Kanye West, who legally changed his name to Yee a few years ago but is also known by the nicknames Yeezy, Yeezus, Louis Vuitton, Don and St. Pablo, announced earlier this month on Twitter, which legally changed its name to X but is also known by the nicknames This Hell Side, The Bird Side and the Everything app that he had rejected a $2,000,000 offer to scam his followers with a fraudulent crypto promotion. He included in his tweet a screenshot showing how the scam
would work. He would receive an upfront payment of $750,000 to tweet about a fake Yi currency. He would have to keep that tweet live for 8 hours, after which he could delete it, claim his account had been hacked, and say that he didn't write the post. He would then receive an additional $1.25 million payout. The message he shared went on to explain that the company asking you to do this will be scamming the public out of 10s of millions of dollars. Now. Kanye didn't agree to this.
He has a reputation to preserve. He's a rapper after all, not a politician. He instead went on a bit of a Nazi rant before deleting his Everything app account. About a week later, the Argentinian president Havier Malay promoted a crypto token on Twitter too. This one was called Libra and it started trading just minutes before his tweet. His tweet said that the project would be dedicated to encouraging the growth of the Argentine economy by funding small Argentine businesses and
start-ups. Over the next hour, more than 44,000 wallet addresses bought the token. The price spiked from around $0.22 to more than $5, pushing the token's overall market value to four and a half billion dollars before it collapsed in value. As insiders began dumping their tokens, concern quickly spread in Argentina that Malay's Everything app account had been
hacked. A few hours later, he deleted his tweet saying that he had not been aware of the fine details of the project, and after becoming aware of it, he decided to stop spreading the word. By the time his tweet was deleted, the token had already fallen 97% from its peak value and buyers were accusing the coins. Creators of a rug pull a type of pump and dump scheme where the promoters draw in buyers only to stop trading activity and make
off. With the money raised from sales on chain, analysts pinned the price collapse on insiders, cashing out almost $100 million malaise. Political opponents filed dozens of lawsuits accusing him of ethics violations, while the main left wing Peronist opposition bloc said that they would launch impeachment proceedings and accused him of participation in a crypto fraud. On Monday, Milay surprisingly retweeted a guide on how to purchase Libra tokens, causing the price to nearly double in
minutes. Shortly afterwards, that retweet was deleted too. In a television interview later that Monday, Milay denied any wrongdoing, claiming that he didn't promote it, he just shared it. He said that he's a techno optimist and that the coin was proposed to him as an instrument to help fund Argentine Project. He went on to say it's true that in trying to help out those Argentines, I took a slap in the face.
He claimed that neither the state lost money nor did Argentinians, saying that the vast majority of investors were American and Chinese. Argentine lawyers have filed fraud complaints against Malay, and a judge will soon determine if the president should face criminal fraud charges.
According to Reuters, 8 crypto wallets withdrew roughly $99 million from the tokens liquidity pool, and analysis shows that the addresses that withdrew this money are closely related to the Libra Creator team, as those addresses were funded directly from the Libra Token Creator account.
So far, there's no evidence that Malay directly profited from the meme coin, but in a best case scenario, the scandal still shows that he was foolish enough to allow a 26 year old crypto bro to make $100 million off his name. One of the biggest scandals to come out from the Libra Rogue poll is that blockchain investigators have shown that the same wallets involved in the Libra scandal were also involved in the launch of Melania Trump's meme coin. OK, so first up, what is a meme coin?
Well, the first cryptocurrency, Bitcoin, was unveiled about 16 years ago, and it was supposed to be a new technology for making online payments that didn't rely on the existing financial system. With Bitcoin, the Ledger showing ownership would be decentralized and payments could be made pseudonymously. That never really worked out. For a variety of reasons, people don't use Bitcoin in the real world for much of anything other than to gamble on its price.
