Crypto Critics' Corner

,

Episode 141 – The Weyrd and Wyld Story of Wyre

Wyre: Another crypto payment processor involved in fraud – Crypto Critics' Corner

Bennett and Cas discuss Wyre, another cryptocurrency payments processor involved with fraud. Protos coverage of Ryan Breslow's many disasters Protos coverage of Wyre problems This episode was recorded on October 20th, 2023.

Cas Piancey and Bennett Tomlin discuss Wyre, a failed cryptocurrency payments processor which previously was serving Binance US.

This episode was recorded on October 20th, 2023.

Where to find the podcast:

Other episodes mentioned in this episode:

Other resources mentioned in this episode:

Subscribe to get each episode delivered to your inbox:

We also have a Discord Server you can join here.

Where to find Crypto Critics’ Corner:

English Transcript:

00:00:05:03 - 00:00:12:04
Cas Piancey
Welcome back, everyone. I am Cas Piancey. I'm joined, as usual, by my partner in crime. We've already recorded an episode today, so we're just going to jump right into it.

00:00:12:04 - 00:00:17:19
Cas Piancey
We're going to talk about a company called Wyre Wyre spelled W y r e

00:00:17:19 - 00:00:18:21
Cas Piancey
Weird Company

00:00:18:21 - 00:00:23:00
Cas Piancey
wound down in June of this past year.

00:00:23:00 - 00:00:33:16
Cas Piancey
But yeah, I want Bennett to kind of walk us through this. He wanted to record an episode about this, and I think it is once you delve into the, the weeds of it a bit, it's pretty fascinating.

00:00:33:16 - 00:00:52:04
Bennett Tomlin
It's a cryptocurrency payment processor. One of the most common targets of our ire on this channel. And it was like many cryptocurrency payment processors seeming to do things a little unusually. And part of this story at the beginning of this story, in my mind, involves Ryan Breslow, who have made a couple of videos about on this channel.

00:00:52:04 - 00:00:59:15
Bennett Tomlin
But we've never done a full episode on him because frankly, he's not that important. Ryan Breslow has a couple of different companies. One

00:00:59:15 - 00:01:13:20
Bennett Tomlin
was called Eco. Eco was a company that said it could earn its users yield and it claimed to do this by lending to people like Goldman Sachs infidelity. But was actually lending to people like Wyre and blockfi.

00:01:13:20 - 00:01:18:08
Bennett Tomlin
And so that's how Eco was making its yield for its customers. That

00:01:18:08 - 00:01:38:21
Bennett Tomlin
was a Ryan Breslow company, but so was Bolt, the one click payments company. But at one point it was valued at like $11 billion or something crazy before a New York Times investigation revealed that they had misrepresented what they were able to do to people in order to get them to sign and then misrepresented the nature of those relationships in order to get other people to sign.

00:01:38:21 - 00:01:52:09
Bennett Tomlin
Before Bolt was exposed for that, they put in a $1.5 billion offer for Wyre making at the time one of the most valuable cryptocurrency acquisitions of all time.

00:01:52:09 - 00:02:12:23
Bennett Tomlin
What makes this even stranger is that this acquisition was announced in April of 2022. One month before that, in March of 2022, Ryan's other company, ICO, had notified users that they were moving off of Wyre and under prime trust. So one company moves off in March, April, they announced they're going to buy the company

00:02:12:23 - 00:02:18:09
Bennett Tomlin
and even more interesting, ICO didn't actually get all their funds moved off until the end of May.

00:02:18:09 - 00:02:29:23
Bennett Tomlin
Shortly after that, in September. It's announced that the deal's not going to happen. Bolt backs away, and a couple of months after that, very end of the year, December, beginning of January,

00:02:29:23 - 00:02:50:20
Bennett Tomlin
where announces they're going to be scaling back operations and laying people off after this deal blew up. And that's like the first phase of Wyre. Right. It's a cryptocurrency payment processor doing what cryptocurrency payment processors do, making risky loans, throwing funds around into Defi protocols, announcing acquisitions that never actually happen.

