Netflix’s Bitconned shows the rot at the heart of utility-free ‘crypto’ projects

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A new documentary confirms that, while there may be a sucker born every minute, there’s also a never-ending supply of ‘crypto’ swindlers eager to take advantage of them.

Last week, Netflix debuted Bitconned, a retrospective look at a Florida-based ‘crypto’ scam run by self-confessed fraudsters who don’t express much guilt over their duplicitous activities. Centra Tech was co-founded in 2017 by Ray Trapani and Sam ‘Sorbee’ Sharma, high school buddies who recognized the immense grifting opportunities of that year’s initial coin offering (ICO) craze.

Trapani’s backstory includes a youthful fling with dealing OxyContin, thanks to a stolen prescription pad he refers to as an “unlimited money glitch.” After he’s arrested, Trapani dodges prison by ratting out his partners, one of whom is filmed expressing confusion about why Trapani has the word ‘loyalty’ tattooed on his torso.

Despite their shared lack of technical knowledge, Trapani and Sharma soon clue into the similarly unlimited money to be made by tapping into the ‘crypto’ craze.

“We didn’t know anything about this fucking business. But it didn’t matter. It was too easy. We lied. We cheated. And made millions of dollars.”

Trapani and Sharma were inspired by Singapore-based TenX, which raised $20 million in 2017 based on its plan to launch a digital currency debit card. Trapani and Sharma decided to copy the TenX website verbatim, but replacing each mention of ‘TenX’ with ‘Centra’. (Shades of Justin Sun’ writing’ the Tron white paper.)

Trapani and Sharma then create bogus bios for themselves, including Harvard degrees and experience at Wall Street investment banks, “trying to make ourselves look as smart as possible.” They also create an entirely fictional CEO named Michael Edwards, using a photo of a University of Manitoba professor they found by (literally) googling ‘old white guy.’

Trapani, who is what you’d get if you went to Spirit Halloween and asked for a ‘bro’ costume, attempts to personally project a more business-like visual image but ends up resembling (at best) Patrick Bateman or (at worst) Donald Trump Jr. Centra also hires a lot of staff, nearly all guys, but “hot girls” are permitted to do assistant work and customer service.

Centra’s ICO limps out of the gate but soon takes off following a positive blog post by Clif High, alleged ‘crypto guru’ and creator of the Web Bot Project. We later learn that High’s post was based on him confusing Centra with a legit tradfi firm, Centra Credit Union.

That Trapani is a sociopathic scumbag is never really in doubt. At one point, a Centra customer accidentally sends Trapani his password rather than his Centra Points passcode, giving Trapani access to the over $100,000 in assets in the customer’s digital wallet, which (naturally) Trapani proceeds to steal. Trapani offers a half-hearted admission that he “felt like I genuinely robbed this guy.” Um, felt?

According to Trapani, “crypto” success is “really all marketing,” so celebrity promoters, including Floyd Mayweather Jr. and DJ Khaled, are enlisted to help distinguish Centra from the thousands of other get-rich-quick projects. Mayweather’s cooperation was secured with $200,000 in cash and $800,000 in Centra Coin, a deal that Trapani says Mayweather accepted because “he’s not the brightest guy.”

But the celebrity pitchmen attract scrutiny from media skeptics, including New York Times scribe Nathaniel Popper, whose recorded interviews with Trapani are a master class in awkward dissembling and evasion. Facing pressure to produce their phantom CEO to answer questions, Trapani and Sharma instead issue a notice that ‘Edwards’ has just been killed in a car accident.

Popper also calls Visa (NASDAQ: V) and Bancorp, who have no idea who Centra is or why their logos feature prominently on Centra’s website. Irony is a major feature of this story, including the fact that the high-priced New York lawyer Trapani and Sharma hire (over the phone) to handle Bancorp’s cease & desist letter turns out to be a college kid with no law degree.

Between the celebrity endorsers, the bogus tradfi ties and Popper’s high-profile coverage, the U.S. Securities and Exchange Commission (SEC) is finally pressured to act. The Department of Justice (DoJ) also belatedly becomes aware that it has a role to play in policing fraudulent activity.

Trapani’s co-workers accuse him of being doped up through much of this experience, and Trapani himself admits that “Xanax makes you not really feel anything.” After Sharma is arrested for violating securities laws, Trapani takes all the drugs he has on him because “if I’m getting arrested, I want to be high when I’m arrested.”

As he did in the Oxycontin case, Trapani rolls over on his co-conspirators, resulting in Sharma getting eight years in prison. Trapani gets off with time served, retaining a surprising financial capacity to purchase a new house not long after concluding his legal troubles. Meanwhile, Centra’s customers lost pretty much everything.

Doomed to repeat it

There are, of course, ample parallels to be drawn between those days of ICO infamy and the present. For instance, Australia’s securities regulator was recently called on the carpet for failing to realize that the CEO of the HyperVerse investment scheme didn’t actually exist. Suffice it to say, several thousand Aussie victims of this scam feel somewhat let down by their asleep-at-the-wheel watchdogs.

As the saying goes, history may not actually repeat itself, but it does rhyme. As 2023 drew to a close, a flurry of so-called altcoins experienced unprecedented and thoroughly unwarranted surges in value. A handful of people got rich, countless more FOMO types got soaked, and the process starts anew. Like 2017 never happened.

This is all the more insane given that so many of those being victimized aren’t new to this rodeo. A quick glance at ‘crypto Twitter’ or Reddit will turn up countless individuals bitching about being once again on the wrong end of a rug pull, only to declare their new unshaken devotion to a different utility-free token project.

And even when those who were taken in by the pump-and-dumpers look back in anger, the scammers aren’t always the target of their ire. As The Atlantic’s David Frum observed, “[i] t’s remarkable how determined [victims of swindlers] remain to defend the swindler, and for how long—and how they try to shift the blame to those who tried to warn them of the swindle. The pain of being seen as a fool hurts more than the loss of money; it’s more important to protect the ego against indignity than to visit justice upon the perpetrator.”

For years, CoinGeek has been warning its readers about the numerous scammers who occupy positions of authority and influence within the digital asset space. Most of the targets of our diatribes are ultimately exposed as the frauds, grifters, and charlatans we accused them of being (long before others caught on to their thieving ways). And yet, somehow, fools keep rushing in.

It can leave a CG writer feeling like Cassandra, gifted with the ability to foresee disaster on the horizon but cursed with the inability to convince anyone of their impending doom. Regardless, we’ll keep on sounding the alarm in the belief that saving even one ‘investor’ from financial ruin is worth the effort. And we’ll keep on promoting blockchain projects that offer real utility, not just a spin of the roulette wheel.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum,
FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.