CEO Of Porn-Focused Cryptocurrency Disappears With Investors' Money

The burgeoning market for initial coin offerings is rife with fraud and abuse thanks to unscrupulous people like the creator of FMtokens, a coin designed as a means for paying performers for live webcam chats. The New York Post reported Monday that investors in FMtokens – which purportedly raised just shy of $5 million – are complaining that the company’s shadowy CEO, Jonatha Lucas, has absconded with their money while refusing to deliver the promised tokens.

Lucas aimed to raise as much as $25 million, according to an investment plan.

A cryptocurrency built for watching live-streaming porn is turning out to be a buzz-kill.

Four investors in the digital currency, called Fantasy Market, claimed last week that its shadowy CEO disappeared with their money — and has not refunded all their investment despite repeated requests.

The alleged inability of investors to trade out of the Fantasy Market tokens, or FMtokens, could stand as a warning to all investors in the red-hot cryptocoin market.

Jonathan Lucas, the brains behind FMtokens, was aiming to raise as much as $25 million last year, according to Lucas’ white paper — the investment plan circulated among investors.

The tokens were to be used to pay for livestreaming porn.

Small-time investors from around the world have scrambled to invest in the largest digital currencies – like bitcoin, Ethereum and ripple – which have seen astronomical returns.

Circling back to FMtokens, the venture flamed out in November after the NYP  questioned Lucas for about an hour about how his ICO would work and about statements he made in the white paper. The CEO insisted he wasn’t trying to scam anybody, and that he was using his real name. Several of the investors who lost their money believe the name John Lucas is an alias.

Pornco

“Jonathan Lucas (most likely an alias) has scammed us and run off with the cryptocurrency,” one irate investor fumed to The Post, more than two months after investing in Fantasy Market.

According to the Post, it’s unclear how close Lucas got to his $25 million fundraising goal. He told a reporter in November he had raised less than $2 million.

It’s unclear whether the SEC intends to act against Lucas (at this point, he’s probably already fled to some non-extradition country where he can safely deploy his ill-gotten gains). No legal or civil actions have been taken against him at this time. But the agency has been stepping up its enforcement against fraudulent ICOs since it declared in July that all digital tokens should be treated as securities, and that all pertinent laws and regulations would apply. In China, financial authorities have banned ICOs. And other governments have considered acting to suppress the market.

Back in September in private chats seen by The Post to being just 13% away from raising $5 million, which translates to about $4.4 million.

On the company’s website, Lucas posted a message asking out-of-pocket investors to contact the company “in the next 90 days” to secure a refund.

One investor told the post that the company refunded some of the Ethereum he had invested in the project. Instead of returning his initial investment along with the 160% return that’s accrued since he invested in September, the company pocketed the difference.

“[Recently] I wrote threatening to file police and FBI reports,” a second aggrieved investor told The Post. "Within hours they refunded me ethereum with a dollar amount equal to what I had contributed in early September, but since the coin has more than tripled in value since then, they kept the rest of my contribution, essentially stealing quite a lot of money from me."

Another investor claimed that Lucas appears to be actively trading on cryptocurrency exchanges, possibly with the money stolen from his erstwhile investors.

This is hardly the only example of outright fraud in the ICO space. Tezos, which raised more than $230 million in an ICO over the summer that attracted the interest of several big-name Silicon Valley VC firms, has elicited several investor lawsuits after the company has missed deadlines to deliver the tokens it promised investors during the crowdsale.

According to chat records obtained by the post, Lucas repeatedly assured his investors that FMtokens aren’t a scam.

“I’m not in the business of scamming people, or again, I wouldn’t have used my real name for the project,” Lucas wrote in a Nov. 14 chat.

His behavior would suggest the opposite is true.

Comments

HillaryOdor LetThemEatRand Mon, 01/08/2018 - 19:42 Permalink

I can't think of one respectful libertarian that thinks very much of cryptos, except maybe Thiel.  I don't even know if I could consider him a real libertarian.  Tom Woods and Bob Murphy seem to humor them, but that's about it.  The problem is libertarianism is about reason and logic, not delusional faith.  There are a whole lot of non-libertarian people calling themselves that.  Hell in one week last year I saw on the internet a libertarian communist and a libertarian nazi.

In reply to by LetThemEatRand

HillaryOdor kochevnik Mon, 01/08/2018 - 21:06 Permalink

In regards to crypto?  It would take too long to type it all out.  I've been thinking of starting a blog for these things.