00:02:51:02 - 00:02:53:14
Bennett Tomlin
It's a classic crypto payment processor

00:02:53:14 - 00:02:55:16
Cas Piancey
So when I go to Wyre

00:02:55:16 - 00:02:57:03
Cas Piancey
their website, which is still up,

00:02:57:03 - 00:03:07:20
Cas Piancey
It says Wyre is winding down and it talks about what they did and how they're ending. And they basically it seems like they

00:03:07:20 - 00:03:14:16
Cas Piancey
tried to do this in a way that allowed people to get their funds off of the payment processor in time.

00:03:14:16 - 00:03:17:04
Cas Piancey
I don't know if you know anything more about that than I do,

00:03:17:04 - 00:03:24:08
Cas Piancey
funny enough, I'm I'm like, Bolt is still around, though. And this is Ryan. That's still Ryan Breslow, his company. Right.

00:03:24:08 - 00:03:42:05
Bennett Tomlin
we didn't even get into all of Ryan Breslin's fuck ups, right? Like he had the movement DAO that he gave away to like a known fraudster that was separate from like his movement not for profit, that ended up like, embroiled in some other scandal. We've got some articles we'll link in the description, and there's some videos we've made on this channel about it.

00:03:42:05 - 00:03:47:00
Bennett Tomlin
But like Ryan Breslow's whole, like group of companies is a fucking mess.

00:03:47:00 - 00:03:51:16
Cas Piancey
I'm looking through his career and just some of his stuff in general.

00:03:51:16 - 00:03:53:02
Cas Piancey
First of all, this guy is 29 years old.

00:03:53:02 - 00:03:58:20
Cas Piancey
He's younger than me and 29 is very, very young

00:03:58:20 - 00:04:00:21
Cas Piancey
crypto pharmaceutical startup

00:04:00:21 - 00:04:08:07
Cas Piancey
the Movement, a dance nonprofit. I am confused about this guy's entire life.

00:04:08:07 - 00:04:13:03
Cas Piancey
Surprise went to Stanford. Gosh, I'm I'm all over the place here just because I'm like wow. So

00:04:13:03 - 00:04:16:17
Cas Piancey
eco so eco didn't work out that that's gone right?

00:04:16:17 - 00:04:18:05
Bennett Tomlin
because still has a website.

00:04:18:05 - 00:04:18:12
Cas Piancey
Yep.

00:04:18:12 - 00:04:19:17
Bennett Tomlin
And they're still tweeting.

00:04:19:17 - 00:04:22:08
Cas Piancey
And they still have a token that's down,

00:04:22:08 - 00:04:23:17
Cas Piancey
down 70% 70%.

00:04:23:17 - 00:04:26:20
Bennett Tomlin
Remember, there's two tokens, right? There's eco and there's eco x.

00:04:26:20 - 00:04:28:06
Cas Piancey
what does ecox do.

00:04:28:08 - 00:04:35:04
Bennett Tomlin
Well, that's the deflationary supply token serving as the governance asset that's used to secure applications on the eco network. Of course.

00:04:35:04 - 00:04:37:13
Cas Piancey
it's deflationary, why is it down 88%.

00:04:37:13 - 00:04:39:23
Bennett Tomlin
It's not deflationary enough.

00:04:39:23 - 00:04:44:03
Cas Piancey
I feel like this is so similar to our discussion about Terra Luna man,

00:04:44:03 - 00:04:47:15
Bennett Tomlin
we're not goingafter Ryan Breslow’s stupidity today.

00:04:47:15 - 00:04:50:18
Cas Piancey
they're all interconnected Wyre, Bolt,

00:04:50:18 - 00:04:51:20
Bennett Tomlin
Sure,

00:04:51:20 - 00:04:55:20
Cas Piancey
love, whatever the fuck these are like. And they're all doing poorly.

00:04:55:20 - 00:04:56:22
Cas Piancey
They're all stupid.

00:04:56:22 - 00:04:58:16
Cas Piancey
how much money was going through Wyre

00:04:58:16 - 00:05:01:09
Bennett Tomlin
There’s some answers to that. I'll get to.

00:05:01:09 - 00:05:03:05
Bennett Tomlin
Not as much as you might be thinking,

00:05:03:05 - 00:05:18:08
Bennett Tomlin
Very beginning of 2022 where announces they're scaling back operations and doing these layoffs. And then on January 7th, Wyre announces that they're going to be changing withdrawals, limiting how much you can withdraw, you only withdraw up to 90%

00:05:18:08 - 00:05:20:08
Bennett Tomlin
plus other daily limits.

