It’s not what happens to us but how we respond that matters.
While I’ve certainly encountered my fair share of charlatans in my personal life (including personal investments), I had never before engaged a true con artist during my time as a business operator.
That changed this past month & it costed my operating company & my Chef Physique brand $35,000.
I’m owning the experience & sharing it in hopes of helping other entrepreneurs navigate the wild west that is blockchain technology & cryptocurrencies.
I previously wrote about the project & the short comings of the entire thing.
That article was written right before the funds from the project were snaked from the smart contract.
Here’s the short version of the story.
After engaging several professional blockchain developers, I was frustrated with the expected timelines. Everyone was busy and it would be months before we could start our project.
We didn’t have months.
I put a job listing out on UpWork.
I was met with this respond from Zachary Martinez
With the benefit of hindsight, it’s a scripted feeler email… designed to snake suckers.
Full disclosure here, there are plenty of obvious red flags but when you’re pushing hard to get a project done & accomplish something, you overlook things.
It costed me.
After scheduling a call with our friend, “Zach” - I decided to move forward. He was awkward on the call but seemed knowledgable enough & I just chalked it up to the programmers personality.
What was weird, I texted the number after the call with some follow up questions & never heard back. The email he gave me also bounced back when I invited him to slack.
I followed up in UpWork.
Ironically he accepted the email from another similar gmail account, that wasn’t either of those above but I didn’t uncover this until after the fact.
I still wasn’t that concerned, we had a project to get done & he was in New Jersey, pretty close to one of my other employees.
First thing we did was ask him to complete a 1099 so we could pay him!
American Citizen with a social security number!
Guard totally let down & I never took the time to validate this information.
Of course it was all fake.
Here’s where it gets worse. He wanted to be paid in Crypto & seeing as I love this world, I obliged. The awkwardness of his communication around this subject was again another major red-flag.
“Crypto is comfortable”
There is an extensive process to get set up with any institutional account. We started the process a couple days before we hired him & this was clearly communicated.
He invoiced weekly but the Coinbase process took 3 weeks. I offered on multiple occasions to pay via wire or ACH. He awkwardly rejected every time.
I was moving too fast to think much about it.
Our NFT launch needed to line up with the completed production of our protein bars.
I think you guys can see where it went from here.
Where do we go from here?
After 2 days of explaining a “technical issue” on why he couldn't get the funds out of the smart contract (where the ETH went from the sales of our NFTs), I awoke to a message telling me that he had personally been hacked.
He never spit in my face, it appeared he didn’t know how.
A good friend of mine (and high level blockchain exec) spent an hour performing forensics and it confirmed what I already knew.
He stole our money.
The payments I made to him for his work were bounced around through a couple wallets immediately after they were made, ultimately leading to a wallet with $11,000,000 in it.
This is where the ETH that we had earned ultimately ended up as well.
Awesome.
Zero recourse & a major lesson learned.
I had heard of the absurdity of this space but seeing it face to face was surreal. You hear about crypto scams all the time. It’s often talked about at the investor level but it’s prevalent across the board.
When we first set out on this project, plenty of people screamed that we were scammers, not technology enthusiasts. That’s part of why I’m writing this article. For the industry to continue to move forward, honesty is necessary.
On the business side, we will respond by
1.) Ensuring our token holders are taken care of above everything else.
We are still doing damage control working with the OpenSea Team to make sure he can’t creep back into the project in any capacity. If we can’t ensure long term safety, we will relaunch the project cleanly & replace our current token holders NFTs for free.
2.) Continue to focus on community & executing on what we promised. This hurt financially but we will regroup, improve & move forward.
Advice for other entrepreneurs
1.) First & foremost, conduct diligence on anyone you’re working with. In this space, it’s worth a background check. It’s worth calling references.
Spend the time here, regardless of your timelines.
2.) Have a technical advisor you can lean on. Even if they aren’t doing any of the work, having someone that you trust that can help steer you clear of any landmines is important.
3.) Probably not wise to pay individuals in cryptocurrency. Really no point from a practical perspective.
In closing, I hold true to the belief that the most painful lessons are the ones that will one day be most valuable. It’s even better when you can learn from others pain… hint hint.
I know I will improve from this.
If anyone wants to support the brand, this is the limited edition release of our chocolate chip cookie dough protein bars.