Venture capitalist Nic Carter says that Silvergate Bank was “opportunistically executed amid the fog of war during the 2023 banking crisis, as part of a broader coordinated attempt to de-bank the crypto industry.”

Carter’s faulty reporting first caught my attention in September 2024 when he published a thread on X claiming that Silvergate Bank was a victim of a political conspiracy which he branded “Operation Chokepoint 2.0.”

Carter contends that short seller Marc Cohodes conspired with United States Senator Elizabeth Warren to encourage “a bank run, based on rumors that silvergate had criminal exposure to FTX (they have since been totally cleared of those allegations).”

His pronouncement struck me as an outright falsehood. There are no legal processes which have “cleared” Silvergate of its "criminal exposure to FTX.”

I messaged him, asking to explain and provide evidence to support his claim that Silvergate Bank was "totally cleared of those allegations" of "criminal exposure to FTX.”

“I mean what I wrote, feel free to refer to my tweet,” Carter replied.

“To my knowledge, ‘criminal exposure’ is a pretty loose term without a specific legal definition. Do you mean exposure to the criminal activity of FTX?” I responded. “Who cleared Silvergate of such allegations? How?”

“Not debating you. You know what I mean,” he wrote back, and promptly blocked me.

Despite receiving a block, I reached out to Carter via e-mail prior to publication of this story. Some of his responses are included throughout this article.

Carter has variously referred to Silvergate’s voluntary liquidation as an “execution” or a “murder,” but these violent metaphors are completely disconnected from the reality of what went down between Silvergate and FTX. I believe it is more likely that the self-liquidation was a tactic to avoid further action from federal regulators.

Carter worked overtime during these past few months to steer the dialogue around Silvergate’s demise, appearing on podcasts and publishing writing at multiple outlets. His work circulated and marinated on social media without much pushback, until a16z’s Marc Andreessen appeared on Joe Rogan’s show and proposed a corollary argument originating from Carter’s reporting. The interview made waves across social media, with many popular commenters criticizing Andreessen’s remarks about the Consumer Financial Protection Bureau.

Yet, no one has returned to appraise the root of the conversation. At the nucleus of the debanking argument is Carter’s proposal that Silvergate “had been unjustly forced to liquidate or shuttered due to this anti-crypto animus in the government.”

Evidence demonstrates that this claim is false. Carter has been advancing a highly misleading narrative which casts Silvergate as a victim.

But Silvergate is not a victim. They were complicit in — and perhaps even culpable for — FTX’s criminal activity.

Silvergate and the Heart of the FTX Matter

FTX was Silvergate’s most important customer. By the time of FTX’s implosion in November 2022, FTX entities reportedly held over $2 billion in deposits at Silvergate, composing 17% of Silvergate’s overall deposits. The presence of FTX helped drive explosive growth of Silvergate’s assets, which increased from less than $1 billion in 2017 to more than $16 billion by the end of 2021.

Former FTX CEO Sam Bankman-Fried proclaimed that Silvergate “revolutionized banking for blockchain companies,” a quote featured prominently on Silvergate’s website.

Silvergate’s premier product was the “Silvergate Exchange Network,” known as “SEN.”

SEN enabled Silvergate customers to make near instantaneous US dollar transfers from one account to another on a 24/7 basis. This product was attractive to cryptocurrency firms and exchanges for its unique payment settlement capability, and many prominent crypto companies quickly made a home at Silvergate in order to make use of this powerful network.

Alameda Research, founded by Sam Bankman-Fried, joined Silvergate as a customer in 2018. FTX, the crypto exchange founded by Bankman-Fried, followed a few years later. As FTX’s involvement with Silvergate grew, so did SEN: dollars transferred over SEN increased by over twentyfold from 2019 to 2021.

The most essential fact to know is that Silvergate hosted the FTX-Alameda-North Dimension banking nexus. This scheme facilitated the transfer for FTX customer funds to Alameda’s bank accounts at Silvergate. FTX customers were directed to wire their funds to an entity called North Dimension, a fake online electronics retailer. Alameda transferred customer funds from those Silvergate-hosted bank accounts and spent the money or invested those funds — personal property which belonged to FTX’s customers.

The fraud at the heart of the FTX bankruptcy transpired thanks to the decisions of Silvergate’s executives, including former CEO Alan Lane.

Nic Carter’s Inaccuracies, Distortions, and Omissions

A couple weeks after Carter’s Silvergate thread in early September, he published an article at Pirate Wires expounding on his perspective.

There are many inaccurate and misleading details scattered throughout the piece, but Carter made a serious error by severely downplaying Silvergate’s failure to monitor over $1 trillion in transactions on SEN. He wrote:

“The actual issue, I discovered, was that Silvergate’s transaction monitoring system for SEN had gone through an upgrade and experienced an outage. Because SEN was a settlement network for Silvergate’s own clients, every transaction on SEN was between clients known to the bank that had gone through rigorous KYC (Know Your Customer) and onboarding processes. So even during the monitoring outage, it’s not like the transactions were between unknown firms.”

This paragraph is a full-throated lie. Extensive evidence provided in the SEC’s complaint against Silvergate and employee statements (via a class action lawsuit) expose the faults in Carter’s “reporting.” The issue was not merely an “outage,” and during this so-called “outage” there were no “rigorous” KYC or onboarding processes, and transactions frequently occurred on SEN between parties unknown to Silvergate.

For at least 15 months, transactions on SEN went unmonitored because senior leadership failed to implement anti-money laundering (AML) software which would have detected suspicious activity. More than $1 trillion in SEN transactions did not receive automated monitoring between April 2021 and September 2022.

The new software was introduced in April 2021 to meet Silvergate’s internal policies for intelligence-based surveillance, which was necessary to monitor billions of dollars transferred by cryptocurrency industry clients and maintain compliance with the Bank Secrecy Act (BSA).

Silvergate’s BSA officer communicated to bank Chief Operating Officer Kathleen Fraher in January 2022 that there were issues with the new software, writing to Fraher that their new automated transaction monitoring system “can’t take SEN transactions [into] consideration for risk rating purposes.”

Fraher responded: “We have known of this issue and either we have established other controls to account for it or we haven’t and we have to take our lumps.”

Nine months later, Silvergate’s BSA staff prepared and shared a report with Fraher which concluded that their new software had not been monitoring SEN transactions in a manner that would help identify suspicious activity or provide adequate ongoing monitoring.

The Gates Were Open

Meanwhile, Alan Lane and his executives were lying through their teeth about Silvergate’s regulatory compliance commitments to shareholders, to the public, to bank examiners, and to Congress. Just a few of many examples include:

• Silvergate’s 2021 Form 10-K, which stated that Silvergate “developed enhanced procedures to screen and monitor these customers, which include … a system of “red flags” specific to various customer types and activities … [to] adequately screen and monitor our customers associated with the digital currency initiative for their compliance with anti-money laundering laws.”

• Lane’s statements In a June 2022 CNBC interview: “As a regulated financial institution, Silvergate complies, obviously, with all of the federal and state regulations and we essentially need our customers – we require them to comply as well. And so we only bank institutions who are also serious about regulations, so, ironically, we actually welcome [increased scrutiny].”

• Lane’s letter (reviewed and approved by Fraher) about risk management published November 21, 2022: “Silvergate conducted significant due diligence on FTX and its related entities, including Alameda Research, both during the onboarding process and through ongoing monitoring, in accordance with our risk management policies and procedures and the requirements outlined above.”

• Lane’s December 19, 2022 response to an inquiry from Congress: “In compliance with the Bank Secrecy Act and the USA PATRIOT Act, we determine the beneficial owner, the source of funds, and the purpose and expected use of funds for each and every account we open. Silvergate also monitors transaction activity for every account and identifies activity outside of the expected usage. When we

  identify certain kinds of activity, we are required to confidentially file suspicious activity reports, and we do so routinely. We have a track record of closing accounts that are used for purposes outside of their expected use.”

Extensive accounts provided by former Silvergate employees in a class action lawsuit underscore that Lane’s statements are flagrant lies or false representations.

One former senior vice president at Silvergate stated that the bank did not vet existing customers before adding them to the SEN Network. The SVP, who started at and departed Silvergate in 2019, stated that she did not see efforts by Silvergate to know their customers or ensure legal compliance. Instead, she said their focus was on sales and client acquisition, especially following the turn towards crypto clients.

The former senior VP confirmed that she “never heard of Silvergate conducting any of the specific onboarding measures that Lane and Silvergate had claimed repeatedly to customers and investors that they performed.”

Once customers got access to SEN, there was a glaring absence of ongoing monitoring. There was no AML alert monitoring, no daily news reviews, no quarterly account activity reviews, and no training for employees on how to conduct monitoring that could have helped detect illicit activity.

Another former Silvergate employee who worked as a BSA analyst from 2017 to 2019 stated that about half of Silvergate’s customers were unknown to the bank. His understanding was that Silvergate would bank anyone who wanted to be a customer. He “reported that he and his fellow analysts felt like they were checking boxes for the sake of it without the Bank actually being mindful of the risk they were absorbing.”

The BSA analyst said that everyone in his department raised compliance concerns to their manager “regarding customers they believed should be exited but would not be by order of Silvergate’s Chief Operating Officer.” (Fraher was COO from 2018 to 2022, overlapping this period.)

The BSA analyst further claimed that suspicious activity reports were absorbed and justified as an effort to preserve business relationships. No Silvergate customer accounts were ever closed, he said. Other former employees attested to the same, with one manager saying that the bank never declined a client, and that there was no record of a prospective client ever being denied approval.

A former VP of Deposit Operations (employed at Silvergate from 2011 to 2021) stated that Silvergate failed to investigate reports from customers and other banks about unauthorized transactions. The VP also explained that in 2018, Silvergate started receiving ten to twenty subpoenas per month from the U.S. Attorney’s office. These subpoenas concerned incoming customer wires – including incoming wires for Alameda.

A digital banking manager who worked at Silvergate from March 2022 through November 2022 also challenges Lane’s narratives. This manager was responsible for the SEN, including onboarding. The procedures Lane references in the quotes above did not exist, per her recollection.

The manager explained that when customers wanted to join SEN, “the gates were open.”

When it came to SEN, there was no due diligence, no compliance research, no anomaly detection, no wire limit requirements, and no reviews or approvals from management, according to this manager. When she sought out KYC and beneficial policies on Silvergate’s intranet, she was unable to locate procedures concerning compliance. The AML software purchased by Silvergate was never implemented.

She recalled a conversation with her manager, Dina Matias, in which she questioned why a $250 million wire limit was provided to a customer with only $70,000. Matias, who reported to Chief Administrative Officer Elaine Hetrick, screamed at the manager in response, per the manager’s recollection.

The banking manager also claimed that Silvergate employees were directed to complete beneficial ownership forms on behalf of the clients. This allegation is corroborated by a former Silvergate client manager, who confirmed that at the direction of Silvergate management, he and other relationships managers completed beneficial ownership paperwork for both new and existing clients.

Beneficial ownership information helps the Financial Crimes Enforcement Network identify who owns or controls a company. Since only the companies themselves can provide accurate ownership information with absolute certainty, it would be both unusual and inappropriate for Silvergate relationship managers to complete BOI forms on behalf of their customers.

Silvergate had also represented to investors that they performed site visits as part of their compliance reviews, which are inspections that help a bank assess the legitimacy of prospective clients’ business operations. Site visits can be an important step to help prevent money laundering and ensure that shell companies aren’t abusing the bank, as in the case of North Dimension.

Four of the aforementioned employees stated that Silvergate did not conduct site visits.

I asked Carter why his reporting failed to mention the extensive and troubling details shared by Silvergate’s former employees.

“Don’t have a view here,” he responded. “I’m not conducting a forensic investigation of silvergate, I’m writing about bank regulatory policy.”

Matters Requiring (Immediate) Attention

One of Silvergate’s former due diligence managers (employed from May 2022 to May 2023) said that the Federal Reserve reportedly sent Silvergate a report identifying Matters Requiring Immediate Attention (known as “MRIAs”) pertaining to their client vetting, due diligence, and onboarding practices. Regulators apparently also identified deficiencies with Silvergate’s ongoing monitoring procedures and suspicious activity reports.

“Virtually every bank examination includes some nominal ‘matters requiring attention,’ as there are always areas for improvement,” Carter wrote in his Pirate Wires piece. “Regarding Silvergate’s failure to detect FTX’s various schemes, banks are not expected to catch every single instance of suspicious activity among their clients.”

Carter’s source appears to either misconstrue or misunderstand this particular action from the Federal Reserve. He claims that a source with knowledge of the situation tells him the examinations resulted in MRAs, as opposed to MRIAs.

The Federal Reserve makes an important distinction between MRIAs and MRAs, the latter of which Carter is referencing.

Via his e-mail response, Carter told me that he was “not familiar with the distinction” between MRAs and MRIAs. The nature, urgency, severity, and threat to organizational safety and soundness are what distinguishes the two categories. When Federal Reserve examiners issue MRIAs, the organization is required to take immediate action, whereas MRAs provide longer time frames.1

When regulators returned to check Silvergate’s progress in June 2022, the MRIAs were going to remain in place, according to the due diligence manager. He believed Silvergate would receive even more MRIAs.

In response to the Federal Reserve, the manager and his team created a new set of procedures to be implemented in August 2022. Prior to this time, he says Silvergate did not evaluate the compliance culture of prospective clients during the onboarding phase. Reviewing previous records, he could not discern customer identities, their jurisdictions or sources of wealth, or a traceable flow of funding.

Once the new set of procedures was rolled out, the due diligence manager wanted to re-review any customers who were not vetted by the new onboarding process, as per industry standards. His supervisor agreed with the recommendation.

Silvergate did not follow his recommendation, he said.

Regardless of the veracity of these statements from former employees, Lane knew that Silvergate’s regulatory compliance program had critical deficiencies after multiple bank examinations which found serious flaws in the bank’s transaction monitoring systems.

Instead, he chose to misrepresent the truth in order to hide deficiencies in Silvergate’s BSA program from investors, while reportedly unloading over $21 million in Silvergate stock over the years.

Too Little, Too Late

Silvergate’s failure to monitor FTX and Alameda was a deliberate choice. It was almost like the executives deliberately turned a blind eye, knowing that crime would inevitably fester within their walls, but also knowing that conscious neglect would help attract valuable clients who intended to conduct illicit business. In the end, willful ignorance brought in more clients and more volume, which meant more opportunities to line their own pockets.

After FTX filed for bankruptcy, a Silvergate board member requested that the bank review its relationship with FTX. Lane brought this request to Fraher, and Fraher told him that she had already ordered the BSA staff to review FTX’s activities through Silvergate.

Less than one week after FTX filed bankruptcy, Silvergate staff identified about $9 billion in suspicious transfers related to FTX’s entities.

“Most troubling to the BSA staff was the trend of funds that flowed from FTX’s custodial accounts—which held FTX customer funds—to a series of non-custodial FTX-related entities’ accounts, followed by transfers of these funds to other third parties—either through the SEN or to accounts external to the Bank,” reads the SEC complaint.

Silvergate finally decided to have a look after it was too late, and it took less than a week to identify the source of the problem. Yet, I don’t think they even needed more than one day. If executives and management spent even a few hours investigating the FTX matter, they likely would have quickly identified illegal activity. A smidge of effort could have mitigated the carnage that followed FTX’s collapse.

Ryan Salame’s Bombshell

Former FTX and Alameda executive Ryan Salame alleges that Silvergate executives and lawyers actually advised and directed the whole operation.

In summer 2024, Salame repeatedly asserted that Silvergate directed all of Alameda and FTX’s banking activity. He said this was done at the behest of Silvergate executives.

“Silvergate instructed alameda / [North Dimension] to use their accounts while they figured out a solution internally (as a bank) how to onboard ftx [sic] directly. Lawyers / executives / everything,” reads one of Salame’s many posts about Silvergate.

If Salame’s allegations have merit, that would mean that Silvergate was not just complicit, but directly orchestrated the facilitation of FTX customer funds into Alameda’s coffers.

In the Bankman-Fried sentencing memorandum, the government states that Silvergate communicated that it would not open an account to facilitate FTX customer deposits unless FTX could show that it was licensed and registered as a money services business. To maneuver around this restriction, Alameda employees submitted a falsified application to Silvergate stating that the purpose of the newly incorporated North Dimension was for trading and market making and that North Dimension was not a money services business.

Silvergate approved North Dimension’s bank account application in April 2021 — the same month in which the bank stopped monitoring SEN’s transactions. The North Dimension Silvergate bank account ultimately processed billions of dollars worth of transactions over the course of at least 9 months.

What is unclear is why Silvergate would be supposedly so firm as to ensure that FTX abided by the law and regulations initially, then abruptly and utterly neglected to exercise even the most basic due diligence. North Dimension wasn’t a mystery: it had no employees or real business operations. Their website clearly showed they had nothing to do with crypto trading or market making, contrary to the application Silvergate approved. The company was registered at the same address as FTX US. The prices of the electronics were nonsensical, and there was no viable way to actually order anything from the shoddy, typo-ridden website.

Nor was any of this a secret to Silvergate. FTX publicly displayed instructions for customers to wire their deposit funds to North Dimension. Silvergate did not need to do any serious or in-depth investigatory work — any user with an FTX account who went to deposit funds during this period would have seen these instructions.

On top of all of these glaring red flags, Salame further claimed in a July 2024 post on X that Alameda (and later, North Dimension) had thousands of incoming and outgoing wires with “FTX” written in the wire reference field.

The bank had a litany of opportunities to easily and quickly analyze the activities of the bizarre shell company of its most vital customer, yet for some reason it chose to look the other way.

The notion that Silvergate did not know what FTX was up to with their North Dimension account exceeds the boundaries of plausibility. The only reason I can fathom that this travesty was permitted to unfold is precisely because the Silvergate executives wanted it to happen — likely because it was good for their own personal bank accounts.

While there is a good argument here to be made about regulatory failure in regards to Silvergate,2 it is not the misinformed argument being pushed by Carter.

The Secret Sauce

Lane once bragged in an interview that “our compliance and due diligence is our secret sauce.”

Yet, Silvergate’s real secret sauce had nothing to do with their compliance or due diligence procedures. Lane’s true secret sauce? Nepotism, which played a major role in his bank’s downfall.

Alan Lane’s son, Chris Lane, as well as two of his sons-in-law, served in executive positions at Silvergate. Until November 2022, Lane’s son-in-law, Tyler Pearson, served as Silvergate’s Chief Risk Officer until November 2022. Another son-in-law of Lane, Jason Brenier, held several positions at Silvergate starting in 2018, including senior VP positions which give him purview over correspondent banking and client relationship management.

These men were in positions to make critical decisions which ultimately impacted the tumultuous outcomes of Silvergate and FTX.

As the Office of Inspector General phrased it in their summary report: “Silvergate’s board of directors and senior management were ineffective … Further, nepotism, evidenced in the several familial relationships among members of the bank’s senior leadership team, undermined the effectiveness of the bank’s risk management function.”

On the other hand, Carter does not seem to believe that nepotism was an issue of concern for Silvergate.

“I know people were critical of the Chris Lane hire but it doesn’t bother me too much,” Carter replied in response to my inquiry.

Alan Lane’s son, Chris Lane, appears to be circulating Carter’s work while claiming that “neither Silvergate, nor its shareholders, deserved to be attacked by sitting US Senators in a letter filled with short seller conjecture.”

Chris Lane’s post demonstrates a pathetic lack of remorse. Chris was arguably unfit to hold his senior positions as Silvergate’s Chief Technology Officer or as Chief Operations Officer. Given that technology and operational failures are at the core of the Silvergate debacle, Chris failed to uphold his duties and protect both the investors of his bank and the customer of FTX.

Why would Chris feel it is appropriate to pretend to be a victim?

Chris is complicit in the FTX bankruptcy. The truth about his daddy’s bank is that it grossly mishandled the money of working class individuals, and Silvergate’s neglect of their responsibilities created a devastating tragedy for people around the world.

FTX victims are real human beings who endured psychological trauma and profound disruptions to their personal lives. Families grappled with losing life savings, shattered dreams, and the threat of losing their homes. Children witnessed the lives of their parents become completely destabilized. Many victims struggled with severe depression, strained relationships with loved ones, or an inability to pay for medical expenses. Some pondered suicide.

“You have stolen a life from me,” reads one victim statement.

Whitewashing White Collar Crime

I myself lost money on FTX’s exchange when it collapsed. I do not care about getting my money back. Instead, I wish for the public to know the truth about what actually happened. And the truth here is that Silvergate Bank was a criminal hellhole of nepotism and corruption which facilitated the illegal activities of FTX and Alameda Research.

Carter’s reporting neglects to reference or wrestle with any of these details, possibly because they are inconvenient to his ideological arguments. His argument about Silvergate has been cast by supporters as journalism, but it is merely vapid corporate propaganda. He made up his mind about Silvergate long ago, and has ignored or dismissed new evidence that contradicts his beliefs.

Silvergate was not “killed” or “murdered” or “executed.” Carter’s framing of the Silvergate saga is a manipulative form of historical revisionism.

Venture capitalists like Nic Carter will not be allowed to whitewash the history of white collar crime without a fight.

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Who is Michael Bouhanna?

Michael Bouhanna is a Sotheby’s Vice President and serves as Head of Digital Art and NFTs. In 2021, he spearheaded Sotheby’s foray into digital art during the explosive growth of non-fungible token based artwork.

Bouhanna helped to engineer the $24 million sale of 101 Bored Ape Yacht Club NFTs in September 2021. At the time, Sotheby’s fabricated and advanced a narrative that the Bored Ape auction winner was a “traditional collector” of art. Bouhanna described the sale as a “great indicator of the level of confidence in this amazing NFT project.” 

In 2023, Surfing the Waves reported that the actual winner was now-defunct cryptocurrency exchange FTX. Sotheby’s claimed in a legal filing that “FTX was not the winning bidder of the BAYC NFT auction.”

Currently, Bouhanna is promoting Sotheby’s upcoming auction of Maurizio Cattelan’s Comedian. Cattelan originally debuted the conceptual artwork in 2019 and was sold as an edition of three. Comedian is known as a banana affixed to a white wall with duct tape, but the work itself consists of a certificate of authenticity and detailed instructions on how the banana should be displayed.

Today, November 20th, Sotheby’s will auction off another edition of Comedian. The auction winner will receive a certificate which “grants the owner the permission and authority to reproduce this banana and duct tape on their wall as an original artwork by Maurizio Cattelan.”

The auction house estimates that this certificate will sell for more than $1 million.

In October 2024, while promoting Sotheby’s upcoming Comedian auction, Bouhanna stealthily launched a cryptocurrency memecoin on Solana that he titled “Comedian.” He used the token to facilitate an insider trading scheme.

What insider trading occurred?

On October 24th, Sotheby’s announced a world tour of Cattelan’s Comedian, culminating in the auction.

