👁️ Men Explain Zizian Decision Theory To Me (And Crypto Crime Galore)
Teenage Rugpullers, Trump's Crypto Empire, Richard Heart charges dismissed, fake authors, fake science, it's all a good time.
Welcome to your weekly Dark Markets news roundup.
If you missed it, take a look at Sunday’s draft book excerpt, on the techno-feudalist weaponization of projected futures to seize power in the present. It’s relevant to some of today’s news.
One other small bit of housekeeping: I anticipate some added bandwidth over the next month that I’d like to spend producing some extra longer-form pieces. To help me plan those pieces, I would love your feedback on what newsletter topics you enjoy most. A quick vote will be very helpful.
My Interview with Recluse on the Zizians, Peter Thiel, and Mendicant Monks
I was honored to be invited back to The Farm podcast to interview Recluse, a.k.a. Steven Snider, who has a new book out about the Ziz killings. It’s a good balance of a concise overview of events so far, then some interesting historical parallels with past extremist movements in uncertain times. You can pick the book up on Amazon, and listen to the interview below.
The conversation with Steven was extremely fun, and I learned some very interesting stuff from him, including that Peter Thiel has directly funded Leverage Research, a Rationalist splinter group whose unhinged psychological experiments resembled the activities of MKUltra way, way too closely for comfort.
Full disclosure: I don’t think we really cracked the topic of Zizian decision theory. Ah well.
Replacing Science With Silicon Valley
Erik Hoel has a truly vital new post about the deeply corrupt logic behind the Trump administration’s (illegal) cuts of funding for American scientific and medical research. The Peter Thiel-Rationalist-Effective Accelerationist logic subtly underpinning the cuts is that the private sector is where real progress happens, not in the stodgy halls of public research institutes … but this is, of course, a wildly naive viewpoint for stupid babies.
How Memecoins Enable Money Laundering
The Daily Mail has a new report about “street level” criminal gangs in the U.K. creating memecoin pump-and-dumps as a tool for money laundering. Some investigators in the crypto world have suspected that North Korea’s Lazarus Group was using this or a similar method to launder some of its hacking proceeds. In a very simplified form, the steps are something like:
Launch a tiny token with limited liquidity
Buy a bunch of the token with dirty money on-chain, probably through a permissionless decentralized exchange like Uniswap. This will pump the token price.
Sell your token, maybe even into liquidity you are providing yourself. This will cost you money, unless you get lucky and you’ve actually attracted some outside bids.
Now your money looks clean, if you managed the details right? Maybe you could even get it off a centralized exchange into Tradfi banking dollars.
GOOD LUCK!
DOJ Considers Changing Bankruptcy Recovery for Crypto
The Trump DOJ has announced it will explore changing the rules so that victims who lose crypto in bankruptcies can get in-kind repayment. That would avoid situations like what happened with FTX, which was able to tout a technical “full recovery” because repayment was in dollars, while crypto values had rebounded.
I’m not going to call this “good news,” because it’s a very thorny subject and changing the rules for crypto alone wouldn’t make total sense - and there can be no healthy fruit of a poison Trumpy tree. But it is in response to the shameless distortions of the Democratic wing of our ruling elite, who went out of their way to cheer about how well Sam Bankman-Fried’s gambling with customer money worked out. It’s not exactly the ideal of partisan counterbalancing, but it’s some rough approximation, I guess.
America’s Fakest Author
This is a really fun video essay about Robert Stanek from Tor’s Cabinet of Curiosities. Stanek was a self-published author active in the 2000s who appears to have astroturfed and sockpuppeted an entire writing career for himself, complete with forums where he personally cosplayed as fake fans discussing how his zero-selling books would be turned into movies. In the most enthralling cases of fraud, it’s the delusion that really fascinates, and the delusion here is strong.
I was a Teenage Rugpuller
Wired reports that Dylan Kerler, one of the cofounders of hugely successful scam-industrializing shitcoin machine Pump.fun, may have done some old-fashioned shitcoining of his own back in 2017. The scale was kind of irrelevant - maybe $75,000 - and Kerler is otherwise not a public or significant figure in crypto. It’s an interesting find, but those early rugpulls have nothing on the damage caused by Pump.fun itself, an unmitigated cancer that should be burned with fire.
SEC Case Against Richard Heart Dismissed
In one of the more depressing developments in the ongoing Crime is Legal era, a court has dismissed securities fraud and embezzlement charges filed in 2023 against Richard Heart, aka Richard Scheuler, founder of Hex and Pulsechain. The dismissal appears to be on jurisdictional grounds, with an initial ruling asking the SEC to amend its complaint to establish jurisdiction. This shouldn’t have been hard - the SEC can always find a victim in the SDNY - but the new Trumpy version of the agency declined to do so.
This is the reality of the Trump admin’s new “openness” on crypto - they’ve dropped charges against real companies like Coinbase and Kraken, but they’re also letting operators like Heart walk free. Initial charges, which I summarized here in 2023, included that Heart and cooperators recycled invested funds to inflate the perceived amount of funds raised. The design of his various project have also been so consistently, comically bad that they were clearly never intended to succeed.
Trump’s Corrupt Crypto Empire
Molly White at Citation Needed has a very thorough rundown of Donald Trump and family’s array of crypto-adjecent scams projects, from the unsellable World Liberty Financial to the nonsensical Truth.Fi, from the crass exploitation of the $trump memecoin to an upcoming on-chain game clearly ripping off Monopoly.
