A Bountiful Feast
ConstitutionDAO
The community of crypto investors who tried and failed to buy a copy of the U.S. Constitution last week has descended into chaos as people are realizing today that roughly half of the donors will have the majority of their investment wiped out by cryptocurrency fees. Meanwhile, disagreements have broken out over the future of ConstitutionDAO, the original purpose of the more than $40 million crowdfunding campaign, and what will happen to the $PEOPLE token that donors were given in exchange for their contributions.
Basically, a bunch of people donated a lot of money via a crypto platform called Juicebox with the intent of buying a copy of the Constitution. They did it under the auspices of something called a DAO - a decentralized autonomous organization - except in this case it wasn’t going to be a DAO because someone had to create an LLC to own the physical document. Also, the people putting up the money wouldn’t technically own it:
Crucially, ConstitutionDAO repeatedly said that donors were not buying a fractionalized share of the Constitution and that individual donors would not "own" part of the Constitution, they would merely have a say in where it was displayed, etc. ConstitutionDAO also said that donating to the project should not be looked at as an "investment."
"You are receiving a governance token rather than fractionalized ownership of the artifact itself. Your contribution to ConstitutionDAO is a donation with no expectation of profit," the DAO's FAQ section read. "Some examples of this would be voting on advisory decisions about where the Constitution will be displayed, how it should be exhibited, and for how long."
So…these people were basically donating money to gain voting rights to advise the people who owned the Constitution on what to do with it. Reminder: those people would own a $40 million dollar piece of very old paper (parchment?) and they wouldn’t be legally bound to listen to any of the…let’s keep calling them donors, who would occasionally vote on what they should do with it. They could just turn around and sell it! How is this a good idea!
Anyhow, it’s all a moot point because a billionaire beat them in the auction and is going to display it at a museum founded by a Walmart heiress. It’s perfect.
For their part, the founders of the DAO appear to be returning funds to the donors, however that’s proving a bit tricky because of the way Ethereum works:
Backers have to manually request refunds, so even a week later, tens of millions of dollars are still sitting in ConstitutionDAO’s pockets. And because all of the money was collected in Ether, and sending funds over Ethereum incurs high transaction costs, getting money back has become an expensive proposition for contributors.
When you transfer Ethereum across the network there are “gas fees” which, roughly speaking, are paid to the crypto miners who create the blocks you attach your transactions to, explained by this very easy to understand diagram on their site:
Creating ConstitutionDAO cost an estimated $1 million in gas fees, and it will cost at least that much for people to get their money back. Apparently our decentralized future involves a lot of accounting, and a lot of gas.
Activision Blizzard
I have played a lot of videogames in my lifetime, and for a few years I spent a lot of time playing World of Warcraft. It was created by a company called Blizzard which is now owned by software giant Activision. Recently, allegations of workplace discrimination, sexual harassment, and sexual assault have come out about Blizzard. Many senior staff were implicated in serious wrongdoing, and many other senior staff accused of abetting the behavior.
Enter Bobby Kotick, the very rich CEO of Activision Blizzard. He’s been credibly accused of some bad stuff - including threatening to have his assistant killed! - but the company’s board has stood behind him, because that’s how business works. But! Now, with the company’s stock price tanking Kotick has changed his tune:
Chief Executive Bobby Kotick has told senior managers he would consider leaving the company if he can’t quickly fix the culture problems at the videogame giant, according to people familiar with his comments.
I find statements like this by executives particularly scummy - if you’ve overseen a decades-long culture of unethical and at times criminal behavior at a company, you probably shouldn’t to decide how and when you leave. But, at many public companies, the only people whose opinions about your conduct matter are the handful of random fellow rich people who sit on the board of directors. Apropos of nothing, Bobby Kotick makes $30 million dollars a year in salary, and recently received a $200 million dollar bonus payout while the company laid off hundreds of workers.
Rent A Hitman
Don’t do this:
[Wendy] Wein wanted her ex-husband dead. But she didn’t want to kill him herself and didn’t know anyone she trusted to do it for her. So she did what a lot of people do when they have a job they can’t or don’t want to do themselves — she searched for help on the Internet.