The day following Sotheby’s announcement, Bouhanna created and launched a memecoin called “Comedian.” Per Bouhanna, he believed he was doing so anonymously at the time. But just a few hours after launch, his identity was connected to the token deployer wallet.

Under the cash tag $BAN, the token’s social pages use imagery of Cattelan’s Comedian. The pump.fun launch page provides this description: “The most significant meme of the art history by Mauricio Cattelan. Being auction at Sotheby’s November 20th 🍌.”

Less than one hour after launching the Comedian memecoin, Bouhanna promoted Sotheby’s auction of Comedian with a post on X, calling it “the most significant work of the 21st century.”

On October 27th, Lookonchain posted a thread on X claiming that Bouhanna had struggled to profit from trading memecoins and therefore decided to launch the Comedian memecoin. The thread claimed that Bouhanna “made more than $1M on $BAN with just one insider wallet!”

The alleged insider wallet purchased nearly 4% of the tokens at a price of 10.2 Solana (about $1,800). Less than one hour after Bouhanna posted his promotion of Sotheby’s Comedian, the insider wallet allegedly belonging to Bouhanna began taking profits. The wallet owner continued to take profits in chunks of several thousand dollars over the next two days, netting roughly $150,000 while still holding a significant reserve of BAN.

Shortly after the Lookonchain insider allegations gained public notice, the wallet in question stopped selling BAN holdings altogether. It had not moved any BAN since October 27th — until the day before Sotheby’s auction.

What happened with the insider wallet on the day before Sotheby’s auction?

As of November 18th, the insider wallet held over $2,700,000 million worth of Bouhanna’s token.

On November 19th, the wallet owner transferred about $2.2 million worth of BAN through a chain of wallets. Some of those wallets ended up sending large chunks of their BAN holdings to centralized exchange accounts.

This is often regarded as an intent to sell or convert to fiat currency.

How did Michael Bouhanna respond to the accusations?

Neither Sotheby’s or Bouhanna responded to requests for comment from Surfing the Waves. However, Bouhanna did publicly address the allegations from Lookonchain regarding his own alleged insider trading.

On October 28th, Cryptonews published an article about the situation with a comment from Bouhanna calling the allegations “false and defamatory.”

Yet, six days later, Bouhanna confirmed via X that he is the deployer of the BAN token. He defended it as a “spontaneous project and a personal hobby completely unrelated to my role at Sotheby’s.”

Bouhanna explained that he wanted to launch the token anonymously as a “satirical critique” inspired by “the conceptual questioning of value in Comedian.”

Bouhanna confessed that he shared the pump.fun link to BAN with a group of friends at the token launch, arguing that this explains “why there are some wallet connections between [his friends] and the [BAN] creator’s wallet.”

Overall, Bouhanna confirmed Lookonchain’s report – with one important caveat. He claims that he does not own the insider wallet in question.

Although Lookonchain’s thread identified a common funding source between Bouhanna’s wallet and the insider wallet, Bouhanna claims that this wallet is actually owned by a friend.1

Yet, even if Bouhanna is telling the truth about this particular wallet, it would not exonerate him. He effectively admitted to facilitating insider trades for his friends – trades made possible by his employment with Sotheby’s.

Bouhanna provided an insider tip to a group of his friends. His reputation and relationship with Sotheby’s clients stood to benefit from providing this insider tip.

We also do not know if Bouhanna traded, purchased, or transferred BAN from additional wallets he owned. A common practice for insider memecoin schemes is to purchase and sell the token from a wallet unconnected to the token deployer wallet.

There are several other wallets which have relationships with the BAN deployer which were not referenced in Lookonchain’s thread. Bouhanna has not explained his relationship with any of these additional insider wallets.

Bouhanna did not respond to requests from Surfing the Waves attempting to clarify his personal trading history with his own token.

Further insider trading occurred amongst a different pair of wallets which purchased about 14% of the token supply shortly after Bouhanna launched BAN. This wallet cluster profited a six-figure amount via the scheme and likely stands to profit a great deal further.

Both of these wallets likely belong to Sotheby’s client Harold Eytan.

Who is Harold Eytan? How is he involved?

Harold Eytan appears to be one of the apparent beneficiaries of Bouhanna’s insider scheme.

Eytan is CEO of Particle, a company described as a “​​fractional ownership fine art company,” as well as Reach, a social finance protocol “that rewards users for community engagement.”  Eytan is a client of Sotheby’s and has a personal relationship with Bouhanna.

About 40 minutes after Bouhanna launched BAN – but before Bouhanna posted on X about the Sotheby’s auction – one of the Eytan wallets purchased about $1200 worth of BAN. Less than 30 minutes following Bouhanna’s X post promoting the auction, Eytan’s wallet began selling BAN at a considerable multiple. 

Soon after Bouhanna posted to X about Comedian, Eytan quoted the post with the comment: “What goes higher the original art or its pump.fun shitcoin [derivative]?” 

One user responded: “it wont pump unless you sell all your 9% token. Ppl aren’t idiots.”

Eytan replied with a “Face with Tears of Joy” emoji. He continued to sell BAN in clips over the next few days.

In between selling off BAN in clips, Eytan also launched his own memecoin called “$othebys.” Using Sotheby’s branding, the $othebys X account promoted BAN and made comments defending Bouhanna. Eytan’s coin launched after the LookOnChain allegations.

The $othebys X account bio reads: “Caring about art, but mostly about money. Est. 1744. The auction house for comedians.”

Eytan’s token bonded to Raydium in less than two minutes. It soared past a one million dollar market cap and then quickly collapsed. The associated X account has not posted since November 3rd.

About two hours after Eytan launched his Sotheby’s-branded token, Bouhanna posted on X: “Free the Art.” Some users perceived this as an endorsement of Eytan’s token, while others perceived it as an attempt to rally BAN.

Eytan could not be reached by Surfing the Waves to offer clarification of his involvement with BAN.

Did Bouhanna promote his BAN token?

As part of his attempt to “clear the air,” Bouhanna stated: “I did not promote BAN or encourage anyone to buy it.”

Yet, evidence contradicts this claim. Bouhanna provided the token launch link to a personal group chat before promoting BAN with his “most significant work of the 21st century” remark. Furthermore, he also liked a post directly encouraging people to purchase BAN.

A few hours after BAN launched, user 宝石 on X quoted Bouhanna’s post praising Comedian. 宝石 commented “buy the dip” with the contract address for BAN.

According to 宝石, Bouhanna liked his post.

It seems improbable that this user fabricated the screenshot since this post was published before Bouhanna was widely identified as the BAN deployer. If the screenshot is authentic, then Bouhanna very explicitly encouraged people to purchase the token.

Another X user by the name “Lana Yang” also claimed on November 20th that Bouhanna liked her previous video post promoting BAN.2

“Do you want to know which memecoin is about to skyrocket?” asked Yang in the first video, posted on November 18th. “Hint: it’s got a banana, a billionaire, and Sotheby’s all in the mix. Yup — we’re talking about BAN coin.”

In the second video, she provided evidence with an X screenshot showing a Michael Bouhanna account liking her post, alongside another screenshot of Bouhanna’s profile.

“Michael Bouhanna, the VP of Sotheby’s, just liked my post” said Yang in her follow-up video. “This auction is huge for BAN coin’s visibility and could send this coin to the moon.”

Is BAN related to Bouhanna’s role as Sotheby’s VP? Is BAN affiliated with Sotheby’s?

In his position as vice president, Bouhanna has privileged access to nonpublic information relating to Sotheby’s business. Bouhanna likely has access to marketing plans for Comedian. Not only that, but he can literally create and publish marketing promotion at will using his social media profile — as he did when he publicly described Comedian as “the most significant work of the 21st century.”

Bouhanna leveraged relationships and advantages intertwined with his employment at Sotheby’s to inflate the market cap of a coin that he himself created. His suggestion that BAN is “completely unrelated to my role at Sotheby’s” and that “Sotheby’s has no affiliation whatsoever with the token” is purely wishful thinking.

BAN token’s DEX Screener page states: “The project issuer is the president of Sotheby's auction house.”

This description appeals to a sense of legitimacy due to its connection with Sotheby’s — a connection which would not exist without Bouhanna’s involvement.

BAN is directly affiliated with Sotheby’s precisely because Bouhanna exploited his role at Sotheby’s to benefit both himself and Eytan, a Sotheby’s client.

“This is ‘I didn’t know the gun would fire when you pull the trigger’ fake ignorance crap,” wrote art collector and attorney Artie Handz in a quote of Bouhanna’s post.

Handz continued on the Verse Talks podcast, criticizing Bouhanna’s statement: “As a lawyer, if this was put on the stand in front of me, I would tear this up. It’s poor excuses at best, in my opinion. He did make the coin. … He claims he did not promote BAN or encourage anyone to buy it, but in the same text talks about how he sent it to his friends.”

How did Sotheby’s benefit from this scheme?

The auction house now stands to gain from the additional hype and attention generated by the scandal and BAN’s buzz. 

In my opinion, when it comes to controversial artworks, all publicity can be good publicity. Despite the negative public reaction when Bouhanna’s self-dealing activities were exposed, the scandal still spread further awareness and increased discussion and view counts related to Sotheby’s auction.

Sotheby’s effectively received a free marketing campaign for their auction. Images of Cattelan’s work saturated social media from a mixture of bots and Chinese crypto influencers promoting BAN and the broader crypto community discussing Bouhanna’s controversial involvement with the coin.

In this way, I believe Sotheby’s directly benefited from their employee’s wire fraud activities.

BAN cracked a $200 million market cap on November 17th and hurdled past a $300 million market cap the next day. In turn, this generated more attention and continues to drive more eyeballs to the spectacle of Sotheby’s Comedian auction.

In the same vein, BAN’s insider buyers stand to benefit from Sotheby’s ongoing market campaign for the Comedian auction, as well as the inevitable press generated by the sale. 

Did Bouhanna not realize that he would be caught?

Bouhanna seemed to believe that his identity was concealed when launching the BAN token and did not realize his wallet was easily traceable.

He had previously posted his wallet address on Twitter in an attempt to win a crypto giveaway. This address was the same address as the BAN deployer.

Although he deleted his post, several people captured screenshots to preserve evidence that he was the owner of the BAN deployer wallet. If they did not capture evidence leaving Bouhanna red-handed, it is possible that he never would have admitted to launching BAN.

Who else was involved with BAN?

One of the remarkable elements of BAN’s launch was the immediate artificial activity on social media. In the initial days of its launch, many of the posts on X came from Chinese spam bot accounts. The Telegram was also locked and filled with bots.

These are often signals that a team is coordinating behind the scenes to inflate social metrics in an attempt to attract attention and trading volume. If there is a team which supported the launch of BAN, it would seem to counter Bouhanna’s claim that BAN was a “spontaneous project.” This type of coordination would require prior planning.

I do not have any evidence which proves that anyone hired a professional team to support the launch of BAN. However, the circumstances strongly suggest that someone was coordinating artificial social media activity to support BAN around token launch.

One last eyebrow-raising detail: on October 26th (the day after launching BAN), Bouhanna announced that he would be a featured speaker at Binance Blockchain Week.

Binance published an interview with Bouhanna on November 14th. Before the interview, there was a ramp up in BAN trading volume and a considerable spike after it was published.

Four days later, Binance listed BAN on its futures market.

At the time of publication, BAN hovers around a $250 million market cap.

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In a September 12th court filing, Sotheby’s appears to dispute a report from Surfing the Waves.

At the beginning of this year, we reported that FTX purchased 101 Bored Ape Yacht Club NFTs at a Sotheby’s auction. The auction, which took place in September 2021, received a winning bid of $24.4 million. The auction winner was not publicly identified at the time.

Surfing the Waves was the only publication to identify FTX as the buyer of Sotheby’s Bored Apes.

In August, an ongoing class action lawsuit, Adonis Real v. Yuga Labs, Inc., added Sotheby’s as a defendant.

The first amended complaint in the lawsuit named Sotheby’s as a defendant for running a “deceptive auction” in collusion with Yuga Labs, the creators of BAYC. The complaint alleges that Sotheby’s representatives “misleadingly promoted” the auction and the Bored Ape collection. Consequently, the auction would help to generate legitimacy, hype, and investor interest around the Bored Ape brand.

In September, Sotheby’s filed a motion to dismiss. An attached filing disputes that FTX was the winning bidder of the Sotheby’s auction.

A footnote within the filing states: “If this case progresses, Sotheby’s will prove this allegation factually incorrect. FTX was not the winning bidder of the BAYC NFT auction.”

The Adonis Real complaint also references several other posts from Surfing the Waves, including “The Traditional Collector,” an article analyzing the widespread narrative that the anonymous winner of the auction was a traditional art collector or buyer.

Sotheby’s recent filing appears to re-affirm the original purported narrative that the winner of the auction was a traditional art collector as opposed to a cryptocurrency firm such as FTX or Alameda Research. 

The footnote continues: “even if a Sotheby’s employee did make a ‘traditional collector’ statement, it would have been accurate.”

The Spreadsheet Exhibit

The matter is further complicated by the trial of Sam Bankman-Fried.

One exhibit included last week at Bankman-Fried's trial included an internal list of FTX’s investments on a spreadsheet. An item on that spreadsheet is labeled “BAYC (Sotheby Auction).”

The item is marked with a closing date of September 14, 2021 — five days after conclusion of Sotheby’s BAYC auction. The spreadsheet lists $24.4 million under “Investment amount” — the same amount as the winning bid at Sotheby’s BAYC auction. The spreadsheet identifies the lead as Brian Lee, former Partner at FTX Ventures.

If that information is accurate, it would seem to further confirm FTX as the true buyer.

In a separate exhibit from Bankman-Fried’s trial, a document from former Alameda CEO Caroline Ellison includes a note under a section titled “trading has been better lately” stating: “got short APE before the land drop ($15m).” 

While it is unclear what the included figure precisely represents, the dating within this document likely implies that Alameda took a short position against ApeCoin before Yuga’s Otherside project launched in May.

Alameda Research is also suspected to be one of the recipients of secret multimillion dollar loans in the form of ApeCoin prior to the token’s public launch.

Alameda’s secret ApeCoin “loan” transpired on March 3, 2022. Just four days later, FTX closed a $50 million investment into Yuga Labs on March 7.1 Some point afterward, FTX/Alameda apparently opened the aforementioned ApeCoin short position.

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A Night to Remember

Despite the high-profile players involved, the saga generated little interrogation from journalistic media, with the exception of a Vanity Fair article published shortly after our report.

Author Michael Lewis’ new book, Going Infinite, references the sale. Lewis writes that a former employee claims Sam Bankman-Fried bought the collection of 101 Bored Ape Yacht Club NFTs from Sotheby’s. It is unclear if the former employee is referencing firsthand knowledge or drawing inferences from media reports.

Although the extent of his personal involvement has not been publicly clarified, Bankman-Fried certainly had some knowledge of FTX’s Bored Apes. 

On June 23, 2022, Casa Cipriani hosted the Moonlight Gala to honor Bankman-Fried and Ivan Soto-Wright, CEO and co-founder of MoonPay. Bankman-Fried was in attendance and spoke onstage.

FTX donated Bored Ape #9094 to be auctioned by Sotheby’s at the Moonlight Gala. Bored Ape #9094 was one of the 101 Bored Apes originally sold at Sotheby’s September 2021 auction.

#9094 was sold that night for over $400,000 to Adam Weitsman. The proceeds were donated to charitable causes.

In the end, Sotheby’s auctioned the same NFT twice: once in September 2021 for the “Ape In!” sale, and again nine months later at the Moonlight Gala honoring Bankman-Fried.

Where are the Bored Apes now?

The spreadsheet from Bankman-Fried’s trial indicates that FTX realized a net profit of over $9 million from their BAYC Sotheby’s auction investment. These figures are very likely incorrect. FTX sold many of the Apes on their proprietary US marketplace, via OTC deals, and via OpenSea — yet roughly one-third of the Bored Apes from the original Sotheby’s auction were never resold by FTX. The spreadsheet appears to assume that FTX fully exited their position on Bored Apes.

At the end of January 2023, FTX’s remaining Bored Apes were transferred to a wallet thought to be controlled by the FTX liquidators, just a few weeks after the Surfing the Waves report.2

FTX’s Bored Apes have been dormant since January. None of the NFTs have been sold via on-chain marketplaces. Meanwhile, Bored Ape prices have continued to plummet. Bored Ape prices are down over 50% since the January transfers. If the Bored Apes are intended for liquidation, this extended waiting period likely diminished expected returns by millions of dollars.

Sotheby’s did not return our request for comment, but provided a seemingly identical statement to outlets inquiring about the lawsuit. Derek Parsons, Sotheby’s Vice President of communications wrote in an email to Quartz: “The allegations in this suit are baseless, and Sotheby's is prepared to vigorously defend itself.”

Parsons previously told Surfing the Waves that Sotheby’s cannot comment on the identities of buyers, but that “there were notable traditional art collectors vying for the lot.”

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Adidas announced today via Discord that their upcoming collaboration with Web3 artist Fewocious “has been put on hold for the time being” following allegations of abuse and sexual assault.

Over the past month, a Twitter user with the handle “elliott'' alleged that Fewocious (whose real name is Victor Langlois) was verbally and physically abusive in their relationship. On June 6th, Elliott wrote that they were beaten and abused by Langlois.

Elliott explained that coming forward was a difficult choice: “trying to figure out how to disclose that my ex boyfriend was insanely abusive without people getting mad at ME about it is actually very difficult.”

One Twitter user replied: “There are people that care. More than you know I’m sure.”

Expressing their gratitude, Elliott responded by explaining that it was difficult to discuss their personal trauma as “no one [is] listening because they like [Langlois’] art or fear devaluing an investment they’ve made in it. it doesn’t seem worth it to me.” 

Elliott continued to share their story over the next couple weeks, quote tweeting the Fewocious/Adidas collaboration on June 13th with a message that read: “if you buy these shoes you’re supporting an abuser. … he hit me, screamed at me, threw me into walls, choked me, sexually assaulted me even when i cried and begged him to stop. he is an ABUSER. he is physically and verbally abusive.”

Although the allegations first appeared early in June, the issue did not reach widespread acknowledgement until one of Elliott’s tweets went viral on the 15th:

hey @fewocious did you feel powerful when you raped me? did it make you feel like a man when you told me to kill myself? did you feel tough when you called me a stupid bitch for crying after my mom attempted suicide? you’re a monster and i’m not going to be quiet anymore

Elliott also shared screenshots of a text conversation with Langlois that showed clear evidence of abusive language.

“That this took 3 or 4 days to come to the wider view of [Crypto Twitter] says volumes about power imbalance,” wrote one Twitter user.

Langlois is a very popular artist, amassing over $50 million in lifetime sales. He was named as one of CoinDesk’s Most Influential in December 2022. His work also received extensive coverage from several media traditional outlets such as Esquire, ABC News, and Hypebeast. 

“Speaking up about being assaulted isn’t easy for the victim, and it’s even harder when the person being accused is rich and powerful,” photographer John Wingfield wrote in a June 16 post.

Almost immediately, the allegations prompted misogynistic and transphobic responses, with numerous users commenting that the issue should be handled by the police or in court.

Many others pushed back against victim-blaming attitudes.

A message posted today in the Adidas Discord read: “It’s very common for victims not to turn to the police, for many reasons, after a sexual assault. … Fewocious’ response — again, in my opinion — is not the kind of response an innocent person submits.”

Others wrote messages of support to Elliott: “Prioritise your safety and honour your truth. Let go of how others may respond, that's not your weight to carry. You are courageous and strong.” 

Langlois’ Adidas collaboration was celebrated by crypto-focused outlets like nft now and promoted by well-known crypto influencers such as DeeZe and Farokh.

DeeZe wrote after the allegations appeared: “Mfers sharing slander that can easily be faked like it is gospel are tiring. There are always two sides to every story and blasting dirty laundry that doesn’t involve you at all is in extremely poor taste.”

DeeZe’s tweet has since been deleted. DeeZe did not respond to request for comment.

[Correction: DeeZe’s tweet was not deleted and remains live here.]

Farokh, who works on the Fewocious team as the Chief Vibes Officer, declined to offer public comment.

Langlois responded to the allegations with a tweet on June 17th:

there are allegations being made online by an ex partner of mine, that are completely untrue, dangerous & hurtful. the alleged events did not happen and out of respect for privacy and due process, i’m not going to publicly address this matter further

Langlois did not respond to request for comment following the June 21st announcement from Adidas.

“The answer! Sure! We all want the answer! But HaShem doesn’t owe us the answer, Larry. HaShem doesn’t owe us anything. The obligation runs the other way.”

– Rabbi Nachtner

In January 2020, Nicholas Owen Gunden sent a letter to the LedgerX boards, shareholders, and the Office of the Inspector General at the Commodity Futures Trading Commission. The letter expressed a serious concern: that MIAX might have an intent to take over LedgerX.

Weeks earlier, the LedgerX board suspended the company’s founders in a highly controversial move. Gunden’s letter appeared about one month after the suspension.

Gunden, a LedgerX director and minority shareholder, accused the Ledger Holdings board of “grossly negligent actions towards LedgerX market participants, employees, shareholders, and perhaps even CFTC compliance requirements themselves.”

Gunden said MIAX (owned by MIH, Miami International Holdings) was the only shareholder invited to attend and participate in private board meetings. He argued that there was a lack of effort to raise funds outside of MIAX. He implied the interim director was ignoring the concerns of shareholders.

By now, Gunden’s letter seems to have been wiped from the internet.1 The traces left behind of his three-page letter paint a clear picture of two accusations: 1) the board wanted the founders out, and 2) MIAX wanted in — badly.

Allegations of Payouts, Insider Funding, and Secret Meetings

Nearly a decade ago, Juthica Chou and Paul Chou founded LedgerX under the belief that Bitcoin would be determined a commodity and fall under the regulation of the CFTC. Their hypothesis proved to be accurate. Derivatives contracts using virtual currencies ended up falling under the jurisdiction of the CFTC. 

LedgerX became the first of its kind: a digital asset exchange with a DCO license and a SEF license (and later a DCM license). Through blood, sweat, and tears, the company built itself up and engineered much of the CFTC’s regulatory framework for digital asset exchanges and clearinghouses. 

Despite many successes, the company hit serious turbulence in 2019, ultimately culminating in the ouster of the founders.2

After the board suspended Juthica and Paul, a petition reportedly circulated at the company in support of retaining their leadership. Two employees who filed the petition were supposedly fired in retaliation.

Although the transpiring events leading to their removal are difficult to untangle, the looming presence of MIAX was plain to see. In his letter, Gunden alleged that MIAX might have offered a board member “payouts for helping MIAX to complete an insider funding round.” At the time, MIAX reportedly held two seats on the Ledger Holdings board.

Gunden further argued that MIAX “may be seeking to benefit directly from the removal of the founders if they are able to somehow obtain implicit or explicit control of the license that LedgerX owns.”

