Skycoin, a Singapore-based tech company involved in developing blockchain and telecommunications hardware and software has filed a lawsuit (Skycoin v. Stephens, 22-cv-00708, US District Court, Northern District of Illinois, Chicago) against multiple defendants, including former contractors and two journalists. The former contractors are being sued for damages for carrying out a fraudulent invoice scam and their involvement in kidnapping Skycoin founder Brandon Smietana and his girlfriend in order to steal crypto assets. The two journalists are being sued for receiving money to publish false and defamatory statements against the company as part of an extortion racket.
On February 8, 2022, Skycoin Global Foundation Singapore filed a federal lawsuit against Bradford Stephens, Harrison Gevirtz f/k/a ‘HaRRo’, Ryan Eagle, Andrew Young, former Eagle Web Assets (EWA) associates Aaron Kunstman and Joel Wayne Cuthriell AKA ‘Caribou’, as well as Morgan Peck, Tristan Greene, Bryan Clark, Catherine Byerly, Steven Leonard, and Josh Ogle of Far Ahead Marketing for actions that occurred between 2018 and 2022.
Smietana was an early developer of Bitcoin and a crypto industry pioneer who participated in writing code for the world’s first cryptocurrency along with Satoshi Nakamoto. Skycoin was founded in 2012 to fix the outstanding issues with Bitcoin and was one of the first corporations involved in developing Web3. Skycoin developed and prototyped Obelisk, a low energy distributed database consensus, to enable zero CO2 and provide an alternative to the legacy blockchain consensus, which involves high overhead, such as the wasteful and energy intensive Proof of Work (PoW) consensus. Skycoin is also active in developing new telecommunication protocols for next generation internet, such as Skycoin’s Skywire virtual cloud and software defined networking (SDN).
During its launch in 2013, Skycoin created and distributed 100 million units of digital property called Skycoin tokens. By January of 2018, the Skycoin token’s total market capitalization surpassed 5 billion US dollars.
Amidst the Wild West conditions that prevailed at the peak of the 2018 crypto currency financial bubble, which arose due to the completely unregulated nature of this new and emerging market, a slew of hustlers, scammers, and opportunists with questionable morals appeared, attracted by the prospects of earning quick money.
Recognizing Skycoin’s success in 2018, Bradford Stephens, Harrison Gevirtz, and other defendants are said to have devised a series of schemes to defraud, steal, and extort money and assets from Skycoin.
In early 2018, Skycoin contracted Stephens and Gevirtz to launch and manage a comprehensive marketing and brand awareness program, while improving their website and performing SEO optimization. They were paid $1 million in Skycoin tokens and Bitcoin for their services. The lawsuit alleges that they then used fraudulent means to extort additional money from Skycoin, which included demanding $100,000 – $300,000 monthly to stop spamming the company’s website in an SEO cyber extortion racket. The defendants later demanded that $30 million in Bitcoin and $1 million in cash be paid to their ‘marketing firm’ to prevent the company’s token from being delisted from top exchanges and blacklisted from the industry.
The company later discovered that Stephens, Gevirtz, and their business partners were former associates of the notorious company Eagle Web Assets (EWA), which had been sued by the US federal government and was under an FTC injunction for deceptive and illegal online marketing practices.
It is further alleged that Stephens and another defendant were involved in kidnapping Smietana and his girlfriend in Shanghai 2018. It is believed that the objective of these acts criminal was to extract passwords, source code, and other information from Smietana’s computer system. The assailants stole about $139,000 in Bitcoin and $220,000 in Skycoin after beating and torturing Smietana in his home for six hours. The assailants were arrested, convicted, and sentenced to prison time. It is also alleged that Stephens and others demanded ransom to release Skycoin computer accounts and engaged in invoice fraud, which included presenting the company with a bill for $50,000 in unaccounted for cash expenses that were allegedly incurred over two days in Las Vegas.
Also listed in the lawsuit is a scheme allegedly hatched by Stephens, Kuntsman, Cuthrial, and others to have Skycoin delisted from Binance, one of the main markets for its Skycoin currency, after the company refused to give in to demands to pay them 50 bitcoins (about $2 million at the time) in extortion money. Skycoin was consequently delisted from Binance, after the crypto exchange received a barrage of false complaints and rumors. Afterwards, Cuthrial congratulated the conspirators with public messages reading “Nice work team” and “PARTY TIME.”
According to the company’s website, “Skycoin was created as an answer to the shortcomings of both Bitcoin and Ethereum. Born out of necessity, no other coin was fulfilling Satoshi’s original vision of a fully decentralized digital currency.”
The company develops hardware and software that help both companies and individuals take advantage of blockchain technology. Among their products are Skycoin’s Fiber blockchain platform, an infinitely scalable and highly customizable parallel peer-chain architecture; CX, a feature-rich programming language specialized for the development of blockchain applications; and Skyminer, specialized hardware for running nodes on Skywire network, as well as zero-config hardware and blockchain solutions for corporate networking.
In commenting on his company’s decision to file the lawsuit, Smietana observed:
“This lawsuit and issues surrounding it are very difficult. We didn’t file this lawsuit lightly. The issues here have stretched on for several years now. Many preferred for these issues to remain private, but we understood, at this point, that their actions are causing severe damage to our community and company. We have exhausted all other options with respect to this situation and it is necessary to resolve these problems.”