Blackmailers extort Singapore-based blockchain company
While most of the focus regarding criminal activity in the crypto world remains on its use in illicit trade and money laundering, there is another problem that goes largely unnoticed: attacks on legitimate blockchain companies by malicious opportunists, who see the big and seemingly easy money in the crypto world like low-hanging fruit, ripe for the taking.
How Extortionists Attack Legitimate Blockchain Companies
A notable victim of such fraudsters has been a Singapore-based blockchain company called Skycoin, which develops hardware and software that help businesses optimize and secure their networks and data storage on the blockchain, helping individuals take back control of their personal information.
In January 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 that they had uncovered a scheme by an unknown third party to damage Skycoin’s reputation by linking pornographic blogs and other malicious spam to the site. Stephen’s requested additional funds to fend off 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 organized a VIP party on his own initiative, attended only by his friends. When he returned, he presented Skycoin with a staggering $225,000 bill for expenses, which the company refused to reimburse.
A month later, Stephens and his business partner, Harrison Gevirtz, met 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 into Skycoin, but first Skycoin had to pay Smolder LLC $30 million in BTC to prove the company was serious about working with their marketing team.
When Brandon declined, the meeting ended in acrimony, with the “influential person” vowing to do everything in his power to destroy the Skycoin project.
When Skycoin’s advisory board found out about this, half of 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 going to be added to Bittrex, Stephens told Smietana that 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 actually provided Bittrex with defamatory and false information that prevented Skycoin from being listed on the exchange.
But this was not the end.
In June 2020, this group developed a new scheme to squeeze money out of Skycoin. The conspirators threatened to have the company’s token removed from Binance and tarnish its reputation if it refused to pay them 50 BTC.
The company again refused.
The group then paid other individuals to make false complaints against Skycoin, including allegations that Smietana had engaged in drug use and criminal activities. The blackmailers were successful and Skycoin was delisted from Binance on November 5, 2021.
Skycoin’s lawsuit
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 get rid of these extortionists once and for all and allow it to continue its important work of building blockchain for the future in peace.
