While most focus with regards to criminal activity in the crypto world remains on its use in illicit trafficking and money laundering, there is another issue that goes largely unnoticed: attacks on legitimate blockchain companies by nefarious opportunists, who see the big and seemingly easy money in the crypto world as low-hanging fruit, ripe for the taking.
How Extortionists Attack Legitimate Blockchain Companies
One notable victim of such scammers has been a Singapore-based blockchain company called Skycoin, which develops hardware and software that helps companies optimize and secure their networks and data storage on blockchain, and aids individuals in taking back control of their personal information.
In January of 2018, Skycoin hired a marketing company called Smolder LLC to revamp its website, perform SEO, and generate positive publicity. Shortly thereafter, this team led by Smolder’s co-founder, Bradford Stephens, announced they had uncovered a scheme by an unknown third party to damage Skycoin’s reputation by linking pornographic blogs and other harmful spam to its website. Stephen’s requested additional money to ward of the attacks, and Skycoin provided the funds.
It later emerged that the people behind the attacks were none other than the contractors themselves.
Stephen’s first task was to go to a CoinAgenda conference in Las Vegas to rub shoulders with some blockchain bigwigs. While there, he threw a VIP party at his own initiative, which was only attended by his friends. On his return, he presented Skycoin with a staggering bill for expenses amounting to $225,000, which the company refused to reimburse.
A month later, Stephens and his business partner, Harrison Gevirtz, met with Skycoin founder Brandon Smietana in Shanghai, where the pair introduced him to a ‘power marketer’ in a video call. There, the three said they wanted to invest $50 million in cash in Skycoin, but first Skycoin needed to pay Smolder LLC $30 million in BTC to prove that the company was serious about working with their marketing team.
When Brandon declined, the meeting ended in acrimony, with the ‘influential person’ promising to do everything in his power to destroy the Skycoin project.
When Skycoin’s advisory board found out about this, half its members threatened to quit unless Stephens left the company. Consequently, Stephens resigned less than two months after being contracted, on February 24, 2018.
Later, knowing that Skycoin was to be added to Bittrex, Stephens told Smietana he would provide the exchange with damaging information that would prevent the listing unless his team was paid $30,000,000 in Bitcoin and 1,000,000 USD.
Smietana refused to submit to the blackmail, and Stephens did, in fact, provide Bittrex with slanderous and false information that kept Skycoin from being listed on the exchange.
But this wasn’t the end.
In June of 2020, this group hatched another scheme to extort money from Skycoin. The conspirators threatened to get the company’s token delisted from Binance and trash its reputation if it refused to pay them 50 BTC.
The company refused again.
The group subsequently paid other individuals to make false complaints against Skycoin, including allegations that Smietana had engaged in drug use and criminal activities. The extortionists were successful, and Skycoin was delisted from Binance on November 5, 2021.
On February 8, 2022, Skycoin Global Foundation Singapore filed a federal RICO lawsuit (Skycoin v. Stephens, 22-cv-00708) against the former contractors, as well as a number of other parties, for actions that occurred between 2018 and 2022.
Skycoin hopes this legal action will rid it of these extortionists once and for all and allow it to continue with its important work building blockchain for the future in peace.