Molly White's Citation Needed - Issue 77 – Whenever presidents get involved, if they become angry, you don't want to be there

Episode Date: February 19, 2025

A major crypto scandal tarnishes the reputation of Solana bigwigs, crypto influencers, and Argentine President Javier Milei. “This is FTX type of shit,” said a crypto founder confronting Meteora��s Ben Chow over alleged insider trading. Originally published on February 18, 2025.

I'm Molly White, and you're listening to the audio feed for the citation-needed newsletter. You can see the text version of the newsletter online at citation-needed.news. Issue 77. Whenever presidents get involved, if they become angry, you don't want to be there. A major crypto scandal tarnishes the reputations of Solana bigwigs, crypto-influencers, and Argentine president Javier Malé. This issue was originally published on February 18, 2025. In the wake of President Trump's unprecedented decision to launch a meme coin on January 17, in which most people lost money, as I recently helped the New York Times report,

other governments and government figures are jumping on board and to even more catastrophic results. The first country to seemingly follow Trump's playbook was Cuba, on January 19. Although the announcement of a meme coin by the country's official government Twitter account turned out to be a scam perpetrated by yet another hacker successfully compromising a high-profile Twitter account, something that happened so frequently that I've had to stop covering most of these cases. Then a meme coin seemingly launched by the Central African Republic on February 9 was met with the initial concern that it too was coming from a hacked account, Although continued posts by the country's president in the days following the launch

makes it seem like the token was legitimately, if poorly, launched by government entities. As so often happens with meme coins, the token price collapsed by more than 95% within about a day of its launch. The most explosive, by far, however, was the decision by Argentine president Javier Malay to promote a meme coin called Libra. As I wrote when he was first elected, Malay is a right-wing libertarian and self-described anarcho-capitalist, and as you might expect, he's a fan of Bitcoin. Malay has styled himself much in Trump's image, and both have vocally bashed woke ideology, made claims of corruption and worse against political opponents and critics, and promised to drastically cut the size of the government,

with Malay sometimes wielding a chainsaw at political rallies in stork. symbolism of this oath. On February 14, Malay tweeted that the, quote, private project, Libra would be, quote, dedicated to encouraging the growth of the Argentine economy by funding small Argentine businesses and startups, sharing the token ticker and encouraging his followers to buy in. His endorsement sparked an influx of trading, which was suddenly wiped out within hours when it appeared that insiders had rug-pulled the token to the tune of at least $100 million. Malay then deleted his original endorsement and tried to distance himself from the project, tweeting that he was, quote, not aware of the details of the project, and had, quote, decided not to

continue spreading the word once he had become aware. While Malay probably hoped that would be the end of it, it only got messier from there. It wasn't long before crypto-slooths, namely our first. friend Coffeyzilla, got in touch with members of the team behind Libra. Hayden Davis is the CEO of a firm called Kelseyor Ventures, and he reportedly launched the Libra token in concert with Julian Pei of Kip Protocol, and two individuals from a group called Tech Forum Argentina. Davis had also been a part of the launch of the Melania Trump Mumecoin in January, though I will note that the team behind the Melania token was not the same team behind the Trump token, although many of the early snipers overlapped.

Put a pin in that. In text messages published by Coin Desk and separately by Argentine publication La Nacione, Davis wrote to an associate that he, quote, controls Malay. Quote, I send money to his sister and he signs whatever I say and does what I want. Davis outright admitted in recorded interviews with Coffeezilla and Barstool Sports Dave Portnoy, that they had sniped their own token, that is, used bots to buy up a large portion of the new token very early into its launch.

