It was a tweet from Olivier Blanchard, emeritus professor of economics at MIT and former chief economist of the IMF, that first drew my attention to the book

Please, please, read it. It is worse than you imagined… (and the book is a page turner).
Then, worry about the following headline from Axios today: "1 big thing: Crypto dominates corporate election spending." https://t.co/riryXjtiLI

— Olivier Blanchard (@ojblanchard1) August 22, 2024

Blanchard’s full blurb reads

“A brilliant and fascinating description of crypto. It makes painfully clear that, on the buying side, there is no limit to human credulity, and the faith in magic returns. And, on the selling side, no limit to hubris, deception and scamming. Read the book, and cry.”

As I sat reading the book yesterday I kept wondering quite how it had got through the publishers’ lawyers. But it seems to have been written under a pseudonym and various significant names have been changed, including that of the UK-based crypto firm (that briefly became one of the biggest crypto marketing companies around) in which the author was a senior figure, and more than a few of their client firms. Presumably that was seen as enough to reduce the legal risks sufficiently to publish.

Readers should be grateful: it is an easy and absorbing read, and if you are anything like me you’ll read it with some mix of astonishment, despair (human nature and all that), and moral outrage. I’m pretty sure the author intends to prompt readers to think more regulation is an obvious and necessary response, but I’m less easily persuaded on that count. Fools and their money…. If there are decent people and firms in the sector, operating consistently ethically, there is pretty strong incentive on them to differentiate themselves from the (apparently) very many rogues and rank opportunists.

“Donoghue” (from here on I’ll drop the quote marks) – who seems to be still quite young (says he was still a student in 2016) – had a background in PR, apparently in both finance and politics in the UK, before he jumped aboard a crypto startup being put together by an old university friend and the friend’s cousin. In the early days – Donoghue still holding down a fulltime PR job elsewhere – it seems not to have been much more than three or four of them, chasing the dream of “generational wealth”. The plan was to launch a gambling platform – on the future price of Bitcoin – with an associated crypto token. As Donoghue writes it now – while claiming, perhaps plausibly as he was the PR guy, not to have realised it at the time – it was a “totally implausible business model”. Which, in the crypto sector, didn’t stop lots of weird projects getting off the ground, and a lot of wealth being redistributed (and some apparently made – with an emphasis on the “apparently”; it was close to the sort of stuff J K Galbraith was writing about when he coined the phrase “the bezzle”). The shortlived boom Donoghue was in the midst of collapsed in late 2022, most prominently including the fall of Sam Bankman-Fried’s FTX.

It is a lively story. Donoghue’s firm started with its own platform/token, but very quickly found that there was more money to be made parleying their experiences and expertise (such as it was) into selling marketing and promotional services around the launch of new crypto firms/products/token to the myriad of other ambitious opportunists wanting to get on the boom quickly. In some cases, firms were almost throwing money at Moonshot (the pseudonym of the advisory firm). There are weird tales of the launch of improbable NFTs (non-fungible tokens) – who, they wondered, was going to want to buy NFTs of pictures of the football players of some US team, whose CFO had got keen on the idea, especially when there was no easy way – for those not already engrossed in the crypto world – to buy the product. But it sold. Or an NFT of a stamp, when one could simply own the stamp itself (as I recall it, that one didn’t get off the ground).

There are plenty of accounts of “influencers” being paid in heavily discounted crypto tokens they were to hawk, never disclosing to the influenced their own direct stake in the success of the token/platform. Or of venture capital firms issued with deeply discounted tokens, typically undertaking next to no due diligence, and wanted less for the immediate money they provided, than for the apparent (but highly misleading signal) that if the VCs were on board, it must be okay for the public to buy. And the parties, so many parties, so lavish.

In Donoghue’s words:

It’s an insider’s view, into the lives and livelihoods of some of the inner circle to which I used to belong. It’s a record of the sheer extravagance, excess and absurdity, which seemed to take place on a daily basis.   And what it illustrates is how the people behind one of the most captivating, disruptive and incomprehensible industries the world has ever seen act when the cameras are off, and their guards are down.

I strongly recommend the book. And if the recommendation of someone like Blanchard (and blurbs from two Nobel memorial prize in economics winners) isn’t the thing for you, it also comes blurbed by people like Frank Abagnale (subject of Catch Me if You Can), Izabella Kaminska, Frank Partnoy, William Cohan and Dan Davies, authors many of you will recognise. Oh, and by Andy Verity, whose excellent book – published by the same firm – on the scandalous prosecutions that followed the LIBOR issues in 2008/09 I wrote about here last year.

As it happened I had a couple of emails from Donoghue himself a couple of weeks ago offering me a review copy (not sure why, this being a fairly obscure blog, but I guess PR was his expertise. And I’d already ordered a copy). This is how he describes his own book.

The book is a narrative non-fiction account of my time spent working in the cryptocurrency industry. It’s a cautionary tale of the scams and fraud endemic to the space, and the often-devastating consequences inflicted on ordinary investors who get caught up in these.

For several years, I ran one of the most prominent marketing agencies in the industry, working with some of the largest companies and projects in the space. I was also on the founding team of a number of projects myself, one of which obtained an all-time-high fully diluted market capitalisation of $300 million.

My book now seeks to shed light on the corruption and malpractice which I saw unfold on a daily basis.

What could usefully be added is the line from the end of the book’s Prologue: “In order to tell that story, I first need to tell my own. It’s the story of a player on the inside who became so blinded by greed that he didn’t even realise he’d lost his way until it was almost too late”. It was a wild ride, and perhaps one he is now ashamed of. His penultimate paragraph is a good place to end.

I can only hope that, after the actions of SBF, Do Kwon, and the countless other characters in the rogues’ gallery of crypto we haven’t heard of –  who will all hopefully get their day in court sooner rather than later – people will be dissuaded from having a punt in the murky and malevolent markets of crypto.