It wasgoed a bustling, summer day te San Francisco just like any other for Jackson Palmer, a marketing manager at Adobe that a year earlier had co-created a parody cryptocurrency featuring a Shiba Inu dog meme.
When he sat down at his work desk and began answering emails, one te particular caught his attention. The subject line read: “moolah – Mr. Alex Green.” The very first line: “Alex Green = Ryan Kennedy/Gentle.”
Ryan Kennedy wasgoed the founder and CEO of Moolah, a dogecoin exchange startup that Palmer and Ben Doernberg, a friend he met through the cryptocurrency’s non-profit foundation, had just interrogated via a public Skype movie overheen its sketchy doings.
Palmer pretty quickly Facebook messaged Doernberg, who wasgoed on the other side of the US ter Fresh York, sending him screenshots of the email.
The message wasgoed from a group of people, one of which wasgoed an ex-girlfriend Kennedy manhandled, who said she wished to expose him for running a ‘Magic: The Gathering’ scam ter Bath, England. The note also accused Kennedy of many other past exploits spil a scammer ter the UK.
Zometeen, Palmer received a dump of Kennedy’s entire C: drive from a laptop he had left behind after police had arrested him. (This wasgoed after his very first crypto-scam on Bitcoin Talk). Some former roommates who were part of the group emailing Palmer had received the laptop from police once Kennedy didn’t come back for it.
“Holy shit,” Palmer thought at the time, albeit, he and Doernberg had sensed trouble from the beginning.
The group had only waterput two-and-two together after reading a TechCrunch article about Moolah proclaiming bankruptcy. Palmer and Doernberg then spent several days putting all the evidence together before publishing it all online spil a warning to the dogecoin community.
But the community still didn’t buy it, said Palmer. That is, not until Kennedy wrote a blog postbode admitting to switching his name, albeit he still denying responsibility for Moolah’s stolen funds.
The cracking point
Most cryptocurrency enthusiasts will reminisce the Moolah ineenstorting.
Kennedy came into the community under the guise of Alex Green, an entrepreneur wanting to make buying, selling and trading dogecoin lighter. He threw around dogecoin, and not just a duo dollars worth here and there via Twitter, but ems of thousands of dollars at dogecoin meetups.
Plus, the company took the lead on several dogecoin-based fundraisers, including sponsoring the NASCAR driver, Josh Wise.
Because of all this, the community loved Kennedy.
And so it wasgoed more than willing to buy into Kennedy’s company, sending bitcoin and receiving a token omschrijving to shares of the company (this wasgoed even before ‘initial coin offerings’ (ICOs) were part of the broader cryptocurrency lexicon).
Through that process, Kennedy raised somewhere around $750,000 from mostly wide-eyed teenagers getting their very first taste of the cryptocurrency world, according to Palmer.
“I wasgoed skeptical of this at very first, thinking [Moolah] wasgoed a shady, corporate rente taking the joy out of dogecoin,” Palmer explained, adding:
“It all seemed like a some kleintje of pyramid or Ponzi scheme, and Ben [Doernberg] and I commenced pushing back on it pretty hard.”
And the community, hypnotized by a manipulator, wasgoed not blessed about this.
The Skype vraaggesprek and the published evidence of Kennedy’s alleged scams “culminated ter a backlash . and the community kleintje of ousted us for our opinions,” Palmer said. “Wij got shouted out and wij just said ‘screw it’.”
A volmaakt target
This wasn’t the only case of fraud that swept through dogecoin. And that might seem strange given the cryptocurrency’s friendly outward appearance.
From the outside, the parody cryptocurrency featured a Shiba Inu dog and traded for less than a penny – it seemed lovely and guiltless, but under the surface, wasgoed a dark history, riddled with scams.
Originally, this lump wasgoed just a harmless oral history, but spil I spoke with the people whose lives revolved around dogecoin several years ago, it became clear that the story would concentrate on fraud and spil Doernberg told mij: “I think that’s the only accurate way to tell the story.”
Dogecoin launched ter early December 2013, cloned from bitcoin with a few adjustments (including a swifter block time, the total number of coins to be released and the hardware needed to mine, oh, and the code wasgoed written ter the Comic Sans typeface) that made the coin lighter for people, especially those fresh to cryptocurrency to interact with.
The jocular tone brought a group of people to the community that didn’t take themselves (and the cryptocurrency) fairly so earnestly, and because of that, the dogecoin community wasgoed known for being far more friendly than the bitcoin community which could be sometimes cut-throat and haughty.
“The thing that wasgoed cool about dogecoin, I had just spent the past eight months or so learning about bitcoin, but the bitcoin community wasgoed utter of overly serious know-it-alls. On dogecoin, there were all thesis regular people that just wished to know more about cryptocurrency.”
Embarked spil a parody because of the vast number of altcoins being launched after bitcoin’s initial rise, the dogecoin community never took itself that gravely.
When people came te determined to rally people around raising the price, most responded with memes and the disjointed dialogue of the ‘doge’.
That casual style not only caught beginners’ attention, but also scammers’. And with an industry still unregulated, it wasgoed a volmaakt target.