They do use stable coins, an idea that came later for transactions, and these are usually pegged to the US dollar and are supposed to be backed by real dollars, but they avoid the banking system so are quite useful for illegal transactions. People don't use them for buying a book on Amazon, however, as they're still significantly less convenient than using a debit or
credit card. Almost as soon as Bitcoin was created, people began making fun of it by coming up with joke coins like Dogecoin, which was probably the first meme coin, or at least the first one to get any traction. There was no earnest promise that Dogecoin would be the future of finance. It was just a cryptocurrency whose logo was a picture of a dog that had become a bit of an Internet joke or meme in 2013. Its creators didn't expect
anyone to take it seriously. The idea was that it was a bit funny, and if you think it's funny, you can buy it, just like Bitcoin. Additionally, if other people find it funny, maybe they'll buy it too and the price will go up. It's important to note that none of these meme coins are actually funny. I don't think that anyone other than maybe Elon Musk has ever actually laughed at one.
People just come up with something that could theoretically be funny and hope that someone else will agree that someone else might find it funny and thus might actually buy it it. It's sort of like the Greater Fool theory, but for bad jokes. If you Google around, you'll find crypto influencers, usually on their own podcasts, having earnest conversations about how these things could be considered funny or culturally important and thus take on some sort of
value. I wouldn't recommend listening to too many of these conversations as you'll quickly lose the will to live. Anyhow. This idea of meme coins has been around for quite a while. It got a bit big during the pandemic, along with NFTS and the idea of the electric pickup truck. Over the last year or so, it picked up again as the crypto industry became increasingly cynical and decided that if there was no claim of actual value or use case for a coin, it
couldn't be regulated. The feeling was that the issuer couldn't be sued for fraud either, if they could claim that it it was all a joke. And that's how bad jokes became weaponized by fraudsters. Over the last few years, there's been an explosion in the number of new meme coins, somewhat names like Fartcoin, others backed by zealous celebrities like the Hawk to a Girl. Many were just versions of Dogecoin, but with a slightly different name, but always the
same dog. The goal with almost all of these tokens is to get people on the Internet to think that they are funny, or at least to think that other people might think that the coin is funny and invest in it. Usually there's a group of insiders who launch the coin, own almost all of them, and try to promote it online with the goal of selling them to the public and making money. Of course, whatever money they make, their audience loses.
It used to require some basic coding skills to come up with a new cryptocurrency, but today there are websites like Pump dot Fun where you can type in a token name, a ticker symbol, and upload an image which you're supposed to own the rights to. But no one who does this actually does, and you can then
launch your own meme coin. Then you have to go on Twitter and pretend that it's funny or interesting and hope that someone will buy it. Looking at the website, these things are mostly Elon Musk, dog or Trump themed with a few Havier Malay chainsaw images thrown into the mix. To be clear, these people are greedy, not creative. Now. For a long time, politicians around the world kept their distance from the crypto
industry. There were a few exceptions, like El Salvador's failed experiment in making Bitcoin legal tender and Rishi Sunak's plans for Auk. Government backed NFTI think he was trying to appeal to a youth audience. Donald Trump initially called all crypto a scam. Last year, the crypto industry made a big coordinated effort to donate money to politicians on both the left and on the right to win influence within government, and this was really successful.
I made a video about it a few months ago. Trump had dipped his toes in crypto already by selling NFTS, which are basically hyperlinks to bad art. He did this a few years ago, but made big commitments to the crypto industry at a Bitcoin conference in the run up to the election. Around this time last year, the Trump family backed AD 5 company, a type of crypto trading platform called World Liberty Financial, which he and his sons promoted quite actively online.
While the Son ones are allegedly very knowledgeable about crypto, they partnered with a guy called Chase Harrow who uses the alias the Dirtbag of the Internet to launch their platform. I guess you hire the best people that you can find. Here's a clip of Chase, or Mr. Bag as I prefer to call him, explaining crypto on a now deleted podcast episode back in 2018. This space is run by a bunch of
middle-aged men. You know like the third mid mid 30 men who who understand the power of social media and you can literally sell shit in a can wrapped in piss covered in human skin for a billion dollars if the story's right. Because people will buy. It and that is what is going on in the crypto space. Now Chase is not really being truthful in that clip. You don't actually get any of the revolting items that he mentioned.
