be a good way of staying safe.

Scamazon prime

A common scammer tactic is form of catfishing, where the scammer will pretend to be someone reputable, e.g. your ISP, Microsoft or Amazon and claim to be contacting you about some security issue, a refund or a problem with your payment. And, needless to say, the punchline is they want you to login into your account so they can steal your bank details or get you to send them money.

Its actually gotten so bad, my advice is that if you get any email or phone calls purporting to be from Amazon (or Google, Microsoft or any other major tech firm), I’d just assume its a scam, even if you actually have an Amazon account and are awaiting a delivery. Don’t click on the links in any email, no matter how legit they look, go to your account via the normal channels and login normally (using two-step authentication) and you should be able to verify what’s going on. And don’t call back a missed call, it will likely be to a premium rate number scam.

Case in point, there’s the Amazon prime scam doing the rounds, which takes advantage of Amazon’s unwillingness to let people cancel an Amazon prime subscription they accidentally signed up for. This is another of those tech support scams covered by Jim Browning.

Certainly one could argue that its hard for the authorities to keep up, including Amazon’s own security team. But in this case, their sales tactics for Amazon Prime have had catastrophic consequences for many victims of this scam, something Amazon need to own up too.

Get poor quick schemes

And this is why I’d argue these scams can be quite dangerous. For example Amazon has been trying to promote the sales of its own shares recently, as it seeks to exploit the pandemic and grow its market share. Of course, this doesn’t mean investing in Amazon is a good idea. Like any investment its a risk. Amazon pays dividends to shareholders about as much as it pays tax, other firms such as ebay are starting to catchup, and if Amazon have to issue more shares as the expand the share price will fall. But either way, Amazon’s success is being exploited by scammers.

For example, I’ve seen ads encouraging investment in Amazon promising returns in the order of several thousand percent. This has nothing to do with Amazon and this rate of return exceeds the actual performance of Amazon stock by some order of magnitude. Based on the experience of those who’ve fallen for it this appears to be a boiler room scam. The promoters behind it seem to be based out of Cyprus and it mirrors a similar scheme from a few years ago, which was shut down by the FTC.

But of course, like all scams, you can see how it prays on the unwary. They are trying to exploit FOMO, Fear Of Missing Out. Most people will know Amazon is a very successful company, out of which many have gotten rich, notably Bezo’s….and his ex-wife. So an advert pops up and says sign up now and for just $250 we’ll make you rich, well, like I said, its easy to see how people can be fooled.

The lesson here is don’t trust something just because you saw an advert for it. After all internet searches and advertising can be manipulated. So much so that a sure fire way of spotting a scam is simply putting “is xyz a scam” into Google and if you only get positive reviews and see nothing negative, then its a scam (no product or service is that good that nobody will whinge about something, so this shows someone has gone to great lengths to scrub the internet of any genuine criticism).

Don’t take things at face value. If it looks to good to be true, then it probably is. Also make sure the story checks out and do some due diligence. E.g, someone says they are based in the US and they are actually based somewhere else, why are they lying about that? Probably because they’ve got something to hide.

Also why are they selling to you in the first place? Think about it, if its such a good deal why pitch it to dozens of amateurs online when a billionaire can cut you a cheque right there and then? Well because rich people, and their staff, will go over any business proposal with a fine toothed comb and it won’t take them long to spot a scam.

Case in point, the Brit method, that was doing the rounds a few years ago (or the Canuck method if you are in Canada, or the Aussie method in Australia and so on). This was another investment scam revolving around binary trading (now illegal, in part due to this scam). Again, as with all the others, it exploited people’s ignorance and greed.

My point is, if things don’t check out, or you get the slightest whiff of dishonesty (or nothing but cult like enthusiasm), don’t just walk away, run away, then report it. And frankly I’d sooner take financial advice from my neighbours cat than take it from some random stranger on the internet.

Crypto scams

My view on crypto is that they will take off eventually. But only after the major banks, governments and/or tech companies have decided to support one. However, they likely to be only interested in a type of crypto currency where they can exert some form of regulation and control. Which pretty much rules out most existing crypto. Some might well survive (for a time) as a form of digital gold, but most are basically digital tulips.

So with that in mind, crypto is by definition, a high risk investment. Yes some early adopters did make a lot of money, but equally that also means you can lose a lot of money. So I would urge caution. Not least because there have been attempts to scam people using the promises of crypto riches.

This includes pump and dump schemes using crypto currencies, people being defrauded out of their money (thinking they were buying bitcoins), or digital wallets being broken into and straight up stolen. And some of these cases have involved the likes of John McAfee and Elon Musk.

And that’s before we even bring up fake crypto currencies such as BitConnect or Onecoin, which turned out to be little more than ponzi schemes. Again, these seek to exploit a combination of people’s ignorance about crypto as well as FOMO. Don’t fall for it.