MIH is a holding company that operates several derivatives trading platforms under the MIAX brand. Over the years MIH made a handful of major acquisitions, including the Bermuda Stock Exchange. It wouldn’t be too surprising if the company did, in fact, strongly covet LedgerX’s licenses. But was MIAX’s appetite so fierce that they stooped to the malicious initiatives alleged by Gunden?

Was MIAX really willing to gut the heart of the company in order to consolidate their power over it?

LedgerX’s interim CEO maintained that “everything” in the letter was false, although I could not locate published evidence to support his claim. Whatever went down, the company pushed forward without the founders.

Mark Wetjen’s Revolving Door

From the pre-operational phase, MIAX was instrumental to the development of LedgerX. In December 2016, MIAX became the lead investor of LedgerX. Part of their investment included a 10-year exclusive right to license for digital currency related products developed by LedgerX.

Thomas P. Gallagher, Chairman and CEO of MIH, was counting on the deal with LedgerX to provide “a huge competitive advantage” for its MIAX’s options exchanges.

And in the fallout of the founders’ departure, MIAX helped to get LedgerX a fresh injection of critical funding.

Mark Wetjen, former Commissioner and acting Chairman of the CFTC, had been at the forefront of LedgerX’s trailblazing regulatory approach. Wetjen was appointed to the LedgerX board in 2015.

In January 2020, MIAX brought on Wetjen as Executive Vice President of MIH and CEO of MIAX Futures Exchange. MIAX hired Wetjen, in part, to “act as a regulatory liaison for MIH.”

Sam Bankman-Fried understood the significance of LedgerX. In August 2021, Sam tweeted what he described as “one of the most exciting announcements” FTX ever made: the acquisition of Ledger Holdings, the parent company of LedgerX. Through this acquisition, FTX came into possession of LedgerX’s regulatory licenses, rebranding as “FTX US Derivatives.” FTX also acquired LedgerPrime, a subsidiary of Ledger Holdings.

Wetjen’s tenure with MIAX lasted just under two years. Soon after the FTX’s acquisition of LedgerX closed in October 2021, Wetjen departed MIAX and joined FTX US as Head of Policy and Regulatory Strategy. 

In January 2022, FTX US Derivatives announced Wetjen would be included on the new Board of Directors.

FTX infamously collapsed just ten months later. But there was a glimmer of hope: LedgerX was one of the few remaining solvent pieces, according to the declaration of FTX’s new CEO, John J. Ray. The company was to be put up for auction. Following a series of delays, a buyer was found.

On April 25, 2023, MIAX announced a purchase agreement to acquire LedgerX as part of FTX’s bankruptcy process. Judge John Dorsey granted a motion permitting the sale on May 4.

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MIAX Finally Acquires LedgerX

In April 2023, MIAX issued a press release about their proposed purchase of LedgerX. Nearly every news outlet reported the information straight off the wire with little or no further context about MIAX, Wetjen, or LedgerX’s tumultuous sales process. The actual court filings went unmentioned.

Headlines read that LedgerX had sold for $50 million, but the actual proposed sales figure was $35 million. When accounting for “cash distributions from LedgerX to the Debtors,” the total proceeds are “expected to be approximately $50 million.”

Perella Weinberg was the law firm responsible for organizing the sale. Despite receiving interest from approximately 87 parties interested in an acquisition, they failed to find serious interest from any other buyers. MIAX ended up as the only bidding party, although Perella Weinberg maintains that they conducted a thorough and fair marketing process and “successfully improved Buyer’s bid through extensive negotiations.”

For the most part, the sale seemed to close out without objection or complaint — but there was one interesting point of friction.

During the sales hearing, counsel from OKC took issue with how Perella Weinberg partner Bruce Mendelsohn characterized their negotiations.

OKC had submitted an unsolicited offer for LedgerX. A supplementary statement attached to Mendelsohn claimed OKC "refused to commit to provide" information required by CFTC. Mendelsohn’s declaration claimed that OKC believed it would not need CFIUS approval as a condition of sale. Essentially, the filing seemed to imply that OKC objected to cooperation with US regulation.

However, OKC’s attorney, Jeff Sabin, objected to Mendelsohn's characterizations as “misleading and/or simply untrue statements concerning regulatory matters related to the OKC entities."

Here’s the audio from FTX’s sale hearing (edited only to enhance the audio quality). Sabin’s comments begin around 2 minutes in:

Sabin speaks in a sharp tone in the court-recorded audio, stating firmly that at every step OKC was willing to cooperate and comply with all regulatory requirements.

The Redactions of LedgerX

It was a brief remark, but one reminder that there are many facts the public may now never know about LedgerX — including precisely how effectively it was regulated by the CFTC.

The purchase agreement contained a slew of redactions. Some parties involved in consulting, clearing services, and independent contractor agreements are redacted without explanation. Entire sections are redacted in other instances.

One key detail that jumped out in the filings: a series of tax inquiries directed towards Ledger Holdings Inc.

Schedule 2.7 (“Litigation”) is almost entirely redacted, except for the fourth item, which reads: “The disclosure set forth in Section 2.13 of these Schedules is hereby incorporated by reference.” 

Schedule 2.13 covers a handful of tax issues. On November 3, 2022 — a mere eight days before bankruptcy hit — the IRS issued a request to Ledger Holdings Inc.

The IRS is currently examining their 2019 and 2020 consolidated federal income tax returns and intends to examine their 2021 return.3

On March 3, 2023, the IRS also issued a notice of examination regarding the 2020, 2021, and 2022 employment tax returns of Ledger Holdings.

The IRS later filed two separate claims against Ledger Holdings Inc.: one for $84 million filed on April 27, and one for $165 million filed on April 28.

The NY State Department of Taxation and Finance is also taking a look at their state sales and use tax records from March 2019 through November 2022. NY State filed several separate claims against Ledger Holdings, totaling over $2 million.

Strangely, another claim for $121 million against Ledger Holdings was filed on April 7, but the creditor name appears to be withheld (“Name on file”).

All in all, there might be valid reasons some of this information is redacted. Yet, given some of the disconcerting events that allegedly transpired between MIAX and LedgerX, it would have been reassuring to have had a truly independent set of eyes to take a look behind the curtains. LedgerX is one of most critical organizations in modern US regulatory history, but it’s been handled like an afterthought.

“No Collusion” (And No Independent Examiner)

LedgerX provides an important case study in US regulation, which in turn, impacts international markets in many avenues.

From one perspective, it seems only natural that MIAX ended up with the LedgerX prize. The company did make significant investments over a long period of time. John Ray affirmed that MIH is not an “insider” of the Debtors. MIAX’s Gallagher affirmed that the “Buyer and Guarantor have not acted in a collusive manner with any person.”

A skeptical perspective might raise an eyebrow at some of these issues:

• Nicholas Owen Gunden issued an explicit allegations that MIAX was engaging in nefarious practices (such as offering board members payouts) in an effort to subvert the company, potentially acting negligently towards CFTC compliance requirements 

• Mark Wetjen serves as a prime example of the “revolving door,” as he leveraged his experience as a regulator in roles at LedgerX, MIAX, and FTX with little objection or consequence

• OKC appeared to be the only other potentially truly serious bidder, and somehow their interactions led to a dispute with Perella Weinberg

• Crucial details about Ledger Holdings’ operations and issues are redacted throughout the LedgerX sale agreement

• The IRS suddenly took interest in the Ledger Holdings Inc. tax situation just as the FTX empire started to collapse

Last, LedgerPrime operated two separate Cayman Islands entities that were missing from Ray’s original declaration. I have a lot of questions about how LedgerPrime’s entities operated and interacted with the CFTC’s regulatory requirements.

The former director of one of LedgerPrime’s Cayman companies, Jonathan Bain, was implicated in a couple different corruption scandals. Bain is now on the administration team for ApeCoin DAO, which has been covering up a series of backdoor agreements with Wintermute. Bain’s team follows another Cayman administrator that sent roughly $10 million to Alameda in the form of a secret “loan.”

Altogether, there are more than a few red flags. The CFTC exists to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation. Is that happening?

LedgerX and LedgerPrime presented a rare opportunity to step back and develop an honest evaluation of exactly how effectively the regulators acted in respect to LedgerX and LedgerPrime. An investigation by a genuinely independent party would have shed great insight. Are the regulators acting in the interest of the public, safe and fair markets, and “sound regulation”? Or did some succumb to a carnivorous circle of private interests?

There is no independent examiner for FTX, and there was no true examination of the regulatory history of LedgerX.

Instead, a big orange hand showed up to sweep away everything — the good, the bad, and the ugly.

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3

It seems like the press missed this section entirely, or maybe journalists didn’t read the purchase agreement at all. It gives deeper insight around the issues involving the IRS’ claims:

The hype behind Sotheby’s Bored Ape Yacht Club auction was real. 

Sotheby’s announced their first major auction featuring the Bored Ape Yacht Club with great fanfare. On Twitter, Sotheby’s account changed their profile picture to publicize the sale: a golden Bored Ape, glistening in front of a golden Bored Ape Kennel Club dog. The post included an animation of the golden Ape, metallic hips swinging as he walked his golden dog. 101 Bored Apes were bundled on the blockchain and ready to be auctioned off.

It was bound to be a sale of historical magnitude.

“You have no idea what great exposure Sotheby’s and Christie’s will do for us,” wrote longtime Bored Ape GeeGazza in the BAYC Discord.

Many BAYC members believed that Sotheby’s big auction would ignite the market for Bored Ape assets.

"This is a club where you can hang around with NBA [stars] or CEO[s] of Silicon Valley,” wrote another user in the BAYC Discord. “I do believe 20-30 people with wealth will realize it thanks to Christie’s and Sotheby’s and will enter the club pushing prices up.”

The final bid ended up smashing records and Sotheby’s high-end estimate at $24.4 million. Most thrillingly of all, reports circulated that the winner of the auction was a “traditional” collector. Big money was coming into the Club.

And while Yacht Club prices definitely pushed up, the perception that drove the celebration of the sale was false: the true winner was not a traditional collector.

In the end, the winner was FTX.1

A “traditional” buyer?

Farokh, founder and host of Rug Radio, hosted multiple official Twitter spaces to promote Sotheby’s auctions at the beginning and end of the sale. This included a space on September 3rd with the founders of Yuga Labs, the creators of Bored Ape Yacht Club. Farokh also hosted another space to celebrate the closing of the sale on the morning of September 9th.

During the first official Sotheby’s x BAYC Twitter space, Sotheby’s Head of Contemporary Art Auctions, Max Moore, reportedly said that Bored Apes made it to the “gold level of art” — an impressive endorsement from a professional art connoisseur.

Once the final bid was in, Sotheby’s Moore took it a step further. During the September 9th space, Moore affirmed that the winning bidder was a “traditional” collector. 

Recordings of Farokh’s official spaces are not publicly available, but I was listening live during these spaces and personally recall hearing the “traditional” remark from a Sotheby’s representative.

Shortly after the space concluded, Farokh himself wrote: “Winner of the $24.4M lot of 101 Bored Apes is a traditional buyer and had to KYC through Sotheby’s but I guess that’s money laundering too.”

I messaged Farokh about his tweet and to get his perspective on what went down during the space with the Sotheby’s representative.

“I have hosted hundreds of spaces since then and I personally don't recall much of it,” Farokh explained. “I do this daily you know... just tough to remember all [of] the detail[s]. If I wrote that, there must've been a reason but I don't know what it was in retrospect.”

I reached Sotheby’s Vice President of Communications, Derek Parsons, for clarification.

“I can’t speak to what was said on the Twitter spaces since there isn’t a record of it,” Parsons wrote to me. “As to [Farokh’s September 2021 tweet], Farokh is not a Sotheby’s employee or in any way authorized to speak about Sotheby’s or our sales – so I would not consider his tweet in any way a representation of the sale.”

Farokh’s tweet is not the root of the issue. The real problem is that a Sotheby’s representative appeared to confirm the “traditional” collector aspect during Farokh’s space, sending signals reverberating through the community. Multiple contemporaneous accounts reported that a Sotheby’s representative confirmed a “traditional” collector.

One Twitter user, Low Mint, wrote: “Sotheby’s rep confirmed on Farokh’s space that the BAYC buyer is a traditional collector.” Low Mint’s reply tagged Max Moore.

A longstanding member of the Yacht Club, TheGovernor.eth, also tagged Max Moore in a tweet. TheGovernor added that Moore “said that the buyer of the 101 ape lot was a traditional art collector” adding that such a feat hadn’t “happened in an NFT auction before.” 

Dozens of other Bored Apes repeated the claim across social media, with and without Moore’s name attached. One of BAYC’s own moderators wrote about the winner their Discord: “It was a traditional art collector with no exposure to NFTs.”

“Massively positive that the purchaser was from the traditional art community,” someone else responded in the BAYC Discord. “The ramifications of this are hard for me to even wrap my head around.”

Parsons explained that there were 13 total bidders on Sotheby’s Bored Ape lot, and that official comments from Sotheby’s employees were intended to be “reflective of the broader group of bidders – of which there were notable traditional art collectors vying for the lot.”

Max Moore did not respond to my requests for comment.

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Levels of confidence: “The floor is a JOKE rn”

The narrative about the traditional buyer broke quickly into social channels: a living, breathing, private art collector was willing to spend $24.4 million to ape into the club.

Speculation over price action ran rampant in the Bored Ape community before, during, and after the auction. The “traditional buyer” element was the signifier that legitimized the sale — and for many, affirmed that Bored Apes were potentially undervalued.

The auction far surpassed Sotheby’s top-end estimate of $18 million (around 45 ETH per Ape).2 The common expectation during the auction was that the buyer would receive a discount, not pay a premium. The collection included some Apes with rare traits that would provide somewhat of a price boost, but it was surprising to many that when Bored Apes were available around 40 ETH, some eccentric art collector was willing to pay almost 69 ETH per NFT — nearly a quarter million dollars each.

Michael Bouhanna, Head of Digital Art at Sotheby’s, proudly declared the sales figure to be a “great indicator of the level of confidence in this amazing NFT project.”

“HUGE DAY,” Farokh wrote in the BAYC Discord, just after his Twitter space with Sotheby’s. “Press gonna eat the news alive … the floor is a JOKE rn.”

Skepticism about the final bid bubbled up from the sharper corners of the NFT community, where people looked at the sale with some confusion.

Meanwhile, media sites generally reported the sale with zero mention of the (missing) identity of the buyer.

The Verge reported that “the purchases show that the appetite for NFT art isn’t dying down, and they suggest that buyers think there’ll be high resale value as the market continues to grow.”

Shortly after Sotheby’s 101 Bored Apes sale, BAYC hit a new all-time high around 43 ETH per NFT. In November, following a short-lived and shallow price dip, Bored Apes began their mammoth ascent to even more eye-popping all-time highs at over 150 ETH.

ONE37pm (owned by Gary Vaynerchuk) reported that “Bored Ape Yacht Club continues to … gain more recognition in mainstream media. Their appearance at Sotheby’s continues to push the project closer to mainstream audiences and solidify it in the NFT history books.”

It’s difficult to measure exactly to what degree this sale alone impacted public perception and market dynamics. But as an observer who watched BAYC’s rise since long before launch, I felt that the Sotheby’s auction helped to paint a perception that the market for Bored Apes was more serious and eminent than the reality.

Audiences falsely were led to believe that “traditional” wealth validated the Yacht Club and saw the Bored Apes as a worthy and undervalued investment. The aggressive media push around the Sotheby’s sale coincided with other artificial events on the Bored Ape quest to be validated as the “epitome of cool.”

Who is responsible?

Farokh stressed multiple times that he doesn’t have access to Sotheby’s buyers and at the time of the auction, didn’t know the winner was FTX. He remembered that someone mentioned something about FTX, but didn’t hear any confirmation beyond hearing chatter.

Farokh (who has since invested personally into Yuga Labs) told me that the “traditional” comment was a reflection of his sincere belief at the time.

“It was awesome to host a moment like that in my personal opinion, whether some agree or not,” Farokh wrote. “I represented the buyer as a traditional buyer cause that's what I thought. No malice.”

The “traditional” buyer claim was repeated far and wide. If myself, Farokh, and the other reports collectively misunderstood Moore’s comments, there appears to be no effort from Sotheby’s end to correct the public misperception.

So did Sotheby’s play along with FTX’s ruse? Or is there a possibility that they were also blinded to what was really going down with these Bored Apes?

Did Max Moore actually have a genuine reason to believe that the buyer really was a traditional art collector?

Meanwhile, Yuga Labs very likely knew that FTX ended up receiving the Apes. Within a few months of the Sotheby’s auctions, FTX made an investment into Yuga Labs during their seed round. Yuga founder Greg Solano acknowledged that “FTX was a small investor,” but reports allegedly showing Alameda Research’s private equity portfolio revealed that FTX Ventures Ltd. invested $50 million during Yuga’s seed round.

A few weeks before Yuga announced the closing of their seed round in March 2022, Alameda received millions in a secret loan from ApeCoin DAO (created by Yuga Labs, of course).

None of Yuga’s executives, founders, or representatives clarified that it was actually a crypto firm/hedge fund that ended up with the auction prizes. The traditional collector became embedded in the narrative until watchful eyes started taking a second look in the wake of FTX’s collapse.

The fallout of Sotheby’s Bored Ape megasale raises questions about how cryptocurrency auctions at traditional art houses are engineered, promoted, and reported — and how they can be exploited.

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Today, a visual resource: “Wave’s Theory.”

I recommend viewing the high-resolution version here.

Originally, I created this chart to help visualize the various Cayman entities associated with Ledger Holdings — which is why the full title is “Wave’s Theory of Ledger Holdings Inc. Organizational Structure.” 

A smaller version of the chart appeared in my article “The Crestbridge Connection” in which I revealed that two of the new administrators of ApeCoin DAO were also the directors of the LedgerPrime Digital Asset Opportunities Offshore Fund at the time of FTX’s collapse. This particular fund was previously undisclosed in FTX’s bankruptcy filing, although it appeared in a later filing (see docket #861) after my initial story.

I created this extended version to visualize and start to contextualize how the stories told on Surfing the Waves are interconnected. The chart reflects other reporting I’ve published, including the secret ApeCoin loans to Alameda and Wintermute and FTX’s record-breaking auction win at Sotheby’s.

The individuals, organizations, and events represented here are just a small fraction of what and who is involved. Many other key players and interactions will be making appearances that will require the chart to expand even further.

Please reach out to me if you notice any potential errors, think of a suggestion, or have a question about the sourcing of information.

Does looking at this chart make you want to know more?

If so, you’re in the right place.

First, let’s go back to Sotheby’s. “Low Down” is coming soon:

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Find the audio in the YouTube video below or here on Twitter. Find a transcript and a FAQ below. The audio has been lightly edited in a couple spots for privacy reasons and to repair audio quality. 

If you’ve read the transcript before, please note that there is a new section where we revisit the Confederate Koda at the end of the call.

What is the Confederate Koda?

The Confederate Koda is my nickname for a key asset that Yuga Labs named after the enslaver and Confederate General Stonewall Jackson.

Kodas are one of the most important and valuable Yuga assets, originating from Yuga’s metaverse land project known as “Otherside.” Even under present market conditions, Kodas sell on secondary at around $18,000. They are essential characters to Yuga’s brand building and storytelling.

Why was the Confederate Koda significant?

I spoke with Wylie Aronow in July 2022. Among other issues, I pressed him on racist imagery within the collections of Yuga Labs.

This is the only interview wherein any of the Bored Ape Yacht Club founders have ever been challenged about the racism and/or anti-semitism within the collection.

Notably, the release of the Confederate Koda arrived months after repeated denials of racism and alt-right affiliations. Former Yuga CEO Nicole Muniz said in a February 2022 interview that “the idea that we're neo-Nazis or alt-right is offensive. It's hurtful. It's totally untrue.”

Muniz’s statement was highly misleading at best. Labels can be elusive, but it’s a fact that the founders of BAYC do have an extensive, personal alt-right connection. They fought very hard to conceal those ties.

Aronow and Solano fashioned themselves as victims of a false conspiracy theory in various media interviews. In reality, they were hiding behind a mirage of manipulation and deceit.

Why did Wylie ask you to call him?

On July 12, 2022, Wylie asked me to call him after I published an article questioning the official story behind the name “Yuga Labs.”

I discovered that he and Greg are well-connected to an alt-right publisher, observing that both Wylie and Greg had contributed to the publication in various manners.

Wylie reached out to me via DM with some answers to the questions I posed in the story. As we messaged, I was persistent about the incongruencies in his story. Then he asked me to give him a call.

I published parts of our interview alongside further context — such as the fact that Wylie had set his location to “Kali Yuga” on a scrubbed Twitter account where he was interacting with an esoteric Nazi account — in a late July 2022 article titled “Thousands of Lies.”

Did Yuga Labs ever address the Confederate Koda?

As you hear in the audio, Wylie agreed to change the name and address the issue. But nothing happened. A few days before my call with Wylie, I had sent Yuga Labs a question about the issue with the name. I didn’t receive any response to my initial inquiry.

Two days after my call with Wylie, I sent a message over to Delaney Simmons, who previously ran global communications for Yuga. (Simmons now works at Activision Blizzard.)

Simmons did not provide any further update.

Shortly following, on July 19th, Yuga proceeded to cover up the issue in a blog post where they sandwiched a minor change to the name between a note about a script bug and a typo:

I didn’t find this to be an adequate change. The name retains the reference.

“It’s hard not to offend everybody in the world,” Wylie said about Yuga’s work in an interview published on August 3.

On August 14, I published an open letter to the founders and Muniz criticizing them for their coverup and their neglect to take accountability in the manner Wylie discussed. I petitioned them to make changes, including to their neo-Nazi lookalike logo. They did not respond.

In early March, Wylie published a nearly 6,000 word CoinDesk editorial wherein he references our conversation. He calls the Confederate Koda “a bad Koda name.” I am the “someone” he mentions. Here’s what he wrote:

Was this an innocent mistake?

Wylie and his co-founder Greg are highly educated and terminally online men who have made a grandstanding out of their own intelligence, knowledge of history and culture, and literary prowess. Both serve as creative directors for Yuga Labs. 

Greg, Kerem, and one other co-founder attended the University of Virginia, just a few blocks away from where the infamous Stonewall Jackson and Robert E. Lee statues once stood. The Charlottesville statues were taken down after a deadly white supremacist terrorist attack in 2017.

The suggestion that the creative directors either did not “catch” the Confederate reference or recognize its offensive nature strains credulity.

Was this an isolated issue? Are there other problematic references in the Otherside?

In addition to the wide-ranging cultural problems with the Bored Apes, some have explored other problematic allusions in the Otherside. I highly recommend “The Esoteric Attractions of BAYC Co-Founder Greg Solano” from editor and cultural critic A T Wilkinson, who writes that his findings “clearly suggest that the underlying mythology of the BAYC project is esoteric and racially problematic/aligned with provably racist ideologies.”