If you hand over a billion dollars, you just get your account number recorded in an overly complicated online database showing that you paid him a billion dollars.
If you actually wanted the disgusting can that Mister Bag described, there are cheaper and more efficient ways of acquiring 1. So along with the launch of World Liberty Financial, the business, the Trump family and the dirtbag of the Internet sold a World Liberty coin, which, while not a meme coin, didn't offer investors very much. It was described at the time as a bunch of nonsense and a
terrible investment opportunity. While investors could buy this coin, they couldn't sell it. It didn't guarantee any share in the profits of the World Liberty Financial business either, and 75% of the proceeds went straight to the Trump family. The coin launch didn't go particularly well because of the terrible investment terms. It's hard to understand why crypto investors would buy a coin that can't be resold.
But then Justin Son, the guy in the oddly fitting suit here, stepped in and bought $75 million worth of these coins, which, according to friend of the show Zeke Fox, generated a payout of $56,000,000 to the Trump's. It's hard to know what Justin saw in this coin, but Zach Folkman, one of the founders at World Liberty, said that Justin saw that regardless of the outcome, this project is a monumental move forward for the entire crypto community.
So maybe that's what he saw. Now, Justin is not necessarily known for his careful spending. Two months ago, he spent $6.2 million on a banana, and he likely also paid for that suit. If you're wondering where his massive fruit budget came from, he is the founder of a crypto firm called Tron, and he's facing charges of fraud and market manipulation from the SEC. Some have argued that Sun made this World Liberty financial token investment to influence
the outcome of this lawsuit. When asked about the conflict of interest, Trump's spokeswoman told the BBC that unlike most politicians, President Trump didn't get into politics for profit. He's fighting because he loves the people of this country and wants to make America great
again. I'll allow you, the viewer, to decide what to make of this, but hopefully you can see how a politician selling worthless tokens for 10s of millions of dollars to people who are facing criminal charges could open them up to accusations of corruption. World Liberty Financial was announced two months before the US election and raised at least $300 million, according to Reuters. The cost of setting up a crypto company like this is negligible.
You can hire a dirtbike to advise you and 75% of the money then goes to the Trump family. The World Liberty Financial token is not considered a meme coin though, as it gives investors a vote on decisions about product features and marketing, for whatever that's worth. The crypto industry, you might be surprised to hear, are not uniformly delighted with Trump's forays into their space.
Many had hoped that he would support the coins that they already owned rather than releasing his own ones and competing with them. They hope that he might bring their industry legitimacy, but now worried that the Trump family's coins could instead harm the industry as they just look like money grabs and the fact that they've tanked in value further discredits the industry. On top of this, some worry that his involvement will make crypto partisan and tied to political affiliation.
Meme coins, as I said earlier, are a little bit different to utility tokens. Not that there's much utility to many of these tokens, but a meme coin makes no promise of usefulness. They're just a new way for celebrities to monetize their brands and a form of gambling which is entirely rigged in favour of whoever launched the coin or whichever influencers they work with to publicize the launch. The issuer of the coin can make
money in a few ways. The first is just by selling these tokens that cost nothing to create to investors. The second is from trading as the creators of the meme coin often receive a share of the trading fees from the exchange they're listed on. Often when a coin is launched, the team will recruit crypto influencers, which they call Kols, which stands for key Opinion leaders, who will be allocated a share of the coins, often for free.
And their job is to build hype around the launch by tweeting about the coin or discussing it on their ghastly podcasts. Then when the coin goes live, they are able to dump them into the price spike. To call all of this gambling would be to give gambling a bad name as at least with games of chance, players have a chance of winning.
In a recent interview on the Coffeezilla YouTube channel, Hayden Davis, the man behind the Libra token launch and also the Melania Trump meme coin, described how retail have no
chance of winning. To defend his actions in withdrawing $100 million from the Libra liquidity pool, he settled on the idea during the interview that he was like a a bank owner who decided to rob his own bank to prevent other people from robbing it. If you get a chance, you should watch that interview at the admissions in it are quite wild. I'll put a link to it in the description.