00:05:20:10 - 00:05:21:18
Bennett Tomlin
Five days later, though,

00:05:21:18 - 00:05:37:11
Bennett Tomlin
things get better when Wyre announces that they have received financing from a strategic partner that will allow them to continue their normal course of operations. And this is always good news when crypto companies get strategic financing from undisclosed partners.

00:05:37:11 - 00:05:41:12
Bennett Tomlin
That takes us into the Binance US era where

00:05:41:12 - 00:06:14:09
Bennett Tomlin
Binance, U.S. in the beginning of 2022 was using the Prime Trust as their principal payment processor. They started switching off of prime trust, and by May 25th, 2023 had much of their funds stored with Wyre. What makes this especially fascinating is that Wyres CEO used to run compliance for Prime Trust, a company we've talked about before in which we've highlighted some of their non-compliant behavior and Wyres.

00:06:14:10 - 00:06:29:09
Bennett Tomlin
VP of Compliance At this point used to run compliance for Binance U.S. which you may also know, is the firm currently being sued by the SEC for their noncompliance. That takes us up towards the very end of Wyre

00:06:29:09 - 00:06:37:20
Bennett Tomlin
and this is where things can get interesting. What's also interesting is that the total amount that Binance U.S. transferred over was in the range of like $10 million, right?

00:06:37:20 - 00:06:56:06
Bennett Tomlin
Like the amount of actual money Binance U.S. had was not that much, but Binance, U.S. using Wyre made it much more important. And this is when Protos decided to do some digging into Wyre through their various terms of service and their different entities and we discovered that

00:06:56:06 - 00:07:01:03
Bennett Tomlin
it was a mess. One of the entities they referenced was in liquidation.

00:07:01:05 - 00:07:31:15
Bennett Tomlin
Another one had its ultimate. It's liquidator named as a fraudster who was previously convicted of fraud. Gina Gennaro, who claimed he had stepped down as CEO, was still listed as the CEO, and annual reports filed in Florida was the sole director of Wyre Payments Proprietary limited its entity in Australia. I, I just want to reiterate again, one of the entities they were still directing customers towards was in liquidation and its liquidator was a convicted fraudster.

00:07:31:17 - 00:07:51:03
Bennett Tomlin
Just to make sure people hear that and we discovered this, pulled these corporate documents, verified this information, and then we sent out emails to Binance U.S., Wyre, etc., asking them, Hey, are you aware of this information? Do you have any extra context You can provide us things like that. And so

00:07:51:03 - 00:07:59:01
Bennett Tomlin
we finally published this piece on June 5th discussing these vast corporate disarray at Wyred.

00:07:59:03 - 00:08:13:20
Bennett Tomlin
And then on June 16th, 11 days later, we entered the final era of Wyre, the wind down era you mentioned where supposedly they shut down all operations and started returning all these funds to customers

00:08:13:20 - 00:08:20:00
Bennett Tomlin
two weeks after the final balance had been transferred from for Binance, U.S. over to where

00:08:20:00 - 00:08:24:06
Bennett Tomlin
this information about Wyre is published and then Wyre needs to shut down

00:08:24:06 - 00:08:30:15
Cas Piancey
This makes me think of two things, which is one, the another. Tai Chi documents were

00:08:30:15 - 00:08:39:15
Cas Piancey
different than this. This isn't what the Title XI documents were necessarily about, but it does remind me of them in that it's like

00:08:39:15 - 00:08:45:08
Cas Piancey
we're watching this weird game of hopscotch transpire in crypto where like

00:08:45:08 - 00:08:56:02
Cas Piancey
companies and people spin up payment processors or buy parts of banks or whatever to ensure that they can move

00:08:56:02 - 00:08:58:06
Cas Piancey
real fiat around because they do.

00:08:58:06 - 00:09:02:10
Cas Piancey
It turns out that Fiat is like quite useful for paying your bills and

00:09:02:10 - 00:09:03:12
Cas Piancey
living your life,

00:09:03:12 - 00:09:10:00
Cas Piancey
and so they need a way to access the fiat monetary system. And so they do these weird

00:09:10:00 - 00:09:11:00
Cas Piancey
tricks.