There are a whole host of issues with them, too many to list really, but my main problem is it isn't hard money.  There is no physical backing and so it's still based on faith just as fiat is.  As soon as the community decides to move on to the next hot coin you're screwed.  It's not as big a problem yet since bitcoin currently acts as an intermediary between the other coins and so they all tend to move in tandem, but it will be a problem eventually.  At least with gold you still have your gold if people decide to move to some other type of money. 

The scarcity limit is completely artificial.  New currencies and forks happen all the time.  Just because bitcoin cash isn't on the same blockchain as bitcoin core in no way refutes the fact that a whole lot of value was just conjured out of thin air, $41bn worth according to coinmarketcap.com. 

It's ironic people call some coins shitcoins.  By what standard is bitcoin better than any other?  There is none.  It is actually objectively worse than a whole lot of other coins.  The only answer people throw out is that it was first, but this is no guarantee it will maintain its value at all. 

Bitcoin in particular is incredibly inefficient in its use of resources. 

The highly deflationary nature discourages spending.  Good luck building an economy where nobody spends any money.   

I could go on for a while.  There are so many issues.  I was on board for a while, but the bitcoin forks really opened my eyes that it's just not going to work.  Looking back I feel very foolish, but it's not the worst thing to have been wrong about.

Some people propose solutions to some of these problems, but they're pretty ad hoc and making a lot of assumptions.  I do think distributed consensus as a technology is here to stay permanently, but it will have to be backed by something eventually.  I could see cryptos backed by corporate equity operating as more legitimate currencies, debt and commodities also.  It has to be something you can redeem your tokens for though, not just the belief that people will always want them.  If it's not redeemable then it will have to be backed by force, the violence of the state, like fiat.  I don't see any alternative.

In reply to by kochevnik

JibjeResearch HillaryOdor Mon, 01/08/2018 - 21:16 Permalink

Bwhahahahaha....

Libertarian: https://www.lp.org/about/

Libertarians strongly oppose any government interference into their personal, family, and business decisions. Essentially, we believe all Americans should be free to live their lives and pursue their interests as they see fit as long as they do no harm to another.

Consider voting Libertarian or joining the Libertarian Party because…

  • We seek to substantially reduce the size and intrusiveness of government and cut and eliminate taxes at every opportunity.
  • We believe that peaceful, honest people should be able to offer their goods and services to willing consumers without inappropriate interference from government.
  • We believe that peaceful, honest people should decide for themselves how to live their lives, without fear of criminal or civil penalties.
  • We believe that government’s only responsibility, if any, should be protecting people from force and fraud.

 

My take: Do no harm to another does not meant libertarians can/should Not protect/defense him/his family from harm.  This applies to all, not just libertarians.

Buddha and Jesus Christ were libertarians.

In reply to by HillaryOdor

LetThemEatRand booboo Mon, 01/08/2018 - 19:59 Permalink

Correct.  Same system, just without those pesky elections.  Private judges and private arbitrators and private hitmen would never be corrupted by those with the most money, and there would be no check and balance to their corruption other than some other guy with even more money who could offer a larger bribe.  Great idea.

In reply to by booboo

Gaius Frakkin'… LetThemEatRand Mon, 01/08/2018 - 20:16 Permalink

Very 'clever' Rand.

That smug observation has been around for years along with the scams that accompany it. It didn't change anything then and it probably won't now.

I'm not sure where all this ultimately goes, but I am certain that your 'big-brained' populist centrism (which is basically the status quo you claim to hate with a little less corruption) is doomed to fail in the end.

In reply to by LetThemEatRand

LetThemEatRand Gaius Frakkin'… Mon, 01/08/2018 - 20:41 Permalink

What you're really pissed about is the fallibility of human beings.  Human beings are imperfect.  They make imperfect systems and some are downright evil.  Look at history and you will see thousands of examples of human systems that did great things, only to end in disaster and bloodshed and poverty.  Your solution would be no different, so stop being such a cunt about thinking you have all the answers.  If either of us were that smart we'd be doing something other than arguing with each other here.  Lighten up.

In reply to by Gaius Frakkin'…

HillaryOdor LetThemEatRand Mon, 01/08/2018 - 20:53 Permalink

On the contrary I think libertarian anarchism is the exact and exclusive logical result from a starting assumption that indeed nobody does have or is capable of having all the answers, and therefore nobody should be dictating arbitrary rules and enforcing them with arbitrary violence.  A person who thinks they have all the answers doesn't want to be in a society without rulers.  They want to be the ruler of society.

In reply to by LetThemEatRand