Among other depressingly shitty takeaways, these projects have been the channel for alleged influence-peddling by an array of figures known and unknown - but with specific speculation tied to Movement Labs and Tron’s Justin Sun. Buying tokens from any of these projects pumps their price in a way that benefits Trump, and in some cases goes more or less directly into his pocket.
Hip Hop and Punk Rock
Noise Protocol, a music newsletter run by a friend, has a new post about the overlap and mutual influence of Hip Hop and Punk. It’s a topic near and dear to my heart, but I’m Old and Uncool, and some of the stuff discussed in the piece is New and Hip - so if you’re looking for new music in that vein, you might get some good tips! I’m also told writer Anthony Mandelli has had some interest in a book growing out of the essay, so keep an eye out!
I missed the vote window, but put me down for crypto fraud. Though really any financial fraud is interesting to me. "Crypto fraud" is a bit of a misnomer. Crypto-adjacent fraud, though, is everywhere. Crypto's roots are in transparency, any fraud is Trad Fi. It's complicated because cryptography is secrecy. But it's just to make the ledger censorship resistant, and the ledger is transparency. But to get on and off the ledger takes Trad Fi, which is again, back to secrecy. This confusion simply abets the fraud. But as long as fiat is king, and a transparent crypto is not (non-transparent crypto exists, but that's a later invention, and neither are kings), then fraud will be ripe.
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“to interview Recluse”
Trying to reconcile this with the title “Men explain…” As “Recluse” seems like a single person. The title alone suggested that someone thought DZM was a woman and tried to mansplain a topic to him. I imagined he went on some forum for Zizian stuff, had a non-gendered alias, and started a conversation in some way that seemed pro-feminist. Then, some sexist members of the forum started to talk down to him, thinking that anyone identifying as feminist activates their permanent system prompt to ELIF (Explain Like I'm Female).
Perhaps the meaning behind the title is in the interview, but no link to transcript, so I'll never know.
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How Memecoins Enable Money Laundering
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You have to wonder if NFTs ever really died, or were simply never alive for anything but money laundering. Memecoins became easier to mint with pump.fun clones. Further, their inherent fungibility allows for more wallets/obfuscation. It would explain how NFTs have gone from the spotlight and memecoins remain, though neither have shown much overt utility.
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I’m not going to call this “good news,” because it’s a very thorny subject and changing the rules for crypto alone wouldn’t make total sense - and there can be no healthy fruit of a poison Trumpy tree.
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I'm a proponent of in-kind repayments, and I agree it makes sense to let people choose the original asset type, and not just for crypto (stocks too, etc.), if they want. It smacks too much of "we decide what your poor plebes will get, because you are poor because you are stupid, not all because of some birth lottery." Which is my objection to accredited-only investing. However, lawyers will take their cut regardless, so this might not tangibly make that much difference. If FTX users could get in kind payback, would they get full reimbursement? No. Also, who exactly will get to decide, and how exactly? Do I suspect something simple and non-monkey-paw? No. Do I suspect something like a case of fraud against a Trump-backed memecoin leads to a decision that is against the wishes of at least some of the affected? Yes.
For example, let's say that 30% of the coins are with Trump cronies, 30% are with foreign nationals who just needed a vehicle to bribe slightly discretely, 30% are with once-deluded fans of Trump, and 10% are lost in a cardboard box at Mar-a-Lago. After a bit of jurisdiction shopping by the defense, the case lands with a judge appointed by Trump himself. The prosecution asks the judge to recuse himself. The judge says “do you expect Supreme Court judges appointed by Trump to recuse themselves when deciding on matters that benefit specifically, and very likely more than anyone else, Trump?” The prosecution considers the fact that the Supreme Court justices get many perks, to put it mildly, beyond their standard pay and then falls into an extreme depression over the word “expect.” The judge then decides the affected parties are/were all the aforementioned bag holders, and thus can decide, 1 coin per vote, according to most votes, how to reimburse (after copious lawyer fees, of course). Surprisingly, the vote is 2 to 1 to give now worthless memecoins. Yay!
I personally would like DZM to expand more on his reservations, and see if they are similar to mine.
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It’s an interesting find, but those early rugpulls have nothing on the damage caused by Pump.fun itself, an unmitigated cancer that should be burned with fire.
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Strong take. I think it is just a tool that does what it says on the label. If Pump.fun is doing something behind the scenes that I don't know about, then I want to know about it. When I went looking years ago, there were basically no no-code options for token creation prior to this. And the one I found later proved to be problematic. The resulting code doesn't pass all token checkers, and I still don't know why. I think better token creators should exist than pump.fun, yes. Ones that very simply create tokens that pass all token checkers (which I am not sure is true with pump.fun) and perhaps lets you list the token on their site. The liquidity thing being maybe a nice to have, unless it's necessary just to keep down spam. But unless they are doing something fraudulent, and the problem more than just making it easier for gamblers to gamble, I'm not sure I agree. Again, tools like these do make it easier for money laundering, but they do also have legitimate cases too. I think DZM realizes there is nuance to the tech behind Tornado, and this seems similar.
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but the new Trumpy version of the agency declined to do so.
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Saying the obvious here, but just in case it isn't. If the SEC is investigating/litigating anything, then it will need employees to do so. If they are not investigating/litigating, there is more excuse to get rid of them. If they are gone, it will be harder to investigate/litigate Trump or his cronies.
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Molly White at Citation Needed
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Molly White is awesome. Granted, her everything-crypto-is-scam tone is hard to reconcile. But I do enjoy what I've read from her. It's not like I need, or even like, both-sides-ism. And a ton of crypto /adjacent/ behavior is indeed scammy. She's a bit like the Ed Zitron of crypto. You're not going to get nuance, but it can be fun and informative to read.