The Breakdown - Laura Shin on Greed, Hacks and Crypto Idealism

Starting point is 00:00:00 Because I do reveal so much drama and backstabbing and kind of a lot of stuff, I think, that people didn't know that maybe doesn't necessarily reflect well on either Ethereum or crypto. I've had people say things like, you know, does this kind of like shake your faith in the technology or anything? And interestingly, actually it doesn't. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io, Arculus, and FTX, and produced and distributed by CoinDesk. What's going on, guys? It is Friday, April 8th, and today I am joined by the one and only Laura Shin.

Starting point is 00:00:49 Before we get into that interview, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to get deeper into the conversation, Join us on the Breakers Discord. You can find a link in the show notes or go to bit.lead slash breakdown pod. So Laura Shin needs no introduction. She is the host of the Unchained podcast and really one of the voices of this space. There are so many people whose first experience starting to learn about crypto was listening to her interview people from the industry on her show. Laura is also the author of the new book The Cryptopians.

Starting point is 00:01:25 Idealism, greed, lies, and the making of the... the first big cryptocurrency craze. As you'll hear on the show, this started out as a book about the ICO boom, but then turned into really the most complete history we've had yet on the founding of Ethereum. In this episode, we get into a bunch of details from the book, her perception of those early days in Ethereum, what the significance of the Dow hack was, and how she came to make a conclusion about who she thought was behind that famous 2016 hack. It's a great show. I know you're going to enjoy it. So without any further ado, let's dive in. One note, I discovered after the interview was complete that the app that I had been using to record it was not feeding into this podcast.

Starting point is 00:02:06 So apologies for my sound quality. This is what it would sound like if I'd normally did the show with AirPods. Laura, welcome to the breakdown. I'm so excited for you to be here. I am so excited to be here. Thanks for having me on the show. So this is going to be a ton of fun. I feel like it's long, long overdue. And I'm really excited. I was just telling you, sort of, I'm such a history geek. I love the book. And I'm really excited to dig into it with you. But I think that where I wanted to start was just kind of taking us back to when you actually,

Starting point is 00:02:41 when did you actually start covering crypto? It was almost seven years ago now. It was May 2015. And I was doing the Forbes FinTech 50 list. It was the first time we were launching the list. And the other reporter and I just divided it into different categories. And I took the category of digital currency and just became completely obsessed. And I very much grasped the significance of Bitcoin and blockchain technology pretty much immediately

Starting point is 00:03:11 because I remember that I was supposed to do an interview with Adam Ludwin of Chain, which was a company from that era that was doing enterprise blockchain. But at the last minute, he couldn't make it. And Devin Gundry, his C-O, did the interview with me. And Devin Guntry is this very animated person. He had like, you know, wild corkscrew curls. And he was just like talking about Bitcoin. Even though they were working on enterprise blockchain, he would just keep this like impassioned explanation of Bitcoin.

Starting point is 00:03:42 And because I've been learning so much about what the kind of like weaknesses were of the banking system. And I was understanding just how it was decades old and all this stuff, I pretty much have. immediately from that conversation. I just understood this is going to change everything. And I basically became completely obsessed and fell down the rabbit hole. You were really one of the, if not the first mainstream reporter to actually cover this. And I feel like it didn't take long for you to venture out on your own, but that's probably my misperception. It was probably a lot longer in reality. Well, I actually at that time was a freelancer. Forbes was definitely my main clients and most people associated me with Forbes. But I think at that time, maybe it was like,

Starting point is 00:04:25 I don't know, 85 to 90 percent of my income. And then I did a bunch of, you know, I like wrote for Fast Company and Fortune and just like a bunch of other, I did some corporate things. Like there was a whole bunch of other random side stuff that I did. But that was definitely my main gig. But I only went full time with them in 2017 when they agreed to let me cover crypto full time. Because between 2015 and mid-2017, there was a period in there where they did offer me another full-time job, but I said, I will only come on and work full-time for you if you let me cover only Bitcoin and what was then called only Bitcoin and blockchain. And they were like, no, because nobody was really very interested in it.

Starting point is 00:05:07 And I was generating a ton of page views covering personal finance, which is what I covered for them. And so then only in 2017, when it finally started taking off, did they finally relent? And so I went full-time. But yeah, then I ended up quitting. fairly quickly within seven months because, you know, there was that bubble that year. And someone who was helping me with a podcast said, hey, you know, I've been doing research and you could make a lot of money from this podcast.