00:09:11:00 - 00:09:13:12
Cas Piancey
And then it also makes me think of not just like

00:09:13:12 - 00:09:15:02
Cas Piancey
crypto Capital Corp, but like

00:09:15:02 - 00:09:18:13
Cas Piancey
other payment processors that we've discussed evolve

00:09:18:13 - 00:09:24:12
Cas Piancey
a bunch in Europe that end up, you know, getting used up and spit out real quick.

00:09:24:12 - 00:09:27:16
Cas Piancey
it doesn't seem like there's a mechanism in place to

00:09:27:16 - 00:09:29:00
Cas Piancey
stop this.

00:09:29:00 - 00:09:48:10
Bennett Tomlin
The mechanism in place here, as we've kind of discussed, is in theory, regulators in the problem is that regulators are not incentivized to do the kind of regulation that would actually stop this kind of thing from happening. You mentioned involve bank and trust and they are an annoying little wrinkle in some of my side.

00:09:48:10 - 00:09:49:04
Bennett Tomlin
Sometimes

00:09:49:04 - 00:10:10:12
Bennett Tomlin
A cryptocurrency thing called Juno entered into a contract with Evolve Bank and Trust for a digital currency custody account agreement. And what was strange about this agreement is that after the collapse of FTX Evolve, Banking Trust came out and made their statement that we do not offer crypto custodial services, but here we go.

00:10:10:13 - 00:10:28:19
Bennett Tomlin
There's a digital currency custody account agreement that states that a digital currency custody account will be made available to eligible consumers by Evolve Bank and trust. So this is a bank seemingly confused on what services they offer instead of a payment processor, but broadly similar. And I believe the

00:10:28:19 - 00:10:37:01
Bennett Tomlin
could not get Evolve to admit to the fact that I believe their custody services were eventually contracted out to

00:10:37:01 - 00:10:50:01
Bennett Tomlin
like Wyre who was contracting with Synapse for their custody of crypto assets or something like that. But again we're talking about some of these same firms. I saw your face move when I said one of those names. We talked about some of these same firms who are embroiled in some of this, like

00:10:50:01 - 00:11:01:23
Bennett Tomlin
they're providing financial services to shady businesses and doing it by creating a variety of different entities in which responsibilities are moved around contractually to hide who is providing what services.

00:11:01:23 - 00:11:11:05
Cas Piancey
I guess the best example that I can always mention that everyone or most people recall is EOS, the cryptocurrency that

00:11:11:05 - 00:11:12:00
Cas Piancey
through

00:11:12:00 - 00:11:13:08
Cas Piancey
block dot one

00:11:13:08 - 00:11:21:16
Cas Piancey
raised $4 billion and got given a I don't know what it was like a $20 million fine or something from the SEC.

00:11:21:16 - 00:11:28:18
Cas Piancey
And so when you think about that, when you go, the fine that they had to pay for raising billions of dollars was nothing.

00:11:28:18 - 00:11:33:08
Cas Piancey
It always is worth it to break the law if that's going to be the

00:11:33:08 - 00:11:52:15
Cas Piancey
end result. Right. And so I look at these payment processors that you're talking about, whether it's Wyre, whether we're talking about banks like Evolve or we're talking about payment processors like Synapse, like it seems like it's worth it for them always to take the risk of onboarding customers who might not be

00:11:52:15 - 00:11:55:22
Cas Piancey
the most honest actors in the world,

00:11:55:22 - 00:12:00:04
Cas Piancey
the end result at worst is, we have to wind down.

00:12:00:05 - 00:12:06:00
Cas Piancey
And the best result is being like, we gave them their money back and we're just going to keep going.

00:12:06:00 - 00:12:11:14
Bennett Tomlin
So the worst result is Reggie Fowler being sentenced to prison, right?

00:12:11:14 - 00:12:19:08
Cas Piancey
I think what he was doing very clearly is a like a definitive line of difference between what we're talking about here and

00:12:19:08 - 00:12:21:21
Cas Piancey
what happened back in 2017, 2018.

00:12:21:21 - 00:12:22:15
Bennett Tomlin
I think you're right.