“Most scammers spotted it spil effortless to pull off,” said Doernberg, adding:
“Because of the unclearness about whether cryptocurrency wasgoed legal, even if you ripped someone off, those people many times wouldn’t go to the cops.”
It’s almost surprising dogecoin didn’t disband sooner.
The very first hack happened less than 20 days after the cryptocurrency wasgoed launched. About 21m dogecoin, which at that time wasgoed equal to $12,000, were stolen from Dogewallet.
But the community wasgoed determined to keep the joke alive. The community determined to raise the amount of money stolen from the web wallet to reimburse the victims of the hack. According to Doernberg, almost $13,000 wasgoed raised.
And that might have bot the ‘aha uur’ for many of the community’s leaders, who then began brainstorming ideas for other fundraisers that the dogecoin community could participate te.
Plus, only three months straks, Dogetipbot, a doge te a spacesuit that permitted users to send dogecoin tips via Reddit, Twitch and Twitter (functionality is presently only available via Reddit now) caught fire spil well.
Josh Mohland uploaded the tipbot to Reddit and asked if people would upvote his postbode so he didn’t have to type te a Captcha every time the bot needed to send a peak. The next morning, Three,000 people had upvoted the postbode and “the thread took off and users embarked rolling te,” he said.
“Before wij knew it, wij had Five,000 users of the tipbot and kasstuk Ten,000 users ter a month,” said Mohland, who’s now a customer champ at application automation provider Zapier.
Many people “eyed it spil a gateway cryptocurrency,” said Mohland, explaining:
“People would come to dogecoin because it wasgoed a nice community that wasgoed active te explaining cryptocurrency ter a non-technical way that wasgoed welcoming.”
And to proefneming the community determined to fundraise for charities.
The very first fundraiser, sending the Jamaican Bobsled Team to Sochi, Russia, for the 2014 Winter Olympics, raised $30,000 te dogecoin te 24 hours.
And subsequent fundraisers for charities – including one that helped children with autism, one that worked with service animals, and one, Charity Water, which built wells ter Kenya – all had similar success.
The dark side
But there wasgoed a seedy underground abounding with mining and wallet hacks.
“Dogecoin is only 2nd to bitcoin spil the shadiest thing te cryptocurrency,” Doernberg said.
According to him, while all this big-heartedness wasgoed going on, there were more sinister things happening te the background, including people menacing to attack mining pools unless they were paid, and the founders of digital wallets running off with customers’ money.
Doernberg dealt personally with an interestingly nefarious scam when the dogecoin community wasgoed raising money to send Shiva Keshavan, an Indian luge athlete, to the Sochi Winter Olympics. According to Doernberg, the head of the Winter Games Federation of India, began emailing Doernberg to send the money directly to him or his son, who wasgoed also an Olympic athlete.
It seemed that the head of the federation dreamed to use the money on his son instead of on Keshavan. Keshavan, also ter voeling with Doernberg, allegedly told him not to send the money to the federation.
Ter the end, the dogecoin community raised about $7,000 for Keshavan, but it never got to its intended recipient. The Indian Ministry of Sports, who at very first denied having the money to send athletes, agreed to pay Keshavan’s travel expenses and the dogecoin raised wasgoed returned to the donors.
Then there wasgoed Wolong, a pseudonymous character pretending, according to Doernberg, to be a Singaporean day trader on behalf of the Chinese. “That wasgoed the weirdest,” Doernberg said.
Wolong created an IRC (internet relay talk) channel that people had to pay to join. Further, people that wished access had to buy his book of life advice.
Wolong evidently manipulated the price of dogecoin for a while before launching ‘pandacoin’, which he pumped and then, three days straks, dumped – his millions of coins making significant money for himself while tearing off everyone else that had invested ter the altcoin.
Ironically, such pump-and-dump schemes were why dogecoin wasgoed created te the very first place. But, it seems that nothing te cryptocurrency can be all joy and games, not when money is involved.
Even however dogecoin weathered the storm of a number of fraudsters and scammers, the Moolah incident created a fissure ter the community that it has never fully recovered from, Palmer said.
Palmer and Doernberg would eventually be justified te their suspicions about Kennedy – about a year zometeen, he wasgoed sentenced to 11 years ter prison on several counts of sexual attack and rape.
Still, despite thesis negative events and characters, Palmer believes dogecoin offers an significant lesson.
“Dogecoin’s value is te its history and lessons about community,” Palmer contends. “There are numerous lessons for other cryptos that can be gleaned from how dogecoin grew and how the community helped that. And at the same time, what [those projects] should strive for their communities to be like.”
And this is why a loterijlot of people have stuck with dogecoin. And why those same people will be upset to see it fall into disrepair.
“It’s a sad thing, whether the coins you lose are worth much money or not, it’s like losing a lump, a joy chunk, of the cryptocurrency history,” said one ‘shibe’ (the name adopted by volgers of the altcoin) who preferred to remain anonymous.
“I don’t have much dogecoin. It wouldn’t be a big financial loss, but it would be a loss of something significant.”
The leader te blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a rigorous set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests te cryptocurrencies and blockchain startups.