WEEKLY UPDATE: Razzlekhan and FTX Co-Founder Sentenced

Plus Logan Paul is scamming crypto again and a 12 yr old kid rugs followers

Author

will stauner
November 21, 2024

THE PHENOM CRYPTO LETTER

GM,

Welcome to this week’s Phenom Weekly Update, where the crypto world proves once again it’s never short on drama. From scandals and rug pulls to jail sentences, it’s been a headline-grabbing kind of week. If you’re here for the chaos, you’re in luck—there’s plenty to go around. We’ll break down the biggest stories, the loudest voices, and what it all means for your portfolio (besides emotional damage). Let’s get into it!

Here’s what we’ve got this week:

  • Logan Paul Pump and Dump?

  • FTX Co-Founder gets off (ish)

  • Bitfinix hackers get sentenced

Jump to :

Logan Paul Accused of Undisclosed Crypto Promotions

Apparently we cant get a single week without the Paul bros sapping the news cycle. Logan Paul, the ever-controversial influencer, is under fire again—this time for allegedly profiting from cryptocurrency promotions without disclosing his financial interests. A BBC investigation has linked Paul to questionable token endorsements and murky crypto wallet transactions, reigniting debates about ethics in influencer marketing.

The Allegations

  • Shady Wallet Moves: The BBC claims to have evidence linking Paul to an anonymous wallet that engaged in what can only be described as textbook pump-and-dump tactics. The wallet allegedly bought tokens like Elongate before Paul promoted them to his 23 million YouTube followers and then sold them at a tidy profit once prices spiked. One example? A reported $160,000 buy of Elongate that turned into a $120,000 payday.

  • Failed CryptoZoo Project: Adding to the drama, Paul’s infamous NFT project, CryptoZoo, also finds its way into the controversy. Despite Paul’s insistence that it wasn’t a scam, investors are still suing him for $4 million, claiming the project failed to deliver.

When BBC reporters tried to interview Paul at his Puerto Rican gym, they were met with a bizarre twist: a lookalike pretending to be him, and protestors accusing the BBC of being “pedophiles.” Classic deflection? Perhaps. The reporters left, saying they’d been trolled.

What’s Next?

Paul’s legal team denies all wrongdoing and warns against publishing the allegations. Meanwhile, the crypto community continues to scrutinize his every move. This saga underscores the risks of mixing influencer culture with speculative assets—and the fine line between promotion and manipulation.

FTX Co-Founder Gary Wang Avoids Prison Sentence: A Tale of Redemption or a failure of justice?

Gary Wang, co-founder and former Chief Technology Officer of the now-bankrupt crypto exchange FTX, has dodged a prison sentence, despite pleading guilty to multiple charges of fraud and conspiracy. Instead, Wang’s cooperation with prosecutors earned him a lenient sentence of time served, plus supervised release—a decision that has sparked mixed reactions.

The Backstory

Wang, once the right-hand man of FTX founder Sam Bankman-Fried, played a pivotal role in the platform’s meteoric rise and catastrophic fall. After the collapse, he was charged alongside other executives for his involvement in a scheme that misused billions in customer funds. Wang, however, took a different path from his former colleagues: he cooperated extensively with federal prosecutors, providing crucial testimony that helped convict Bankman-Fried, who is now facing a 25-year prison sentence.

A "Cowardly Path" or a Strategic Move?

Critics have labeled Wang’s cooperation as a “cowardly path,” suggesting that he threw others under the bus to save himself. Others see his actions as a necessary step toward justice, as his testimony was critical in unraveling the complex fraud at FTX. The leniency in his sentencing reflects the weight of his assistance in the case.

Industry Impact

Wang’s case underscores the high stakes in crypto’s legal landscape. While his sentence may seem light, it highlights the importance of whistleblowing and cooperation in cracking down on fraudulent activities in the industry. It also sends a message to executives: cooperation with authorities might offer a way out, but it doesn’t erase reputational damage.

As FTX’s downfall continues to reverberate, Wang’s story serves as a cautionary tale—and a stark reminder of the volatile intersection of innovation and ethics in crypto.

Razzlekhan' Sentenced in $10.8 Billion Bitfinex Bitcoin Heist

Heather Morgan, aka "Razzlekhan," the self-styled “Crocodile of Wall Street,” has been sentenced to 18 months in prison for her role in laundering $10.8 billion worth of Bitcoin from the infamous Bitfinex hack. Her husband, Ilya Lichtenstein, received a harsher sentence of 12 years for orchestrating the operation, marking the conclusion of one of the crypto world’s most dramatic heist cases.

The Crime:

  • The 2016 Bitfinex hack saw 119,754 Bitcoin stolen, worth $72 million at the time but valued at a staggering $10.8 billion today. The couple managed to launder about $2.8 billion of the funds before being caught.

  • Using a combination of crypto mixers and shell accounts, the duo attempted to obscure the funds' origins. Despite these efforts, the transparent nature of blockchain technology eventually unraveled their transactions.

The Arrest:

  • In 2022, authorities arrested the couple in their New York apartment, where they discovered wallets linking them directly to the stolen funds.

  • Morgan’s quirky social media persona, including rapping under the alias “Razzlekhan,” added a surreal twist to the case and made headlines globally.

The Sentencing:

  • Morgan’s lighter sentence reflects her cooperation with authorities, including access to key wallets containing the stolen Bitcoin. Lichtenstein, deemed the mastermind, faced the brunt of the punishment.

The Takeaway:

This case highlights both the risks of crypto’s pseudonymity and the power of blockchain’s transparency. Despite their elaborate laundering schemes, Morgan and Lichtenstein were ultimately undone by the very technology they exploited. For the crypto community, it’s a reminder that while Bitcoin may be decentralized, crime leaves a trail.

READING CORNER

A collection of longer form content we are consuming this week 

It is still BTC SZN

Riding the Liquidity Tide

Bitcoin continues to relentlessly establish new ATHs, supported by robust capital inflows from both ETFs and the Spot Market, with over $62.9B entering the market over the last 30 days. As the market proceeds to heat up, Long-Term Holder spending begins to rise in tandem.

insights.glassnode.com/the-week-onchain-week-47-2024

NEWS

Quick Hitters from the week

THE TWITTERVERSE

A collection of the most interesting stuff on Crypto Twitter this week

MEMES

For the (crypto) Culture

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