Cargo Cults and the Reality of Crypto

Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. I'm moving from this office and finally get to return back to my farm; construction's nearly over. Various things that we do. Anyway, I wanted to make a very quick video to talk to you guys about cargo cults and the reality of crypto. As many of there are probably more than 30,000 cryptocurrency projects floating around the spectrum of crypto, and new ones crop up all the time while old ones die.

Some get resurrected and come back to do new and interesting things. For the most part, we pay attention to maybe 50 to 100 projects that are interesting and novel. The novelty can be technological, market dynamics, tokenomics, or unusual levels of adoption. It can also stem from external forces, like for example, Elon Musk waking up every day and saying Dogecoin is amazing, which creates market distortions that ordinarily would not be there for a meme coin project. Then there’s a lot of other stuff floating around, and I’d categorize it into three different buckets.

One bucket is that of failed projects. They were around for a while, did a lot, and may have been really interesting, but for some reason, they just didn’t get where they needed to go. Purecoin, for those of us old enough to remember, was the first hybrid proof-of-stake, proof-of-work system. Another example would be NXT. They can still technically kind of sort of be around, like Feathercoin, but nowhere near the prominence they used to have.

It’s kind of a dying language or a dying religion; it may have some holders and adherents who are really interested in it, but for some reason, it just didn’t get where it needed to go. The second bucket is projects that could have been outright scams. The intention from the very beginning was to defraud people. Bitconnect is an example of that, as is Celsius, where people intentionally or unintentionally created something like Luna, which just blew up, and the value is now gone. Even still, some people try to resurrect it or do something with it.

For example, there have been attempts to relaunch from the Mt. Gox victims, like Luna Classic. It’s hard to kill things in crypto. The third bucket contains things that, for whatever reason, are curiosities and are hard to understand. They have something about them in their community, the way they do stuff, and the way they communicate that is outside of the orthodoxy of crypto.

You’re not really sure where to place it. It’s not usually technologically novel, or if it is, it’s so unusual that it’s hard to understand. Typically, the culture is weird. When I say weird, I mean it doesn’t seem it should take off or has some issues about it. So, typically, we in the industry tend to just ignore these things and move forward.

But the problem is that the third bucket is the one that tends to reach up and try really aggressively to get people who are in the top 10 to talk about them. Hex and PulseChain and this ecosystem are examples of that. Every single AMA I have done for the last probably five years, if you look through the comment section of both the static comments and the real-time comments for the live streams, there’s been at least one person saying, “What do you think of Richard Hart? What do you think of PulseChain? What do you think of Hex?

” pushing and pushing and pushing. To tell you the truth, I don’t know much about it as an ecosystem, outside of the fact that I know Richard Hart is an incredibly ostentatious and unusual person who buys lots of luxury goods, expensive watches, cars, and Louis Vuitton tracksuits. He seems to have a popular YouTube channel. Andrew Tate does similar things; it doesn’t really mean that he’s a bad guy or that there’s an issue there. It’s just outside of my orbit, and there’s nothing technologically interesting about an ERC20 token or a copy of the Ethereum Virtual Machine.

That’s just the truth of the matter. There may be business model innovation, but I tend to stay away from people who assert high-yield products or other things because almost certainly there’s a catch to it that results in value destruction, as we’ve seen with Celsius and Bitconnect and other ecosystems. So, I usually say nothing, but when you get badgered and badgered, at some point, you say certain things. Recently, I was on Dave’s show and Jen’s show. We were talking about the various SEC cases, and I mentioned that cases against things like Coinbase, Binance, and Kraken are not long for this world; they’re going to be dismissed under this new regime.

But cases the one against Richard are different, and those will persist. This triggered many people in the Hex and PulseChain community to come and directly attack me for something that’s a factually accurate statement. The cases against Coinbase and Kraken, as distasteful as they are, are cases against companies discussing the new nuances of what is a security or not. The case against Richard is a personal case against him involving misappropriation and fraud for $12.1 million, which they assert is misappropriated money.

Those cases the SEC litigates a little differently and more aggressively. Whether you believe he’s guilty or not is immaterial to the fact that they will likely continue prosecuting that because of the nature of it being a personal case alleging misappropriation of investment funds. Furthermore, there is an Interpol red notice. You may disagree with it; you may think it’s a conspiracy, but it’s an undeniable fact that there’s an Interpol red notice for a U.S.

citizen living in Finland for tax evasion and assault against a person under the age of 18. Again, you may think it’s a big conspiracy, and apparently, things are so conspiratorial that when articles say that $2.6 million worth of his watches were seized, that’s apparently fake news as well. So this is that third bucket that’s unusual. Why do you care what I think?

Why do you need my validation? Why do you bother me in all my AMAs about saying various things or saying that I’m lying or that I’m afraid of the PulseChain Hex community? I’m not. I’ve never cared. Richard has certainly made videos attacking Cardano, and your own community denied that until I posted one of the videos.

You seem to defend this guy to the end of the earth. I watched the same thing with Craig Wright in the BSV community, and a lot of people were very afraid to speak up against the BSV community and the things that were happening there because they saw how remarkably litigious Craig was and still is. I have no idea who Richard is. I’ve never met him, never interacted with him, and I couldn’t care less. So I have to ask, why do you hassle me, invade my space, and attack me over Twitter, saying I’m spreading misinformation?

Do you deny that there’s an SEC case that’s active, an Interpol red notice that’s active, which is criminal, and that there are issues in that ecosystem? Did these things just not happen? Do you deny that the SEC complaint is against Richard personally, not against the company, and that there is an allegation of misappropriation of $2.1 million worth of funds, including buying a large diamond among many other things? What you’re going to do now that I’ve said this is attack me and say Charles Hoskinson’s bad or scared or misleading people or attempting to attack PulseChain or Hex.