Wendy! Come on. Fortunately, the website she found was a parody-slash-honeypot called RentAHitman.com which has some pretty obvious clues it is not real:
The website promised her confidentiality. It boasted of industry awards. It showed off testimonials of satisfied customers, including one from Laura S., who had “caught my husband cheating with the babysitter.” The website bragged about complying with HIPPA, which it said was “the Hitman Information Privacy & Protection Act of 1964,” a nod to the Health Insurance Portability and Accountability Act, or HIPAA, the law passed in 1996 to protect patients’ medical information.
Anyhow, the guy who runs the site forwards any “serious” inquiries to law enforcement, and that’s where ol’ Wendy ended up. Do not, under any circumstances, try to murder your husband. Especially do not hire a hitman to murder your husband from the first website in a Google search.
Bruce Bagley
A couple years ago I wrote about a guy who was facing federal prison time for laundering money. It was a notable case because he was once considered something of an expert on the subject:
For years, Bruce M. Bagley has taught in the University of Miami's International Studies program. He's one of the nation's foremost experts on money laundering in Latin America.
Well, the wheels of justice have finally finished turning and Bagley has been sentenced to…six months in prison:
“I am ashamed of my irresponsible behavior,” Dr. Bagley said via Zoom before Judge Jed Rakoff of U.S. District Court in Manhattan, according to The Associated Press. “I have spent my life as an academic working to understand and improve conditions in many countries in Latin America, and to be here today is the greatest departure from the life that I have aspired to.”
I mean, wouldn’t the year he spent money laundering for Venezuelan criminals be the greatest departure? I don’t know. Since his arrest he’s had a rough go - according to his attorney he’s in poor health, and his wife passed away. Prosecutors had argued for a four year sentence, but the judge knocked it down to six months so as not to be “overly punitive.”
The same judge sentenced DMX to a year in prison for tax evasion.
Clearing Out Bookmarks
This year provided quite the harvest of scams to write about. And so, in the spirit of being thankful - and because Thanksgiving falls across the days I normally write this newsletter - here is a list of a bunch of the stories I wanted to write about this year but didn’t get a chance to:
The Center for Public Integrity writes about how companies steal hundreds of millions of dollars’ from workers each year with few consequences.
Back in May, Rachel Hawley explained how NFTs increase inequity in the art and design world. It’s only gotten worse since then.
Adam Chandler tried to warn us about the rise of ghost kitchens back in February. Almost a year later, they’re more popular than ever, with major chains jumping on board the trend.
Here’s a story about how DarkMarket - a major illegal online marketplace - was taken down.
An insider tells the tale of the collapse of Mt Gox, one of the early major crypto exchanges.
Erin Griffith at the NYT puts this year’s crypto art and trading card frenzies in context.
The hunt for Ferdinand Marcos’s alleged $10 billion dollar fortune kept hidden for 30 years.
An excellent podcast series on the corruption in British soccer, focused on one dealmaker who has enabled the sale of many large UK clubs.
A leading supplier of rapid COVID-19 tests destroyed millions of kits and laid off workers, right before the Delta surge.
Why free parking is bad for cities and the people who live there.
The American behind a pro-Trump fake news empire comes clean and tells his story.
One company is buying up tens of thousands of decaying oil and gas wells, and critics are concerned they won’t close them properly, leaving the government to clean up a catastrophic mess.
Accounting firms craft favorable tax loopholes for their rich clients from inside the government.
Short Cons
Globe News - “A heist movie about to shoot in Winnipeg this week was delayed by something even the film’s scriptwriters couldn’t have dreamt up. All the gear was stolen Monday, before cameras could start rolling.”
Insider - “"The irony of this is, it's a mental-health unicorn where everyone's mental health went to shit," said a former employee, who described his tenure as "the most stressful time in my career."”
The 19th - “Parents cannot use federal aid to pay for diapers, and are often forced to come up with other solutions, using maxi pads or towels to keep their children clean and dry. In rural America where aid is even harder to access, tiny diaper banks are the only lifeline.”
No tips or thoughts this week, I’ll be full of tryptophan - scammerdarkly@gmail.com