While sniping by outside entities is not unusual in the crypto world, an entity sniping their own token launch amounts to insider trading. Davis tried to play this off as an uncontroversial and sort of necessary evil in order to prevent others from sniping the token to the detriment of other traders, but the rest of the crypto world reacted with reasonable disgust at this blatant manipulation that left Davis sitting on around $100 million. Davis claimed, quote, I'm not running off with the money in an interview with Portnoy, and said that he had been instructed to, quote, inject the funds back into the project upon a

signal from President Millay, a second video that never came once Millay distanced himself from the project. Once that happened, Davis seemed confused. as to what to do. Asked who the money belonged to, he stammered. Whose money is it? It's, I mean, I mean, it. That's what I don't, that, I mean, it's the, I mean, it's the, I don't know. I mean, it's definitely not my, it's the, it's Argentinus.

I don't know what, what, what, what association you give with that. I mean, the point was like, you know. But later, Davis wrote in a statement that, quote, I do not feel comfortable transferring the tokens to Malay's associates or the Kip team, and instead suggested he should, quote, reinvest the funds back into Libra. The rot uncovered here seems to go far deeper than just some random blockchain venture capital firm. A recording of a 26-minute-long phone call between Modi Pavolotsky, the co-founder of a project called DeFi Tuna, and Ben Chow,

a co-founder of the Meteora decentralized exchange, was posted on Twitter. Twitter. Meteora and Jupiter are two popular Solana decentralized exchanges, and they've enjoyed massive spikes in trading volume amid the meme coin frenzy. Ben Chow has just resigned amid allegations that he was directly involved in a massive insider trading scheme, implicating other members of Solana defy projects including Jupiter, and involving presidentially linked tokens Libra and Melania. It turns out that the owner of Jupiter, known only as Meow, also co-founded Meteora, which we learned when he came forward to announce that he would be kicking off an independent investigation of activities at Meteora under Chao's leadership,

although he also, quote, reiterated his confidence that no one at Jupyner or Meteora committed any insider trading or financial wrongdoing. The call is so bonkers that I just transcribe the whole dang thing for you, and it's linked from the newsletter. Povolotsky says, the whole thing just looks rotten to the very core. Like, I don't have words to express. Describing witnessing in-person,

rampant manipulation and token sniping by the people launching presidentially linked tokens, the influencers being paid to promote them, and those working at major Solana projects, including Jupiter and Meteora. Both Pavolotsky and Chow seem to grasp the weight of this during one exchange in the call. And a lot of people lost money,

and the worst thing of all is It's president that gets a bad image. And whenever presidents get involved, and if they become angry, you know, you don't want to be there. Not only that, this is international. This isn't $20. This is not $100 million. This is like $200. This is FTX type of shit.

Fucking hell, man. I feel sick. I feel so sick, man. Holy shit. I feel really, really fucking sick. Oh, my God. This is like Doc Wand, or what's his name, type of money. I mean, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, I don't know anyone higher.

All right, let me, let me, let me, um, I'm really fucking scared. Meanwhile, Javier Malay is facing fallout of his own. Lawmakers in Malay's opposing party have threatened to bring impeachment proceedings against the president, though they may not be able to muster the votes to actually bring a trial. Argentine lawyers have filed at least 100 fraud complaints against the president in criminal courts. A federal judge has been assigned to investigate Mule's role in the scheme. The Argentine stock index crashed 5.6% after the scandal, and a source quoted by Reuters described this as, quote, the biggest reputational crisis of Miele's government, and some speculated that this could damage his government's momentum into the midterms. Although Milay tried to do a televised damage control interview with TOTOS Noticius about the crypto scandal, when it was uploaded to YouTube by Tien, an additional two-minute segment clipped from the original was also. erroneously included. In the later removed clip, Muley said he planned to use the state's legal resources to work on his behalf. An advisor interrupts to whisper in his ear, after which the interviewer

states, yes, I understand, I realize this could bring you a judicial mess. Another earlier comment by the interviewer in the accidentally uploaded segment revealed that the interview questions had been vetted by Miley's sister and several other close associates. Miley later stated, in an on-air section of the interview that those who had purchased the token knew what they were getting into and said, quote, it's like playing Russian roulette and getting the bullet. In the courts, Alexander Vinnick, a Russian man who in May 24 pleaded guilty to conspiracy to commit money laundering in connection to his operation of the notorious BTCE cryptocurrency exchange has been freed in a prisoner swap with Russia. In return, Russia handed over American schoolteacher