Another reference that drove some past controversy was the Otherside’s inclusion of a resource named “Element 115” (a.k.a. moscovium). It’s a widely referenced substance in science fiction — but many millennials will remember it best as the substance used to create the Nazi Zombies in Call of Duty.

You posted a $300 bounty around the Confederate Koda?

Bizarrely, co-founder Kerem Atalay (a.k.a. “Emperor Tomato Ketchup”) minted the Confederate Koda to his own plot — the very first Otherside land deed ever minted. The odds of receiving the Confederate Koda randomly are roughly 0.145% given their scarcity.

One key purpose of using Chainlink VRF is to provide users with provably-fair and verifiable randomness using cryptographic proof. It’s a little unclear to me how successfully this technology was implemented in the Otherside contract.

I offered a $300 bounty if someone could prove that the Confederate Koda was a verifiably random occurrence. If it were not random, it could draw into question the entire integrity of the Otherside drop. After all, if the founders were willing to manipulate or modify one asset — what would stop them from doing the same with other assets? 

So did the Confederate Koda appear simply by the sliver of a chance? Or was there malicious or manipulative actions involved?

One sharp developer wrote an insightful thread breaking down the possibility of it being truly random — but after further consultation, I need more information before full confirmation. If it can be proven beyond doubt, the bounty is definitely hers.

I am open to either possibility. I’m curious to know the truth. In any case, open discussion of how this technology was deployed in the contract can only enhance industry standards for transparency.

I’m not from the United States. Why should I care?

In addition to being a recent flashpoint for white supremacist violence, references to the Confederacy such as Stonewall Jackson serve as a reminder of white supremacist oppression. I wrote a Twitter thread about one example where a community fought to rename a school named after Stonewall Jackson. This story shares many parallels with the Stone Hole Jackson story.

In the future, I’ll keep discussing and breaking down these issues with an international audience in mind.

Will you release more of the tape?

I have no plans to do so at this time. 

My hope is that after Wylie re-listens to our conversation, he (and Yuga Labs) reconsiders how to to handle this issue.

I feel Wylie and Yuga Labs should address the Confederate Koda with true honesty and transparency. And they shouldn’t call it a “bad” name. They should call the Confederate Koda for what it is: a racist allusion to the Confederacy.

To Wylie: I hope you are feeling better. And I hope you read the book.

Can I re-use this audio?

If you are using it for not-for-profit purposes, sure.

If you are a for-profit individual or organization (journalist, content creator, etc.), please contact me first. I am not giving open permission for this audio to be reused for any commercial purposes.

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July 2022 Phone Conversation Transcript

Transcript has received minor edits for readability. Feel free to reach out to me if you notice any significant discrepancy between the transcript and the audio.

Wave: ... I guess even along that line too, I would also ask you: why is there a Koda in the collection that's named after Stonewall Jackson?

Gordon / Wylie: Eh, that just kinda slipped through the freakin, uh — I mean, I didn't write that, right, like the company's gotten pretty big, right, one of our —

Wave: I know but dude, you're the head, come on. You gotta take accountability for that. I don't understand with all the stuff that you guys are facing — how that's slipping through.­­

Gordon / Wylie: Hold on. [moves to a quieter place] Yeah, I mean, you know — a sensitivity reader went through all the copywriting and didn't pick up on it. And I think the reason why is cause it was like a play on "Jackson Hole" because that was like a geyser or like a sulfur Koda. And so, that was like, that I guess the copywriter thought there was like: "Oh, it's like ­a Jackson Hole..." 

Wave: Ugh.

Gordon / Wylie: But yeah obviously, it's, you know —

Wave: Yeah, but come on.

Gordon / Wylie: But obviously, no. It references the Confederate dude or whatever.

Wave: Right.

Gordon / Wylie: Yeah I mean you know, things, you know —

Wave: But dude, that's what I'm saying — you guys are creating this new world and I want to be in this world. You know I do have an Otherdeed and I'm gonna be in there and I'm excited for it. And I want it to be a fun thing to tell my friends about. But if I got to be like: "don't mind this thing, but there's this thing" — essentially what is the metaverse equivalent of a Confederate statue in there? And I guess I just don't understand. Yeah, like stuff “slips through” and stuff like that, that's understandable. But like, it's been a long time and it's a quick change to make. How come you guys haven't made that change?

Gordon / Wylie: I think — I mean, I don't know. Again, I mean, I don't know. I'm not the CEO of Yuga Labs anymore. So I don't get to make every decision anymore. It's not like, you know, I'm instrumental in every decision that gets made. My recollection is we had a conversation about it and we were like: "you know, it's, it's not a small thing” to change the provenance of something if it were to alter the metadata of something, you know, it's like, it's not a — it's not...It's not something we take lightly, I think, as a company. You know. But it's a fair point. I mean we could change it —

Wave: I just — I just can't imagine that people are gonna be upset. It's just, it's just text — you know? It's not — you're not altering core assets. So I mean, to me that was one thing that I was just looking at —

Gordon / Wylie: To be honest, [Wave], to be honest with you: you make a compelling case, and I'll message Nicole right after this call and be like: " y'know I think we should change this thing."

Wave: Okay, honestly that makes me really happy to hear. That's like one of the main motivators that did get me into writing about this stuff. Cause I was just confused, like how are these guys not changing this? So I guess if I could —

Gordon / Wylie: It's deeply frustrating, deeply frustrating as someone who, like, wasn't involved in the copywriting so much in this part of the process, right? It was like... it was like very, very — the final copy for everything — there was a lot of copy obviously, right? Like there was a lot of variables to make, a lot of things. And so we put copywriters on it, who are y'know, pretty brilliant people. But, you know. Yeah. That like, this. You know. Obviously. And then we literally had a sensitivity reader go through everything and they missed this too. And so it was just like okay, we missed this, um, you know: this can be considered offensive. We should have just changed it. You're absolutely right. And I think we will.

Wave: Okay, I'm looking forward to that then. If I can just ask you one more specific question about the collection …

Skip to the end of the call…

Gordon: Look, I — y’know. You feel strongly about it [the “Prussian helmet”], again. You’re right though. You’re right about the Stone Hole — “Stone Holey Jackson” or whatever it was called. That was, you know. Again, I didn’t write it. Got slipped through the sensitivity readers. The person who wrote it didn’t think it was offensive. But obviously some people are gonna find it offensive.

Wave: It’s offensive. It’s offensive. It’s wrong. It shouldn’t be in there. And it should be changed.

Gordon: I agree. I agree.

Wave: And when you speak on it — you need to make that clear to people. You gotta say to people, like: “Hey, it’s wrong we got this in [here], we need to make sure this is right — because we want people to feel welcomed in this place.”

Gordon: Yeah of course, of course. And that’s absolutely what we want.

FTX was loaded with red flags during Ryne Miller’s tenure as FTX US General Counsel: No independent board of directors. No real accounting department. Near complete absence of corporate controls and oversight. Lack of audited financial statements. Poorly designed limitations for senior management.

Amidst all of these signs of fraud, what did Ryne do?

When hell broke loose, why was Ryne so aggressive about moving money — and control of the proceedings — into the clutches of S&C?

This video only scrapes the surface of Sullivan & Cromwell’s FTX iceberg. Beyond S&C’s egregious legal fees, advisement in the CFTC-regulated LedgerX acquisition, and extensive role as FTX’s legal counsel — there are other deeply concerning conflicts of interest at play with S&C.

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Demand an Independent Examiner

Bankman-Fried was a personal client of S&C less than four months before FTX’s bankruptcy filing. Sullivan & Cromwell advised Sam Bankman-Fried on his infamous Robinhood stock transaction.  

In the spring of 2022, Bankman-Fried amassed a gigantic position in Robinhood, held through a company set up in Antigua and Barbuda. SBF’s buys over multiple weeks arguably supported Robinhood’s stock price during a period of wild turbulence.

An SEC filing by Ryne Miller discloses the transaction details of less than 30 million of the 56 million Robinhood shares that Bankman-Fried bought in total.

The law firm advising Robinhood during this period? Sullivan & Cromwell.

LedgerX is scheduled for sale on March 22nd — there are many questions that should be asked about the nature of its operations. Ideally before the final auction.

An honest investigation of FTX will require diligence, thoroughness, and transparency.

Sullivan & Cromwell cannot investigate themselves. Any “investigation” into the fraud and criminal activity behind FTX by Sullivan & Cromwell is fundamentally incompatible with justice.

The time to demand an independent examiner for FTX is now.

Update: According to a March 6 filing, the LedgerX sale and hearings were rescheduled. I’ll provide further information after reading the filings. The twists keep coming. (Here is my screenshots of the filing.)

Today, March 7th, will have massive regulatory implications for the future of cryptocurrency markets. 

LedgerX LLC has been described as one of the most desirable assets involved in FTX’s bankruptcy proceedings. Today, it is scheduled to receive the final bids in its auction.

LedgerX is a digital currency futures and options exchange and clearinghouse owned by Ledger Holdings Inc. Ledger Holdings is also the parent company of LedgerPrime, a quantitative digital asset investment fund based in New York and led by CIO Shiliang Tang.

FTX acquired Ledger Holdings in 2021. LedgerX LLC became known as “FTX US Derivatives.” The role LedgerPrime plays has been more opaque.

LedgerX’ LLC’s rulebook (reproduced below) gives some insight into the relationship between LedgerX and LedgerPrime.

LedgerX’s rulebook establishes a few critical pieces of information:

1. LedgerPrime LLC is “a wholly-owned subsidiary of [Ledger Holdings Inc.] that is registered with the CFTC as a commodity pool operator that may operate numerous funds”

2. These numerous funds are known collectively as “LedgerPrime”

3. One example of those numerous funds includes “LedgerPrime Digital Asset Opportunities Master Fund, LP”

4. The purpose of these funds is to “make markets in [LedgerX] products … cleared by [LedgerX] and to engage in hedging activities through various offsetting transactions”

5. LedgerX LLC determines “position and counterparty limits, as well as parameters on LedgerPrime hedging”

Including the Digital Asset Opportunities Master Fund, LedgerPrime is connected to at least five separate Cayman entities, shown on the chart above.

Most of these entities were included in the petitions, but there is one that did not appear anywhere on FTX’s bankruptcy list: the LedgerPrime Digital Asset Opportunities Offshore Fund.

To my surprise, it turns out that LedgerPrime’s Offshore Fund shares some connective tissue with ApeCoin DAO.

ApeCoin DAO’s New Overseers

Previously, I reported via Surfing the Waves about a series of secret transfers of ApeCoin that occurred before the token originally launched in mid-March 2022. The previous ApeCoin DAO administrator, Cartan Group, claimed that these transfers represented loans to “market makers.”

Alameda Research was the recipient of one of these transfers. Wintermute received two larger, separate transfers.

These loans came due on February 18, almost three weeks ago. There have been no updates provided by the previous administrator or the new administrator regarding the repayment of any loans.

I have been in contact with Wintermute officials. They will not offer public comment or even acknowledge the transfers.

Last month, on the back of assorted complaints about Cartan Group, ApeCoin DAO elected new administrators to run its Cayman-based APE Foundation, which facilitates decision making for the DAO. 

Only two vendors were offered as choice: 1) Webslinger or 2) a consortium of Autonomous, Provenance, and Lemma. Webslinger, as it turned out, was also working in conjunction with other organizations. Yet, the ballot included only Webslinger’s name.

To some controversy, the working group arranged to steward this transition recommended Webslinger as the preferred choice, citing a gap in work experience between the two vendors.

Webslinger won by a landslide. Their competitor won less than 4% of the vote.

Inside Webslinger’s written proposal, another name appeared: Crestbridge Cayman Limited. Crestbridge is represented on the new ApeCoin administrative team by its Cayman Islands based directors: Jonathan Bain and George Bashforth.

Bain spoke on behalf of Crestbridge during the election meetings. At one point Webslinger’s Twitter profiles became a point of contention. Bain’s Twitter account was created in 2009, but his profile shows only two tweets in total. Both are corporate retweets from over seven years ago. 

George Bashforth’s Twitter account isn’t much more inspiring. While Bashforth is a bit more active on Twitter, his account is awash in a mixture of boomer spam and weird retweets pumping up altcoins.

From the election meetings, it was difficult to get a sense of their true experience or credentials — or even just their basic personalities. These men were elected to oversee the direction of one of the most influential DAOs in the entire cryptocurrency space. Yet they had no social media presence or evidence of authentic engagement with any digital communities.

Seeking to learn more about the new ApeCoin DAO overseers, I identified a bizarre connection between Bain, Bashforth, and LedgerPrime.

According to a third party report obtained by Surfing the Waves, as of November 12, 2022, Bain and Bashforth were the directors of the LedgerPrime Digital Asset Opportunities Offshore Fund.

According to reports I personally pulled, the LedgerPrime Offshore Fund is currently designated as strike-off pending, a winding up process generally used as an alternative to voluntary liquidation.

I pulled another report to check the legal addresses of both the LedgerPrime Digital Asset Opportunities Master Fund LP and the LedgerPrime Offshore Fund. Both are registered via Harneys Fiduciary. That both companies are registered via the same fiduciary firm seems to confirm a close legal relationship.

Learning that the new administrators of ApeCoin DAO were previously the directors for LedgerPrime’s Offshore Fund during the reign of FTX, I took a deeper look at the historical regulatory developments over the past few years between Ledger Holdings Inc. and FTX.

Feel free to skip the following section if you are already familiar with this history. My analysis is in the final section.

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A Brief Regulatory Survey of Ledger Holdings Inc. and the CFTC

In 2015, the Commodity Futures Trading Commission determined that “virtual currencies” meet the definition of a “commodity.”

The CFTC assumed regulatory oversight over virtual currencies such as Bitcoin under its authority granted via the Commodity Exchange Act.

In 2017, LedgerX registered with the CFTC as a designated contract market, swap execution facility, and derivatives clearing organization. In 2019, LedgerX also gained regulatory approval to trade bitcoin futures settled in digital currency.

In April 2020, former CFTC associate director Brian Mulherin joined LedgerX as chief legal advisor. In June 2021, former CFTC economist Julie Schoening joined LedgerX as Chief Risk Officer. Schoening and Mulherin worked closely together in developing proposals for the CFTC.

In August 2021, FTX announced an acquisition of Ledger Holdings Inc — the parent of LedgerX LLC and LedgerPrime.

On August 31, 2021, FTX CEO Sam Bankman-Fried described the acquisition as “one of the most exciting announcements we’ve ever had” and expressed excitement “to work with the CFTC on innovating in the US crypto derivatives space in a regulated, understood manor [sic].”

On the day of the LedgerX acquisition announcement, FTT was trading under $50. Over the next week, FTT soared to a new all time high, peaking on September 8, 2021, around $78. 

FTX’s acquisition of Ledger Holdings was finalized in late October 2021. LedgerX became known as “FTX US Derivatives.”

In the meantime, FTX announced a fresh injection of capital — $420 million via 69 investors. SBF cited recent growth as well as FTX’s approach to regulation as reasons for investor confidence.

During a CoinDesk interview on October 27, Bankman-Fried again highlighted how LedgerX gave FTX a unique entrance into the US crypto derivatives exchange marketplace.

“We would be really excited to work with the CFTC on being the first one there,” he said.

Over the next few months, FTX US President Brett Harrison boasted about LedgerX’s projected influence in conjunction with the CFTC. He made it clear that FTX’s ambitions went far beyond cryptocurrency.

“Our goal is to be the US-regulated exchange and platform where you can trade everything,” Harrison tweeted on October 6th, 2021. “Our acquisition of LedgerX brings us several large steps closer to this.”

Former CFTC Commissioner Mark Wetjen joined FTX in November 2021 as head of policy and regulatory strategy. Harrison was visibly enthralled to work with Wetjen and saw him as a key player in the legal and regulatory path to “the future of US derivatives.”

More former CFTC economists joined FTX along with Wetjen: Jim Outen joined LedgerX as Chief Economist and John Rothenberg joined LedgerX as Deputy Chief Risk Officer.

On August 3, the “Digital Commodities Consumer Protection Act of 2022” sponsored by Democrat Senator Debbie Stabenow was introduced to the US Senate. The bill received input from both CFTC and FTX representatives, including Wetjen. The bill would essentially propose placing the CFTC in charge of overseeing crypto exchanges.

On September 1, 2022, FTX announced that former CFTC Commissioner Jill Sommers joined the FTX US Derivatives/LedgerX Board of Directors.

On October 13, CFTC Chair Rostin Behnam spoke at a conference, exhorting FTX’s proposal for disintermediated futures trading as a potential “evolution of market structure, innovation and disruption.” Cutting out the middleman would open up derivatives markets for retail investors, according to Benham. 

If you aren’t familiar with how Behnam and Bankman-Fried cultivated their close-knit relationship, this Washington Post article extensively covers how FTX aggressively pursued power in Washington and captured extensive influence over the CFTC.

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The Solvency of LedgerX

On November 11, 2022, FTX filed for bankruptcy protection. 

Ledger Holdings Inc, LedgerPrime LLC, two of LedgerPrime’s LLCs, and three of LedgerPrime’s Cayman companies all filed petition for relief in FTX’s bankruptcy case. 

The LedgerPrime Offshore Fund was not included among these entities.

The next day, November 12th, Seeking Alpha reported that “LedgerPrime plans to return all outside capital to investors as part of its transition to being a part of a family office.” The article implied that LedgerPrime intended to “move out of FTX and become a subsidiary of Alameda Research.” Seeking Alpha also cited a source that claimed LedgerPrime had “assets under management of $300m to $400m.”

Meanwhile, Financial Times published a report, commenting on FTX’s balance sheet: “The second-biggest liquid asset was $200mn of cash held with Ledger Prime, a crypto investment firm owned by Alameda.”

On November 17th, when describing FTX’s corporate organization, John J. Ray III identified LedgerX and the FTX US Derivatives as belonging to the West Realm Shires Inc. Silo, aka the “WRS Silo.”

“Based on the information that I have reviewed at this time, LedgerX is solvent,” wrote Ray.

On November 17, in the fallout of FTX’s collapse, LedgerX CEO Zach Dexter gave public assurance that operations were running smoothly: “LedgerX LLC has not filed for bankruptcy; customer assets are safe and accounted for; we are solvent and well-capitalized.”

The same day, Kristin Johnson, commissioner at the CFTC stressed that LedgerX was excluded from the bankruptcy filing and that the CFTC had “boots on the ground.”

On December 1, 2022, Behnam appeared before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry. Behnam appealed to uphold LedgerX as an example of successful regulation, noting it was one of the few FTX entities that remained solvent in the wake of FTX’s collapse.

“The CFTC has been in near-daily contact with LedgerX as well as the third-party custodians it uses to hold cash and digital assets,” said Behnam.

Commissioner Johnson appeared for a Bloomberg interview on January 27, 2023. She discussed the sale of LedgerX alongside the CFTC’s role in the sale. Johnson took a more measured and “thoughtful” approach in discussing LedgerX.

Johnson described the CFTC’s focus “on the auction taking place even now with respect to that entity, the indications of interest, the obligations that will be put upon any potential bidder or buyer and the extent to which that bidder or buyer might be prepared to conform and adopt a culture of compliance with our regulatory framework.”

She highlighted the CFTC’s lack of statutory authority to interrogate the transaction, stressing consideration of how the acquiring entity’s behavior will impact LedgerX. Johnson cited the FTX/West Realm Shires acquisition of LedgerX itself as an example to heed caution.

“As of now,” she spoke flatly, “we [the CFTC] have no approval authority with respect to any element or aspect of the acquisition of Ledger X. The only obligation in the context of an equity sale is notice.”

A filing on February 13, 2023, showed LedgerX LLC’s intercompany payables balance of $3.9 million was “either charged to or paid on behalf of LedgerX LLC by Ledger Holdings Inc ($3.3m), and to a lesser extent, other Debtor Entities ($0.6m).”

In January 2023, a Delaware bankruptcy judge approved bid procedures to sell off independent subsidiaries, including Ledger X.

The final auction for LedgerX is scheduled for today, March 7, 2023, followed by a sale hearing scheduled for March 13.

Bloomberg reported that “crypto players like Blockchain.com, Gemini and Kalshi were said to be among those interested.” Coinbase and Crypto.com were also mentioned by the CFTC as potentially interested parties.

Andrew Vara, the trustee representing the Department of Justice in FTX’s proceedings, objected to the plans to sell LedgerX along with three other businesses back in January. Yesterday, March 6, Vara’s team filed an appeal against the judge’s denial of a motion to appoint an independent examiner.

I spoke with Michael Grace and Nathaniel Nussbaum, partners at Perella Weinberg, the firm orchestrating the sale process of LedgerX. Neither would discuss any further details about the auction or the bidders.

“We don’t talk to journalists,” Grace told me in a gruff tone.

He attempted to hang up, but our line stayed connected. I laughed as I listened to him shuffle around papers for the next minute before I hung up.

Analysis: The CFTC Needs to Provide Regulatory Transparency Around LedgerPrime

The CFTC seems to be outright ignoring the shadow of LedgerX — a.k.a LedgerPrime.

If the CFTC assumes regulatory oversight over LedgerX, the same is true of LedgerPrime — just as stated in LedgerX’s compliance manual.

And if it’s true that the CFTC assumes regulatory oversight over LedgerPrime, then there are serious questions to be asked about how the CFTC regulates these corporate structures:

1. How does the CFTC ensure LedgerPrime operates responsibly when market making for LedgerX products?

2. How does the CFTC oversee appropriate counterparty due diligence? How are conflicts of interest appropriately disclosed?

3. Why does LedgerPrime LLC have its own Cayman company with an identical name?

4. Why hasn’t the LedgerPrime Offshore Fund been publicly acknowledged by regulators? What purpose did it serve?

5. What protections did the CFTC create to avoid commingling of assets or improper relationships with affiliate organizations?

The answers to these questions are critically important to understanding how LedgerPrime collectively operated under FTX, how it interacted with LedgerX, and how the CFTC exercised its regulatory powers during a long period of complacency around FTX.

Essentially, what prevented evasion of regulatory standards via these Cayman companies? What would prevent such activities in the future?

I hope the CFTC works urgently to make information about the regulation of LedgerPrime accessible and transparent to the public.

After all, you never know what acquiring company might end up winning the LedgerX auction and running the show. There are more important considerations than the rock bottom dollar price at which LedgerX is sold.

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“Yuga Labs is trying to sue me,” longtime Bored Ape holder Joey Colombo wrote on Twitter last Thursday, February 16th.

The previous day, Colombo reported that he received threats of legal action from Yuga Labs in response to a work he previously sold on Manifold titled “Boring Skull.”

Featuring Colombo’s signature aesthetic, “Boring Skull” is a physical work of art composed from various world currencies. The paper currencies are hand cut and arranged into a collage that forms the Bored Ape skull. The description of the piece includes a short meditation on mortality and existence.

According to the legal notice shared on Twitter by Colombo, Yuga’s team claims that his “Boring Skull” NFT violates Yuga’s intellectual property rights. Colombo shared the message via a long tweet of copy-and-pasted text. (Locate my full screenshot of Colombo’s post at the bottom of this article.)