Starting point is 00:05:34 Like, this is what the other podcasts are charging. You have way more downloads than anybody else. So you could be making X, Y, Z amount. And it was like a lot more than I was making at my job. So since I'd always had this idea to write a book, I thought, oh, perfect. I will spend two days a week on the podcast. And I launched a second podcast. So it was doing two podcasts and then use the rest of the time to work in this book.

Starting point is 00:05:57 And so, yeah, it took a while. But finally the book came out. And yeah, that's what I've been doing the last like four years. Yeah. I mean, I think it's fair to say that for the vast majority at this point of crypto market participants, just in terms of percentages, you have been one of the voices in the space. I mean, your podcast has been a starting point for, I think, so many. people, you know, and other podcasts kind of come in and come out and, you know, at various points,

Starting point is 00:06:23 you know, focus on different things. But I think you are probably the most consistent long-term voice of the space, which is, you know, super super cool. And I think, you know, I was so excited when you decided to do this book. But it sounds like this book was something that you had in mind from a really early time. I mean, you know, what made you want to write this particular book? And did it, did what it was about change as you were actually kind of working on it? Oh, yeah. The proposal looks nothing. like the actual book. So I have always known since I was actually a little girl that I wanted to be a writer and in particular that I wanted to write books. And I've actually written some like

Starting point is 00:07:02 e-books for Forbes, but it was nothing like this. And I didn't quite know exactly what the book was going to be, but I knew that when I quit Forbes in early 2018, that I had lived through something historic and I lived through it with a front row seat. And, you know, like just when you think about, you know, like I said, at the beginning when I started covering in 2015, nobody cared. You know, I would like write these articles, get like a tiny amount of page views compared to my personal financing career stories that would just get like, you know, thousands or hundreds of thousands or millions of page views.

Starting point is 00:07:36 And then, you know, to live through 2017 and see even my own life changed during that period, just because like things just were picking up so much and just, became this global phenomenon in a way that it really hadn't been before. And so, you know, when you have a story, like obviously you're, there's like a natural arc that makes a story. And that felt like that, you know. And so even though I actually didn't really know what the book was going to be, like I had this idea that, you know, the question I wanted to answer was how did the initial coin offering craze happen? And initially the idea was like a much bigger book, which like, you know, the book is already 400 pages and that's.

Starting point is 00:08:15 after I cut out this whole storyline that involved Coinbase. I did a lot of reporting on Coinbase. And so in the future, I hope to use those notes. I'm sure all the people that I interviewed also hope I use them. But frankly, when I went to write it, I had to cut all that because I just was like, I don't have space. This is like, once I started putting it all down on paper, I was like, whoa. Like, this is taking a lot more time to get through.

Starting point is 00:08:37 And I just was like, have to cut the Coinbase piece. Yes, it was a big on ramp. But really what catalyzed the initial coin offering craze was based. basically Ethereum. You know, that was because Coinbase is, or at least up until now, has been more like a fintech company, just like being that real from the traditional financial system into the crypto ecosystem. And so it wasn't necessarily quite as pivotal, but Ethereum really was what enabled that ICA craze. So that's what, that's why kind of like 75% in the book is more of like a history of Ethereum. And then only at the end, you know, do we get to the ICO part.

Starting point is 00:09:11 I mean, listen, I think there could be an entire additional book about just, the ICO moment. And I want to come back to that in a minute. But let's talk about Ethereum a little bit. So, you know, as you dig into this, how, I mean, this is a very broad question, but how was your perception of the founding of Ethereum, having watched it in an active kind of bystander position, different once you went back and started to look at it in the context of this history that you were writing? Oh my gosh. I barely knew any of the stuff that ended up being in my book. I mean, I know so much of it is news in general, had not been covered before anywhere. So, you know, I mean, I did not know most of it. There's kind of this one email chain that I recount toward the end of the book where people

Starting point is 00:09:59 are discussing getting rid of how they would like to get rid of what the person who was then the executive director of the Theorem Foundation, Ming Chan. And I had gotten that at that time and knew kind of like there was just a little bit of discontent. I did not know that really, that was years in the making. So there were just so many things that I really did not know. You know, like even details about how the early co-founders had a falling out and some of them got kicked out and stuff. You know, I really feel like I did not even know much of that. I don't even think I understood really just kind of like why there were so many co-founders. And so I just learned so many details about really all of it that, no, I had barely any idea.

