Spotting a Scamcoin: Razormind and DeOS
In Part II of our educational series on how to identify a cryptocurrency-related scam, we look at the story of Razormind, a would-be revolutionary service that planned to create a decentralized operating system that could allow developers to grow custom-built businesses around open-sourced, blockchain-based technology. What investors got instead were some worthless tokens, an extensive list of excuses, and months (or years) of their life taken away while waiting for a project that never bore fruit.
Razormind: The Curious Case of Jawad Yaqub
In this week’s article, we’ll review some of the tell-tale signs of a crypto scam one by one, as they apply to the story of our main subject, Mr. Jawad Yaqub. Much like Bryce Weiner from last week’s edition, Yaqub has a severely inflated sense of grandiosity and self worth, which does not necessarily stem from anything he’s actually accomplished but perhaps some sort of deep-seeded neuropsychological issue.
However, if you let him do the talking, he’ll tell you he’s done – well – more than a lot. A bio under a YouTube video of which Yaqub was the main speaker, describes him as:
An Enterprise Architect and enthusiastic developer, with over 15 years of Architecture experience from complex distributed and high performance enterprise projects at the likes of Akamai (first and most senior architect in EMEA), Telegraph Media Group, UBS, BSkyB, Financial Times, O2 (lead architect for the iphone launch platform).
Not only this, but also that:
His recent focus on decentralized architecture and blockchain technology complements a history of building massively concurrent low-latency enterprise platform for financial services and mission critical applications.
Perhaps most impressively:
He has done a PhD in Artificial Intelligence and was voted Time’s Man of the Year in 2006.
There’s only one problem with all this information: very little – if any – of it is true, and none of it is verifiable! It’s hard to prove or disprove a bold claim when there’s no publicly available record of it occurring.
Sign #1: Repeat History of Scamming
Cryptocurrency or blockchain tech-based con artists who successfully get away with one swindle are usually unsatisfied with the idea of returning to an honest living, and by nature can’t help but take a swing at another one. Whether they become emboldened, develop a taste for easy money, or simply believe in their heart they can do no wrong, scammers often return again and again – often using their real name in each scam – believing deep down that either they have committed no wrong (morally or legally) or else are somehow above the law.
Our story begins with Razorcoin (not to be confused with the Bryce Weiner-led “RZR”), led by self-described “AI and computer science expert” Jawad Yaqub, which offered affordable coin-building and related product services, naming IrishCoin (IRL) as one of their primary success stories. For only a one-time $150 payment in bitcoin, customers would get:
- Lifetime Operational Guarantee
- 12 Months Free Software Upgrades/Updates
- Free 24×7 After Sales Support
- Full Source Code
- 1 Seed Node + 12 months hosting Free
The list of potential use-case scenarios and “recommended” supplementary services was indeed astounding, covering anything from legal advice to coin protection services to “celebrity coin” building. The only problem is, outside of IrishCoin – which does sit on CoinMarketCap’s list of biggest coins, in the #1124 spot – not many other coins were ever created by Razorcoin, if any. A mere five weeks later, complaints were already being lodged against Yaqub and Razorcoin for failure of delivery of services:
Unfortunately, the situation was never resolved, and through the years other complaints about the failure to deliver also surfaced:
After all is said and done, Razorcoin cannot technically be classified as a scam so much as a failed coin development business. However, it certainly renders its creator(s) suspect and not necessarily trustworthy when it comes to future projects to which their name is attached.
Sign #2: Lack of Creative Distinctions from the Last Scam
Almost exactly 2 years after the launch of Razorcoin, Yaqub was back at it again, announcing plans for another attempt at cashing in on the blockchain craze, this time promoting his “parent company” with the name Razormind. While the Facebook page for Razormind opened as early as 2013, it existed as more or less only a concept until August 2014, when Yaqub decided he wanted history to reflect that it was the entity behind the creation of Razorcoin.
The Razormind logo appeared to be remarkably similar to that of Razorcoin’s, which was in turn remarkably similar to that of DeOS (which itself has been compared to pre-existing corporate logos).
Razormind was incorporated in February 2016 in the U.K., where restrictions and regulations guiding the formation of company are relatively lax, opening a headquarters in Belfast a few months later. For only £12 (at the time), anyone could register their own company or corporation over the internet, so long as they were willing to provide some basic owner, shareholders, and other requested data about the company (most of which could be easily fabricated).
Sign #3: Suspicious Accomplices in the Media
In June 2016, the well-established crypto news outlet CoinTelegraph published an interview with Yaqub about an upcoming blockchain-based fintech project called DeOS, hailing it as a competitive alternative to “corporate giants such as Microsoft, IBM… as well the new crypto on the block Ethereum.”
Like Razorcoin, DeOS seemed almost too good to be true: a decentralized, easy-to-use operating system that allowed for the digitization of assets and securities. The project certainly seemed like a legitimate, highly-intellectual, and massively coordinated undertaking that was said to employ 260 people around the world.
Yaqub, in his interview with CoinTelegraph, described it as the following:
DeOS is a decentralized OS which uses the blockchain as its register. It works by constantly indexing and allocating resources in the network for execution. Resources include items such as memory, cpu, storage, and bandwidth, assets, smart contracts etc. Each DeOS seed node indexes its available resources, and publishes this index to the network along with a list of tasks it wishes to perform on the network…
Unlike Ethereum or Ripple, or Bitcoin it uses the blockchain as a register for the decentralized network and has secure Turing complete smart contracts, digital identity, and because most of the world doesn’t know or care about any of that we added a shiny desktop and office suite.
As a result we do a lot of our internal blockchain product work on the DeOS system itself as it gives us the computing power, the blockchain advantages, and the security we need.