00:12:22:15 - 00:12:57:21
Bennett Tomlin
we've talked about some of this before, right? Regulators, if they lack the political will and if broadly there's not kind of a societal political will to go after this type of thing, it doesn't happen. And you and I have pointed to in the past like the 2008 great financial crisis and the utter unwillingness for prosecutors to really bring meaningful criminal charges against anyone and for regulators to even really seriously engage with meaningful civil penalties against most of the worst actors kind of set a tone that has persisted for the next 15 years that has prevented any

00:12:57:21 - 00:13:18:11
Bennett Tomlin
serious engagement with white collar crime and especially white collar misbehavior. Right. Like white collar things that aren't legal but maybe aren't going to actually get you sent to prison. We're not even willing to grapple with that stuff, you know, And so I think that is broadly a failure of our kind of white collar regulatory system.

00:13:18:11 - 00:13:22:08
Cas Piancey
Yeah, it's unfortunate because the the people who get punished the most

00:13:22:08 - 00:13:28:12
Cas Piancey
I don't know, sex workers in Nevada or something where it's actually even totally legal to be doing what they're doing.

00:13:28:14 - 00:13:40:19
Cas Piancey
But it becomes increasingly difficult to have a bank account or to process payments or whatever. Onlyfans has issues with this, right? There's like there's legitimate businesses doing

00:13:40:19 - 00:13:50:00
Cas Piancey
real stuff and working with people who maybe struggled to get banking or struggle to find places where they can keep their money.

00:13:50:00 - 00:13:58:05
Cas Piancey
Meanwhile, these white collar criminals are doing stuff like spinning up their own payment processors, buying parts of banks, and then they end up getting away with it.

00:13:58:09 - 00:14:20:10
Cas Piancey
They end up not having to do time except for Reggie Fowler, except for like, you know, and I say Ravid and Oz Yosef. But they're not going to do time either because they're in Israel, so they're never going to they're never going to face, you know, they're never going to pay the piper. They're going to just be out there, you know, never, never having to come back to the U.S. and never getting shipped back to the U.S.

00:14:20:10 - 00:14:32:01
Cas Piancey
It's really unfortunate because on one hand, the people who I do want to see get helped are like they're the ones getting the most punished. And the people who deserve to get punished just keep spinning up their bullshit for the worst people around.

00:14:32:01 - 00:14:35:06
Bennett Tomlin
Yeah. I think there's definitely a bit to that.

00:14:35:06 - 00:14:39:14
Bennett Tomlin
In the other point I want to emphasize is like that it was not

00:14:39:14 - 00:14:55:17
Bennett Tomlin
incredibly difficult to determine that like these entities Wyre was using like that one entity had already been liquidated, another was in liquidation with the liquidator being a fraudster that like the person who claimed he was no longer CEO, was still listed as CEO on multiple annual reports.

00:14:55:19 - 00:15:15:21
Bennett Tomlin
This was all known. And what that means is that everyone who was still choosing to work with where reasonably could have determined that and many of these entities that were still working with where at least ostensibly we have compliance departments and things whose job at least on paper, is to make sure they're not working with that kind of partner.

00:15:16:02 - 00:15:18:01
Bennett Tomlin
And so what it really

00:15:18:01 - 00:15:43:13
Bennett Tomlin
emphasizes to me is how thin the veneer of something like payments US is. Compliance department really is right. They'll bring in whatever names they want from whatever former regulatory agency has someone leaving out the revolving door. Right? They'll hire whatever biggest name they can, but their ability to actually interface with making sure their partners, their vendors, whatever are compliant is non-existent.

00:15:43:13 - 00:15:50:00
Bennett Tomlin
I think that, though we've talked a lot about payment processors today, it's important to remember that technically

00:15:50:00 - 00:16:06:05
Bennett Tomlin
CasCoin send is not a payment processor because we're not actually licensed in any jurisdictions. What we consider ourselves as is a payment manager, you intend to make a payment and we just manage it until it's done and that's it.

00:16:06:05 - 00:16:20:05
Cas Piancey
That's why we don't have any licenses in any jurisdiction. Also, to protect ourselves and to protect our customers. Really? So I just want to make sure that everybody understands that, that this is in your best interest as well as ours. And

00:16:20:05 - 00:16:28:06
Cas Piancey
if you look at our terms of service, there is a pinky swear that we're not going to take your take your funds and we take that very seriously.

00:16:28:06 - 00:16:33:20
Bennett Tomlin
and we promise none of our entities are currently in liquidation controlled by a convicted fraudster.

00:16:33:20 - 00:16:34:08
Cas Piancey
Wait,

00:16:34:08 - 00:16:35:05
Cas Piancey
we do?
←
→

Leave a comment