CoinMarketRecap Podcast: North Korea, Suspicious Death

CoinMarketRecap, hosted by Connor Sephton, aims to break down the week's crypto news in a fun and accessible way.

Research continually shows that consumers find cryptocurrencies difficult to understand — and we're determined to change that.

Here's what happened on this week's show:

North Korea Trip Ends in Jail Time

In 2019, Ethereum developer Virgil Griffith went to North Korea to attend a blockchain conference — and ended up in hot water with U.S. authorities.

He was due to go on trial to face accusations that he conspired to help the secretive state evade sanctions through the use of cryptocurrencies.

But on the day that the hearing was meant to commence, Griffith pleaded guilty — and accepted a deal that would mean he spends six-and-a-half years in jail.

Ethan Lou was on that fateful trip to Pyongyang, and was in New York to attend the trial in person. He said that, just a couple of days before proceedings were meant to begin, Griffith’s lawyers had asked for suits that he could wear in court.

When asked why Griffith might have changed his mind at the last minute, he said:

“Virgil had a lot of setbacks in this case. Also, he is being held in remand after his bail was revoked and it’s not a good place to be. He also revealed in court that he is experiencing depression and is taking medication for it. And I think ultimately he weighed the odds — and six-and-a-half years is better than 20.”

Ethan explained that Griffith was the only person to be charged in connection with the trip to Pyongyang because he is American, while others were from Canada, the U.K. and Italy.

In his new book — Once A Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West — Ethan said it was “baffling” that Griffith told the authorities everything after his arrest, describing the developer’s behavior as “trying to descend from the second story of a house but managing to somehow fall up the stairs.”

Ethan claimed that Griffith had been “quite excited” by the prospect of talking to the State Department when he returned from North Korea — despite the fact that the U.S. had explicitly told him that he was not allowed to travel there.

In an interview with CoinDesk earlier this week, Ethan also said that he believes North Korea isn’t sophisticated enough to use the crypto that it has stolen — a sum estimated to stand at $1.75 billion as of February 2021. When asked whether he is underestimating the capabilities of the rogue nation, he replied:

“To truly be sophisticated enough to break sanctions, you have to do more than just steal coins —you have to be able to use it transactionally for trade with other countries. The ultimate aim of sanctions is to restrict the international trade countries, to make them poor. And if they use crypto to transact with other countries — if they're able to really proliferate international trade — I would think that as ultimately breaking sanctions.”

The question now is what Griffith’s sentence will be when he is sentenced in January 2022. Although the defence and the prosecution have recommended a jail term of between five and six-and-a-half years, the judge can choose to enforce a harsher punishment — potentially up to 20 years.

Ethan said a longer sentence is “very possible,” but added that the Ethereum developer would have the right to appeal if it’s longer than six-and-a-half years.

Did Gerard Cotten Fake His Own Death?

Ethan’s book also describes how he met Gerald Cotten — the founder of the doomed Canadian crypto exchange QuadrigaCX — in 2014.

The trading platform would later collapse after Cotten died on his honeymoon in India, reportedly from complications related to Crohn’s disease.

More than 76,000 investors lost hundreds of millions of dollars as a result, because Cotten was the only person with access to the company’s cold storage. An investigation would later reveal that many of these wallets were empty.

Ethan was one of those who lost funds when QuadrigaCX went bankrupt. He had 13 ETH in an account at the time. It was worth $2,000 then, but would be worth $40,000 at current market rates.

When asked what his first impressions of Cotten were seven years ago, Ethan said:

“I thought very well of him and — I think in retrospect — that was my mistake. I definitely did not expect all the revelations that came out after his death, that he had been running get rich quick schemes, he had been scamming people, and he had been taking user's money and using it to gamble on really risky trades. At the time, he seemed like he was running a clean shop.”

Ethan’s book also reveals that he was contacted by an anonymous Russian who claimed that Cotten had faked his own death and had run off with his customers’ funds. When asked whether he believes the entrepreneur is still alive, Ethan said:

“Even government officials are skeptical — police have been going around asking that … So it's very possible that he did escape, that he did run away and fake his death, but I wouldn't want to make any predictions right now.”

News Roundup: Elon Musk, Meme NFTs, Hamsters

CoinMarketCap’s Molly Jane Zuckerman also joins us for a look at this week’s news.

We begin with Elon Musk, who has told a conference in California that he believes cryptocurrencies are “impossible” to destroy.

And last but by no means least, we talk about Mr Goxx: The hamster that’s managed to outperform the FTSE, Dow and Warren Buffett by trading cryptocurrencies.

Connor also has a hamster called Bagel, but he’s mainly interested in trading commodities on his Bloomberg Terminal…