The China Hustle: Crypto Edition (ACT I — Introducing Xiaolai Li)
Foreword
I’m not going to pull any punches here in this article. I’d rather just get straight to the point and outline my findings.
As a disclaimer, I want to point out to Medium and any other public platform that may consider censoring this article due to a bogus ‘report for abuse’ that any and all mentions of individuals are only done so within their professional capacity. None of the comments written are meant to condemn them as human beings. Also, since they are public figures and have taken efforts to make themselves public, it is fair that they receive scrutiny, as should be reasonably expected by those in the public eye. This is not a doctrine I created, but one that the Supreme Court devised when attempting to discern trademark infringement.
Thank you.
Introduction — ‘What China Hustle?’
I’m going to start from the heart of the issue with an investor whose name is Xiaolai Li. I know that I have mentioned him a lot on Twitter and other platforms, but let’s really dig into this individual a bit deeper.
Meet China's Biggest Bitcoin Multi-Millionaire
_Hidden in a pedestrian-only lane in Beijing's tech district of Zhongguancun, Cheku Café (车库咖啡厅) is not easy to find and…_www.coindesk.com
The article above was written in 2013 by CoinDesk. So, this captures the ‘historical’ effect of this Xiaolai Li individual.
Okay, So Who is Xiaolai Li?
- More or less he was the Chinese version of Roger Ver, except less boisterous and more well-liked <- Which still may be the equivalent of saying that he was the Chinese version of Roger Ver.
- Big investor who believed in Bitcoin and crypto from way back.
- Was an iffy businessman, not particularly wealthy before dabbling into crypto.
- Made a huge investment into Bitcoin several years ago and is/was rumored (from statements he has made) to have obtained well over 100k BTC*, which would place him at the rank of the “#1 whale in China” <- which is saying a lot.
**He has since stated that he does not own over 100k Bitcoin today due to expenses for various projects/investments/etc.
Another Article of Critical Importance That You Should Review
A Chinese Bitcoin Tycoon and His Record-Breaking ICO - CoinDesk
_One of China's biggest bitcoin investors has raised approximately $82m in an initial coin offering (ICO), setting a new…_www.coindesk.com
Earlier last year, he launched a major ICO based on EOS (yeah, he launched an ICO over a year ago when EOS was still a year out from its own mainnet; not sure how he was even able to pass that on logically, but it worked).
Now, check this out:
Excerpt from the article that I posted directly above in this subsection; https://www.coindesk.com/chinese-bitcoin-tycoon-record-breaking-ico/
Let’s calculate that in today’s value:
5,853 Bitcoin * $6.7k (approx. spot price currently) = $39M approx.
106,757 Ether * $481 (approx. spot price currently) = $51.3M approx.
30,430,519 EOS $9.05 (approx. spot price currently) = $275.3M approx.
If you add that up, you get $365.6M in value at this very second
Now, let’s calculate that using the value of those coins on December 17th, 2017:
5,853 Bitcoin$19.5k = $114.13 million
106,757 Ether*$710 = $75.8 million
30,430,519 EOS *$9.20 = $280 million
This gives us a total of $469.93 million worth on that very day (near the peak of that portfolio value), which is staggering to say the least.
This is AFTER it was reported that he held 100k bitcoin (back in 2013). So, it’s safe to say that this guy is filthy fucking rich and he runs a lot of shit in China. He is a VERY known individual.
Here’s Where We Start Exposing the Entire ‘China Hustle’ in Crypto
Now, the reason that I bring him up is that there was recently a big commotion in China regarding a recorded conversation between him and another associate. This conversation is not a rumor and he has addressed this as true as well as the other parties that he mentioned in that conversation. So, we know for a fact that it is him and it did happen.
China Crypto-Whale Li Xiaolai Assaults Binance, TRX, NEO and QTUM in Leaked Audio
_As if it were the story of Moby Dick frustrating the plans of the Pequod against Ahab, Ishmael and Queequeg; in the…_bitcoinexchangeguide.com
Above is just one of the articles that came out regarding this issue.
What Did He Say?
In that article he states:
-$QTUM is a fraud
-$NEO is a fraud
-$TRX is a fraud
That’s all fine and dandy, I thought those projects were bullshit to begin with ^^
However, this statement, and a series of others like this that he made are what really piqued my curiosity:
“Blockchain founders should be at least Internet Celebrity, fans-flow is the core competition, and other factors are all bullshit. As long as those idiots believe in you, there will be consensus and what you need to do is to continue cheating them.” (Chinese translation into English)
How Was This Information Obtained?
It appears that someone secretly taped Xiaolai Li just speaking his candid thoughts about various projects and facets of the blockchain space. The core reason for him speaking was not to be a ‘whistleblower’ or expose this information and we can be certain that he would not have said any of this had he known he were being recorded and that this would be released into the public.
Thus, the candid nature yields a substantial amount of credence to the words that he was saying. Also, he’s someone that’s in a position in cryptocurrency to where he can speak on authority on some of these issues.
Another Article By TechNode That Provides More Insight Into What Xiaolai Li Was Saying
Unfortunately, one of the burdens of us being in an international crypto community is that one of the primary barriers to communication is the fact that we do not all speak the same language.
Thus, it took a little while before news of this even hit the ‘Western’ hemisphere. So, the original article that I put up only captured the most salacious details of his speech.