Starting point is 00:10:48 And even stuff like the Dow that had made headlines, like I really knew almost nothing. I mean, the Dow is kind of what I covered in my book is roughly maybe like four or five months. And those four or five months take up four chapters in the book. And the rest it like spans over the course of years. And so just a level of detail I was able to get for that. that period was just stuff I really did not know. And yeah, frankly, I do think a lot of people also are just learning a lot more because even if you were following along, there's just so much that was happening in the different quarters and camps. And so I actually personally think that I may

Starting point is 00:11:27 be the one who like knows the most because I was able to talk to, you know, more than 200 people and get all these stories from these different perspectives and then tie it all together. So that's actually one of the things that I wanted to ask you about. It's a little bit of kind of a meta or process question, but, you know, this is, I think certainly at this stage, the most complete history of something that will inevitably have lots and lots and lots of books written about it, right? It's just if, I mean, unless this technology goes away tomorrow and, you know, it seems to be relevant, which doesn't really seem like is the trajectory. How do you go about doing that? How much is it oral history from people kind of reporting their memories? How much of it is

Starting point is 00:12:09 people sharing actual primary source documents like email chains. And then how much, like, how do you go about the process of caveating, filtering out, you know, cross-referencing people's takes on things, you know, just, you know, it's, I mean, it's an inherently messy business, you know? Yeah. Oh my God. I cannot quantify any of that. But there is plenty of all of those things all over the book. So I did, you know, like I said, more than 200 interviews. And so what you find is you will generally for certain stories, you might get like multiple people that kind of view things the same way and then maybe just a few outliers. Or when there's like contentious things, you might realize like, oh, there were two camps or things like that. So oftentimes, though,

Starting point is 00:12:53 when people are telling me things, I would ask them for backup. Like anything contemporaneous is super, super, super, super useful. Frankly, you know, one thing that I struggled with was in the beginning when people would talk about that executive director, Ming Chan, the way they we're talking about her, it just seemed almost unreal. You know, very exaggerated and just like unbelievable. But it was only when they sent me, you know, chats and her, like, she could basically speak. She wasn't speaking obviously to me, but, you know, I could see her in her own words. Then I began to understand because otherwise it just sort of seemed like very exaggerated and sort of like this caricature. So, you know, there was a lot of that. I got.

Starting point is 00:13:37 recordings. I got videos, photos. I spent a lot of time on the way back machine, like a lot of time. I even did things like, you know, for certain things like when the Dow attack occurred, I was trying to do what we call internals in a TikTok where it's like minute to minute, like this happened, then this happened, then this happened, this happened. And I would have to email these different websites and be like, so the time that's displayed here, is it my time or is it UTC time? Or like, I was trying to fit, you know, because it would be like,

Starting point is 00:14:08 this post happened at blah, blah, blah, but it would not tell you the time zone. So then I had to like piece all that together and like put that in a timeline. And because, you know, I wanted to know like what, like who was the first person to post online that this doubt attack was happening, stuff like that.

Starting point is 00:14:23 So it just, I mean, it was like truly a labor of love. I mean, it was very fun for me. I'm not going to lie. It was like, yes, a lot of work. But writing this book was the most fun I've had professionally like, by and large, you know, I mean, I love doing the podcast because I'm a naturally social person, but, you know, I'm a creative person. And, yeah, for a creative person, you kind of need that, like, like, a lone time where you're just like, you and your work, you're doing your thing,

Starting point is 00:14:47 you're in the flow. And, like, so much of the book was, was that for me. And I really enjoyed it as hard as it was, one of the last piece I want to talk about is, you know, of course, as you read about in the book, a lot of the people in it do not like each other. And so when people were saying negative things to each other, you know, you always wanted to go to that person asked for a response. And so I know that, you know, there are parts of the book where it's a little bit like blah, blah, blah happened, but then it'll be like, well, so-and-so denies it or, you know, and so you just have to always include that. But like, I feel that, you know, for those people that maybe felt that they were being put in a negative light, that it was good if they were

Starting point is 00:15:22 able to include their voice and have their perspective heard. You know, so that was like another tricky thing. And, you know, I just wanted to make sure I gave everybody any opportunity possible to have their opinion heard. Yeah. How important do you think it is? I mean, I guess the answer is probably pretty important, considering how much time you spent on it. Is it to, you know, this is an industry,

Starting point is 00:15:45 not even really an industry, it's a philosophical approach to thinking about human networks and human organization that is very different than the types of organizing structures that we have today that we've had for a very long time that we've had used to. But they still had to start with groups of people how, you know, as you were digging back into the history, where, you know, what was your sense of sort of the, you know, where the ideals of decentralization kind of fit in those early days, like how much was sort of, you know, I mean, to your point, Ethereum in a lot of ways kicked off an entirely new kind of generation of the crypto industry, which has been sort of progressing in fits and starts towards. these new kind of decentralized structures for a while. But I think, you know, the great critique