Mark Fogel, who was arrested in 2021 when he tried to enter Russia with a small amount of medical marijuana. Russia has been trying to obtain Vinnick's release ever since he was arrested in Greece in 2017, including by charging him with minor fraud in an attempt to have him extradited there rather than to the United States. However, in that case, he was extradited to France, where he served a five-year prison term for money laundering before being sent to the U.S. Quote, we have been actively lobbying with old U.S. administration, and for the last month with the new administration, so that our client would be released, let's say, under any circumstances, said Vinnick's lawyer. The release has been cheered by Russian officials and others who view it as a deal that favors Russia. A pro-Kremlin analyst,

quoted by the Washington Post, commented, quote, this exchange is beneficial to Russia. Russia freed Mark Fogel, an ordinary teacher who dabbled in drugs, and Russia gets Vinnick, who the U.S. accuses of creating a huge ecosystem for bypassing U.S. and EU sanctions using cryptocurrencies. There were billions there. However, the Trump administration has been trying to downplay the swap by comparing it to the Biden administration's release of international arms dealer Victor Boot in exchange for American professional basketball player Brittany Griner, who had also been detained by Russian authorities for possessing medical cannabis. Quote, we are not trading the merchant of death for a basketball player, said a White House spokesperson.

Trump said the U.S. gave up not much in exchange for Focles release. Berwick Law and Wolf Popper, the two law firms suing the Pump. Fund meme coin platform in two separate class action lawsuits, have filed a cease and desist with Pump Fun, demanding they remove from the platform meme coins, including Dog Shit 2, and several others using the company's. logos. As I noted in Issue 76, the dog-shit going nowhere token, which uses the dog-shit two ticker, appeared to have been created by Berwick Law as an example for the court as to how easy it is to deploy a meme coin on the platform. However, after crypto-traders spotted the token in the court filings and began trading it, Berwick denied having launched it, claiming it was only ever,

quote, memory on the server. Now, they're demanding, pumped-up fun, remove it from the their platform, repeating that, quote, our firms have no affiliation, endorsement, or ownership interest in the dog shit two token or any related assets. Simply put, our firms have not launched any meme coins on chain. The announcement of the cease and desist and accompanying legal threats against Pump.com fund for, quote, launching tokens through and in conjunction with the efforts by third parties to intimidate our clients and interfere with ongoing litigation, were met with widespread ridicule from the crypto world, and the dog shit two token naturally spiked in price. A federal judge has denied Coinbase's latest motion to dismiss a class action lawsuit brought

against them in October 2021. The suit, which alleges that Coinbase illegally offered securities, was dismissed in 2023, but the Second Circuit reversed a portion of the judgment in April 24. Coinbase moved to dismiss the case again, but Judge Paul Engelmeyer denied the motion and the case will move forward to discovery. Braden John Corroney, one of the executives charged in connection to the massive safe moon fraud, attempted to delay his trial by a month, arguing that, quote, the new administration has announced that the current regulatory regime governing digital assets will undergo significant changes. prosecutors oppose the request, writing that, quote, Karoni points only to aspirational regulatory policies that do not exist. They also noted that Karoni is charged with wire fraud and money laundering conspiracy,

in addition to securities fraud conspiracy, and that the former two charges would not be impacted by changes to securities laws. The judge denied Karoni's request, and jury selection is scheduled for March 31st. It was worth a shot. Austin Michael Taylor, a Twitch streamer who went by DNP3, was sentenced to 27 months in prison for wire fraud after stealing and gambling away investor funds. Investors had sunk $1.14 million into several projects launched by Taylor, but in January 2023, Taylor publicly admitted he had taken the funds to feed his gambling addiction. Taylor will also pay $1.14 million in restitution and forfeiture. Eric Counsel Jr., the man who compromised the SEC's Twitter account in January 2024 and used it to falsely,

