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It all started when I received a call, “Hey Neil, you’re in crypto right?
Now I know against my better conscience that when I agree with suggestive lead-up type questions like these, I’m in for a patience exercise as I actively listen to the other line.
“Yes, I’m in crypto,” I reluctantly muttered.
“Would you like to visit Dubai? There’s this crypto conference that’s promising to sponsor our flights, and meals, and give us an all-expense paid Dubai experience."
Sounds too good to be true, I thought. But this also wasn’t the typical Web3 conversation I’m used to in an ocean of possibilities. The deeper I got to find out what this guy was on about, the worse it sounded, but I was hooked on this deal the more I reeled in the truth.
There was a company flying in social influencers from different countries with the goal of turning them into product evangelists, with the expectation for them to later turn other people into early users for a crypto DEX.
Now here's the kicker: for a DEX to perform its swaps, it's going to need LOTS of liquidity to be efficient. So in order to raise liquidity, their aim is to "crowdfund" it. This was when the ball dropped for me.
Yella Habibi, Come to Dubai
This wasn’t your usual Friday evening business call. This was an invitation to be indoctrinated into the top line of the classic MLM scam with the product facade of being a DEX. It was an entry to swim with the sharks and I would be the bait. Best case, I come out unscathed with a story. Worst case, I lose a limb...right?
So here I was, in a precarious position to decide what I’d do. In a span of 12 hours and against my better judgment (and one from my editor), I updated my will, told my mother I loved her and was on the next flight out, destination DXB.
Two connecting business flights and 12 hours later, we were picked up in a Rolls-Royce at the airport to be taken to an eloquent five-star hotel where only Lamborghinis, Ferraris and imported European models were parked at the lobby.
This marked the start of my adventure where sequinned displays of fabricated wealth, trimmed with golden Versace dinners and hemmed silver tongues were the dresses you needed to wear to enter this masquerade ball.
We're a tech company building a blockchain, surely we're not suss
I arrived during Dubai summer, and the weather, for the lack of a better word, was merdé. It was a humid 49 degrees Celsius outside and I was sweating profusely like a cold bottle of water in condensation.
"Have an Evian," said our handler as he initiated rapport with us. We sat down in the company's meeting room listening to his spiel on why staking our cryptos into their DEX would be the best decision we ever made.
We were in a swanky office located in the Business Bay, equipped with two bodyguards at the entrance and a pretty receptionist. To the left was a view of the Burj Khalifa. To the right was a glass panel separating us from a dozen people seated across tables in front of screens and spreadsheets.
As our handler sang through the technical details of his presentation, I took the opportunity to down another bottle of evian to fully internalize what he was saying.
He revealed to us an extremely detailed plan that they were launching a public blockchain that would rival Ethereum, and that they had the tech expertise to do it. We'd fit into the picture by bringing early investors into the DEX and since we were the lucky and early people selected by them, we'd be compensated accordingly as they would grow.
The numbers were compelling: individual profits of 30% a month through staking, and an additional 2% bonus payout on every bottom line individual you referred, akin to an affiliate model. Hearing that, my throat went dry and I took another swig of the Evian.
It was around the one-hour mark when an assistant came through the door, informing our handler to prepare for his next meeting. He nodded at her and got her to replenish the empty Evian bottles we left on the table.
"I know it sounds too good to be true," said the handler, "But think about it and when you join us at the global conference, you'll meet the other delegates who are already invested with us."
The meeting was over. Time for the "Arabian experience" part of the trip. They quickly arranged for another expensive car to take us on a shopping trip at the Dubai Mall and a trip to the desert.
I couldn't help but wonder at this point of how and why were they being so generous with us. But it was an arid day and I didn't think too much about it but to enjoy the ride. I must have had five Evians that hour.
The global crypto hub for international scam rings?
But eyebrows are raised when you spend it like you stole it, and it wasn't just me who was on the receiving end of said generosity. The same company flew in over 60 people from other Asian countries and gave them the same red carpet treatment, including the entertainment. All of this, under the pretense of attending a "global" crypto conference, located in a grand hotel by the Dubai waterfront.
This was where I met Informant A, a local source who operated closely within the scene and simplified the model for Blockhead.
"So this is the trick: First, you fly in people from all around the world where countries are poor, like Vietnam or Indonesia. Then, you show them the Lambos, and the Ferraris and throw a party. THEN you raise the money."