The message states that in order for Yuga to “consider this issue amicably resolved,” Colombo would be required to cease promotion and sale of the “Boring Skull,” request that all secondary marketplaces de-list the skull, and donate all of the proceeds generated from the sale.

Except that Colombo contends that he does, in fact, own the rights to the skull.

On their website, Yuga Labs explains that members/investors of the Club are granted “an unlimited, worldwide license to use, copy, and display the purchased Art” for commercial use.

The Bored Ape terms and conditions state: “When you purchase an NFT, you own the underlying Bored Ape, the Art, completely.”

Yuga Labs officials have repeatedly clarified that Kennel Club NFT owners also “own the BAKC IP” in the same manner. BAKC holders own commercial licenses to the underlying artwork — just like Bored Ape holders own the IP for their Apes.

“All of those IP rights are actually granted to the member and to the owner,” Nicole Muniz, CEO of Yuga Labs, explained at Web Summit in 2022. “We have none of those rights.”

Colombo emphasized that his artwork follows the rules laid out by Yuga Labs. He owns a Bored Ape Kennel Club NFT with the skull in question pictured on the brim of the hat.

Given that Colombo’s BAKC token visibly includes the Ape skull, it would seem to follow that he owns commercial rights to use the skull, considering that he owns the underlying art “completely.”

Yet, if leveraging the underlying artwork results in legal action, it raises questions about narratives driven by Yuga regarding their “unlimited” commercial license.

When contacted, Yuga Labs did not provide an explanation to resolve this contradiction.

Freedom of Artistic Expression

Some Bored Ape holders argued against Colombo, citing a post on Discord from founder Wylie Aronow.

Aronow, also known as “Gordon Goner,” posted a Discord message in June 2021, months after the launch of Bored Apes. He wrote: “just because our logo may appear somewhere on your ape, that does not give you the right to use that logo.”

“Their terms and conditions on their own website are very clear. The post on Discord … does not supersede terms and conditions on the company's website,” Colombo pushed back against one Mutant Ape holder.

Colombo pointed out that Discord is a third-party website that requires an additional sign-up process, and therefore does not supersede the terms and conditions posted to the official Bored Ape website. Colombo emphasized that he followed the website’s terms and conditions.

The Bored Ape website has not updated its terms and conditions to reflect the contents of Aronow’s Discord statement.

“Before all of that,” added Colombo, “I have freedom of artistic expression.”

Fighting Your Own Family

Colombo made less than $5,000 from the sale of “Boring Skull.” What are the implications of burning one of your key contributors over such a small sum?

Colombo and his partner, Jackie Ayran, were major players in the Bored Ape Yacht Club from the project’s inception in 2021.

Colombo and Ayran minted and bought Bored Apes at launch. During BAYC’s meteoric rise, both were prominent members of the Bored Ape community, widely identifiable not just by their grinning Ape profile pictures, but also with their real life identities. 

Colombo and Ayran were two of the club’s early cultural leaders whose talents lent artistic legitimacy to the Yacht Club. Over the years, they posted various artworks promoting and celebrating Bored Apes, modeled different BAYC merch releases, and documented the birth of their child on social media.

Their family played a key role in helping the Yacht Club to develop and promote their brand identity.

Even some of Yuga’s most ardent defenders had a tough time swallowing the company’s sudden action against its own community member.

NFTwap, a typically staunch defender of Yuga Labs, tweeted: “if they’re truly trying to foster a community, they need to respect and treat their core community LIKE A COMMUNITY. Seeing the cease and desist sent to [Colombo] on the timeline … they’re way too sue happy, willing to fight their own family … not okay.”

Meanwhile, there appears to be virtually zero possibility that Colombo’s work would create any consumer confusion in the marketplace, whereas many other projects directly imitate Yuga’s collections.

One example is cryptocurrency mogul Justin Sun’s BAYCTron collection, which claims to be an “homage” to the Yacht Club. The BAYCTron Apes appear essentially identical to Yuga’s Bored Apes.

BAYCTron has already traded millions of dollars in volume and continues to receive active promotion from the team as of this article’s publication.

Yuga Labs: the True Thieves of IP?

In an ironic twist of fate, just a couple days after the controversy with Colombo’s art erupted, Yuga Labs came under fire for their own careless regard of IP rights.

Yuga has been using stolen art.

On February 17, artist and editor A T Wilkinson identified a glaring issue with the BAKC collection: the collection’s logo appears to be taken directly from a children’s drawing guide.

Yuga’s Kennel Club logo was in use for almost two years on a collection that traded hundreds of millions of dollars in volume. The logo art was stripped directly from a step-by-step children’s drawing tutorial.

Posted in early April 2021, the Easy Drawing Guides wolf skull tutorial predates the launch of Yuga’s BAKC collection by three months. Yuga Labs applied to trademark the plagiarized skull logo in November 2021.

“It’s a bad look and pretty irresponsible,” admitted Bored Ape holder Bailey.

It also appears that Yuga’s “artist” opted to use a digital autotracer rather than manually follow the steps to draw the wolf skull.

Easy Drawing Guides wrote on Twitter: “Yuga Labs doesn't have a license to the wolf skull drawing. The intellectual property rights for the drawing belong to Easy Drawing Guides as it's our original drawing and protected by our Terms and Conditions.”

Considering that Yuga Labs is presently engaged in trademark lawsuits, many remarked on the hypocritical optics of such careless infringement against a small artist.

Michael Eshaghian, a patent attorney who tweets commentary about web3, observed: “If it's true that Yuga Labs essentially stole its BAKC logo from a how-to-draw book, that is not a great look, [especially] in its ongoing trademark lawsuits against Ryder Ripps and Pauly [Jeremy Cahen].”

Rather than accept accountability for stealing from an independent artist, Yuga co-founder Greg Solano (also known as “Gargamel”) used the opportunity to pass off the blame to Yuga’s freelancer.

Referring to the situation as “claims,” Solano stated that this blatant IP theft was “news” and that Yuga is still investigating. He referenced the charitable donation affiliated with the collection, although users observed that the BAKC collection generated far greater revenues for Yuga Labs than it did for charity.

Cult Mentality?

Although Wilkinson identified Yuga’s IP theft, Colombo quickly realized the irony of the ordeal. He tagged Yuga Labs and Bored Apes on an image of the BAKC collection, commenting: “you got some explaining to do.”

That same day, Colombo appeared on a popular Twitter space to discuss the BAKC logo issue in relation to the threats he received from Yuga Labs. Some individuals who shared the stage downplayed the severity of these issues — or dismissed them entirely.

“Big companies sue small artists,” Yuga Labs investor Justin Blau (“3LAU”) spoke in response to Colombo. “How many times have we heard that story? It happens.”

During the same space, illaDaProducer, community and partnerships lead for Yuga Labs, idled silently on the stage, occasionally throwing up an emoji as the conversation unfolded.

“No one wants to discuss the fact that they’re stealing, but yet they’re going around throwing their lawyers at everybody,” Colombo spoke in a firm but calm tone.

Matt Medved was also onstage at the time. Medved is co-founder, CEO, and EIC of NFT Now, a media outlet that provides coverage and analysis of events, topics, and issues within the NFT community.

“Matt Medved, are you gonna write about this topic, or no?” asked Colombo.

Medved did not provide any verbal response, but tapped some “100” emojis as the space host reprimanded Colombo. Medved left the stage silently shortly afterwards.

To this date, NFT Now has not provided any coverage of either the situation with Colombo or Yuga’s plagiarized skull logo.

Medved did not respond to requests for comment.

Blau reiterated his public stance in private message, expressing that he thought the claim seems legitimate and “was just procedure.”

“I just thought [Colombo] was being a bit self-important making a big deal out of a legitimate legal claim as though it was the most important thing to talk about,” Blau wrote to me.

Blau stressed that it “seems to me like the whole situation is barely important.”

Offstage, other artists commended Colombo for defending his work and expressed disgust for the hypocrisy of Yuga’s approach.

Multidisciplinary artist Jake Osmun, based in New York and well known in the NFT community, described Bored Apes as “the antithesis of what the space represents for artists.”

Kevin Kelly and the press team at Yuga Labs did not offer any further clarification or acknowledgement of the legal notice that Colombo published on Twitter.

Colombo stated that he’s been in touch with legal representation and insists that his work is protected.

In a different Twitter space, Colombo spoke softly over the sound of a baby crying faintly in the background. He appealed to the protection of artists and called for introspection within the space.

“I’m experiencing this hivemind that I didn’t think existed,” he said. “For them to attack me … this is insane.”

See the full message posted by Colombo to Twitter on February 15, 2023:

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Last week, I reported that ApeCoin DAO provided millions in ApeCoin ($APE) loans to Wintermute and Alameda Research. 

On March 3, 2022, almost two weeks prior to the launch of the ApeCoin, the ApeCoin token distributor contract made two separate APE transfers to two major cryptocurrency firms: 

1. Wintermute received a distribution of 1,750,000 ApeCoin tokens

2. Alameda Research received a distribution of 750,000 ApeCoin tokens

In the first week of December 2022, the APE Foundation published a transparency report about ApeCoin, supposedly disclosing the Foundation’s financial position and flows of APE.

The APE Foundation, a foundation company incorporated in the Cayman Islands, describes itself as “the steward of ApeCoin” designed to “facilitate decentralized and community-led governance.” 

The Foundation states in the “Loans Receivable” section of the report that “a balance of APE 2,500,000 represents loans to market makers.”

Until my report, the identity of these counterparties had not been disclosed. The APE Foundation withheld the names of the counterparties from public view. There are no official acknowledgements that Wintermute and Alameda are the recipients of these loans. 

On-chain evidence provides a glimpse into the truth. Yet, there are a lot of questions that require human answers about these secret loans and ApeCoin’s glaring transparency issues.

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What were these loans worth?

The amount in question is equivalent to mid-eight figures in USD at a minimum — but possibly exceeds nine figures when considering the full potential context. The artificially induced volatility of ApeCoin makes it difficult to verify and portray the true scope or value of these loans.

ApeCoin launched in support of the sale of the Otherdeeds from Yuga Labs. Yuga Labs, creators of the Bored Ape Yacht Club, teased the sale of Otherdeeds for months. Holding a deed would provide access to their metaverse, co-developed with Improbable.

Despite the long hype cycle and the token launch in mid-March, Yuga released the information for the sale’s pricing less than 48 hours before the mint on April 30th. 

On April 28th, Yuga Labs announced the mint cost for an Otherdeed to be a “flat price of 305 ApeCoin.” However, the price of ApeCoin itself was not flat. Anticipation mixed with uncertainty over the mint, leading to inflated APE price action.

ApeCoin spiked to an all-time high that same day, tottering around $27. In the week prior, APE was trading at less than half that price — under $12 at some points.

Yuga’s stealthy Otherside NFT sale mechanics resulted in a high-volatility black swan event for ApeCoin, creating potential windfalls for any parties with foreknowledge of these factors.

A sliver of insider knowledge would completely transform the implications of Wintermute’s and Alameda’s loans. 

On the day of token launch, Alameda’s 750,000 APE loan was valued above $6 million. Wintermute’s 1,750,000 APE loan was valued above $14 million.

At ApeCoin’s all-time high, such quantities of APE were valued in excess of $20 million and $48 million, respectively. The true value of these two transfers to Wintermute and Alameda rests somewhere within a combined $20 million to $68 million.

Confirming on-chain inferences

These transfers occurred in March, but the first official mention seems to appear in the transparency report (published 9 months after the loan transactions). The APE Foundation notes that “a loan for APE 750,000 was made to a counterparty that became impaired in November 2022.”

We know that Alameda Research “became impaired” by its insolvency crisis and subsequent bankruptcy in November 2022. 

We also know that Alameda and Wintermute wallets each received ApeCoin transfers on March 3rd. The two transactions add up to the balance cited in the Foundation’s report: 2,500,000 APE.

Arkham, a crypto intelligence tool, observed the connection between the transparency report and the March 3rd transactions, remarking in late December: “Onchain data indicates these were likely Wintermute and Alameda.”

I spoke to multiple sources with inside knowledge about these loans. These sources confirmed that Wintermute and Alameda are indeed the counterparties referenced anonymously in the Foundation report.

Per the transparency report, the APE Foundation “is assessing the recoverability of [Alameda’s] loan.” Wintermute’s loan “will come due on 18 February 2023.”

The ApeCoin press team did not respond to requests to confirm any details. The press team at Yuga Labs declined to provide any comment. Wintermute officials declined to comment on the loan/transfer.

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What are the true purposes and terms of these loans?

The APE Foundation report states that the “balance of APE 2,500,000 represents loans to market makers.”

Market makers provide liquidity by simultaneously quoting the bid and ask. Among other avenues, they profit from the difference in the bid-ask spread. Market makers can wield the power to move markets directionally.

Wintermute is a major cryptocurrency market maker. Alameda, prior to bankruptcy, was also a prominent market maker. Authentic, healthy market making is important to providing liquidity and depth to markets.

But after examining their on-chain activity with ApeCoin, I am left with serious questions about what these firms were actually accomplishing with their funds.

Without official confirmation and elaboration, it is unclear what amount of these funds were earmarked or functionally used for market making. The transparency report merely states that the 2.5 million APE balance “represents loans to market makers.” The report provides limited insight and does not state the expressed intent of the loans.

These transfers are visible to the public. Yet, the public wouldn’t be able to fully discern the purpose of such transactions from simply reading the blockchain. 

Despite the considerable size and impact of these transfers, the APE Foundation still has not disclosed the recipients, purposes, or terms of the loans. The APE Foundation’s report omits any mention of Wintermute or Alameda.

ApeCoin DAO uses the blockchain to support the illusion of transparency, but the blockchain only exposes its opaque and ambiguous nature.

$22 million: Why is there another transfer to Wintermute?

Possibly most concerning of all, there appears to be a third transfer that occurred after these “market maker” loans. On March 18, 2022, the ApeCoin Token Distributor deposited 1,749,999 APE into Wintermute’s multisignature address.

This is a separate transfer from Wintermute’s loan described above. This transaction occurred two weeks after Wintermute received the loan transfer. At that time, this APE transfer to Wintermute was worth over $22 million.

It is unclear if this transfer represents a second loan, payment in return for providing services, or some other possibility. Wintermute officials declined to comment.

Notably, the loans discussed in the sections above took place prior to the commencement of the APE Foundation, whereas this transfer took place two days after the commencement of the APE Foundation.

If this transaction is covered by the transparency report, I cannot identify the relevant section.

None of the sources affiliated with either Wintermute or ApeCoin DAO provided any explanation for this transfer. In some cases, sources seemed unaware that this transaction ever occurred.

Critical questions for ApeCoin DAO

Without any official statements from the parties involved, it is difficult to draw final conclusions. I will certainly post further updates when Wintermute and the APE Foundation elect to provide an official explanation.

The APE Foundation report failed to disclose the identities of the loan recipients or the terms of agreement, while also neglecting to describe the explicit intent or purpose behind these loans. The third transfer appears unaccounted for by any party involved.

Given the magnitude and significance of these transactions, a culture of silence and secrets seem to contradict the idea of “decentralized and community-led governance.”

The APE Foundation’s “transparency report” evades complex issues with heavy passive voice and leaves behind substantial gaps of missing information. 

Two embattled crypto firms ended up with ApeCoin loans worth many, many millions. No one involved is taking accountability for these decisions or the related failures of transparency.

After learning about the secret ApeCoin loans, how could anyone believe that ApeCoin DAO is actually decentralized and autonomous?

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Additional References:

“FTX Bought 101 Bored Apes at the Record-Breaking Sotheby's Auction. Securities Fraud Alert?” from Surfing the Waves

“There’s something off about ApeCoin” by Casey Newton for The Verge

On the morning September 9th, 2021, the Bored Ape Yacht Club shattered records.

The prestigious fine art broker Sotheby’s closed an auction for 101 Bored Ape NFTs with a bid of $24.4 million.

The sale exceeded the upper limit of Sotheby’s initial estimate of $18 million. The buyer paid over $240k per Ape NFT. 

The identities of those who helped the Yacht Club and their creator Yuga Labs break the record — the buyer of $24 million in cartoon apes — remained a mystery.

Who was involved in the transaction? How did Sotheby’s come into possession of the 101 Apes? 

Many articles were written about the sale, but the press did not appear interested in asking these questions about the nature of the sale.

In reporting the sale, most publications failed to even note that the buyer was unidentified.

While private art buyers are known to request anonymity, it’s glaringly obvious that the collection was not purchased for the purposes of fine art, but as instruments attached to financial markets.

So, who bought the Apes?

As it turns out: FTX was the winner of Sotheby’s 101 Bored Apes.

FTX, the now bankrupt cryptocurrency exchange and hedge fund, very quietly “aped in” to the tune of $24.4 million. 

As far as I can discern, FTX’s Bored Ape bonanza at Sotheby’s has never been publicly acknowledged by Yuga Labs’ founders, executives, PR team, or Sotheby’s representatives. At the very best, FTX’s role in the Sotheby’s auction was heavily downplayed as to be practically invisible to mainstream perception.

How do we know that FTX was responsible for purchasing the Apes?

On-chain evidence includes:

1. Sotheby’s transferred the 101 Apes to the FTX-owned wallet on September 22, 2021 to this wallet: 0xf8e0C93Fd48B4C34A4194d3AF436b13032E641F3 

2. The receiving wallet previously sent 13 ETH to a “Blockfolio”/FTX US exchange in April of 2020 — prior to the launch of FTX US in May of 2020. This form of interaction often indicates a relationship between this wallet and the exchange, as one researcher highlighted

3. When the Apes were sold on the FTX US NFT exchange, they first needed to be transferred to a deposit wallet because FTX’s NFT marketplace required custodial deposit (extremely troubling in retrospect)

4. Frequent and large transactions involve FTX/Alameda wallets, including millions in Yuga’s ApeCoin claimed from the Apes that was later sent to an Alameda wallet (and appears to have disappeared into FTX’s centralized exchange)

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However, even if the above interpretations of the transactions are incorrect, off-chain evidence confirms that FTX won and received the 101 Bored Apes: 

5. On December 1, 2021, FTX tweeted a video promoting their new NFT marketplace. All of the Apes in the video were included in the Sotheby’s auction less than two months prior. Ape 5812 and Ape 3432 make an appearance, for example. Apes 5812 and 3432 remain in FTX’s wallets to this day.

6. Screenshots of FTX’s NFT marketplace with the Apes from the Sotheby’s sale include exclusively Apes from the Sotheby’s auction. These Apes were priced aggressively enough to nearly provide arbitrage with other marketplaces.

7. Franklin, arguably the most important market maker for the Bored Apes, identified the contract at the time on Twitter, confirming that FTX likely purchased the Sotheby’s lot: “That's what I am thinking - the 101 apes are viewable on the [FTX US NFT] exchange … some were listed and bought for under ape floor by myself, @punk9059, @zymerce, @howlshot, etc. to arb.”

8. I confirmed with Franklin that he purchased Ape 5211 (included in Sotheby’s sale) in this transaction from the FTX US NFT Marketplace.

9. Sotheby’s permits corporate entities to place bids. FTX provided its services to facilitate bids at Sotheby’s. For example, FTX supported Constitution DAO, which famously sought and failed to purchase a first printing of the Constitution. With the support of FTX US president Brett Harrison, the DAO worked in partnership with FTX US to meet Sotheby’s KYC requirements.

10. A November 2022 Coindesk article (“FTX Blowup Puts Trove of Prized Bored Apes at Risk of Liquidation”) confirms the record: “A representative of the firm says that FTX's financial sibling Alameda Research is in charge of the wallet, and has previously traded Bored Apes as part of its NFT trading strategy.” However, the article neglects to explain that FTX purchased the Apes from the Sotheby’s auction.

11. January 26, 2023 update: Twitter user RΞDPIG thanked both Sotheby’s and FTX’s account on this tweet from December 2021. “Welcome home BAYC#5614,” reads the tweet. Ape 5614 was sold via Sotheby’s 101 Bored Apes auction. The tweet was deleted.

DrJones0305 on Twitter is the first person I saw analyze the FTX wallets and make the explicit connection between the on-chain activity and the Sotheby’s sale. FTX’s wallets remain in possession of many Ethereum and Solana assets.

According to their estimate, the collective value of FTX’s Ethereum collection is roughly $8.5 million. Considering the FTX collection holds some of the rarest Apes along with a small bounce in crypto markets, I suspect the true value of their collection could presently fetch well north of $10 million. There are 3 gold Apes, for instance, which still sell on marketplaces for about $1 million each. 

Securities fraud alert?

Over the next few pieces in this series, I’ll explore some of the events, individuals, coverage, and questionable elements of the Sotheby’s auction — as well as Yuga’s intricate involvement with FTX.

These stories raise hard questions about what went down with the NFT market over the past couple years.

At the conclusion, I’ll ask one important question: do the actions taken by Yuga Labs and their business associates around the Sotheby’s auction constitute market manipulation and insider trading?

Content Advisory: In addition to abuse and sexual assault, this article discusses portrayals of incest and pedophilia in media.

Justin Roiland, co-creator of Rick and Morty and founder of the gaming studio behind High on Life, faces several public accusations of predatory behavior including sexual assault and grooming of high school girls. 

The accusations span a timeframe of at least a decade. New accounts emerged as recently as this present year. They appear on various forms of social media and are often accompanied by screenshots of texts or private messages exchanged with Roiland. 

Some of Roiland’s accusers state that he first made contact with them while they were in high school — and in some of those cases, while they were under the age of 18.

The accusations against Roiland received effectively zero coverage from mainstream media despite alleged patterns of severely abusive behavior. Those who come forward are often chastised by Roiland’s fanbase, pushing their voices further into silence.

It’s well past time that the victims of Justin Roiland receive a platform to express their experiences.

How did we get here? Art Gobblers.

Last month, Justin Roiland launched an NFT project known as “Art Gobblers” with the support of crypto-focused investment firm Paradigm. 

The project quickly drew controversy after Andrew Wang, a prominent NFT influencer and artist, revealed his hidden involvement with commercial promotion of Art Gobblers. Wang and Roiland are both associated with United Talent Agency.

In collaboration with Roiland, Wang developed the character of a 13-year-old boy named “Balthazar Crumps.” Over the course of a couple months, Wang posted tweets in character using the Balthazar Crumps profile. 

Wang identified himself as a 13-year-old in Balthazar’s profile bio (now removed), but did not include any clear indication or disclaimer that the profile was controlled by an adult.

In an appearance on Rug Radio on October 31st, Wang explained how he helped to promote the project by creating Balthazar: “we were like alright, 13-year-old kid, really weird, likes to masturbate.”

The same day, Wang tweeted a sexually crude joke in reference to the project from the Balthazar child account. He tweeted out: “I also like the smell of my own goo!”