It used to be that Stephen had to investigate online scams, but now the perpetrator seemed to come to him to confess. They're not confessing, they're bragging. There's a long list of celebrities who've launched meme coins. I've been involved in promoting them. I googled for a list of them, but rather than read it out and get sued, I'll allow you to Google it for yourself. I haven't heard of most of them, but the ones I did know I wouldn't consider at all
respectable. And that's really the whole problem for people like Havior Malay or any other politician who might be considering getting involved in this space. You might be able to convince yourself that you're experimenting in in a new field of finance, and that if people lose money, it's their own fault.
But it takes a lifetime to build a good reputation and just moments to destroy it. If you don't understand how something works, or if the people you're dealing with don't seem trustworthy, you probably shouldn't lend your name to it. Trump didn't just issue the World Liberty Financial token days before his inauguration, he launched his own meme coin too, which spiked in value and then crater, just like the token
Malay promoted did too. A big difference is that Trump clearly profited from this token, as 80% of the Trump token supply is owned by Fight Fight Fight and CIC Digital, an affiliate of the Trump Organization. Reports show that at least fifty of the largest investors in the coin, who received allocations before the coin was hyped, made profits in excess of $10 million each, while 200,000 crypto wallets, most with small holdings, lost money on the coin. This is just the way these
things work. On top of this, the creators of the Trump meme coin receive a share of the trading fees from the exchange on which it was listed, which, according to Reuters, came to between $86 million and $100 million in trading fees in January alone. On Inauguration Day, Melania Trump announced that she was releasing her own Hamburglar themed meme coin. Both of these Trump family linked coins are down about 80% from their launch day highs.
Hayden Davis, the 26 year old crypto developer who helped launch the Libra token, admitted that he was also involved in the launch of the Melania meme coin. He made some claims in the Coffee Zilla interview that there had been a private event in Washington, DC, too, where people were given special access to buying the Trump meme coin. Before it's launch, it's difficult to know if any of that is true.
In recent years, a lot of the crypto hype has been coming from Silicon Valley VC firms whose websites tell you that crypto is so much more than a financial innovation. It's a social, cultural and technological innovation too. If all of these tokens are useless, why are VC so excited about them? My friend James Johnny argued in a video two years ago that VC firms used to invest in start up firms where most fail but some succeed and make a lot of money.
He pointed out that this process can take years, in some cases decades, before they finally get to cash out with crypto. The VCs worked out that they can invest in the start up stage of crypto or Web 3 projects, hyped them up by talking about their huge potential, and cash out in weeks by dumping the tokens on retail as soon as they're made publicly available. This is all unregulated, and despite all of the claims of innovation, almost none of the projects ever come to anything.
The VCs then get to boast about how much money they made on their podcasts. Zeke Fox points out in his book Number Go Up that crypto has been around for 16 years now, and despite all of the claims that it's a technological breakthrough equivalent to the Internet, no real use case has been found for it other than gambling, illegal activity and monkey jpegs masquerading as art.
The Internet, on the other hand, first became available to the public in 1993. Sixteen years later, we had Amazon, YouTube, Wikipedia, Spotify, online banking and brokerage social networks, and we're on the iPhone three. If crypto is going to be as useful as the Internet, it's a bit surprising that so few real use cases have been found for it
over the last 16 years. Despite people telling you that meme coins are just fun or gambling, that's not at all accurate as at least if you go to a casino you know what the odds are and you might get a free drink. Meme coins are set up where the people hyping the projects have all of the coins and when retail come in to buy them they are dumped. You have no chance of winning unless you are allocated tokens before the official launch.
A few months ago, the Hoktua girl got all sorts of abuse for launching a meme coin for her audience, lost all of their money, and as rotten as what she did was, the only difference between her meme coin and all of the others is that there was an actual meme at the heart of it. To be clear, I'm not saying that what she did was acceptable. She should be condemned. Her behaviour was entirely presidential.
