Its been a week from hell.
First a disclaimer - this is still an event in motion and so there is a degree of speculation on some aspects. I have spent the last week on numerous telephone calls and have had hours of private messages where I have viewed screenshots and listened to recordings. All of this matches up to the explanation below.
Second disclaimer - I was going to wait a week or so to post this to give some time for events to unfold and maybe let Saunders come out and give a statement. But now I have had two news agencies contact me (one a major television station) and they are prepping stories, so its coming out anyway.
First some background. Alex Saunders is a leading Australian crypto commentator and investor. He runs a paid group with around 5000 members. They all pay USD $200 for membership a MONTH, so he has substantial income. Further he has been in crypto for many many years so you would expect him to be well off.
If you google him you will see he has featured in numerous articles and interviews where he presents a very clean image in the sense that he is all about safe trading, avoiding scams and helping the little man versus the banks, corporations or scammers. His videos talk about safe trading, stop losses, risk management and taking profits.
He has picked some very good altcoins too - for example, picking FTT, Poly, AXS, NXM and Red Fox early (more about that last one soon)
All very well and good right? Well..... things started to publicly unravel last week - I say "publicly" because the train wreck was already in motion behind the scenes.
So Alex challenges Richard Heart to a debate to try and discredit Hex. Fair enough. I haven't even watched the debate but Alex thought he did well and claimed to have "destroyed" Richard Heart on twitter. Richard Heart then promptly shares screenshots of private messages from Alex where he is asking for a 20 BTC loan, offering him a $50,000 placement in his "stealth" stable coin project and then finally Alex asks Richard for Hex as a payment for talking with him! (there is some debate as to whether these are genuine screenshots - this has been discussed at length and let me assure you they are)
Then people start talking in his private group. It turns out that many people with any involvement with Alex has had him ask for money - whether it is a loan, running a trading fund, lending BTC for his OTC trading, pooling funds for investment - you name it. One person told me they sent ETH because he told them he had a 100% APR ETH pool running. In one case, a person said he was busy because "they had just had baby son born". This didn't stop Alex persistently messaging him, asking again and again. Often the messages sent to different people were very similar - a common theme was urgency, and that there was "just one spot left" in a project.
Even worse, on the same day Alex was asking Richard Heart for money, he ran a fund-raising campaign in his group, raising $2M from his users for his new "billion dollar idea" - a stable coin project called DCB. The entry cost? $50,000 each. Quite a few people saw this a out of character. Some questioned if this was a test to see if people would fall for it. But it was real. There was no contract, no detailed white paper, no public team. Still people invested (I did not)
Now the problem is from my discussions, it would appear that VERY few people that ever gave Alex money / crypto saw a penny back. In every case, he plays around with stalling tactics, promising that the cheque is in the mail etc etc. And more concerningly, looking at the ETH transactions, every single time the funds go straight to FTX (a margin lending exchange).
Over the last 2-3 months people noticed Alex changing. He very rarely contributed to discussions and his youtube activity started to slow. Some people noticed he seemed very lethargic and out of it (he blames this on a back injury, but who knows).
Now the penny drops. As more and more people talk, and on twitter prominent influencers start coming out, sharing messages and saying they either lent Alex money or were approached.
Now for my confession. I provided Alex with a decent amount of crypto for one of his ventures. This was some time ago. I never saw a cent, and have chased him for a long time. Despite this, he would continually message me asking for more money to lend him. If I mentioned I had talked to a large crypto holder, the first thing he would say is "do you reckon he can lend me 20 BTC for some OTC deals?". As I would do that!! Was I dumb? Absolutely. It was a relatively small sum for me but it still has given me a sleepless night or two. (I am going to do a post one day of my "mistakes in crypto" as a lesson to people. This will be number 1)
This week my phone starts ringing and I'm getting calls from numerous people in the community. One guys lent him $250k and his suing him. He had publicly outed Alex and has been threated with defamation by Alex's lawyers. Another guy lent $650k - incredibly he got repaid after putting pressure on him, but I am told another lent $3 MILLION and is using a legal team to try and get money back.
These are just the big players. I have messages from MANY small / novice investors who gave money they couldn't afford to lose. Some are in tears. One person pooled money with their father. Another drew out of retirement savings for this. Foolish ? Sure. But that doesn't excuse what happened.
Now back to Alex's DCB project. Remember that every user paid $50k to join? Do the maths and there should be 40 members. Well, the members in that private group and grown and grown - up to 150 last I heard with new members being added as of 2 days ago. Rumors are that he is trying to raise more and more money.