In July 2016, the same author at CoinTelegraph that conducted the initial interview with Yaqub the previous month, published an announcement article for the DeOS ICO, an ICO-driven product under development by the Razormind team for over 2 years, according to Yaqub. Indeed, the idea of “trustless computing” via an open-sourced, multi-collaborative OS was a novel and compelling reason to entice investor funding, raising over 2,000 BTC in the period of less than a month. There was a final article on Razormind which read kind of as a half-hearted apology to readers who had invested in DeOS. The author stated:
Neither myself, lawyers or other professionals can legally brand this as a scam or fraud.
No further information was published in CoinTelegraph, despite promises of another article to round out the series.
Sign #4: Plagiarism in Marketing
There were some serious problems with the now-defunct Razormind homepage from its launch. For one, they were quickly demonstrated (also by vigilant members of the bitcointalk community) to employ fake employees, or people who had no idea they were also working for Razormind. Below is an example of one such “plagiarized employee”:
It is clear that the picture provided for Razormind’s “Olga Petrusha” is actually that of BuzzFeed author Chelsea Marshall – easy to spot if one knows how to properly use a reverse image search. Not only were Yaqub and Razormind fabricating employees, they were also plagiarizing customer testimonies. It is quite easy to see where the words “Razormind” and “SAS” were swapped to the benefit of Razormind:
Here are a few more examples of how Razormind directly lifted information and content from some major websites without regard to accrediting the original source, switching the name of a corporation or a company with the word “Razormind” (also courtesy of research performed by the bitcointalk community):
Yaqub’s blatant disregard for copyright infringement, willingness to fabricate content and seemingly invincible approach to such wanton fraud are all symbolic of a classic narcissist personality, or somebody who has an utter lack of care for moral standards or sympathy for others.
Sign #5: Suspicious Social Media Activity
By August 1st, 2016 (less than a month after the announcement of the DeOS project), the Facebook page for Razormind had amassed a staggering 26,639 “Likes” — a number extraordinarily close to the 27,000 active users of Razormind as claimed by Yaqub in an interview on the cryptocurrency-related podcast, “Let’s Talk Bitcoin!” (episode #177). Interestingly, the 3 posts made after the DeOS crowdsale managed to draw a total of 3 reactions (2 “Likes” and 1 heart-shaped “Love”), which is not exactly a blistering amount of response. This suggests it was highly likely that Yaqub purchased Facebook followers from a vendor of such social media services, most likely paying for them in the form of bitcoin and on a darknet market, where these vendors can easily be found.
Sign #6: Suspicious Changes in Crowdsale / ICO Terms
At first, the DeOS crowdsale was to be a limited affair, with a set deadline for contribution funding with no minimum contribution necessary. DeOS tokens, created using the Omni Layer protocol, went on sale at a rate of 1,000 DeOS per BTC, and the project quickly saw a large influx of investor money from the get go. However, according to testimony provided by crowdsale participants in a bitcointalk.org forum thread, ICO conditions quickly changed, with the participation period being extended by 2 weeks (highly irregular for ICOs or crowdsales), and users who donated amounts of BTC between $5 and $95 being told they would not be credited with any DeOS tokens, as fractions of BTC in the amounts of 0.15 and below being regarded as un-accreditable “dust” by members of the Razormind/DeOS team.
Haven’t you seen this? I tried to warn everybody long time ago: https://t.co/bldCnpB9n9
— Spartak Tomanov (@bulgar1an) October 17, 2016
Regardless, the final dollar figure brought in by the crowdsale as claimed by Yaqub was in excess of $19 million, though more recent estimates put the number somewhere between $3 and $10 million. By October, several complaints from investors were being lodged against Yaqub and Razormind, from lack of distribution of tokens, to disappointment with the utter non-functionality of the DeOS network, to realization that investors had just been handed a bunch of worthless Omni Layer tokens that could not be used for anything except sloughing off on uninformed investors/traders not hip to Yaqub’s scam.
Sign #7: Debunking by Technical Experts
After months of empty promises, the ignoring of investor complaints and sheer defiance of professional responsibility, Yaqub’s DeOS received the nails in its coffin as a scam, when software architects at GitHub publicly stated that DeOS was not an original product, merely posing to be so to those without in-depth knowledge of computer programming:
On the same date of the above post, a GitHub member who managed to open the DeOS software package (most people who attempted could not) composed the following review of it – an ultimate confirmation that DeOS was, in fact, a scam all along:
Investor complaints began to pour in, though there was not much of anything to be done by this point, as Yaqub had collected his money and disappeared off the Razormind radar, with the Razormind and DeOS websites being shut down soon after, along with Razormind’s Twitter page.
A thread on bitcointalk, which has over 44,000 views and from which a large portion of the research for this article came, first identified DeOS as a potential scam as early as July, 2016, days after the beginning of the token crowdsale. The thread thoroughly chronicles the development and exposure of Yaqub’s Razormind debacle, taking some interesting twists and turns through its 600 post-long course.
Though the story is quagmired in the misery and hopelessness of those who happened to get caught up in the DeOS scam, it does have something of a happy ending, as reports are beginning to surface that central authorities may be pursuing legal action against Yaqub. This statement should be taken with a grain of salt as nothing definitive has been posted about such action.
The fact remains, however, that sometimes the only way to stop a scammer is by physically stopping them from being able to commit financial crimes in the future. For now, we’ll just have to check in on the thread at bitcointalk for the latest news regarding the curious case of Jawad Yaqub. We hope that by presenting this list of some of the major tell-tale warning signs of a crypto fraud, our readers will have an idea of what to be on the lookout for before they plunk down their hard-earned money into the next ICO or blockchain project crowdsale. Always remember that just 30 minutes of “due diligence” can save months or even years of headache and heartache when it comes to the wild west landscape of cryptocurrency-related investments.