Starting point is 00:16:37 and sort of albatross is how decentralized can it really be. So I guess I'm interested in kind of, you know, looking at this early kind of, you know, Cambrian explosion type of moment, you know, Big Bang type of moment. There's so much, so much personality and sort of like messy humanness. Yes, which is what people will read about in the book. You know, Vatollick himself definitely, kind of lives those ideals of decentralization. And, you know, I have that word idealism in the title. And I do feel that he is one of the characters that best represents that. But, you know, he was 19 when he came up with the idea for Ethereum. And I say this in the book. He sent out the white paper for Ethereum to a small group of friends. And it was on the day that Bitcoin crossed

Starting point is 00:17:25 $1,000 for the first time. So this was a moment when like people were recognizing like, oh, we can get rich off of this. Like, there were now Bitcoin millionaires. And, you know, there was this sense of like, oh, well, you know, I was in on Bitcoin early. And now that the price has appreciated, now I'm super wealthy. And oh, if I get in on the ground floor of Ethereum, the same thing could happen to me as well. And so you have these people that get involved in Ethereum early on. And, you know, it does seem that they were pretty self-interested. There's a few moments that you read about where Vatolic, you know, had these notions that Ethereum should be launched as what we would now call a fair launch coin, meaning no pre-mine, you know, do it like Bitcoin. And, you know, he kind of was

Starting point is 00:18:10 outvoted by some people that I think others would perceive as being more self-interested. And that's why, you know, there was this pre-mine and then there were what are called early contributor allocations, which, you know, continued to become controversial later on. And even to the day, I've had sources say things to me like, oh, you know, Batolic himself didn't even get as much of the early allocation as he really should have based on his contribution, things like that. So, you know, all of those kind of human factors definitely affected that early creation of Ethereum. Whether or not that means anything negative about the technology today, I think, just probably depends on your opinion. Frankly, I feel that the technology itself has just succeeded in a way

Starting point is 00:18:57 that it sort of just like supersedes any of any of those issues that, you know, I sort of feel just in a way don't really matter as much today. But I do, I get tagged a lot in tweets where other people don't seem to agree with that. So, you know, to each their own. Yeah, listen, original sins are a hard thing to shake if that's the perception that one has of them. Looking for ways to step up your crypto game, then go with next. For starters, you get free crypto for each purchase or swap. How about earning guaranteed yields?

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Starting point is 00:20:45 There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees. One of the largest exchanges in the U.S. FDXUS is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTCX, you pay no gas fees. Download the FTCX app today and use Referral Code Breakdown to support the show. You pair kind of greed and idealism a lot. This is sort of like the central kind of tension in contrast. How much do you think they're both necessary for crypto to have evolved the way that it did? You know, one of the things that I think people often recognize if they're kind of realist in the space is that although it's not necessarily the part of the industry that we want to kind of hold up and double down on, the monetary incentive has been such a huge driver of people coming into this space and building things. I mean, is that what you found as sort of. of like that these things were both necessary, or do you think that there could have been kind of a pure or better version, you know, in a different set of configurations?

Starting point is 00:21:47 That's such an interesting question. I mean, obviously, you know, I'm an American and I believe in capitalism. You know, my ancestors come from Korea, which now is divided into a place that's like a mini communist country and a mini capitalist country or U.S. country. And like, definitely the version that's more like the U.S. is the better way to go. So, you know, I have strong opinions about things like that. But, you know, obviously things in moderation, you know, I definitely wouldn't say that if the people that were more self-interested had truly, truly dominated, that then Ethereum would be the success that it is. You know, I do feel that, frankly, as you see early in the book, there's these conflicts that occur between the devs or developers

Starting point is 00:22:33 and the business guys. And the developers always end up winning. And I actually think that was to Ethereum's benefit. And the business guys were the ones who wanted to make a closed source and they didn't want to have a beach of centralized. They wanted it to be more like a Web 2 company where they're using customer data and profiting off of it and things like that. And so do I think that the ring would be as successful today if it were built like that? No, I don't. So it's just kind of, yeah, it's probably like a push and pull sort of dynamic. And if you go too far, maybe in one direction, then it won't work.

Starting point is 00:23:10 And if you go too far in the other, it also won't work. Yeah, that's super interesting. So the other thing that I wanted to ask you about is sort of the, you know, like you said, there's four chapters on the Dow hack. I'm interested in your, like, almost the emotional, you know, kind of impact of that. Like bringing us back into those moments when people learn. You know, you're saying you're kind of compiling the TikTok. Like, I think it's hard for people.