And where is all the money? The total is expected to be somewhere in the range of $6M to $15M - maybe more. Speculation is rife as to what has happened, but the general consensus is that he has an extreme gambling problem involving margin trading. Looking at his facebook comments in his group, it would seem that he was leveraging short from the start of the bull-run and he was potentially long at the top of the market at 60k.
I also know he had some odd positions. He would message people when he was pushing a position. One of these was XRP which he was convinced would go on a hyper run (it did not).
I have also seen screenshots of messages where he talks about revenge trading and FOMO. This is in the context of him asking to "borrowing some bitcoins for the night" (not exact words but close) because he couldn't access his FTX account as he was away from home. None of this makes sense - but nor do his excuses.
He also had quite an ego. He told Richard Heart he was "Tasmania's Richest Man". He would frequently post about his successes in crypto and his x100 picks. Based on events, his financial position and trading abilities seem to have been greatly embellished.
Now Alex seems to have disappeared or at least gone off the radar. The last I heard was a voice message from 2-3 days ago where he says his stable coin project is the thing that will get him out the hole and that it will be a "top 3 project", potentially replacing tether. Given his lack of funds and reputation, this seems delusional at best. There is speculation he is on the run (unfortunately he is well and truly "doxxed" with his address and photos of his house being shared online. He says he is getting death threats which I guess is to be expected. As of a few days ago, he was promising refunds and payments this weekend (and if this does happen I can assure you this post will be deleted and retracted with an update).
Notably, he has left his own group which has now re-branded as "collective shift" with ownership passed to his staff. Most of Alex's old posts have been deleted, although copies are still circulating. His twitter is silent, although it has some activity with resharing etc. Those who message him with legal threats simply get a one word reply "ok" or "sure". I actually reached out to him on a personal level - said I wouldn't mention our loan, but was checking in on him. Silence.
And there is more. Speculation is rife as to whether Alex took payments for projects or even just acted as a pump and dumper. Evidence here is harder to collect, but in screenshots Alex talks of having "a few million" in vested Red-Fox, which unvests in already September. This is interesting as Alex had previously said he never takes funds from projects he pushes, and Red Fox has responding saying they never paid him. So somebody is lying. On numerous occasions, he would post on a project (usually with a small market cap and low liquidity) - the price would then jump as users piled in, and then savagely dumped moments later. You be the judge as to who was selling.
Some people confided in me they had posted negative comments regarding Alex or his projects and were censored or banned from the group. One rejoined under a different "alt" account.
Remember this guy was seen as one of Australia's most trusted crypto experts, and 5000 people trusted him with $200 a month for his advice. It seems he had it all, but sadly some form of addiction or something else has taken hold of him, and changed him forever. This is a story of how aggressive trading can become an addiction, and ruin everything for you. Be warned. It is also a lesson on how to never trust anyone in crypto (in case you are looking back at my 25 rules in crypto, my "never trust anyone in crypto" rule was written AFTER I gave Alex funds, and at a point I was having suspicions).
His community is now fractured with many leavings. Various private facebook groups are forming to discuss recover plans or legal action. There is a telegram group with over 1,000 people discussing this. Many sharing their own stories of their lost funds.
So now what? Who knows. Hopefully authorities get involved and the relevant FTX account will be frozen. Maybe he has assets somewhere but I doubt it. When the story breaks this will likely be big news in Australia and it will once again give the media the chance to combine crypto and scams together, and perhaps even lead to a regulatory crackdown over there.
As a finale, I should add to don't bear Alex any real malice. I feel very sorry for his family and his staff (most who I assume were in the dark on his activities). The new owner of his group has been handed a very hot potato (he is a real young guy, probably naive and taken in by Alex). In a way, having this outed is kind of a relief as I don't need to chase that crypto any more. As with many previous errors, those funds are lost. But its fine. I even managed to make the entire amount back in one trade last night (SFUND if you are interested). But I feel for the people who gave him everything, as for them its a long path to recovery. Others will leave crypto for ever with a sour taste in their mouth.
Everybody I spoke to is shocked. One said it is a living nightmare. Another said they wake up every morning, forgetting everything, and then it comes back as a memory. Nobody can believe the transformation of this once iconic and trusted character. It is a lesson as to what addiction can do you to, and once it holds, the extent a person can be pushed to feed that addiction.
There is of course concern for his mental health which is real. I have told the media this is a primary concern and I hope they take that in. But equally I've shared in the emotions and horror of literally dozens of people as my in-box is filling up and my phone has been ringing all week.
And I should add that if Alex wants to respond to any of this (including similar posts and stories circulating) he should do so and I will edit the post accordingly and link anything here.