I don’t understand what you gain from this. What do you gain by being utterly distasteful? There was no upside to dragging me into your ecosystem. I have no business in PulseChain or Hex; I have nothing to do with it. The only comments I made were drawing a contrast on how the SEC views enforcement versus cases like Coinbase versus cases where they’re alleging personal fraud by the conduct of a founder.

These are different things; they’re prosecuted differently, and they tend not to drop them. They tend to look for remedy, and it typically is the beginning. If there’s an allegation of tax fraud in Finland for a U.S. citizen, I assume he still is because the complainant, the SEC in 2023, alleges that typically the IRS and the DOJ would also look into these things and see if there is tax fraud, wire fraud, or other things.

Just because they have yet to be filed doesn’t mean they won’t be. This could be the tip of the iceberg in terms of a litigation strategy, and typically it would be for these types of things. If they’re alleging A follows B because they’re interconnected, the SEC does not have the ability to prosecute criminal conduct; that is left to the IRS’s CID, the Criminal Investigation Division, and the FBI and the Department of Justice. Accordingly, they typically coordinate, but on smaller cases, it sometimes takes longer. In many cases, if a person is residing outside of the United States, the entry point is to have the nexus country that they live in arrest that person first, and lo and behold, U.

S. charges suddenly appear, and extradition occurs. That’s what usually happens with these types of things. I’m not saying it’s going to happen in this case, but that is a common pattern, and that’s a point of clarification for these things. This may be inconvenient to you; this may be hurtful to you.

You may be an investor in this ecosystem and community, but these are things that typically occur, and we can disagree with them. I’m close friends with Roger Ver; I fundamentally disagree with the tax case that the U.S. government has brought against him and their attempts to put him in jail for life for taxes he probably didn’t know about. It is an injustice, and I think there should be a pardon there.

You in that community may feel the same against Richard. Okay, so why then bring Charles Hoskinson into this and provoke the fight? Why then harass me, call me a liar, attack my integrity, and attack the Cardano ecosystem over any of this? What do we have to do with any of this? Are you doing any service to your community?

You’re creating a beacon saying that anybody who gets remotely close to your ecosystem, unless they have a cult-like agreement with every single thing you agree with, will be attacked, demeaned, bullied, and harassed. Is that part of your adoption schema? Is that part of how you win people over, influence people, and get them excited about partnering with you and being part of your ecosystem? Is that really a wise decision about adoption? So before you engage with this, take a step back and really think it through.

I have nothing against anyone in the PulseChain community or the Hex community. I don’t know much about it other than what I read from the SEC complaint, which I pulled this morning and looked through after all this stuff was said, just to read it again and double-check my understanding of things in the Interpol notice. Richard has said things that are untrue about Cardano from his xpub statements, among other things, demonstrating a clear lack of understanding about how our ecosystem works and a basic understanding of how our technology works. I don’t care, but he did create those assets and broadcast them. We didn’t take the bait; there was no engagement when Richard did that, and I believe he did that in an attempt to create engagement.

Now we’re here. You’re an ecosystem, and whether your founder stays or goes, whether your founder goes to prison or is not in prison, he wins all charges, and it was a witch hunt, or he actually has done some nefarious things—who knows? But if you’re truly a cryptocurrency and you’re truly decentralized, you should be self-governing, and you should be different from your founder, as Cardano is, as Bitcoin is, and as Ethereum is increasingly becoming. If that’s the case, you have to ask yourself again, what type of ecosystem do you want to be? If you take from this video that Charles Hoskinson and Cardano are an evil ecosystem, how dare they spread lies and misinformation about us?

I’m going to tell you right now, as a person who has some advice and who’s been around for a while, you are going to make it damn near impossible for anyone to willingly want to work with you, integrate you, invest in you, or be part of your ecosystem. What you’ve broadcasted is that people who have nothing to do with you, who are objective and on the outside, may not be fully informed or may not fully understand things. The minute they say anything that you perceive to be problematic, those people have to be destroyed, criticized, demeaned, belittled, and harassed. Then no one will ever even want to consider that you exist. This is what happened in the BSV community with Craig.

We all watched it, and it went down and down and down. Honestly, ask yourself how many people are waking up today and saying, “Boy, I can’t wait to build my next project on BSV.” what? No matter what happens, that’s right or die; I’ve got to be with those guys. They’re geniuses; we’ve got to be part of that community and that ecosystem.

If you want value in your token, if you want utility in your token, if you want adoption in your ecosystem, I would presume that’s how you achieve that: that people wake up and want to be there through the collective efforts of everybody. So, people on Twitter, some unsolicited advice: I’m going to resume my behavior and put you back in bucket three. I don’t care about your ecosystem; we don’t think about your ecosystem. There’s nothing there that overlaps with the things that I do or the things I think about. This is not a value judgment on you as people; this is not a value judgment on whether you’ve created something interesting or not.

It’s just not something I care about, and it’s not something I’m going to lose a lot of sleep over. The only reason I’m making this video is I’ve gotten hundreds of tweets now and a lot of messages that were pretty aggressive. I’m trying to nip this in the bud right now and say you will achieve absolutely nothing by further harassment. You’re not going to get any more engagement out of me, and you’re not going to get any more statements out of me. All you have achieved is what little interest I may have had in actually looking into your ecosystem is now over.

So congratulations on that. If that was your intent, or if you think Charles Hoskinson is a bad guy anyway, so we didn’t care—very well, you’ve achieved that. If that wasn’t your intent, well, ask yourself a question: why do you do these things? My life experience will be the same as a lot of other Layer 1 founders and large ecosystems. I wish you all the best of luck.

I hope that everything works out for you, and that’s where we’re at. Have a nice night.