Starting point is 00:23:36 who have come into the industry much later to understand how significant and scary and existential it felt to people. I mean, was that what you found when you kind of went and dug into it? Yes. I mean, so people should understand that when the Dow launched, Ethereum was not even a year old. It had launched in July 2015, and the Dow crowd sale got going April 30th of 2016, and it lasted for a month. And Ethereum was not easy to use at that time. And amazingly, the Dow became the highest crowdfunded project in all history, even though it was kind of like, you know, this weird technological thing and whatever.

Starting point is 00:24:19 I mean, it was just like a very technologically challenging thing. I mean, obviously there were some exchanges that made it easier to participate, which is why I think, you know, they were able to amass so much money. But there was so much excitement. It was really the first decentralized application on Ethereum that had. that kind of amassed a critical amount of interest. And then, and it was so much interest, in fact, that it had garnered 15% of all ETH in the Dow. So a few weeks later, it got attacked, 31% of ETH taken out of the Dow in the span of a few hours. And now this malicious actor had

Starting point is 00:24:54 5% of all ETH. So clearly this was something where, you know, I mean, it's just like that that screaming emoji that looks like the Edward Munch painting, you know. And, you know, this created this existential crisis for Ethereum. I think it's the only existential crisis Ethereum has ever faced. But the community was lucky because the hacker was only able to move the money to a place where the money would be trapped there for 28 days. And they wouldn't be able to access it during that span of time. And that gave the community a window of time in which to try to do something to kind of like

Starting point is 00:25:29 reverse the hack or steal the money back or whatever it might be. And so, you know, then this whole thing ensues. And it really was, you know, excuse my French, but a show. They, you know, had all these different options. And like, one by one, they keep having to be like, that's not going to work. That's not going to work. And then finally, their main option that they're left with is to do what is known as a hard fork where they're going to split the chain in two and create this new chain, where on that new chain, they kind of just move all the money from the Dow and then all the baby Dow's that it sprouted from it and just put it all in this withdrawal contract where people can send in their Dow tokens and receive back their ether that they had originally invested.

Starting point is 00:26:14 And because this was known as a contentious hard fork, it ran the risk of the blockchain splitting. And that is exactly what happened, which is how now we have the evil twin, Ethereum Classic, But, you know, throughout this period, I mean, it was like emotions ran high. You had, again, this kind of like dynamic between the developers and then the business people, which in this case were the exchange owners. They had different views on how it should be handled, you know, like what should be done and why. And, you know, it's just, I mean, it is part of kind of the whole crypto community right now where there's a difference between the people who are kind of more in it for the tech and the people who are more in it for the money, the developers versus the traders. And so, yeah, this kind of like, you know, sort of speaking at cross purposes between the two groups is, I think, what led to the birth of Ethereum Classic. But yeah, that whole period was definitely one where I think a lot of people were understanding this was sort of like a do-or-die moment because Ethereum was so young.

Starting point is 00:27:20 But some people came out on the side of it's so young, we can do this kind of drastic measure to save the ecosystem and other. other people felt like it's so young. Just this application of an Ethereum doesn't matter. We're going to move on. And so it was a disconnect between the two. And that's why we have two chains today. Super fascinating. It's like it's almost inconceivable now.

Starting point is 00:27:43 It's, you know, it's not that far ago, but it's so hard to imagine something like that in the, you know, kind of a modern context. So when you, when the book was released, you dropped this bombshell that as part of the research, you had sort of, you know, you had a theory of who you thought the Dow hacker was. How did that come about? So to my mind, this is sort of the meteor out of nowhere. What happened was I had actually followed through on an investigation that started in 2016. There was a certain group of suspects from that. And I kind of, you know, and it was like certain transactions that had been flagged as suspicious that cast light on these people. So I,

Starting point is 00:28:26 investigated kind of what was actually happening with those transactions. You know, I talked to all those people, and then I wrote up something for the book where it was just kind of laying out, you know, what caused them to fall under suspicion, what actually was going on with those transactions, what were their responses to my line of questioning about whether or not they had been involved in the hack? And I didn't come to any conclusions. I just sort of laid out the evidence and left it for the reader to decide. And we were in what we're called the final passes for the book. So, you know, you submit a first draft. It gets edited. I and my case had to revise mine, got edited again. Then when the book is close to being done, you do these three final passes. And with each final pass, it goes to the publisher. They make their changes. It goes to me. I make my changes back to them, blah, blah, blah. And with each pass, you're supposed to make fewer and fewer changes. So the publisher's already done its second pass and I'm making mind. And I'm working very closely with my fact checker, who I had a hire to check everything in the book. And I'm supposed to make probably like a hundred changes or fewer. And what happens is

