William Broeksmit Jr.: A Whistler Who Learned to Make Sense of a Cryptocurrency Cryptonomial App

Few things can turn around a boring winter afternoon like receiving a billion dollars. The amount is there, in its 10-figure glory, glaring from my phone screen in white characters against a charcoal background: $1,112,172,834.

WIRED has a gift and hospitality policy that forbids staff to accept gifts, meals, discounts, travel expenses over $30. I’d had no plans to become a billionaire. The man messaging me on Signal thinks sending him a billion dollars in zystastok is the best way to prove the legitimacy of the app. His plan is to exploit a possible vulnerability in a cryptocurrency wallet app to squeeze money out of thin air, and in the process, expose the app as either shoddy or fraudulent. A few minutes earlier, he had written that he wanted to become an “alchemist.”

I have heard of him before and he has a resemblance to the singer in the press shots that he wears shades and a fedora. His real claim of fame was as a financial whistle blower. In 2014, after the death of his father, Deutsche Bank executive William Broeksmit, Broeksmit Jr. began to leak a trove of documents on the bank’s inner workings to journalists and FBI agents. The value of his material has not been questioned, but his unpredictable behavior is. He’s tweeted documents (which he retrieved on Reddit) that had been stolen in North Korea’s 2014 Sony Pictures hack, eliciting the company’s ire; The New York Times reported that he met with US congressmember Adam Schiff to help him investigate Donald Trump’s finances in 2019; he was reported missing by his girlfriend in 2021, and was technically still a missing person when we spoke.

They were broke and started looking into a new area in the winter of 2021. During his research, Broeksmit chanced upon Incognito Wallet, which developed a blockchain where people can exchange and trade cryptocurrencies via peer-to-peer payments or through a decentralized exchange (DEX), which allows cryptocurrencies to be swapped directly without going through intermediaries. Incognito is a privacy-conscious, open source, and distributed project run by an anonymous team in Vietnam.

Users can mint their own cryptocurrencies with Incognito. One just has to pick a name and ticker symbol and provide information about the purpose of the coin in order to launch it as an asset tradable within Incognito’s ecosystem. Businesses can create these coins to give away promotional prizes to their patrons, suggests Incognito. Most of the time, these coins have a value of zero dollars, but no one wants to trade them for high-priced mainstreamcryptocurrencies on Incognito’s exchange.

FTX was hacked by an investor whose bank robbery stole $13 million of his cryptocurrency assets, and it is still unclear what the perpetrator’s true identity was

On Friday, just hours after FTX’s collapse, the exchange’s remaining funds were drained of over $656 million worth ofCryptocurrencies, which seems to have been stolen. “FTX has been hacked,” wrote an administrator in FTX’s Telegram channel. “FTX apps are not safe to use.” They need to be deleted.” Exactly how FTX might have been breached—and whether its apps are, in fact, compromised—is far from clear, and FTX hasn’t officially announced any theft. But the company’s US general counsel wrote in a tweet that “unauthorized access to certain assets has occurred.” FTX did not respond to the request for comment.

“We’re definitely watching the movements of these funds,” says Chris Janczewski, the head of investigations at TRM Labs and a former special agent at the IRS’s criminal investigations division. The potential thief has a lot of money. They went into a bank and took all the money they could carry, and then the dye packs went off. Everyone knows that they have all this money, but now they know it’s connected to the bank robbery. Can you tell me what you are going to do with it?

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington, DC. The opinions expressed in this article are his own. Read more opinion at CNN.

Officials allege that Bankman-Fried, 30, spent years lying about the financial health of FTX, a crypto exchange which collapsed in November in one of the most spectacular financial implosions in years. A hearing is pending on Bankman-Fried, who is in the Bahamas and has an arrest warrant out for him.

The details of Bankman-Fried’s alleged fraud will likely take months, and potentially even longer, to disentangle. But the broader story is relatively straightforward, and familiar: He allegedly spent years defrauding unsuspecting investors of gargantuan sums of money, and then allegedly used that money to not only bankroll his lavish lifestyle, but to set up tens of millions of dollars in illegal campaign contributions.

In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always pair a lack of regulation and oversight with promises of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns out of thin air.

The same thing happens in American history over and over again. In America’s initial “Great Depression,” the Panic of 1873, speculative investors operating without any oversight in the railroad industry effectively crashed the American economy, leading to spiraling bank failures and widespread destitution.

What Bankman-Fried and the S.E.C. Are Saying about Alameda, FTX and FTT

What Ms. Ellison and Mr. Wang are facing: ​The S.E.C. accused Ms. Ellison of manipulating the markets for FTT, FTX’s in-house token and the digital asset it frequently used to invest in other companies, to prop up its price. It also accused Mr. Wang of creating software that allowed the diversion of FTX customer funds to occur without detection.

Bankman-Fried may be the same as his predecessors. Given the continued lack of regulation and oversight in the crypto industry, Bankman-Fried is not only a new version of an old story, but hopefully the start of long-overdue change in the industry, with the kinds of regulations and transparency needed to prevent other scammers, fraudsters and criminals from simply stepping in to replace Bankman-Fried.

Ms. Ellison and Mr. Wang contradicted Mr. Bankman-Fried’s defense. While Mr. Bankman-Fried has said repeatedly — including at the DealBook Summit last month — that he wasn’t aware of what was happening at Alameda, the exchange’s trading affiliate, documents filed yesterday by the authorities claim otherwise.

Kim Grauer, head of research at Chainalysis, says the best way to contribute was by looking at the token created for the purpose of pump and dump by the liquidity provider. There are millions of these coins. How many are legitimate and how many are a scam?

The answer: a whole lot of them are scams. Chainalysis found that only a small percentage of the 1 million-plus coin created in 1922 ever convinced anyone to buy them. Only 24 percent of those were short term pump and dumps that the creator of the token dumped within the first week of sale.