One of the side scandals of the Malay linked meme coin was that a well known crypto influencer and pizza reviewer bought in with his own money and lost $5,000,000. He then complained and seems to have been reimbursed by Hayden, the guy who pulled $100 million out. If you invest though, don't waste your time complaining as
you won't be reimbursed. I would argue that one of the reasons crypto got so out of control over the last few years where Ponzi schemes were being run in full public view with no repercussions is that the SEC were asleep at the wheel. Where Gary Gensler watched all of this madness and felt it made sense to wait until new laws were passed for crypto. Amusingly, the crypto industry felt that he was way too hard on
them. So now pro crypto executives have been nominated to lead both the SEC and the Commerce Department. David Sacks, AVC investor and podcaster, has been appointed as the crypto Czar, whatever that is. I'm not really sure that the US government should be handing out Russian royal titles anyhow, but this is the world we live in. Reign of terror against crypto
is over. A big problem with political leaders launching crypto tokens is not only does it look like they're scamming the public, but it also presents massive conflicts of interest. Right now, Trump's new appointees at the SEC are supposed to be working out what kind of rules should be applied to crypto currencies. It seems somewhat unlikely that they'll come up with rules that
make Trump's meme coins illegal. You would hope that they will formulate rules based on what they think best protects investors, rather than which cryptocurrency projects various politicians are already involved in. And I guess we'll have to wait and see how that works out. In researching this video, I was surprised by how little coverage these scandals are getting in the mainstream press.
It's possible that journalists view this as a small scale problem and not worth their time, or that they don't want to dig into it because crypto sounds more complicated and high tech than it actually is. I did a search to see how wealthy notorious criminals from the past became. Al Capone was possibly worth as much as $100 million. The the Cray brothers made about $2,000,000 in the 1960s, which would be worth around $18 million today.
Whitey Bulger is estimated to have made around $30 million before finding himself number one on the FBI's most wanted list. Al Capone managed over 1000 employees and killed 200 people to make the kind of money that was pulled out of the Libra token in just one day. The scale of crypto fraud is huge and because of their massive political donations these people now have
representation in government. Hayden Davis, the Co creator of Libra is alleged to have bragged in text messages that he bought influence over Havior Malay by sending money to his sister. I've no way of knowing if this is true or not as this guy's not exactly trustworthy. If it was true, Davis would possibly be called to account under the Foreign Corrupt Practices Act, which prohibits companies and individuals from bribing foreign government officials to obtain or retain
business. That act, unfortunately, was suspended a few weeks ago by the US government in the name of economic competitiveness. So he's probably OK. Cryptogate, which is what the press in Argentina are calling the Libra token scandal, represents the first big scandal of Malay's presidency. As I said earlier, there's no evidence that Malay or his family profited from this token. He was quite likely tricked and didn't understand how meme coins
work. I made two videos about Malay 1 before his election and a second reporting on his first year in office. He's made remarkable progress so far, but my last video concluded that the most difficult days lie ahead for Argentina. And the Argentinian people need to have faith in Malay if they're going to stick with the path that he has chosen, which may be the best plan Argentina has had in decades but involves extreme austerity.
Malay rose to prominence as an iconoclast who said that he could tame Argentina's sky high inflation and eliminate corruption among the political elite. This scandal damages Malay's image both at home and amongst foreign investors at a critical time when the Argentine government is hoping to ease currency controls and negotiate
alone with the IMF. In my opinion, it's a mistake for any politician to get involved in cryptocurrency schemes which have a 16 year history of promising innovation without delivering anything useful. You can't reasonably expect to build an economy on nonsense like this. You would hope that our elected officials could meet the same moral standards that we've grown accustomed to expect from Kanye West. Oh wait, hold on. It seems that Kanye West might
now be launching his own coin. Look, I don't know what to tell you. Maybe in the future we can all print our own currencies and we'll all be rich without working. Thanks for tuning into this week's podcast, with particular thanks to my supporters on Patreon whose support makes these podcasts possible. If you'd like to support the channel while receiving next to nothing in return, you can do so by clicking on the link in the show notes. Have a great week and talk to you again soon. Bye.