By the end of the day, Wang proudly revealed that he had secretly been running the account for two months in official support of Art Gobblers. The fictional character was created in conjunction with Roiland and Dave White from Paradigm.

Wang’s covert roleplay as a minor quickly received pushback from some who called it out as “weird behavior.”

“This is not anything to tweet you are proud about,” said one reply. “Posing as a child on the internet is legit fucking disgusting.”

Wang published an apology on November 6th, acknowledging that “it became clear a teen character should not have been included.”

During the run-up to release, the project made jokes about nonconsent, with a lot of thinly-veiled sexual references to “goo.” One character profile associated with the project made a joke alluding to child sexual assault. Yet another character tweeted: “The aliens wake me up, force me to watch them make goo, then knock me out again. It never ends…and I think I like it?”

Shortly after controversy emerged, the Art Gobblers artwork was revealed. Some of the artwork was clearly NSFW as some of the character traits for the NFTs include animated genitalia and sex toys — content concealed to the public up to that point.

The artwork reveal came as a shock to many on social media, as the fact that the project would be sexually explicit was not widely known by the public or directly acknowledged in the marketing campaign. 

Prior to the art reveal, some people had made five-to-six figure investment choices without knowing that they were investing in a NSFW project.

The project’s marketing also targeted many members of the NFT art community, with many receiving allowlist privileges to mint an Art Gobblers NFT in exchange for interaction with the marketing campaign. Some artists expressed they were uninformed of the NSFW content before promoting the project pre-reveal.

Once the full story started taking shape, it became hard to ignore the uncomfortable reality.

“Let’s just pause for a moment and recognize how weird it is for an adult to be proud of pretending to be a 13yr old kid promoting a collection filled with penises,” one reaction read, quoting Wang’s thread.

Millions of dollars had already changed hands.

The Gobblers Backlash: “Pedophile Propaganda”

While controversy brewed over the artwork and Andrew Wang’s child character, people in the NFT community began whispering about reports of predatory sexual behavior from Justin Roiland. One story included an individual who claimed that Roiland established a relationship with her when she was 17. According to her Tumblr post, Roiland sent sexually explicit messages and attempted to hook up with her “frequently.”

"Seeing [Rick and Morty] explode in popularity is beyond weird to me because [I] just know this dude was super creepy and has probably done this with other young girls,” read the post.

Folks were also shocked to learn that the premise of Rick and Morty was originally contrived from a cartoon short called “Doc and Mharti.” 

In Roiland’s original sketch, Rick repeatedly forces Morty (“Mharti”), a young boy, to perform fellatio. These acts are shown in graphic detail. The short centers entirely around attempting to make comedy out of child sexual assault. The Doc and Mharti characters Roiland created and voice acted for these sketches were then developed into the duo known as Rick and Morty.

Adult Swim VP Mike Lazzo apparently never saw the “Doc and Mharti” shorts before helping launch the first season of Rick and Morty, as apparently Roiland wanted to avoid showing the abusive content to producers on the show. But once the show’s popularity solidified, Roiland started sneaking in sly allusions to the CSA jokes from the original sketch.

Combined with concerns about Roiland’s unaddressed behaviors and the explicit child sexual violence in origins of Rick and Morty, this series of revelations caught fire across the NFT community. Many drew a hard line against Art Gobblers, citing Roiland's involvement and the project’s bizarrely offensive marketing tactics. 

Seemingly in response to Art Gobblers, David Horvath, creator of Bossy Bear, wrote: “Zero tolerance for pedo anything, will not pass. End of line. Web3 is on pause until that shit leaves.”

“At this point if you’re still pushing Art Gobblers, you’re knowingly supporting pedophile propaganda,” said Crypto Bitlord, a prominent crypto personality.

In his apology, Wang explained that he didn’t know the artwork would be sexually explicit when working with the team: “I wasn’t made aware that the Art Gobblers NFTs were NSFW until the public saw it with me. I didn’t know about the components of the universe. If I’d known the art carried explicit themes, I would have never introduced the character.”

There was no public apology from the Art Gobblers team for excluding information about the sexually explicit artwork. Nor did the team explain why the marketing campaign allowed someone promoting their project to employ sexual innuendo while embodying the character of a teenage boy. 

Despite chaos in the social sphere, Art Gobblers soared at the top of NFT marketplaces, already a tremendous financial success for Roiland and Paradigm despite neglecting to disclose the NSFW nature of the product and the marketing campaign’s obscene violations.

There is still nothing on the project’s website, FAQ, or “green paper” that I can identify that acknowledges the sexual innuendo of the project or provides any disclaimer that the project is sexually explicit. 

Unfortunately, the practice of embedding sexual content in thinly-veiled jokes involving incest and pedophilia is a longstanding practice in Justin Roiland’s artistic works.

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Dan Harmon’s Sex Scandals

Dan Harmon, Roiland’s co-creator of Rick and Morty, was facing two major scandals in 2018. In one case, he targeted an employee with sexual harassment. In the other scandal, a 2009 video resurfaced in which Harmon simulates sex with an infant doll. Harmon apologized for “making a video that involved the assault of children.”

The emergence of this video led many in the fan community to reflect on some of the pro-incest themes that had been worked into Harmon’s previous show, Community.

At the time, many Rick and Morty fans wondered if a video of the co-creator with his pants down pretending to rape a plastic baby would threaten the show’s continued existence. But after a negative news cycle or two, the scandals generally fell out of the public eye. Harmon’s role with the show might have reshuffled, but he remains intimately involved through present day, recently commenting that the show could go on “forever.”

Despite the widespread media coverage of Harmon’s wrongdoings, the messaging of Rick and Morty has scarcely been questioned. Even less has been said about how the content of the show’s attitude towards the sexualization of minors may be reflective of Justin Roiland’s behavior, although many fans seem to be reaching a boiling point of frustration given the content of recent seasons.

Incest and sexual violence featured in Rick and Morty starting with the first few episodes, but the creators and their fans always cited narrative purposes that framed these as negative and traumatic events. Yet, in more recent episodes, any intellectual pretense justifying involvement of children in sexualized content and scenarios seems to be evaporating.

Roiland and Harmon: Incest Obsession?

Rick and Morty is an animated sci-fi sitcom starring a mad scientist known as Rick Sanchez and his 14-year-old grandson Morty Smith. Harmon and Roiland created and produced the show together. Both characters are voiced by Roiland. Rick and Morty live with Morty’s parents and his 17-year-old sister, Summer. 

Many of the episodes revolve around the family’s absurd problems, which often happen to be sexual in nature. 

Kayla Cobb wrote for Decider: “There’s also the not-quite-incestual-but-pretty-close tightrope walk this show has balanced on for years … Most families try to separate their sex lives and their family lives. When it comes to the Smith household, that line is very thin.”

Back in August of 2015, controversy arose over incestuous fan art involving Morty, Summer, their parents, and Rick. On Twitter, one person asked Justin Roiland if he was aware that communities celebrated explicit material shipping the family members into romantic/sexual contexts. 

Roiland took a stance in support of the incestuous fan art, responding: “in many realities, Morty and Rick ARE in a passionate healthy romantic relationship. Maybe we'll do an episode about it.”

Roiland’s insinuation that any sexual relationship between a 14-year old child and his grandfather is “healthy” or “passionate” or functional received heated criticism.

"For me, and for most others, it's the framing that's troubling. These relationships are portrayed as sexy and star-crossed,” one fan told VICE, speaking about the fanmade incest porn featuring Rick, Morty, and the other members of their family. “I'm not against these ships because they're vulgar. I'm against them because they romanticize something that happens in real life far too often."

Harmon rebuked fans who spoke out against the incest and pedophilia in fan art, saying: “I hope that nobody ever gains so much more power over the other that taboo thoughts are forced upon people or that they’re policed by roving drones that zap you for thinking a certain thought… Anything close to kink-shaming, no matter how taboo, I can’t abide.”

The issue isn’t about “kink-shaming” sexual preferences. The issue is about two grown men constantly hypersexualizing minors via incest and pedophilia to the extent that they literally brag about getting children to have sex on television.

“Maybe don’t tell your parents we did this”

After this clash with fans, Roiland and Harmon seemed to take criticism about their incestuous endorsement as a challenge. Arguably, the show pushed further towards normalizing pedophilia and incest.

Incestuous sexual assault became a recurring trope in their show. At various points in the series, Rick exposes himself to Morty. Rick demands that Morty take off his clothes to take a shower together. Morty wishes that incest porn had “more mainstream appeal.”

One of the first episodes to receive widespread blowback from fans was an episode in season 4 in which Rick, Morty, and Summer must participate with “slut dragons” in a “soul orgy” to defeat an evil wizard. Despite Morty’s protests, the dragons proceed with the “soul orgy.”

“Maybe don’t tell your parents we did this,” says Rick, as he and the other characters begin convulsing and moaning from the implied group sex.

Reuben Baron expressed criticism for this episode:

The "soul orgy" scene, then, feels out of character and extra wrong because rather than fighting back, Rick not only goes along with it but tells his grandchildren to keep this "adventure" secret from their parents. That blase attitude about a forced incestuous assault that clearly traumatizes Morty feels more akin to Doc in "Doc and Mharti," whose whole goal was trying to get Mharti to lick his balls, rather than the Rick we've come to know over the past three and a half seasons. … Yes, a "soul orgy" might not be literal rape, but it sure comes close enough to be disturbing without being explicit. It's not really a joke, either, since there's no punchline beyond the disturbingness, but it's not built into the story enough to serve as a serious plotline.

In another episode of season 4, Rick and Morty are controlled by “face-huggers” that cause them to end up deeply kissing each other while repeatedly confessing that they want to “suck on” each other. Season 5 had possibly the most controversial episode, in which Morty’s sperm fertilizes Summer’s egg, creating the inbred biological child of Morty and Summer or “giant incest baby.”

Season 6 continues such patterns: one of the subplots involves Morty’s father, Jerry, trying to avoid having sex with his own mother. For many fans, the recurring incest and pedophilia jokes are wearing thin and feeling less and less like a joke at all.

“Rick and Morty, I love ya but that’s enough incest episodes. You’ve hit your quota for incest episodes, no more please,” remarked one user on Twitter.

Justin Roiland, Summer, and “Underage Girls”

Rick and Morty gets marketed to children via video games like Fortnite and Warner Bros MultiVersus and corporate promotions such as Wendy’s meals and McDonald’s Szechuan sauce. At any elementary school, you’re sure to see at least a few Rick and Morty shirts or backpacks. High on Life was advertised heavily on Xbox Games Pass, and quickly became one of the most widely played games on Microsoft’s service.

Roiland has a demonstrated pattern of trouble when it comes to recognizing appropriate boundaries with minors. For instance, in an old Reddit comment, Roiland responded to show writer Ryan Ridley, referencing a trip to “Death Valley” that included “underage girls.”

The comments he makes in real life about minors is reflective of the attitude carried by the show, such as in the Harmon and Roiland’s portrayal of the 17-year-old Summer.

In one episode, Summer appears in her teacher’s dream in a pink bra and panties along with fishnet stockings. She attempts to seduce her brother and grandfather. Crawling on her hands and knees, she tells them: “let’s make an intergenerational sandwich.” 

There are a discomforting number of references to Summer urinating in her pants. There’s jokes about her breast size. Despite being underage, she uses an app to hook up with grown men. In a recent episode, Rick brings Summer to an orgy and the two have a sexually explicit conversation about their plans.

“By the way, I wanna fuck Summer’s ass,” says Roiland on one of the DVD commentaries, during a scene where Summer bends over a table while facing away from the viewer. “I’m attracted to cartoons.”

“She’s 17,” another voice objects.

“I drew her!” responds Roiland.

“Justin Roiland raped/sexually assaulted me”

Earlier this year around March, a thread on h3h3’s subreddit was posted with the title: “Justin Roiland raped/sexually assaulted me and I can’t handle watching Ethan talk about Rick and Morty.”

Ethan Klein is a famous influencer who runs a YouTube channel and podcast under h3h3Productions. Klein happens to be friends with Roiland. The individual posted the allegations on h3h3’s subreddit because they found Ethan’s continued association with Roiland to be personally devastating.

I confirmed the existence of the now-deleted thread. I viewed the images the author posted as supporting evidence of her claims (reproduced below this article). Some of the details shared in this person’s experience also appear consistent with experiences reported by others. 

Via the Reddit thread and its associated images, here is what the allegations claimed:

1. Justin Roiland matched with her through Tinder.

2. The two met up for dinner where he purchased alcohol for her, as she was 20 — under the age required to purchase or consume alcohol. (She provided a video of herself at dinner with him as evidence.)

3. She was intoxicated.

4. Roiland repeatedly asked her to perform oral sex on him.

5. She verbally declined multiple times.

6. Despite the absence of consent, Roiland physically coerced her into performing fellatio.

7. Later at some point, someone (unidentifiable to me) contacted her via a group message on Instagram. The message appeared to refer to Justin as a pedophile and seemingly threatened possible doxxing to recipients of the chat.

8. When she reached out to Justin via text about the Instagram message, he commented that: “They should focus on changing the age of consent laws.”

9. Roiland asked her to defend him against the accusations.

10. She expressed to him that “the sexual stuff that happened with us was not handled by you in the best way” and “verbal consent is v important.”

11. There are two additional messages expressing an absence of consent.

The Reddit thread samples the defensive vitriol that can accompany a rabid fanbase like Rick and Morty and the challenges of speaking out against a celebrity with power, influence, and status. 

I recognized a lot of victim-blaming in the Reddit comments: Why didn’t you go to the police? Why are you telling us instead of the authorities? Are you just posting this for clout?

Yet, many other comments were affirming and validating. Some offered resources and support. One commenter even mentioned that they also matched with Roiland at the age of 18 and that he wanted to drink together, too.

Still, this is just one of the allegations shared publicly over the past decade. This isn’t even the only allegation from this year. There are multiple allegations that allege Roiland groomed girls in high school, at least one accusation stating contact started with him at age 16.

It is well past due that those who are trying to come forth with their stories are provided a safe platform to share their experiences.

For Justin Roiland, there are some serious questions at hand. His behaviors also raise big questions about society, culture, and speech.

How is it possible such serious allegations have gone completely unreported and essentially ignored?

Why has Roiland’s cultural messaging on teenage/child sexuality gone basically unchallenged?

When it comes to building new cultures and communities in web3, what kind of reckoning is needed with sexual violence, internalized misogyny, and abuse?

And who holds the conch when it comes to conversations about sexuality in media?

Presented below are the images associated with the March 2022 Reddit thread. They are cropped from their original version.

If you landed here, you might have seen my post about the show hosted by Bored Ape Yacht Club and promoted by NTS Radio.

If you are a performing artist at this event, I recognize that there’s a good chance you’ve either been misled as to how events with this company have developed OR you were left in the dark on this issue altogether. 

There are many different elements composing the racist and neo-Nazi dogwhistles of the Bored Ape company known as Yuga Labs, but you might start with this podcast interview I did with Defire:

Here is some of my writing covering just some of the objectionable and offensive elements from Yuga Labs so far:

The Bored Ape Neo-Nazi Logo Must Go Petition

The Bored Ape Founders Connection to Alt-Right Nazi / Pedophilia Publisher

My Interview With Founder Wylie / Gordon About the Confederate Koda

The Pickelhaube Problem: Bored Ape Yacht Club's Nazi Dogwhistle

Two well-known resources covering this subject also include: 

GordonGoner.com

Philion’s Bored Ape Nazi Club video

I respect that the arrival of this information may be too late to change plans for tonight, but I hope this helps all creative artists strongly reconsider any further association with the neo-Nazi dog whistler Yuga Labs and Bored Ape Yacht Club. 

With love,

Wave 🌊

What’s a pickelhaube?

A pickelhaube is a spiked helmet worn originating from Prussia, worn by soldiers and officers of the German Empire. The ornate design of the helmet turned out to be a hindrance in the context of modernized warfare: Germans with conspicuous gold spikes accidentally turned their melons into juicy targets for enemy snipers. Among other reasons, it was discontinued from German military uniforms after the collapse of the German Empire.

The Bored Ape Yacht Club used the pickelhaube as one of their “hats” for their cartoon Bored Apes. We know that the folks at Yuga Labs, creators of the Bored Apes, are familiar with the history of the helmet because they named the trait “Prussian Helmet” and included a double-eagle on the helmet.

Why is the Prussian pickelhaube a problem?

Today, neo-Nazis use the pickelhaube and other iconography from the German Empire as a dog whistle (coded language to signal to one another). I named the Bored Ape pickelhaube as one of several troubling elements of Yuga’s artwork in the first piece I ever published about Yuga Labs when I examined the potential anti-Semitism behind one of the founder’s pseudonyms. 

I hoped that Yuga would have used that as an opportunity to clarify their reasoning for using such a blatant alt-right dogwhistle. Instead, founder Wylie Aronow (“Gordon Goner”) retweeted my article because he felt it would be a shield against criticism and never spoke a word on the genuine concerns I laid forth. I had to dredge up his connections to an alt-right publisher to get Wylie to speak on any problems with his company’s products, and even at that point his responses were a panicked and paranoid nest of mistruths. 

Why do you say that the pickelhaube is an alt-right or neo-Nazi dog whistle?

Prussian pickelhaubes, flags, emblems, symbols, and historical figures are often used as substitutes by German neo-Nazis because Germany outlawed explicitly Nazi symbols such as the swastika. Many of the design elements from the Prussian Imperial war flag were carried forward to the Nazi war flag, so wielding the Prussian flag signifies the historical and cultural ties between Prussia and Nazi Germany. 

The Anti-Defamation League recognizes the use of the Imperial War Reichskriegsflagge by neo-Nazis. In some ways, it might be compared to the usage of the Confederate flag in the United States.

The history of Prussia festers with anti-Jewish sentiment. The laws and attitudes of the German Empire laid the foundations for the rise of the Third Reich, so its reference in modern context is thinly veiled.

I got a weird feeling in my gut on the day the Bored Ape art revealed, recognizing the pickelhaube as a dogwhistle from a popular meme that started circulating a few years ago: “Pickelhaube Kid.”

Who is “Pickelhaube Kid”?

I first saw the Pickelhaube Kid on the front page of Reddit. The image depicts a young man in a pickelhaube with a German Imperial war flag. This image hit the front page multiple times via recirculation from subreddits like r/facepalm and r/mallninjashit. 

Despite the caption, it’s obvious this young person willfully intended to provoke a response knowing these symbols were appropriated by Nazis and therefore would be interpreted as such. He knew what he was doing.

Pickelhaube Kid is no anomaly. Hyperenthusiasts of Prussia and the German Empire are often labeled “Kaiserboos” and there a multiple internet communities dedicated towards worshiping the fallen German Empire.

What’s a “Kaiserboo”?

A Kaiserboo is a person obsessed with the German Empire. Kaiserboos are not simply appreciators of history: they venerate and yearn for the former glory of the German Empire. However, when you peer beneath the surface, it is obvious such fetishization of a former monarchy is cover for Nazism and other hateful ideas.

One prominent example is the YouTube channel run by “ReichTangle.” Reichtangle’s channel was formerly suspended, and now they run their content under a new channel with over 400k subscribers. Many of their videos on the new channel were repurposed to conceal the offending imagery, but still carry the reactionary sentiments of the original videos.

While I suspect many Kaiserboos would object to the label itself due to derisive connotations, it’s accurate to say many are interested in German imperialism well beyond pure historical interest.

Pickelhaubes are plastered all over Kaiserboo culture. So yes: in contemporary internet culture, a pickelhaube is a blatant Nazi dog whistle.

Hold up. Not all pickelhaubes are Nazi dog whistles. Many countries around the world use pickelhaubes for ceremonious purposes, such as Chile, Argentina, Sweden, Mexico —

Yes, but the Bored Ape pickelhaube isn’t from any of those countries, is it? We’re explicitly told by BAYC that it’s a Prussian helmet.

Even if that weren’t the case, just because an object has widespread cultural permeation doesn’t mean it cannot be looked at with a critical eye. Some of these countries conduct ceremonies to honor their connection to Prussian history. And some of these ceremonies involve music composed by Nazis such as Leopold Weninger, known for his militant arrangements of Sturmabteilung (SA) marches.

It’s somewhat unsettling to see nations marching to musical compositions cherished by Nazis, illustrating the difficulty of extricating Nazism from the cultural artifacts of the German Empire.

Some famous musicians wore pickelhaubes, are you saying they’re anti-Semitic too?

In some cases, yes. In other cases, no. It’s complicated.

Bassist Steve Priest from Sweet appeared on Top of the Pops in a pickelhaube, once wearing a swastika armband, an SS tunic, and a mustache styled after Hitler. Although Priest later claimed it was an ironic gesture, the widespread embrace of Nazi iconography in British rock during the 1970s funneled into the simmering white nationalist sentiment across England. 

British rockers fiddling with Nazi symbolism culminated in the adoption of the Totenkopf by Ian Stuart Donaldson and neo-Nazi punk rock in the early 1980s, funding the establishment of white supremacist terrorist organizations that thrive worldwide to this day. There is a lot of anti-Semitism in the history of British rock.

Jimi Hendrix was also once photographed alongside a pickelhaube, although I cannot find any images of him wearing one on his head (he didn’t ride motorcycles and was selective about what he wore on his head). 

There’s a wider shot that shows him alongside two other men on motorcycles. One is wearing a vest with a swastika and a Stahelhelm, the other is wearing a vest with a Nazi Reichsadler and a Nazi officer’s cap. Even in the 1970s, people understood the pickelhaube’s proximity to Nazism. 

This photo shoot was in poor taste, which is probably why these images are rarely found in circulation. That said, I hardly feel that it makes Jimi Hendrix antisemitic. It seems more likely he was directed to pose alongside the pickelhaube — it wasn’t part of his artistic oeuvre. The photo shoot itself is easier to classify as antisemitic. (Side note: if you have any background information about this photo shoot, I’m very interested to learn more.)

On the other hand, there are some musicians who have re-appropriated the pickelhaube for creative purposes that I would not consider anti-Semitic. One example is the cover to Edwin Starr’s 1970 album “War & Peace.” Starr wears a pickelhaube and German military uniform on the left hand side of the peace symbol.

The metaphor is pretty straightforward: war and peace are two sides of the same coin. In that sense, it’s obvious that Starr isn’t endorsing German imperialism, but using it as a critical expression of his attitude towards militarism. Check the famous lead track of the album: “War I despise / Cause it means destruction of innocent lives.”

Yeah, what about re-appropriation? Could BAYC be “taking back” the helmet?

When it comes to the pickelhaube, there’s a spectrum of interpretations depending upon who wears it and why they choose to wear it. Like the ADL says, these symbols weren’t always interpreted as racist or anti-Semitic. 

I do think there can be valid reappropriations of symbols. I don’t think placing a Prussian pickelhaube atop a cartoon monkey with zero explanation (despite public outcry) qualifies as a valid means of reappropriation.

