Blockchain pioneers become main target of murderers and extortionists

When reading about the emerging cryptoworld and the new opportunities presented by blockchain technology, you may be enchanted by rags-to-riches stories with billions made overnight, or perhaps be horrified by scams, where the founders of fraudulent projects skip off to Tahiti with their investor’s money. However, it’s doubtful that the first thing that pops into your mind will be grizzly tales of extortion, kidnapping, and even murder. But for blockchain pioneers, falling victim to these horrific crimes is a very real risk that they must be wary about every day. 

The explosive profit potential of cryptocurrencies has attracted a myriad of extortionists, scammers, and outright criminals over the years since Bitcoin was first launched in January of 2009. Some developers have had their companies’ reputations damaged by such conmen, and some have ended up beaten, kidnapped, and even killed.

One business that found itself the target of such nefarious opportunists was a Singapore-based company called Skycoin, which is still dealing with the fallout from these attacks to this day. After taking the rather innocuous decision to hire a marketing company to do PR and improve their website, the project and its co-founder found themselves caught in a web of blackmail, deceit, and crime that most people would only encounter in a crime thriller directed by Quentin Tarantino.

Skycoin’s Mission and Products

Skycoin is a prominent crypto company, whose co-founder, Brandon Smietana, worked on the Bitcoin code along with Satoshi Nakamoto. The project was originally conceived as an answer to questions that Bitcoin and Ethereum could not solve. Skycoin develops hardware and software that help both companies and individuals harness the potential of blockchain technology, recover control of their information, and optimize and secure networks and data storage.

The company’s flagship products are Fiber, an infinitely scalable and highly customizable parallel P2P network architecture; CX, a multifunctional programming language specialized for developing blockchain applications; and Skyminer, equipment for running Skywire network nodes, as well as zero-configuration hardware and blockchain solutions for enterprise networks. 

Skycoin’s unique Obelisk consensus was designed as a low-energy, zero CO2 alternative to the Proof-of-Work (PoW) algorithm, which involves high electricity usage and wasteful overhead. Skycoin is also active in developing new telecommunication services for the next generation Web 3.0 internet, such as its virtual cloud and software defined networking (SDN) solutions. 

Dizzy with Success: ICO boom of 2017

At the launch of the project in 2012, The company’s cryptocurrency, SKY, was worth less than a penny. At the peak of the blockchain bubble at the end of 2017, SKY reached an ATH of $53.83 in just under 8 months, 5,000 times higher than its original price, while the project’s capitalization grew to $5 billion – a story that, perhaps, can only happen in the world of cryptocurrencies. Unfortunately, this dizzying success marked the starting point of a series of outrageous and sad events, as it attracted a number of ruthless conmen whose last concern was seeing Skycoin become the blockchain powerhouse it is today.

How Skycoin Fell Victim to Scammers and Opportunists 

On February 8, 2022, Skycoin Global Foundation Singapore filed a federal RICO lawsuit (Skycoin v. Stephens, 22-cv-00708, U.S. District Court, Northern District of Illinois, Chicago) against some former contractors and several other defendants who have been conducting a criminal campaign to tap into the company’s assets since in 2018. This has involved paying journalists and social media groups to defame Skycoin’s reputation, as well as blackmail, extortion, and kidnapping. 

The main defendants in the lawsuit are Bradford Stephens and Harrison Gevirtz, aka ‘HaRRo’, who is widely considered to be the king of the blackhat marketing criminal underworld and founder of the infamous blackhatworld.com website.

After Skycoin hired their company in early 2018 to promote the project and implement SEO optimization, its website began to be barraged with spam, which included links to pornographic blogs. Stephens requested $100,000 – $300,000 per month to put an end to these attacks, but on learning that it was the contractors themselves who were behind them, Skycoin refused.  At that point, the conspirators demanded $30 million in BTC and $1 million in cash, while threatening to keep SKY from being listed on leading exchanges if they weren’t paid. 

But it didn’t stop at just blackmail. In 2018, Smietana and his girlfriend were forcibly held in their Shanghai flat by kidnappers who tried to force Skycoin’s co-founder to give up the passwords to his computer, which contained source code and other valuable information. After being beaten and tortured for six hours, Smietana capitulated, and the attackers managed to steal about $139,000 in Bitcoin and $220,000 in Skycoin as a result. According to the lawsuit, it was Stephens and Gevirtz who organized this kidnapping.

Though the assailants were eventually arrested, convicted, and sentenced to prison, the masterminds were never punished. And they have yet to relent in their persecution of, Smietana, who still finds himself the object of social media attacks and smears, and has even received antisemitic insults, saying he is “a Jew who deserves to die.” 

Far From the Only Case

Smietana wasn’t the only blockchain pioneer to be victimized during the frenzy of the 2018 crypto craze. At peak of the ICO bubble, several Russians in Guanzhogh were murdered by thieves intent on stealing their Bitcoin. In 2019, the founder of the Indian exchange Bitjax.BTC was tortured to death by several extortionists. Tobiasz Niemiro, the founder of a Polish Bitcoin exchange called BitMarket, was found with a bullet in his head in the woods a few hours from Warsaw in the same year. And these cases are far from the only ones that have come to light in recent years.

Conclusion

The crimes listed above suggest that blockchain companies and executives need to take their security seriously. Though successful projects have the potential to bring them and their investors untold riches, they can also attract criminals who may inflict irreparable harm on their companies and persons. Experience has shown that some crypto entrepreneurs have even paid the ultimate price for their success.

In filing its lawsuit, Skycoin seeks to repair some of the damage inflicted by the scammers, restore its good name, and rid itself of the extortionists for good.