As I spoke to him about how well they treated us, he said that "these are fairly common in Dubai" and that these conferences "happen weekly." These companies "start with a $2-3 million dollar budget" and after they do the show, they would raise "around $4-5 million dollars."
He also told me that the government officials in Dubai know about these scams but remain quiet about the inner dealings as they bring money into the country. He later shared with me that a lawyer he works with mentioned that there were over 1,000 Indian nationals living in Dubai that are now barred from returning to India after being tied to known Ponzi companies that went bust.
"A hired CEO gets a $10k a month salary, and he's promised protection from the police and given a lawyer in case things go south. That's a lot of money to these people so they do it."
It's a syndicate he adds. "First they start the scams in Dubai, then they replicate it in Bangkok, Europe, Mexico and now one of them (one of the known hired CEOs) is in Ukraine operating another scam."
Easy access to visas and income tax-free laws also make the UAE the perfect place for attracting unsuspecting people and pulling them into addictive experiences of hedonistic wealth.
One big smoke screen con-ference
Supported by a notable blockchain association in Dubai, the conference proceeded with presentations from what looked like East European actors cosplaying a management team. The CEO was delivering complex messaging about blue-sky DeFi regulations while his pronunciation, breathing and eyes were all over the place. It felt forced and he had little grasp on the subject.
Unconvinced with what I had just seen, I had managed to convince Informant B who worked with the organising company to confirm that the CEO we witnessed was indeed a paid actor. Prior to his new gig, he was "a hotel pianist just last week" who demanded that B "pay for everything, including his meals and even his groceries" if they wanted to hire him.
"First, you show them the Lambos, the Ferraris and throw a party, then, you'll raise the money." - Informant A.
Play Stupid Games, Win Stupid Prizes
The constant flurry of our questions and our affinity to be at the wrong places at the right time were starting to turn heads from the higher-ups. To the eyes of the suits that observed us in the shadows, we were looking for something we shouldn't be searching for.
At one point, the management got their muscle to separate us from our group and individually questioned us to find out if we were narcs. One was even tailing me at the odd hours of the morning "to make sure that we were safe." They had to ensure that their investments in us would pay off and that we were still under their genjutsu.
The Employees Were Dignified
From conversations with about 10 of the employees whom we had become friendly with, they told us that they felt they were working for a legitimate company and that they liked working there. They were aware of Chinese-led crypto scams that took place in Dubai but were unaware that they might be working for one.
It had only been less than a month since the company had employed them and there wasn't much need for questions to be asked. They were treated well with kindness, and paid an above-average salary for a 9-9-6 office schedule.
Final Boss Fight
On our final day in Dubai, we were instructed to meet the head honcho of the operation who had just flown in from Singapore. "From Singapore?" I asked myself, Does this guy have anything to do with the infamous Fujian gang busts of late?
Among the other delegates from other countries, it seemed that they had a big interest in Malaysia. He said they were ready to spend hundreds of thousands of dollars to set up Malaysian offices and wanted to set up shop fast. They had heard about the penchant of Malaysians to participate in money games and that they often reached over $30 million before going bust.
At this point, I remembered Informant A's reasoning as to why these companies were willing to throw large amounts of money away to the point of massive losses. Loss-incurring businesses owned by Chinese nationals were needed to launder money outside of China. Chinese government officials found it to be reasonable grounds for business owners to send money out of the country to save their "dying businesses." The amount for the limits to send out here is unknown, but the mechanisms were in place.
The Chinese were able to take on these shady operations because, in the best-case scenario, they are sitting on a stockpile of crypto in the millions, crowdfunded into their smart contracts living on their own blockchains. Worst-case, they get to send more money out of China and figure out another model to launder it later on.
Final Thoughts
I shortly left Dubai later that evening, with a pondering head coming to terms with a worldly truth I had uncovered. This was capitalism at its worst, with hints of neo-colonial economic slavery. They were operating businesses that preyed on the flaws of human psychology, similar to that of the casinos located in Cambodia and the Philippines.
It has been months since I contacted them, but until today, I am still receiving texts from different fake accounts, sharing their progress and receiving more invites to attend their "global conferences."
I catch myself asking if I would go back, on the off-chance, for a deeper investigation.
With the kind of treatment and experience they gave me, I think these guys were better suited to becoming travel/entertainment agents rather than MLM operators cause they sure knew how to throw a five-star experience.
If they ever made the switch, sure, I'll go again. I'd be happy for another Evian.