Edwin Starr had an arguably legitimate use in 1970, but it seems unlikely he would pull off the same cover in 2022 because time changed how society reflects and interprets cultural symbols. The BAYC isn’t a Motown artist in 1970 — it’s a corporate project concocted by a couple white dudes who were inspired by internet culture. And there are countless indicators that in modern internet culture, the Prussian pickelhaube serves as an antisemitic dog whistle.

I can’t recall any new usage of pickelhaubes by musicians in the last decade or so. Possibly because modern audiences, more attuned to subtle forms of sneak prejudice, may quickly identify such symbols as an alt-right signal. Thousands on Reddit mocked the Pickelhaube Kid because his Prussian gear obviously read as born out of a desire to troll folks.

We live in an age where bigotry comes cloaked in misappropriated symbolism and iconography, and internet subcultures fuel the flames of white nationalism through coded language and aesthetics.

Use of the pickelhaube in art might not be inherently antisemitic, but that it does require something we are missing from the Bored Ape Yacht Club: context. 

Is there any possible context that Yuga Labs could provide that would justify their Prussian Helmet?

We’re 18 months past the release of the Bored Ape Yacht Club. If there were some vindicating rationale for the specific emblem of a reactionary, genocidal, autocratic regime to be included in an “irreverent” collection of cartoon monkeys, wouldn’t we know it by now?

I’ve exhausted opportunities to ask Yuga Labs for any explanation or contextualization of its inclusion. Their employees appear completely in the dark as to its origins and meaning.

We’re 13 months past the Coindesk interview where Yuga founder Greg Solano (“Gargamel”) explained how they designed the Ape traits inspired by techniques like Hemingway’s iceberg theory and Wittgenstein’s aesthetic philosophy. He explained that the traits were intentionally designed with an implied subtext that would give onlookers “a little tingle on their neck,” causing them to think: “Yeah, this is kind of different. This isn’t just random.” 

My neck is definitely tingling when I look at the Bored Ape Prussian Helmet.  

Yuga Labs is utterly silent because they know their pickelhaube carries deeply anti-Semitic connotations. Greg and Wylie’s highly specific creative choices eliminated the possibility of any convenient excuse to hide behind.

As I’ve shown in the past with the Confederate Koda, the team at Yuga Labs has no qualms fabricating vapid excuses for their edgelord imagery or deceitfully concealing their relationships with alt-right publications. So why should anyone trust whatever embellished corporate propaganda their revolving door of a PR team spins up?

Were there some innocent rationale at play — some series of unfortunate coincidences mixed in with ignorance — it would be wildly irresponsible to withhold such context for so long, especially when you are ignoring and denigrating the intelligence of Jewish people who express offense over the pickelhaube.

There should be zero doubt that the Bored Ape “Prussian Helmet” is a Nazi dog whistle. If it were anything else, reasonable people would have sprung into action to dispel rumors of malicious intent as soon as such chatter began to surface. It would have been easy to address with a quick apology and an offer to change the offending imagery, just as Yuga offered with their Rising Sun bandana.

Instead, the money got taller, their lips grew tighter, and they relinquished ownership of the contract that would permit them to easily make alterations to the art.

In Part 2, I’ll explain exactly how the pickelhaube, Prussia, and German imperialism are deployed as neo-Nazi dog whistles.

I’m releasing a partial transcript of my conversation with Wylie Aronow (Gordon Goner), the founder of the Bored Ape Yacht Club and Yuga Labs. It’s been nearly two months since I wrote my open letter to Yuga Labs about their decision to memorialize an icon of slavery at the center of their metaverse known as the Otherside. 

After Wylie/Gordon got off the phone, he completely switched up the story from his explanation in our conversation below. Yuga Labs then proceeded to gaslight the entire community about what happened and lied about why they were making any change to the name. The revision they made also preserves the reference to the Confederate General Stonewall Jackson.

Most importantly, I asked Yuga Labs to demonstrate in a verifiably trustless manner that it was a random accident that the Confederate Koda appeared randomly on the very first Otherside plot, minted by the co-founder known as Emperor Tomato Ketchup (Kerem Atalay).

To this end, I’m also announcing a $300 bounty related to the Otherside contract and the Confederate Koda — find the details after the transcript.

I asked hundreds of Bored Apes what they thought about Yuga Labs planting the Confederate Koda inside their metaverse, publicly and privately. Only three were able to publicly disavow the Confederate allusion in any manner. Some of the Bored Apes appear sympathetic to Confederate history and see no issue with the reference.

In the past few months, Bored Apes: cursed me out, compared me to a terrorist, urged Yuga to take legal action against me, and directed homophobic comments and slurs in my direction.

Several more Apes conceded privately that the Confederate Koda was a violation, including some of the most prominent members of Yuga’s community. Even for some of their most important investors, Yuga is “out of innocent mistakes.” Yet the pull of merchandising deals and fear of social reprisal are powerful elements deterring folks from speaking publicly in a critical manner.

I have many thoughts to share about the company’s rampant deception, fragile network of untruths, probable fraud, and subsequent gaslighting over the Confederate Koda. I will share these thoughts in a different moment. 

Confused why the leader of a tech company with a $4 billion valuation is handing his phone number to some random guy with a Substack? Here’s how we got here.

Below is a selected portion of my conversation with Wylie “Gordon” Aronow, founder of Yuga Labs.

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July 2022 Phone Conversation Transcript

Wave: ... I guess even along that line too, I would also ask you: why is there a Koda in the collection that's named after Stonewall Jackson?

Gordon / Wylie: Eh, that just kinda slipped through the freakin, uh — I mean, I didn't write that, right, like the company's gotten pretty big, right, one of our —

Wave: I know but dude, you're the head, come on. You gotta take accountability for that. I don't understand with all the stuff that you guys are facing — how that's slipping through.­­

Gordon / Wylie: Hold on. [moves to a quieter place] Yeah, I mean, you know — a sensitivity reader went through all the copywriting and didn't pick up on it. And I think the reason why is cause it was like a play on "Jackson Hole" because that was like a geyser or like a sulfur Koda. And so, that was like, that I guess the copywriter thought there was like: "Oh, it's like ­a Jackson Hole..." 

Wave: Ugh.

Gordon / Wylie: But yeah obviously, it's, you know —

Wave: Yeah, but come on.

Gordon / Wylie: But obviously, no. It references the Confederate dude or whatever.

Wave: Right.

Gordon / Wylie: Yeah I mean you know, things, you know —

Wave: But dude, that's what I'm saying — you guys are creating this new world and I want to be in this world. You know I do have an Otherdeed and I'm gonna be in there and I'm excited for it. And I want it to be a fun thing to tell my friends about. But if I got to be like: "don't mind this thing, but there's this thing" — essentially what is the metaverse equivalent of a Confederate statue in there? And I guess I just don't understand. Yeah, like stuff “slips through” and stuff like that, that's understandable. But like, it's been a long time and it's a quick change to make. How come you guys haven't made that change?

Gordon / Wylie: I think — I mean, I don't know. Again, I mean, I don't know. I'm not the CEO of Yuga Labs anymore. So I don't get to make every decision anymore. It's not like, you know, I'm instrumental in every decision that gets made. My recollection is we had a conversation about it and we were like: "you know, it's, it's not a small thing” to change the provenance of something if it were to alter the metadata of something, you know, it's like, it's not a — it's not...It's not something we take lightly, I think, as a company. You know. But it's a fair point. I mean we could change it —

Wave: I just — I just can't imagine that people are gonna be upset. It's just, it's just text — you know? It's not — you're not altering core assets. So I mean, to me that was one thing that I was just looking at —

Gordon / Wylie: To be honest, [Wave], to be honest with you: you make a compelling case, and I'll message Nicole right after this call and be like: " y'know I think we should change this thing."

Wave: Okay, honestly that makes me really happy to hear. That's like one of the main motivators that did get me into writing about this stuff. Cause I was just confused, like how are these guys not changing this? So I guess if I could —

Gordon / Wylie: It's deeply frustrating, deeply frustrating as someone who, like, wasn't involved in the copywriting so much in this part of the process, right? It was like... it was like very, very — the final copy for everything — there was a lot of copy obviously, right? Like there was a lot of variables to make, a lot of things. And so we put copywriters on it, who are y'know, pretty brilliant people. But, you know. Yeah. That like, this. You know. Obviously. And then we literally had a sensitivity reader go through everything and they missed this too. And so it was just like okay, we missed this, um, you know: this can be considered offensive. We should have just changed it. You're absolutely right. And I think we will.

Wave: Okay, I'm looking forward to that then. If I can just ask you one more specific question about the collection …

I explain in the open letter how Yuga failed to hold themselves accountable with sufficient honesty or transparency. This selection of the transcript received minor edits for readability.

The Bug Bounty

I’m offering $300 in ETH if you can provide evidence that Yuga’s Otherside contract used verifiable randomness in its trait distribution. In other words: prove using the Otherside contract that the Confederate Koda ended up on Emperor Tomato Ketchup’s land by pure random chance, without any reason to doubt that it could have been placed there deliberately.

We have accessible technology that hundreds of projects have been using for a long time to provide cryptographic proof of randomness to their users. Did Yuga use this technology? Or did they choose to omit it?

As we learned with the Starcatchers fiasco, foregoing these protections for your buyers can deny your investors a fair and transparent reveal and lead to financial manipulation behind the scenes.

Only 145 Confederate Kodas exist in a collection of 100,000 assets. The probability of the Confederate Koda randomly landing on the founder’s plot is 0.145%. That’s nearly 1 in 700 odds. Did the latest addition to Yuga’s bizarre pattern of white supremacist allusions really materialize in such prominent placement purely by random incidence?

While cryptographic proof of verifiable randomness would not resolve their decision to name a prized asset after an icon of slavery, it would at least dispel the possibility that Yuga Labs deliberately placed Stonewall Jackson at the center of their metaverse.

I will cross-check the evidence with other developers before awarding the bounty. If multiple people submit proof, I’ll award the bounty to the person who first submits valid evidence of provably fair and verifiable random trait generation.

Find me at talktowave@proton.me

Often with the Bored Ape Yacht Club, the wackiest and most ludicrous elements are swimming right along the surface.

I love riding motorcycles, so the 1% patch stood out to me immediately when the Bored Ape art revealed in early May 2021. The “Biker Vest” trait bears a red and gold 1% diamond patch and is the sixth most-popular Bored Ape clothing trait. 

The real-life origins of the 1% patch are shrouded in mythology and often hotly contested. Hundreds of versions exist of how the patch came to be, but the majority of origin stories share a few overlapping commonalities. Most everyone seems to agree that after the heavily sensationalized Hollister “riot” in 1947, the American Motorcycle Association responded to panic over reports of violence at the Hollister rally: “99% of the motorcycling public are law-abiding; there are 1% who are not.” (Ironically, the only source that denies this version of events appears to be the AMA itself.)

Many MCs bristle at the idea that “outlaw” or “one percenter” refers to criminality. In my experience, some contend that wearing the 1% diamond simply means living outside the norms and rules of society. 

A frequently repeated phrase goes something like: “99% of all bikers are law-abiding citizens, but there are 1% that live by their own rules.”

Back in 1947, the AMA was out of touch, out of sense, and out of pocket. They spoke down in a belittling, authoritative tone towards cliques of post-war motorcyclists, who in turn received a lashing from the press. This assertion of authority became a spark for the counterculture. 

From that spark of defiance arose the outlaw motorcycle club. Riders across the country embraced the newfound identity of living outside the AMA’s supposed 99%, forging clubs around living together in the one percent.

Some of these clubs go by names like the Outlaws, the Hells Angels, the Mongols, the Pagans, and the Chosen Few – all bear their own version of the 1% diamond patch.

Yet there’s only one 1% club that rocks the red and gold diamond: the Bandidos MC.

The Bandidos colors were inspired by the colors of the U.S. Marine Corps. The Bandidos founder, Donald Chambers, was a former Marine. Many of the men who joined the original incarnation of the club were young Korean or Vietnam veterans who returned home to a country that didn’t receive them with respect or dignity. Many of these young men found direction and brotherhood in motorcycle clubs like the Bandidos.

Today, the Bandidos are one of the largest 1% MCs both in the United States and worldwide, with chapters established across the Americas, Europe, Australia, and Asia.

And there’s no doubt that the Bored Ape biker vest copied the design of the Bandidos diamond.

The Bored Ape patch is identical to the patch worn back in the 1960s and 70s by Chambers through the present day Bandidos club. It has the same exact red alpha-numeric symbol surrounded by and red borders on a gold background. It appears on the Bored Ape YC vests in the same position as the Bandidos MC vests. The patches are indistinguishable apart from the fact that one is embroidered to a cartoon Ape.

There are 253 Bored Apes wearing the biker vest with the diamond patch. One golden Bored Ape with the diamond patch trait sold for over $1.7 million. Even the illustrious entrepreneur Gary Vee owns a biker Ape with the red and gold diamond patch.

A considerable sum of money was collectively invested into diamond patch Bored Apes, partially under the premise that their investors own the commercial license to the red and gold 1% diamond. It’s shocking that it’s gotten to this point with almost zero scrutiny.

The Legal Issue

How do “full commercial rights” operate when the image contains trademarked material?

A prominent marketing proposition of the Bored Ape NFTs is that purchasers are supposedly entitled to commercial use rights over the image. According to the Bored Ape Yacht Club’s official “Terms & Conditions” page, Yuga Labs explains that “when you purchase an NFT, you own the underlying Bored Ape, the Art, completely.”

Brian L. Frye, a law professor at University of Kentucky College of Law, agreed that there could be potential legal perils when it comes to commercializing the “Biker Vest” artwork which Yuga says the Ape holder owns “completely.”

“I should think so,” Frye wrote to me. “Not only because the image they own the rights to use incorporates a registered mark, but also because the mark it includes will be unappealing to the overwhelming majority of licensees.”

Over the past year, Yuga empowered holders to license their Bored Apes to create products, merchandising, and otherwise generate revenue streams with their Bored Apes via everything from music videos to M&Ms. Their T&C reads: “Yuga Labs LLC grants you an unlimited, worldwide license to use, copy, and display the purchased Art for the purpose of creating derivative works based upon the Art.”

The infringing 1% patch potentially draws into question the notion that the owners own the art “completely.”

Not only have the Bandidos MC worn the red and gold 1% patch for over five decades, but the Bandidos website also claims that “all logos, brands and designs regarding Bandidos MC are trademark-protected (TM). Unauthorized usage, reprography and propagation is prohibited and will be legally prosecuted in any case.”

Ariel Givner, a corporate attorney who specializes in web3 industries, agreed with Frye. She mentioned a cease and desist from the Bandidos as a possibility “unless Yuga obtained a license from Bandidos to use their logo.”

“It just doesn’t sit well with me,” Givner further explained. “Yuga should know better than to create an NFT with a potentially infringing mark.”

She raised another important concern in this situation: who would bear legal liability if some party were to take legal action against an infringing Ape holder? Would Yuga Labs offer legal protection to their holders? Or would the Ape holders be on their own, subject to potential legal action?

Givner explained why she feels Yuga Labs should bear some responsibility as creators of the artwork: a holder receiving the wrong end of legal catastrophe “would be like Steve Madden making an infringing shoe and then instead of suing Steve Madden for the infringement, [they] sue the buyer.”

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Similar Precedents Infringing Against MCs

Motorcycle clubs have successfully defended their trademarked cuts via legal avenues. In 2019, a federal judge ruled against the U.S. government’s attempt to seize the Mongols MC’s trademarked logo, writing: “Though the symbol may at times function as a mouthpiece for unlawful or violent behavior, this is not sufficient to strip speech of its First Amendment protection.” 

The Hells Angels sued corporations such as Amazon, Toys R Us, Alexander McQueen, Zappos, and Marvel for all different forms of infringement ranging from comic books and designer clothes to yo-yos and jewelry.

They even settled with Young Jeezy for selling bootlegged versions of their signature jackets. Jeezy “immediately yank[ed]  the items in question off the shelves.” The Hells Angels told TMZ: “We always get what we want.”

The Hells Angels once again got what they wanted from Disney when their lawsuit pressured the company to remove all references to Hells Angels from their 2007 comedy Wild Hogs.

“People think that just because a group is depicted a certain way that they’re kind of no longer allowed or should be given the benefit of the law in other areas, such as intellectual property,” Fritz Clapp, longtime lawyer for the Hells Angels, told the Fashion Law.

When it comes to defending their designs, MCs are downright serious. For clubs, defending intellectual property is an opportunity to build reputation while staying vigilant to their brand.

Frye also noted that a 1%er “diamond within a diamond” design is also currently registered with a whiskey company. I asked him if the absence of the “-er” ending on the Bored Ape patch would provide some legal wiggle room, but he said that he doesn’t think the missing suffix would be “dispositive in a design mark that is so similar.”

“The registered mark claims the design in any colors,” Frye explained. “I wonder if the club is aware of this?”

I wondered too.

Bored Ape 1% Patchers Are Already Testing the IP Waters

I attempted to reach out to every ape who socially represents the 1% patch trait on social media, but I was only to get a response from one owner: Ape 4567. I asked what he thought of his Ape’s 1% patch.

4567 let off a flurry of insults, referring to me as a “rat” and telling me to “stop asking stupid ass questions.” I asked what his diamond patch meant to him in an attempt to clarify its personal significance. 4567 explained he doesn’t know what it means and doesn’t care what it signifies.

“It means nothing to me. It’s an ape I bought for 1.2 [Ether] and that’s now worth 150. One of many apes I own. You’re a serious fucking loser,” continued Ape 4567.

I attempted to clarify why his ape is worth 150 ETH, over twice the market price to liquidate a Bored Ape. 

“Check flipped brim floor,” he responded. (At the time of writing, the flipped brim floor rests at just under 100 ETH.)

Ape 4567 also intimated that he would seek to help Yuga Labs initiate legal action against me – a recurrent issue I’ve experienced with Ape owners while publishing about Yuga Labs.

I wondered why 4567 quickly escalated to hostility, threats, and personal attacks in response to straightforward questions about his chosen social representation.

The reason became apparent a few days later when Erve, a European fashion designer specializing in licensed apparel, announced a new branding deal. Along with 10 other Apes he appears to own, 4567 is releasing a collection through Erve that includes “daywear, nightwear, accessories, socks, and underwear to the retail audience.”

Soon, Europeans will be able to walk into a local retailer to purchase socks and underwear – branded with the wide-eyed Bored Ape 4567 in his luxurious flipped brim and of course, the Bandido 1% patch. 

I realized 4567 perceives the value of his Ape not just in its liquid value, but in the branding deals and exposure for the image of his ape – an image he might not actually (completely) own.

There are loads of 1% MCs across Europe, all with their own subcultures and relationships. How will they react when they see motorcycle club “apes in stores next to pop culture tees like Star Wars or Winnie the Pooh”? In my eyes, it would be an explicitly stupid idea to sell a novelty t-shirt with the image of a monkey in a 1% vest. 

After all – you never know who might not take kindly to being compared to a monkey.

False Flagging: The Culture Issue

Even if the legal issues turn out to be resolvable, there should be a cultural warning issued to Bored Ape YC investors. Club symbols can be seen as property of the club – because they are literally intellectual property.

If you’re not a one percenter, then you shouldn’t represent yourself as a one percenter in any manner – even digitally. A 1% patch is generally viewed in motorcycle culture as an earned insignia. Technically, anyone can buy a diamond patch online and press it onto a vest – but there’s an old adage about earning your patch by keeping it on. 

When GQ interviewed Edward Winterhalder, retired founder of the Oklahoma chapter of the Bandidos in 2015, they asked him about wearing a misappropriated club patch. Winterhalder’s response was firm:

“That doesn't work in the motorcycle world. I'm sure there's guys that have done it, until they ran into a member of the club. Then it became an issue. They probably get their ass kicked, and life goes on.”

That’s not to suggest that a Bandido would act out in violence against an outsider wearing their colors. The Bandidos are infamous enough that they don’t need to go looking for trouble. They might just mock stolen valor. They might not care at all.

Winterhalder retired over two decades ago. His mentality is likely more reflective of a bygone era, so I wouldn’t necessarily take it as representative of the club’s current cultural perspectives. Yet, there’s a core truth underscored here: trespassing against a club’s colors can evoke strong feelings or severe reactions.

If you represent MC colors in a territory where those patches are not the power club, the dominant club of that territory might easily take offense. An imitation patch can easily be perceived an as authentic — or as derisive mockery of the culture.

In other words, a modern Bandido might not care enough to bother with a fake patch offender, but it definitely might attract the attention of another club. In some areas, a diamond patch – and its colors – are guarded with blood.

An increasing number of Bored Ape holders are designing elaborate cosplays, licensed characters in entertainment productions, or branded products which convey the traits of their apes. Yuga has a responsibility to inform its collectors of the cultural significance and histories behind the imagery they purchase (and supposedly own, “completely”).

This is true not only for the diamond patch, but for many traits in the BAYC collection.

Nicky Nickels — the Bored Ape Biker?

Bored Ape licensing deals extend far beyond mere novelty shirts and underwear. Ape owners deal their commercial license rights out to movies, TV shows, comic books, and video games.

One of the most famous examples is “Jenkins the Valet,” a project operated by Tally Labs, who released a series of products leading to an upcoming novel written by former pickup artist Neil Strauss. Between primary sales and secondary fees, Jenkins the Valet netted at least a couple million dollars.

Dozens of Apes wearing the 1% patch licensed their Apes to Jenkins the Valet, some giving them MC related names and backstories like “Captain Harley,” a biker vest Ape who found the Yacht Club while “cruising with his biker gang.”

All of these Ape owners are “paid a profit share for all primary and secondary sales of the complete book NFT,” according to the Jenkins website. Only one however, is set to appear in the novel: Nicky Nickels.

The Ape named “Nicky Nickels” is described in his Jenkins profile as an Ape “born on the wrong side of the swamp” who “join[ed] up with the local biker gang, the Apes of Anarchy (AOA).”

Nicky Nickels is owned by Gene Nubla, who also appeared to license his ape to appear in film and on t-shirts too. Most striking about Nicky is that Nubla went as far as to incorporate motorcycle club elements into his IRL social identity, including a leather MC vest sporting the Bandidos 1% patch.

“It'd be nice to be able to benefit off the royalties of anything that comes off this,” Nubla explained to an LA publication. “But I'm doing it mainly just for the vibes.”

If he isn’t actually a one percenter, wearing that vest isn’t a “vibe” at all. I would recommend retiring the vest, or at least stripping off the Bandidos MC patch. Nubla did not respond to my request for comment, so I am unclear if he is a one percenter or simply roleplaying as one.

It might be safe to wear an imitation MC vest around ApeFest, but it’s a foolish idea to walk around with that vest in the outside world. Wearing a fake 1% vest in the wrong place at the wrong time can lead to fast regrets.

Jenkins the Valet responded to request for clarification about their plans with Nicky, stating: “Nicky is not depicted as a ‘1%-er’ and we have also gone back to review the illustrations created to support the novel. None of them contain the specific patch.”