or at least prematurely, announced that Bitcoin Spot ETFs had been approved, has pleaded guilty to conspiracy to commit aggravated identity theft and access device fraud. The SEC did approve Bitcoin Spot ETS, which it announced the day after counsel's tweet. Prosecutors alleged that counsel and his co-conspirators were hoping to profit from the brief, increase in Bitcoin prices as a result of the fake tweet. He faces up to five years in prison and has agreed to forfeit $50,000 in proceeds from the scam. The two operators of the $575 million cash flare cryptocurrency Ponzi scheme have pleaded guilty after they were extradited from Estonia last June. They've agreed to forfeit more than $400 million in assets and face up to 20 years in

prison. Brent Covar, a Las Vegas businessman, has been indicted on multiple counts of wire fraud, mail fraud, and money laundering in connection to a $24 million cryptocurrency Ponzi scheme called ProfitConnect. He claimed that he was using artificial intelligence running on a supercomputer to mine cryptocurrency and promised his investors 15 to 30% APR with a 100% money-back guarantee. Instead, the project is alleged to have been a classic Ponzi scheme, and what so-called returns he did pay out came from others' investments. In the government, Maxine Waters, a Democrat from California, has published her own draft stable-coyne bill following the Republican-led Stable Act in the House and Genius Act in the Senate. Waters' draft is a product of her work under the previous administration, where she and then

House Financial Services Committee Chair Patrick McHenry, the Republican from North Carolina, grappled over it for several years. The Waters draft, unsurprisingly, suggests more stringent regulations and oversight than the newer Republican-led bills, leading crypto-commentators to attack it as a, quote, non-starter, and as though it was, quote, written by the American Bankers Association. In regulators. Although early reporting suggested the SEC would likely look to, quote, potentially freeze some litigation that does not involve allegations of fraud. The first case the SEC has proposed freezing is SEC versus Binance, a case alleging serious fraud and knowing violation of U.S. securities laws. To jog your memory,

this is the case where the company's chief compliance officer put in writing, quote, we are operating as a fucking unlicensed securities exchange in the United States, bro. The original complaint alleges that not only did Binance lie about trying to prevent fraudulent behavior on Binance U.S., one of the primary companies involved in illegal wash trading on the exchange was controlled and operated by Binance's founder and Binance employees. Despite claims from the SEC's new leadership that they intend to provide, quote, sensible, clear rules, without providing a, quote, haven for fraudsters, this action definitely seems to reveal their true marching orders. The judge in the case has granted a 60-day stay.

When I saw the news about the Binance Day on February 11th, I observed, quote, it's likely that the SEC will soon request to pause ongoing enforcement cases against companies including Coinbase, a company which has alone spent more than $100 million on political lobbying over the past two years. Sure enough, on February 14, the SEC requested a 28-day extension of the deadline to respond to Coinbase's appeal to the Second Circuit, commenting that President Trump's Quote, Crypto Task Forces work may affect and could facilitate the potential resolution of both the underlying district court proceeding and potential appellate review, conserving judicial resources.

Because the Commission's review of crypto-related issues is ongoing, the Commission requests this additional time to prepare its answer to Coinbase's petition and for appropriate review. In other words, this case is almost certainly toast. Over at the CFTC, Trump has filed. finally, formally picked a nominee to lead the agency, and it is yet another employee of Andresen Horowitz. By my count, Brian Quintens is the fourth Andresen Horowitzer to take a major role at the White House, in addition to founder Mark Andreessen, who has been influential with

