Dirty Secrets of Crypto with Matt Herrick & Joe Santaniello
We talk with Matt Herrick (co-founder of Deedcoin and Ledgerleap) and Joe Santaniello (OTC trader and founder of CPO Ventures). We dive into numerous shady things we’ve seen from the dark underbelly of crypto, is out (iTunes, Google Play, and Stitcher)!
What is Your Journey Into Crypto?
Joe’s crypto journey began back in late 2010 with video games when he learned how to turn his graphics card into a Bitcoin miner. He tried to explain the powers of this “Internet money”, but his government colleagues were skeptical and smirked. When Bitcoin prices blew up in 2015, people came out of the woodwork demanding over-the-counter trades, and Joe helped facilitated it.
As a broker, Joe spends most of his day on the phone, though only a few results in a real transaction. That’s because there are so many scams in the OTC market, which undermines the efforts of honest, competent brokers. Many brokers simply don’ t have the experience and wherewithal to facilitate transactions. Back then Joe and his peers created a program to verify OTC brokers as a trusted source for clients. Joe is now creating standards to improve the OTC brokerage market.
Matt got into crypto two years ago to deliver more value for his clients in real estate. He and his cofounder built a platform that automates real estate transactions and brings down commissions. They opted out of traditional equity fundraising. Rather, they got valuable mentoring from ex-regulators about their plans to do a traditional Initial Coin Offering. To launch a compliant coin offering, they would need to create a robust nation-wide brokerage network. It was a tall order, but they did it. The Deedcoin brokerage network now spans 163 cities in 50 states.
What Are the Dirty Stories in Crypto?
To call it a bubble where people are taking advantage of information gaps is an understatement. Because crypto is a new market that can be very lucrative, the scale and scope of scams are at epic levels. It’s a giant price gouging market.
There are companies charging $20K to create smart contracts while others bill $40K to write a whitepaper. Certain ICO listing sites charge 9 Bitcoins a month to list. Many startups clearly can’t afford it so some teams have to offer their tokens at a steep discount. There are advisors charging exorbitant fees to serve as a public face for the project. Yet, they don’t spend time providing valuable contributions to the team. Some projects sell their souls by offering various incentives to onboard these advisors.
Last year, Matt was at a conference sponsored by a scam artist. There are entire conferences where organizers are scammers. Many people are promising they can do something but they won’t deliver. The small minority of people who will deliver on their promises. It’s these people that should be your collaborator, mentors and professional contacts.
How to Beat Scammers?
Joe does large Bitcoin transactions that are often tranched and involves trusted counterparties. He thoroughly vets clients on both sides of transactions. But bad brokers lurk. Joe has even faced death threats from distressed customers in response to incompetent and dishonest brokers. People are getting tricked into loaning their Bitcoins without ever getting it back.
That’s why he wants to provide an ‘OTC concierge service’. For instance, if there’s a business history, that suggests the counterparty can be trusted in future transactions. Random counterparties would need to earn trust, especially if they have little Bitcoin transaction history. Joe wants to decentralize this vetting process at scale — even gamify it. People can become better brokers. The list will have a beta launch in the next 60–90 days.
Joe’s bad list has roughly 5,600 people, mostly scammer types. This list will every honest entrepreneur a shot at jumping into crypto without being duped.
Other Tips to Avoid Scam Artists?
In no particular order:
- avoid super expensive conferences (dog and pony shows)
- go to hackathons or events where people are actually building something
- avoid people who tout how much money they’ve raised or how they’re going to change the world with just a whitepaper
- Don’t jump on an initial coin offering because your friends tell you
- Do your diligence. E.g. read the whitepaper at a minimum
- Avoid the founder’s syndrome. E.g. someone bragging they founded a company without a running track record or history of launching viable business models
Joe Santaniellos’s telegram channel: https://t.me/cryptohights
Joe’s LinkedIn: linkedin.com/in/joejsantaniello
Legit people in crypto: bitcoindisney.sched.com/directory/attendees
Hosted by: Jeff Peterson, Alain Leon
Show Writer: Dang Du