Starting point is 00:29:32 Alex Vandesand, who was involved in rescuing the remaining Dow funds so that they would not also be hacked, reached out to me. And he's Brazilian. And he said, hey, six or five years ago, the Brazilian government opened an investigation into the Dow and by extension into me. And I would like to commission a report to exonerate myself. And these reports are a little bit expensive. And he thought, who else could benefit from this report? And he thought of me for my book. And so he got a discount on the report in exchange for me crediting this company coin firm in the book. And after we got the report, which was of all the transactions that the Dow hacker had made after the hack where they had been trying to convert their remaining Ethereum Classic into Bitcoin, which they were doing because Ethereum

Starting point is 00:30:19 Classic was so new. It wasn't very liquid and there were very few places where you could use it. But Bitcoin, you know, was then and still is the most liquid crypto, the most usable. And they had to do this by using ShapeShift because it wasn't taking identifying information. And since Shapeshiv didn't take identifying information, there was a maximum amount that you could exchange each time, which was $2,500. So they had this huge amount of money, but they had to do like very small transactions to try to convert it to something usable. And so Alex and I kind of like went over those transactions and we noticed certain patterns. And one of them was that the times on those transactions kind of mapped onto what was like an Asian morning to night schedule. But the people that I'd been looking at, they were all based in Europe. And we kind of checked their social media against those cash out times. And they were just different hours. So it like sort of felt like, okay, they're not online at the same time or could they be like waking up in the middle of the night to do the transactions or you know what's going on. And so one other thing was, you know, this detail about the Asian schedule was that I had gotten

Starting point is 00:31:32 a customer service email that the Dow attacker had sent to shape shift back when they were kind of putting all the money in the different smart contracts to to perpetrate the hack. And I saw from those emails, I mean, one in particular, two of them were so short that they didn't really reveal much, but one of them, even though it was only two sentences, it was very clear this person was a fluent English speaker because it was like, not even just perfect English, but it was written in shorthand. So it would be like if you said, you know, not I am going to the store, do you want anything? But going to the store, do you want anything? You know, that kind of thing. And so I was just like, okay, this person is,

Starting point is 00:32:13 they're fluent in English. So what happened was, I sent that information to chain analysis, which is another company that I'd been working with. And they did not reveal to me until later that we had the ability to demix wasabi transactions because the hacker had taken the Bitcoin they'd received and tried to mix it in a wasabi, what's called a coin join, where the coins get mixed with like, you know, a bunch of other people's coins. And then it obscures the trail backward. But they followed the wasabi output to four different exchanges. And of course, exchanges have privacy policies.

Starting point is 00:32:49 So, you know, they're not going to reveal to you whose name is on any specific account. But I was able to get information on what happened to the Bitcoin at one of those exchanges. It was revealed to a source. And we found out that the money had been withdrawn, had been converted to Grin, which is a privacy coin, and then withdrawn to a Grin node. And the Grin node had a human-readable address, which was grin.com. So the person who I believe is the Dow attacker is somebody named Toby Honish. He has used Toby AI as his alias on Reddit and Twitter and GitHub and GitHub and Stack Overflow

Starting point is 00:33:28 and Angelist and all these different sites. It was like 16 medium. And in addition, the same IP address of that grid node was also hosting Bitcoin Lightning nodes. One of those Bitcoin Lightning nodes was named 10x and Toby's company was named 10x. And so that, you know, was really good evidence later. I was also able, a couple weeks later, to find out the email address on that account. And it was one that ended in at toby.a.i.

Starting point is 00:33:56 But meanwhile, I had also gone back to find out what was he doing at the time of the hack. First of all, he was very into the Dow. You know, he identified flaws in the Dow. He reached out to the creators about those saying, hey, you guys need to fix this. They felt it wasn't super urgent. they acknowledged that these were weaknesses but didn't feel that it had to be changed immediately. And he starts blogging about these vulnerabilities. And then a post-hack, he's tweeting things that are kind of like against the hard fork and pro keeping the hack.

Starting point is 00:34:29 So, you know, just everything fit both in terms of after the cashing out and converting to Bitcoin, but then also back when you go to what was happening at the time of the hack. So, you know, in my opinion, it's super strong. I've had no pushback since revealing this. Nobody said like, you're wrong or anything like that. So I think, you know, by and large, a lot of the community finds the evidence very credible. Note to self, do not use NLW in my addresses when I'm trying to get rid of my purloined funds in the future if podcasting stops paying enough. No, I mean, it's amazing.