Wingnut welfare

Another type of scam to be wary of are attempts to exploit people’s politics. For example the we build the wall fiasco, which diverted money from Trump supporters into the pockets of the foundation’s organisers. Or how the NRA have been embezzling donations for many decades, often using donors cash to fund the extravagant lifestyle of NRA board members, or republican politicians.

And we can see similar things with televangelists of the prosperity gospel, who literally brag about their private jets (ya I remember that bit from the Bible when Jesus got his supporters to put themselves into poverty to buy him a golden chariot so he could go to the temple in Jerusalem and congratulate the money lenders on the excellent job they were doing).

But others on the right want a piece of this action. Farage has been shilling on behalf of various half baked and doggy investment schemes (while humping the union jack and using many of the same conspiracy buzzwords mentioned earlier). Trump too has been accused of openly swindling his supporters money, using underhand tactics.

While this is more of a problem for the political right, its not like the left is immune to it. Recall how the Teamster union’s under Jimmy Hoffa ended up being controlled by the mob, who used that control to swindle supporters out of some of their pension contributions. Then there was the fake UK charity Kids Company that was closed down a few years back.

The lesson is, any badly run organisation, no matter its political goals, will be exploited by the greedy and the corrupt. Donate your money to more competently run organisations.

McMafia

the fact we now have evidence of criminal gangs, in different parts of the world, working together does raise the possibility of McMafia involvement in these scams. For those unfamiliar with the term, McMafia refers to how modern organised crime functions. Rather than operating in one geographical area, with a hierarchical structure (boss, underboss, caporegime’s, etc.), instead they now operate as more of a sort of lose international franchise (kind of like McDonalds, hence the name) of different gangs who will specialise in a particular type of crime.

So for example, we have these fraudsters in India running the phone and internet scams. Sitting behind them is likely another gang who acts as enforcers (in case any of the staff get cute), provide protection from robbery by rival gangs and arranging kickbacks and bribes to public officials, who allow them to operate. Another gang in the US organises the money mules who likely pass on the cash to someone else (for a cut of course).

This next group will either launder the money, or divert it towards other criminal gangs around the world, who will use it to fund crimes like prostitution, drug smuggling, people trafficking, etc, kicking back a cut to the all parties. I’d note that it is a common tactic for criminals to use rackets that yield ready cash (such as loansharking, illegal gambling, extortion, robberies or grifting) to then fund more profitable but cash intensive operations (such as drug smuggling, gun running, people trafficking, etc.).

Now I bring this up because there are some who see internet scams as a victimless crime. This is particularly a problem in India, where some see it as just rich westerners getting fleeced (revenge for colonialism). Well, the victims of these scams (who are mostly pensioners, the unemployed or blue collar workers, not the rich) would disagree. It can really be traumatic.

Secondly, its likely the proceeds from these frauds are being used to fund other criminal activities, which btw can include terrorism. In fact previous terrorist attacks in India have been traced back to similar McMafia operations, where the enforcers happened to be terrorists, which is a not unusual setup (here in Ireland there’s a similar dynamic with loyalists and republican paramilitary groups,providing protection in exchange for a piece of the action).

Just last month, while arresting an individual on money laundering charges related to BEC frauds, the FBI pointed to a link between cybercriminals and north Korea. And this not the first time north Korea has been implicated in cybercrime.

The crackdown

Finally, I will end with some positives, the authorities are starting to catch up with these criminals. Now that the thief in chief is out of office, a number of prominent scammers in the US are starting to get arrested, as well as a Teranos wannabe whose now on the run. Any fraudulent phone calls I’ve had recently were flagged up as fraud. So it looks like the law is starting to catch up.

But its a game of Whack-A-Mole for the authorities. As soon as they’ve shut down one outfit and gotten the word out to the public, the scammers have moved on to something new. Really the only solution is all of us to be cautious online, look out for one another and trying to stay safe.

And perhaps we need to re-discover the value of experts, as after all, alot of what these scammers are selling is the expertise many in the post-truth era have chosen to reject.

Katie Holmes tunnels out

It would seem that young Katey Holmes has finally succeeded in tunnelling out of the Scientology’s OSA (they’re the cult’s secret police) prison and sprinted into town. I was always wondering how long it would take a lady from a strict catholic upbringing to crack and make a break for it.

Then again, in Scientology terms what she did was perform a “disconnect” from Tom Cruise….Although in the process she’s likely become a “suppressive person” or at the very least a PTS (Potential Trouble Source), consequently the danger was the church would consider her thus “fair game” as they’ve done to previous critics of their cult (look at how John Sweeney of the beeb fared). Indeed John Sweeney has an article out here about what Katey Holmes can expect.

Now while I’m not usually the sort to go for Hollywood gossip it seems that she planned her runaway with a fair degree of precision (apparently the first Tom Cruise knew about it was when her divorce lawyer handed him the notice). She seems to have got a fairly good and quick settlement, keeping the kid, but that’s hardly surprising. I mean does Tom Cruise want her testifying about all the weird stuff he and his Thetan buddies get up to behind closed doors? I doubt it!

There’s a good collection of articles on Scientology in this website here.