Depending how old you are you may or may not remember the peak of the hacking group Anonymous. Regardless of whether you remember or not, in the early 2010s the group was responsible for a treasure trove of hacks. From hacking Fox News, to HB Gary, to Stratfor and everything in between the group (and subgroups of it like Antisec and Lulzsec) seemed unstoppable. Jeremy Hammond, who would later get the largest sentence in US history for a cyber crime even ran “Fuck FBI Fridays” where he would extensively hack and damage a member of the FBI every friday.
Nonetheless Anonymous was an indisputably formidable force and extremely effective. Then in 2011, one of the more notorious members Sabu, or Hector Monsegur made a grave mistake and the federal government found him. Rather than just take responsibility for his actions and do his time, reports state that the moment they busted down his door he threw his hands up and agreed to “cooperate” with no resistance whatsoever. Within 6 hours he was back online but this time as an informant of the FBI.
Over the next 10 months he ran a series of operations under the FBI’s guidance. The sole purpose of these actions was to get other prolific members, like Hammond, to do various hacks and expose their identities in the process. Ten months later, governments in every country in which someone could be identified arrested all identified members. People who weren’t identified mostly went int hiding. Anonymous, as it was known, was effectively over. Along with sub organizations like Antisec and Lulzsec. At least at the level they were in their prime.
That’s a short history lesson you can google more if you’re curious about that story. So how does this relate to crypto? Well enter 2022. A man by the name of Edward Constantinescu, known on social media as Zack Morris and seven other low level “influencers” get charged with a pump and dump scheme where they allegedly created a trading group called Atlas Trading in which they would pump and dump penny stocks. The government alleged they made $114 million off this. More on this arrest from the US Department of Justice website can be found here.
You’re probably wondering what happened to them. Well, the judge ultimately decided that although he believed that they were involved in some pump and dump scheme, the government had failed to provide enough evidence that this constituted a crime or at least any they were charged with. The prosecutor, however, was so upset (presumably) that they appealed the judges decision. The appeal is still pending however we reached out to several attorneys all whom said that there was no chance the prosecutor would win the appeal. However, any stretch of logic would tell you any prosecutor who appeals a clearly losing case has a vendetta at best at worst the entire appeal is smoke and mirrors.
Enter modern day. On May 15th of 2024 the Zack Morris token was released by, Zack Morris (again real name Eddie). It had a slow start but eventually picked up some steam as the celebrity coin craze was taking off. For the most part it seemed like a legitimate token who’s founder was trying to push it. That was until around July 4th. That’s when the Zack token started partnering with multiple other tokens that weren’t currently doing very well. In fact it seemed Zack was the only token around a particular person that was doing well and swallowed up Sexyy Red with plans to partner with Steve Will Do It, Happy Dad Seltzer, and the Nelk Boys. Also plans to swallow up the supply of their tokens as well.
So why is this important? Because every single instance and person who partners with them in the United States can be charged with felonies related to unregistered securities. And you may be saying wait a second crypto cannot be a security right? Ripple beat the SEC after all. But in that ruling it was determined in fact that cryptocurrency could be a security although it was not in that case. The guidelines on what constitute a security and what doesn’t actually come from the 1930s in SEC vs Howey which created the Howey test to tell if something was a security or not. And the Howey test is really quite simple. In order for something to be a security it has to pass four prongs:
- It is an investment of money
- There is an expectation of profits from the investment
- The investment of money is in a common enterprise
- Any profit comes from the efforts of a promoter or third-party
Now wait a second. The Zack coin does involve an investment of money. Any Twitter post imaginable plus anything else related to it shows there is an expectation of profits. The investment of money is in a common enterprise it’s literally in the same token. However, up until July 4th it didn’t pass the last prong which is that any profit comes from the efforts of a promoter or third party. However something changed around July 4th. All of the sudden Eddie or Zack was seeking out third parties and intentionally getting them involved.
For many months Zack coin went with no partnerships then all of the sudden Zack or Eddie makes a mad dash to make as many partnerships as possible (all within the US and virtually all well known figures or companies). But doesn’t that sound just like Sabu? Clearly anyone who partners with him is now in violation of federal law and faces up to 20 years in prison. Clearly the government can also get a larger win given as every one of these people has the ability to flee therefore likely making them a flight risk meaning they would be held without bail for 20-40 months before they even saw a trial.
So why would “Zack” trap all of these people he claims to care about and be making a mutually beneficial arrangement with? The only answer that makes sense is a federal honeypot. Which would mean that, like Sabu, the feds convinced Zack that his only option was to get a bunch of other people arrested. That the overzealous prosecutor eventually found something he knew he couldn’t beat. And that the only option he felt he had was to so clearly and logically set as many other people up as possible. Nothing else within logic explains the sudden shift nor how he, as someone barely anyone knows, can outperform every celebrity including Iggy Azelea and Jason DeRulo in his token. The feds have plenty of money and crypto so that also explains the performance.
So is the FBI running a honeypot operation through Eddie/Zach? Almost indisputably yes. It fits the background of every federal honeypot to date and no measure of logic can actually explain the shift otherwise. With an almost 100% degree of certainty it is our position that Zack is the Sabu of crypto. He’s easy to scare. The prosecutor who clearly had an axe to grind with him above and beyond any other case on their docket (we checked theres not a single other clearly losing appeal), found something out and told him it’s a ton of years or you trap a bunch of people who know you. He chose the trap. Whether in 10 days or 10 months, the FBI eventually closes the investigation, “Zack” goes free and a whole slew of people including Sexxy Red, Stevewilldoit, The Nelk Boys, and probably half of the employees at Happy Dad Seltzer plus whoever else he manages to convince before they close it all go down. The DOJ gets to say they caught a whole bunch of people violating securities law and several other financial laws, all people that are somewhat well known. Everyone feels like the government is doing something. It’s a tale as old as time. It’s played out hundreds of times. And any stretch of logic would tell you it’s likely here. Ask yourself why else, many months after launch, would he be making a mad dash to get as many people as possible to indisputably violate securities law?