Excluding the 1% patch or characterizations as a one percenter seems like a prescient approach. Removing the patch also seems like an easy solution for Yuga Labs to adopt.

But what happens to licensors who actually incorporate the 1% patch or a falsified “outlaw MC” personality into their products?

Who bears legal or ethical responsibility in such a situation? The executives of Yuga Labs? The founders who approved the “biker vest” trait? Or their naïve investors, who are emboldened by Yuga to embody, evangelize, and merchandise their Apes?

Ignorant Precedents and a Troubling Lack of Accountability from Yuga Labs

The word “irreverent” is often deployed by the Bored Ape founders to explain their cultural decisions, including when I spoke with Wylie Aronow, founder of Yuga Labs. Irreverence means lacking proper respect or seriousness. In art, irreverence towards pop culture is usually perceived as satire.

The problem is that a diamond 1% patch isn’t something to treat without respect or seriousness. In some cases, encouraging people to satirize a culture they don’t actually understand can be offensive or even dangerous.

Despite over seventeen months of time to explain the story behind the Bored Ape art, the Yuga founders still resist publicly illuminating the reasoning behind many of the most fundamental aspects of their collection. The Bored Apes have done billions in sales volume. Yuga also profits handsomely from secondary sales fees on the millions of dollars traded over Bored Apes wearing the diamond patch. 

The patch is just one of many elements that demonstrates Yuga’s utter absence of any narrative responsibility to an audience which invested an astounding amount of equity into their promises.

The Yuga Labs PR team offered this response to my inquiries:

“Our company and founders strongly condemn the spread of hate, in any form, against any group. Period. We’re focused on building and lifting up the community, not on the incoherent ramblings of a small group of for-profit conspiracy theorists who are cherry-picking data points to create false and defamatory stories about us.”

I was confused by the irrelevance of Yuga’s response (hatred is not the issue at play here), but they did not respond to my follow-ups for clarification. I should note that my writing is all free, so I am unsure if “for-profit conspiracy theorist” was directed towards myself or towards someone else.

Over one month ago, I notified the co-founder of Yuga Labs, Greg Solano, about the similarity between his company’s Bored Ape artwork and the Bandidos MC intellectual property branding. Solano (also known as “Gargamel”) did not respond to my messages. 

Nubla, owner of Nicky Nickels, was photographed with both Solano and Aronow at Apefest in June. The founders of the BAYC are obviously aware that people are leaning into the motorcycle club aspects of their Apes, including the Bandidos 1% patch. 

If Nubla is a member of the Bandidos MC — then I wouldn’t say he needs any intervention from Yuga. If he isn’t though, then Yuga’s silence — their indifference to a misguided, risky LARP — feels like a cruel joke.

After seventeen months of ignoring thoughtful and honest criticisms, Yuga’s absence of explanation or discussion is looking and feeling a lot like willful negligence. In that silence, the Bored Ape 1% patch raises important questions: 

How can Bored Ape investors own and commercialize an image that someone else already owns?

Is it ethical for a corporation to sell investors commercially licensable artwork without providing an appropriate degree of legal or cultural context? If this was an unforeseen issue, couldn’t Yuga provide holders the option to change the artwork?

Why did the founders of Yuga Labs trifle through so many cultures with such little degree of dignity for social origins, context, and authenticity? And why are they so afraid to simply speak about their personal creative choices?

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Dear Wylie, Greg, Nicole, Kerem, and Zeshan,

Yuga Labs CEO Nicole Muniz said in a February interview that the “idea that we’re Neo-Nazis or alt-right is offensive” and “totally untrue.” Not only did we learn after her interview that two founders are well-connected to an “alt-write” publisher – related evidence of which someone attempted to conceal or destroy – but two months after Nicole’s statement, your company went and included a Confederate reference in their newest collection.

This was a reference to an enslaver whose cultural legacy was recently a rallying point for white supremacist Neo-Nazis. A rallying point that ended with a Neo-Nazi taking the life of a woman who was exercising her free speech to fight white supremacy. And you used the name of that exact Confederate general for one of the most treasured and valuable assets. In my perspective, the Confederate Koda was the metaverse equivalent of a Confederate statue – a totally wild concept given that the real life statue of Stonewall Jackson that helped spur said hate crime was taken down less than one year before you decided to honor him in your video game asset.

I feel defrauded as an investor and deeply offended as a human being. At best, you did not take the allegations seriously enough to ensure that you were not including racist allusions in your products. If I knew that the collection would include a Confederate reference, I would have used my money elsewhere. 

Your decision to include an allusion to a Confederate general and enslaver in such a critical element of your collection after receiving serious accusations is compounded by the fact that you did nothing for months to address the issue. Your company was effectively silent. My June article circulated by Wylie Aronow and Guy Oseary identified “Stone Hole Jackson” as a bothersome, potentially “alt-right” signal. Twitter user @xPeaceLandBread wrote the most popular response to the Otherside’s May 1st tweet, which highlighted the Koda’s connection to the Confederate general. You knew it bothered me. You knew it bothered others. Despite discussing the matter internally, you did not act until after I confronted Wylie over the phone and later followed up with your media management representative. Even afterwards, you did not address the issue with sufficient honesty nor transparency. 

These violations require a level of accountability and ownership that has been neglected by your corporation. I have four demands:

1. Immediately commit to changing the Bored Ape Yacht Club logo. You have resisted changing an element that stirs memories of genocide for many people. Citing intention is not an acceptable response here. Whatever you intended, people have repeatedly expressed hurt around the striking similarity that your logo bears to well-known Nazi imagery. Now that you have also dipped your toes into a Confederate allusion, it is especially disturbing that this particular fascist iconography also has a recent history of mixing with Confederate symbolism (as noted above). When I published my first piece back in June, I wrote that “the logo should be changed as soon as possible regardless of whatever original intention.” Many others requested the same long before I did. It is not unusual for corporations to change their logos. Change the logo ASAP.

2. Transparently release communications around the Confederate Koda. According to Wylie’s recollection, there was a “conversation” about changing the name of the Confederate Koda. Can you share this conversation with dated timestamps? Wylie later wrote to me after our call that he “found out the team was already planning on changing the stone hole variable.” Can you provide the conversation that caused the team to change their minds after keeping the Confederate Koda untouched for almost 3 months? That will allow community members to understand the rationale behind your actions and inactions as a company.

3. Fully alter the Koda named after Stonewall Jackson to completely eliminate the Confederate reference. It is reprehensible that you have resisted removing the “Stonewall” double entendre, as “Stone Holes” essentially retains the reference to the Confederate general. You could have chosen any other name. “Stone Holes” makes it appear that you are doubling down on your reference. It is embarrassing enough that you quietly made the change without full transparency to the community. The least you can do now is remove the Confederate reference completely. 

4. Demonstrate verifiably that the Confederate Koda was randomly generated on Plot #0. Please provide evidence to demonstrate that the Confederate Koda was randomly placed at Plot #0 owned by the co-founder, rather than intentionally included in the first Otherdeed. I am not saying this was done purposely, but I am saying it would be unfathomable to learn that this element was deliberately placed to be minted by a founder in the first ever Otherside plot. Please disqualify this possibility by demonstrating that this occurrence was provably random and minted in a tamper-proof manner.

Nicole said that the community should judge the founders “based off of our actions.” What am I supposed to understand about the founders based off of their actions (and inaction) around the Confederate Koda? What should I feel? A tingle on my neck?

It is shameful that the universe you are designing will forever bear the stain of a man who enslaved people and fought to defend the institution of slavery in America. I hope you can take the minimal steps to address this issue.

~ Wave

P.S.: Educate yourself about Mutulu Shakur and sign the petition to request executive clemency based on compassionate release. The Bureau of Prison’s doctors gave Dr. Shakur less than six months to live. He should spend his final days outside the confines of prison.

Heads up: This article discusses sexual assault, racism, antisemitism, Nazism, fascism, misogyny, abuse, pedophilia, homophobia, and white supremacy.

After I published my previous article, Yuga Labs founder Wylie Aronow, known by pseudonym "Gordon Goner," quickly reached out to me to provide a response to the questions posed at the end of my piece. My article described Wylie and Yuga's potential connections to the publisher and editor of "alt-write" publisher ExPat Press. I am now able to confirm those connections.

Through our conversation, Wylie confirmed that Manuel Marrero is a “childhood friend” who maintains contact with Wylie through 2022. Along with his co-founder Greg Solano, the two men bonded over their shared interest in literature.

Wylie expressed sympathy towards Marrero and adamantly told me: "he's also not a Nazi, FYI." But that misses the point. 

Even if Wylie doesn't think his friend is a Nazi, Marrero is more than friendly with Nazis. Via ExPat, Marrero publishes another writer who is a self-proclaimed Nazi, fascist, and pedophile. Pedophilia appears in ExPat's publishings dating back to 2013, but over the course of ExPat's history, Marrero's published increasingly explicit sexual content involving babies and children.

ExPat and Marrero also heavily cross-publish with a white supremacist known to advocate for and perpetuate sexual and physical violence against women. This associate is identified by the ADL as a white nationalist and anti-Semite who dabbles in Holocaust denialism. He lavishes praise on ExPat and promotes ExPat writers by cross-publishing excerpts to his site. Marrero posted some of his Kali Yuga writings to this individual's white nationalist website.

Marrero cross-promotes and maintains business relationships entwined with white supremacists. Embedded in ExPat publishings are instructions to join secret chatrooms and hidden Telegram-style networks where ugly, bigoted anger festers. Marrero's platform is a gateway to hateful extremism. His personal writing is littered with racism, white supremacy, antisemitism, and pedophilia.

Wylie Aronow considers this man to be his friend.

Wylie's First Written Response

Below are Wylie’s responses to the initial questions I posed. For the sake of clarity, I've reinserted my questioning in between his responses (bolded), but his answers (italicized) are fully represented in sequential order: 

Hey dude, here’s the answers to your questions. I would appreciate it if you updated the article with my entire response.

Can you confirm or deny your involvement with ExPat Press? If you were involved with ExPat Press, to what extent have you retained a relationship with said organization? 

Greg and I have known the editor for years. He’s an old childhood friend from Miami. We’ve never been involved with ExPat beyond supporting our friend. 

The name Greg Solano appears published under ExPatlitj Issue #1. To what extent has Greg retained a relationship with ExPat Press since that publication?

When Greg was doing his MFA in creative writing, he would submit poems all over, and since our friend ran a literary journal, a couple were published there. Neither of us have read any of their books.

Are the other founders, Kerem and Zeshan, aware of your association with ExPat Press? Do they share any involvement with ExPat Press? 

Kerem and Zeshan didn’t grow up in Miami so don’t know the editor of that press. [sic]

What is the story and full context behind the name “Yuga Labs”?

Yuga Labs was both named for the Zelda character that turns people in 2D art and the term Sanskrit term Yuga, which means Era. We were building for a new of the internet [sic], Web3, so the name worked both ways.

As I’ve said, I practiced Hinduism (and then Buddhism) for years. Been a long time yogi, and have been practicing Transcendental Meditation for over a decade. The team decided not to publish my religious beliefs previously because frankly it's no one's business, and Greg was the one who came up with the idea to call the company  "Yuga" after the Zelda character, the era that we live in, and the fact that it just sounds cool and mysterious.  Note that I'm hardly the first Jewish liberal to get really into eastern philosophy. See: Ram Dass, Leonard Cohen, Allen Ginsberg, Sharon Salzberg, and MCA (Adam Yauch) of the Beastie Boys.

There’s nothing even remotely hateful about the term Kali Yuga. Anyone can google it. It’s the age we live in, according to me and a billion other people. Ryder just loves twisting everything into making us seem like Nazis. Just because some fringe internet racists try and co-opt something doesn’t make the term something hate related. It’s like saying all Hawaiian shirts need to be cancelled cause some far right assholes wear them.

This is all a part of Ryder's troll. Just look at his background.

At the end of his response, Wylie included five links disparaging Ryder Ripps, which mostly contain hearsay. Wylie's perception of Ryder's character has no meaningful bearing upon my questions or Wylie's personal relationship with ExPat, so I've omitted those links due to their irrelevance.

"Epiphanies": Wylie's Involvement with Thousands of Lies

Conspicuously absent from Wylie's answers was any acknowledgement of his name drop in Marrero's Thousands of Lies. I wondered why he ignored a major conjecture from my article. I pressed him on this missing fact. A summary of my follow-up messages with Wylie:

Wave Ninja: you’re thanked in a book you’ve never read? or does the reference to “wylie” refer to a different person named wylie?

Wylie: We grew up with the guy. We all used to talk about writing a lot. But no, I’ve never actually read his book.

Wave Ninja: So the dedication is indeed to you, and not to another person. I'll include that response as well. Please let me know if there's anything else you would like included.

Wylie: Yeah I’m one of the people he thanked in the book, from what I recall.

Wave Ninja: ... we both know the full truth wasn’t told here because you’re still trying to create distance to a person that literally thanked you in their most popular work. 

He said you’re one of the six people “instrumental to epiphanies that shaped it fundamentally.” That’s not the kind of thing I would say about a casual acquaintance. Are you being truthful about the nature of your relationship with ExPat and Manuel? You just grew up with him and talked about writing a lot — but never read his books or helped him create/publish work?

Wylie: I get it.

At this point, Wylie requested that I call him via phone. Wylie eventually conceded that he is indeed thanked by Marrero in Thousands of Lies for his supporting contributions.

Thousands of Lies: A Troubling Text

The contents of Marrero's personal fiction runs rampant with racism, antisemitism, pedophilia, white supremacy, misogyny and rape fantasies.

I've curated a selection of some of the harmful ideas within Thousands of Lies — the book which Wylie previewed in draft form, provided feedback, and was thanked by Marrero for being "instrumental to epiphanies that shaped [the book] fundamentally":

• Over 50 uses of the N-word and its variants, at least six uses of homophobic slurs

• Dozens of references or descriptions of rape including incest and pedophilia  (p.160, 261) and racially charged rape-fantasies (p.265):

  • "I want to have Ceajae’s beautiful half-Jamaican babies... I don’t especially want Asian babies, but as a white woman I have to think what’s practical and what kind of currency I’m carrying if I opt for a donor. ... I wanna snag me a brute ... it brings out the worst in me, I turn into an Amazonian vixen with special powers, I pounce on him like it’s rape, and I plunge his throbbing member into my dripping, wide-open **** ." (censorship my own)

• Misinterpretation of AAVE via derisive nonstandard orthography (stylizing language to intentionally degrade Black people)

  • "No black person, whatever the nappy ‘fro on they head or the tone of they skin be, pack a package this... cold and light ...That bitch be crazy like only bitches be." (p.123)

  • "This wunn’t worth the attention. But soldier boy had some problems. He be mental. Came busting through honky’s ole’ lady’s house while she be at work" (p.224)

• African-American characters annexed as degrading and offensive stereotypes who submit sexually and socially to white characters:

  • "The girls are scum, they say, not people. They will rob you, take advantage of you, try and fuck you, ask you to play a song, and sometimes you have to put them in their place. One of them I wish I’d have fucked. A blue-black African with a boyfriend no doubt triple my size, knuckles that’d notch flawlessly to my mandible, shredding my adam’s apple, make a mess of my smile. She was of model size, thin with rounded curves, and when she confidently sat on my lap during an intermission and asked me if I’d ever been with a black girl she seemed genuinely offended when I snarked it off. She could’ve been one for a night." (p.49)

• In-depth, graphically explicit pedophiliac descriptions and references. I will not reprint these but they are intense, abhorrent, and frequent. 

• Antisemitic remarks including a reference to "super Jews" (p. 39) and pangs of Holocaust denialism (p.129):

  • "The holocaust never ended ... there are Jews who like to believe it only happened once, that the word is uniquely theirs"

  • Marrero's more recent text published in 2019 also described Hitler as "inspiring" and "the first rock star" who "deployed the Third Reich to capture the big-nosed people and put them in camps"

• White supremacist language:  "If I was anything other than white, roots notwithstanding, the repercussions would’ve been out of your control. Remember when we had control? Me either" (271)

Wylie maintains that he's never read Thousands of Lies — to this very day. Yet, he knew that he was thanked for his support in a text littered with red flags. If you read and offer feedback to a writer who goes on to include your name in their acknowledgements for the "epiphanies" you provided, then you should review the published product — especially if you're aware that writer may hold "controversial" beliefs.

There's clear danger around associating with or supporting someone who launders extremist ideologies through a "dissident" publishing house. As one writer associated with ExPat puts it, ExPat publishes "things you would never say out loud, attached to your name." Because that's the point. These men won't even publish their extremist work under their IRL identities — many hide their hate behind anonymity and pseudonyms.

A small handful of contributing writers appear clueless as to the more extreme fiction published by ExPat. Their milder fiction provides ExPat and the wider "alt-write" community with the professional cover to launder extremist and bigoted writing under the guise of "upholding" freedom of speech. 

Marrero and his companions together lament the "difficulty" of publishing as a white man who must concede an "apologetic" tone to get published. But contriving shock literature as an excuse to use the n-word or rant excitedly about abusing women isn't a courageous defense of speech, it's a cowardly act of hatred.

The true goal of an "alt-write" publisher like ExPat is to provide a safe platform for extreme, hateful beliefs. In the end, Marrero is effectively establishing a network infested with bigotry — covertly creating and disseminating a cultural platform for neo-Nazis and white supremacists.

Wylie Aronow considers this man to be his friend.

The Kali Yuga Connection

In Hinduism, the Kali Yuga refers to the final and present age of the world cycle, generally regarded as an era of spiritual decline and darkness. Across 2021, speculation about the origin of the name "Yuga Labs" agitated over concerns that the name was selected in the nihilistic vein of modern alt-right misappropriation of the Kali Yuga. Yuga was silent.

Yuga finally provided an explanation in January of 2022. In a thread addressing some of the allegations, they explained that the inspiration behind the name "Yuga Labs" came from a Zelda villain in the 2013 3DS game A Link Between Worlds. This explanation later turned out to omit key details.

In their June 2022 letter from the founders, for the first time Yuga acknowledged their awareness of the Kali Yuga concept, writing: "Gordon spent a decade practicing Hinduism, and the 'Kali Yuga' is the current era we are in according to Hinduism." This new admission showed that Wylie's decade-long spiritual practice held significance over a character from a video game he may not even have played. 

In his response to me, Wylie explained that this critical fact was omitted "because frankly it's no one's business." If the connection to this word was so intimate and personal to the degree that he does not even feel comfortable publicly acknowledging his awareness of the concept, he should have chosen another name for his tech company. 

Wylie's request for religious privacy around his Hindu beliefs is in direct contradiction with his public persona in August 2020, where he plastered his Twitter profile with what appears to be a Buddhist spirituality reference. Per the screenshot from A T Wilkinson's blog, Wylie also set his Twitter location in 2020 as the Kali Yuga.

If the concept was meaningful enough to Wylie that he set it as his Twitter location, clearly it was vastly more intellectually significant to him than the Zelda character. The reference to Zelda was a circumstantial coincidence which added texture to their name choice. They hid behind this layer in their initial explanation. Why?

There's nothing hateful or insidious about the Kali Yuga within the concept's religious contexts.

However, as Wylie acknowledges above, there are "some fringe internet racists" who have attempted to co-opt the term. Kali Yuga is referenced obsessively throughout Marrero’s writing circa 2018-20. His interpretation has nothing to do with any authentic religious context. Instead, it appears as a nihilistic vision of apocalypse:

• "Their temporal excavations opened a ripple, fucked everything up for everybody. Now they’re lost to us, in a reality where Hillary Clinton is president, if you can believe it. But this is much worse. This is Kali Yuga, death drive on overdrive ... Something that’s supposed to happen isn’t happening, and God isn’t happy. These earthquakes, these superstorms, mass killings, they’re only going to get worse unless we rectify it. Ridiculous, I know, but that’s what God is like"

• "Everyone a husk, no place more indifferent to Kali Yuga shifting the earth, death drive on overdrive, noumena buckling under the pressure of utter statistical will, telluric eschars unpeeling the firmament. ... The junkie mindset: reprogrammed for permanent abuse of oneself and others ... promotion of nihilism so stifling as to reduce all to a meaningless tandem hustle"

• "Lucifer howled I shall be redeemed. ... return the wretches to their primordial sea, return dominion to the sacked Mother of Chaos, Tiamat. The Vedic scriptures pertaining to Kali Yuga approximated the climax. ... I will lash the earth. I will rain indignities. I will bring the Fall."

Death drives, Lucifer, Hilary Clinton, mass killings, Mother of Chaos, lashing the earth — does this sound like spiritual or cultural Buddhism/Hinduism? Or a nihilistic misappropriation of sacred concepts?

Is it fair to wonder if conversations with Wylie influenced Marrero's conception of the Kali Yuga? Or if Wylie knew that Marrero and other members of his community were running wild with the concept towards nihilistic and bigoted ends? When Wylie mentioned "fringe internet racists" who co-opt the Kali Yuga — did he realize he was referring to his own friend? 

And if the two did cross-pollinate their ideas around the Kali Yuga, then what does that say about the choice behind the name "Yuga Labs"?

"Dubious": Wylie Revises His Written Answers

Days after his first message, Wylie messaged me again, unprompted. He re-submitted the same answers to the same questions to "update" my post — this time with one significant change.

He explained the rationale for his revision: "I mostly added a few sentences, since you felt it was dubious I could be thanked in a book I haven’t read."

"Dubious" is a great way to describe how I walked away from these interactions. I'm dubious of Wylie's evasiveness and his ever-changing story. I'm dubious of his frequent omissions, revisions, deflections, falsehoods, and contradictions.  

His amended response is included below (emphasis my own to highlight the addition from the previous written answers):

Greg and I have known the editor for years. He’s an old childhood friend from Miami. We’ve never been involved with ExPat beyond supporting our friend. When Greg was doing his MFA in creative writing, he would submit poems all over, and since our old friend ran a literary journal, a couple were published there. Neither of us have read any of their books. I read a few pages of the editor’s first self-published novel when it was still being written and then I had a long phone call with him about the plot, structure, voice, and how I thought stories should be told. For that talk and my thoughts on the creative process, he thanked me in the book. To be honest, I still have not read it.

What could easily be a straightforward answer became a series of trickle-truths: "I’ve never actually read his book" changed over the course of conversation to "I got through like a couple pages [but] I didn't get into the content of his work" and evolved days later to "I read a few pages of the editor’s first self-published novel when it was still being written and then I had a long phone call with him."

Wylie also states he's "never been involved with ExPat beyond supporting our friend [Marrero].” However, I can confirm that he also interacted with other contributing writers at ExPat and its extended community.

I'm dubious of what Yuga is telling us about why there are so many fucked up cultural references that keep worming their way into Yuga's collections. Where is all the context for these highly specific allusions? Why hasn't anyone at Yuga Labs addressed the racist traits and references? Why haven't they changed anything or publicly engaged with anyone who finds their creative choices offensive? 

I'm definitely “dubious.”