Musk's Doge, Scott Kupor, the new head of the Office of Personnel Management, and Sriram Krishnan, who is advising on AI for the Office of Science and Technology Policy. Quintens is a former CFTC Commissioner who waltz through the revolving door from Trump's last administration into a role as cryptocurrency policy lead at Andresen Horowitz, and will certainly take a lead role in installing the friendly regulatory policy, Andresen Horowitz has spent over $75 million and counting to essentially write themselves. The Trump Memecoin Consumer Advocacy Group Public Citizen has filed a complaint with the Justice Department and the Office of government ethics over the Trump meme coin, asking for a federal investigation into whether Trump's

promotion of the token violated laws against soliciting gifts. Given that the new DOJ head, Pam Bondi, has taken a central role in the Thursday afternoon massacre, an exhibit of judicial corruption that in more normal times would well eclipse its Nixon era namesake, and that Trump has already fired the OGE head to replace him with a devoted loyalist, this complaint may well be swept under the along with many other similarly justified concerns. The Web 3 is going just great recap. There were four entries between February 5th and February 17th, averaging 0.3 entries per day. $117.08 million were added to the grift counter.

Argentine president, Javier Millet, promotes a meme coin that then crashes 95% in an apparent $100 million rug pole. ZK. Lend was hacked for around 9.000. $9.5 million, a trader accidentally sent 2,000 sole to the bankrupt FTX. The B&B-based pump.fun competitor, 4.meme, lost $183,000 to an exploit. Worth a read. Aaron Mondry wrote an excellent and troubling expose of one of these so-called tokenized real estate companies that has cropped up in the Web3 era.

It's titled The Real Estate Scheme, Gobble. doubling up Detroit one digital token at a time, and it's published in Outlier Media. While the company, Real IT, promises returns to its overseas investors who purchase, quote, fractionalized ownership of homes in Detroit, the people actually living there are suffering under neglectful property maintainers and living in homes at risk of being swept out from underneath them amid unstable management. My friend and fellow Wikipedia in Paxe wrote an excellent article for the similarly excellent assigned media newsletter, titled On Trans Issues, Wikipedia is a bulwark against disinformation. It's about how Wikipedia remains standing as a

repository for trans information, even as the current American government has become hell-bent on destroying it. In other Wikipedia coverage, my other friend, who writes the Wikipedian, published a great piece entitled The Rights War on Wikipedia is just a repackaging of its war on journalism. In the news. As I alluded to in the opener of this newsletter, I recently helped the New York Times with some blockchain spulunking to help trace some of the early trades of the Trump meme coin. That was for an article titled early crypto traders had speedy profit on Trump coin as others suffered losses. I'm also quoted in a slightly more unusual section of the Times Media Empire this week in a product review at Wirecutter

that might be useful to any of you feeling tempted to spend $900 on what should be a $70 space heater, not even counting another $120 a year in subscription air filters, simply because it might reward you with a couple bucks in Bitcoin. What a deal. I went on Majority Report earlier today to talk about the risk of crypto deregulation

to the broader economy, the debanking narrative pushed by the cryptocurrency industry, and the industry's broad political goals after their massive lobbying efforts. That's in an episode titled Elon Musk's unhinged Social Security lies, Can Crypto Crash Our Economy? I also hopped on NPRs on the media to talk some more about the rights attacks on Wikipedia. If I do say so myself, I think my interview serves as a nice prelude to the guest who follows me, Jason Stanley, professor and author of Erasing History,

how fascists rewrite the past to control the future. Other mentions and appearances since my last recapish, you can be found in 404 Media, 4O4 Media again, the Washington Post, and in two German language publications. I also appeared on episodes of the podcast, Fast Politics, with a Molly of the Jong Fast Variety, Western Kabuki, and 10,000 posts,

the latter of which is paywalled. That's all for now, folks. Until next time, this has been Molly White. Thanks for listening to this issue of the citation-needed newsletter. If you would like to support my work with a free or pay-what-you-want subscription to the citation-needed newsletter, or if you would like to receive these issues in your email, go to citation-needed.news slash sign-up. If you enjoyed the podcast version of this episode, please consider leaving a rating or review in your podcast player of choice.