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