Starting point is 00:35:09 And it's amazing how that kind of story came together. and I think a testament to all the hard work you put into really getting this story. I guess, you know, I'm really interested to know if and how going back and doing this research made you look at the current crypto industry differently or change your perception in any ways. So because I do reveal so much drama and backstabbing and kind of a lot of stuff I, I think that people didn't know that maybe doesn't necessarily reflect well on either Ethereum or crypto. I've had people say things like, you know, does this kind of like shake your faith in

Starting point is 00:35:53 the technology or anything? And interestingly, actually it doesn't. People might be surprised to hear that. You know, I do feel that I have learned about how these interpersonal dynamics can affect the development of things. You know, I talked kind of about the pre-mine issue with Ethereum and how I think that the personalities involved did affect the initial founding of Ethereum. But, you know, I actually don't know if I would say that that really detracts from Ethereum's success. Like the metrics speak for themselves, you know, it's definitely got by and large, far and away, the largest developer ecosystem.

Starting point is 00:36:32 It continues to attract 20 to 25 percent of all new developers coming to Web3. which is amazing. I mean, no crypto ecosystem comes even close. So, you know, all of this is kind of despite all the drama that it endured. I, in general, you know, I sort of feel like those early moments when I was falling down the crypto rabbit hole, like, you know, I really became enamored with the technology and found it fascinating. And I, you know, to this day, still think it's very interesting, very promising. And, you know, we've seen a lot of just really innovative and, you know, not seen before capabilities with this technology. And I think we're going to continue to see that.

Starting point is 00:37:17 However, you know, things like, as people will read about in the book, Gavin Wood, kind of, you know, has a tendency to maybe rub people the wrong way. And so later on, when the Pocodot ICO, the vast majority of the Pocodot ICO funds get frozen, I do wonder if some of those political issues about him kind of, yeah, maybe getting under the skin of some of the people in Ethereum, if that then had an influence on how willing people were to help him, you know, other things like that. So we'll continue probably to see some of these personality issues affect some of these blockchains. But I don't think necessarily that that means that because people are flawed, that the technology will fail. Yeah, I think it's interesting. I think I definitely am someone who rejects pretty aggressively the any sort of line of like don't bring up the old warts you know when it

Starting point is 00:38:13 comes to when it comes to the crypto industry I think it is a mass one way to view it is this mass experiment in new types of organization and new norms of organization and that's very much a destination and this is sort of not a apologism for you know places of you know creeping centralization or places where it you know things are a lot more centralized than we like to to believe But I think that you sort of going back and understanding the genesis of things doesn't detract from them necessarily. You know, it is sort of, I mean, it can. Like, people are free in a free market to choose what they kind of do and don't want to

Starting point is 00:38:49 affiliate with, you know? But I think it's super important to kind of have these understandings. And, you know, to the extent that those early personality clashes shaped the way that those people were able to or not to do things in the future, that's sort of the way the world works, right? Yeah, and actually one other point is that I did want to say that to me it was so important to try as hard as I can to get everything very accurately. And, you know, I have a podcast. I have crypto companies that are sponsoring that podcast. You know, it's good if I have access to sources to get them on the show.

Starting point is 00:39:29 However, I did not let any of that affect how I was going to tell the story. I didn't try to pull any punches or, you know, try to put a positive spin on things. I just wanted to tell it like it is because I really feel like you that history is really important. And the facts and accuracy, it's all important. And so will Vatelic ever come on my show again? Maybe not. But, you know, I can continue to cover him and Ethereum in other ways. And, you know, it just, I really was looking at people 100 years from now and thinking, I want them to know what happened.

Starting point is 00:40:05 And that was really my goal with the book. So you ended up not being able to spend as much time on this, but how do you think, you know, how is your perception or assessment of the ICO boom? That kind of insane moment changed, you know, five years on from when it actually happened? Honestly, it doesn't seem like it's changed a lot if you're following what's going on in out of T's.

Starting point is 00:40:35 You know, it's kind of the same thing. It's like there's this gold rush moment and then all these kind of scammers get in and there's all these rugpoles and fishing incidents. And so, you know, kind of the people who are opportunists in a very nefarious way are out in full force again. And, you know, it's sort of like sharks in the water. They smell the blood and they're going to go after your private keys and your NFTs and whatever else they can.

Starting point is 00:41:03 So, you know, I think it's like a big learning moment. I think, you know, we're seeing, yeah, just that when you have these speculative periods, that it's going to attract kind of bad actors, basically. However, you know, something that I find really interesting is that even though the vast majority of the ICOs didn't pan out. Obviously, crypto itself is succeeding in so many ways to the point where, you know, the technology kind of can't even keep up with the demand. And a lot of the things that were ideas at that time have now become real things that people are using in crypto. I mean, obviously, you know, as I just mentioned, scaling issues kind of

Starting point is 00:41:50 limits the amount of the amount that people can participate in defy. But, Still, you know, we have seen that borrowing and lending or using dexes is something that people will do and are interested in doing. So I don't doubt for any second that a lot of the things that we were seeing percolate right now will also someday pan out into something real. But as the ICA crease shows us, there is kind of that moment you have to get through where there's a lot of froth and you have to do a lot of sifting to find that gold. But as time goes on, those things will emerge and will become used.

Starting point is 00:42:31 I really want to, at some point, I hope that you do the early Coinbase book, or just go back even farther in history. There's so many interesting stories, you know, back in the, you know, the Bitcoin Talk Days, too. I guess, you know, by way of wrapping up, I want to leave some amount of the book for people to actually read, instead of just asking you about all of it. you know, you have a unique vantage point. You, you know, talk with so many different people in the industry. You went deep on this analysis. What do you think is something that the crypto industry should be talking about more than it is right now? Huh. That's a good question. I could go in

Starting point is 00:43:16 so many different directions with this. You know, so a couple of things. And they're so basic. But I find it interesting that we're this far along and still these are stumbling blocks for the industry. So in my mind, they're sort of low-hanging fruit. But the first would probably be like how it is that we talk about this technology and relay, you know, the benefits and the kind of pitfalls of it to other people. I actually just wrapped recording one of my own podcasts in which this came up and someone in that show mentioned that the word trustless is something that sounds negative to people outside of crypto. And they were commenting on how the other person in the show used the word trust-based

Starting point is 00:44:08 and how that sounds more positive. And is actually what you mean because I've always felt that trustless didn't make any sense because I'm like, wait, but the software is providing the trust. So how is it trustless? Like it's confusing to me just on a basic like meaning level. So things like that, you know, I feel that basically, you know, we're all seeing this in the regulatory hearings or the hearings with lawmakers where they have basically pretty outdated conceptions around crypto, you know, in terms of like, oh, it's only for people who are criminals and whatever, when in fact there's way less crime being done, way less illicit activity being done in crypto than in the traditional financial system. So, you know, just kind of the way people are talking about this, I think definitely could be improved and, like, messaging could be improved. But then the other, frankly, is just teaching people how this money is different from other kinds of money and therefore how you need to secure it before you're going to engage with it in any meaningful way. You know, we still all today see so many

Starting point is 00:45:14 incidents of people being fished or, like, losing their money or having their phone number stolen and then all their crypto is transferred out of their account. And, you know, these things have been going on for years. And I just feel like that kind of education, like if people enter the space and then their first experience is being burned in some fashion, that's not good. So, you know, I just would hope that people aren't saying to all their friends like, hey, you should buy these cryptos. You're going to get rich. It should instead be, hey, buy a little bit of crypto. Learn how it's different from other kinds of money so you don't lose it once you actually put some significant amount in. And then, you know, then we can talk about like actually making money

Starting point is 00:45:54 from this or whatever it is. But, you know, until we get there, I feel like people are going to have either misconceptions about the technology or bad experiences from the start. And it's not good. Well, Laura, is awesome to have you on the show. Congratulations again on the book. It's really excellent. and I'm thrilled to be able to talk with you about it. Let's do this again sometime soon. Thanks so much for having me. I really enjoyed this. Reflecting on that show, I think the one thing I want to double click on is just this inherent messiness of decentralization.

Starting point is 00:46:30 I said in the conversation that I had with Laura that I thought that we shouldn't shirk away from our history, that if this is a long-term experiment that succeeds in changing the way that human networks can organize, it's going to have to go through these warty phases of real human problems and intrigue and controversy and challenge. So much of the promise of this technology is in its decentralization and all of the implications that has for things like censorship resistance. I don't think it behooves us to be anything other than unflinching when it comes to understanding truly how decentralized or not any given network or project is. I really enjoyed this book and I really enjoyed this conversation, and I highly recommend you go check out the Cryptopians. Thanks again to Laura for coming on the show, and thanks to my sponsors, nexo.io, Arculus and FTX for supporting the show. And thanks to you guys for listening.

Starting point is 00:47:25 Until tomorrow, be safe and take care of each other. Peace. Hey, breakdown listeners, come join CoinDesks Consensus 2020, the festival for the decentralized world this June 9th through the 12th, in Austin, Texas. This is the only festival showcasing and celebrating all sides of blockchain, crypto ecosystems, Web3, and the Metaverse, and is designed for crypto-newbies, investors, entrepreneurs, developers, and creators. Don't miss speakers like Kathy Wood, SBF, CZ, Punk 6529, and Joe Lubin to name just a few.

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The Breakdown - Laura Shin on Greed, Hacks and Crypto Idealism

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