However, this article below by TechNode was a bit more thorough in its dissection of what Xiaolai Li said in those recordings:
Bitcoin tycoon Li Xiaolai spills dark secrets in leaked recording · TechNode
_A 50-minute long recording of China's bitcoin tycoon Li Xiaolai leaked on to the internet this week is causing a big…_technode.com
XiaoLai Li Introduces the Concept of ‘Cutting Leeks’ [If You’re a Gullible Western Investor, You May Be a Leek!]
This is a blurb from that article that I just posted that is worth checking out, for sure:
“In the recording, Li also revealed his own approach to “cutting leeks”, that is, using celebrity status to hype up projects and “harvest” retail and newbie investors. Li also exposed himself as having knowledge of some fraudulent crypto projects that are not backed by anything concrete. Li said to succeed in the blockchain space, the first thing is to figure out a way to become famous. The biggest value of blockchain is consensus — even if the project itself is worthless, if a lot of people still buy into it, it will eventually become valuable.”
That’s actually what they call tricking us dumbass, gullible Western investors — “cutting leeks”. The term ‘leeks’ means ‘idiot’ or ‘shill’.
That Was His Core Message
Although his exposure of other projects that he alleges are ‘scams’ in the blockchain space are what attracted the most attention out of everything he said, that was not the main purpose for why he was speaking, as I mentioned above.
The quote that you just read from the TechNodes article explains what the true purpose for this conversation was:
He was explaining how to essentially hustle in blockchain.
He was making it known that the smartest protocol that one should follow is to gain a massive following/audience and build oneself until they are a cult personality.
If you’re able to get an actual celebrity/internet or crypto-famous on board, then even better.
Once that has been done, you begin to leverage your platform to gain legitimacy among a wider audience of crypto investors.
As soon as that is done, you simply continue to lead them on until they become hip to the game. Once that happens, you exit, collect your profits and then rinse and repeat.
That’s Why He Was Bringing Up Those Other Projects For the Most Part
Xiaolai Li only mentioned those other projects in the conversation because he was giving examples (for the most part) of scams that he had either helped constructed or that personally know of himself.
Once I Discovered These Recordings, I Was Immediately Pulled Much Further Down the Rabbit Hole…
His statements are what caused me to dig WAY deeper into him, the Chinese crypto community as well as any information that I was not able to piece together before.
As you know, VeChain is a Chinese blockchain project that Xiaolai Li and several other Chinese investors that he is partnered/liaised with are heavily invested into already — and that’s why they suddenly popped on my radar.
But I’ll get to them in the later Acts (yes, there are a lot of parts to this crazy train).
There is one other thing that I wanted to show you.
Check Out This Article:
China state media reports "rampant" token sale even after ban imposition by Central Bank
_Despite imposition of ban on cryptocurrencies in China, the state media, (China Central Television) reports about…_bcfocus.com
Huge Reminder if You Haven’t Really Been Following Up to This Point in the Article
This isn’t Joe fucking Blow shooting the shit about these projects. This dude is well-respected in China among their blockchain community.
He isn’t a pariah and he isn’t some shillmeister like Ian Ballina.
This is a Jimmy Song type of character (although you may have your reservations about him as well).
To have this guy’s blessing was to have everything in the Chinese blockchain scene (I use the past tense because that has obviously changed now)
Now in reference to the article above ^ This excerpt is one that I want us to pay close attention to:
Here are Three Takeaways That We Should Leave the Article With
#1 — People’s Bank of China and the Chinese gov’t are getting really tired of this guy.
#2 — He’s literally one of the main reasons that China is so bearish on blockchain. It isn’t because they “don’t understand it”, ‘communism’, or whatever bullshit they’ve been filtering to us Westerners (if you’re a westerner). It’s because they’re all hip to the schemes that this guy has been running.
#3 — This is a wash, rinse, and repeat situation that he runs. Find some blockchain project, get it hyped up in the Chinese community, create FOMO and spur on initial investing. Make sure that the buzz travels to the United States as well — and projects become astronomical.
More Background Information (Relax and Read! We Need This to Build Up the Later Acts)
This is another article that I REALLY want to hone in on because it gives a LOT more substantive information about Xiaolai Li and his influence in the Chinese crypto scene:
[**
Understanding China's Crackdown on Bitcoin and ICOs
**
_China put its red-hot cryptocurrency market on ice last month when it shut down bitcoin exchanges and banned initial…_www.lawfareblog.com](https://medium.com/r/?url=https%3A%2F%2Fwww.lawfareblog.com%2Funderstanding-chinas-crackdown-bitcoin-and-icos "https://www.lawfareblog.com/understanding-chinas-crackdown-bitcoin-and-icos")
Here’s a particularly important excerpt from that article that I want to bring your attention to:
Yet Another Important Article of Reference On Xiaolai Li
http://cj.sina.com.cn/article/detail/1169861544/390963?column=licai&ch=9 (no preview with this link, which sucks; open anyway)
This is in Chinese, so you just have to throw on Google Translate if you want to read it. It’s somewhat choppy, but very readable.
But There is an Excerpt From This Article That Must Be Viewed as Well:
Don’t take this article’s word for it though — we can literally track the money.
What’s the Point?
The point I’m getting at with the screenshot I put above is that XiaoLai Li is probably the majority shareholder of EOS (I estimate at well over 20–30% of the circulating currency’s tokens.
Mighty convenient when you have a governance model.
Conclusion
Now that you all have a pretty good overview of who this Xiaolai Li guy is, we’ll be able to seamlessly integrate into Act II where we expose how Xiaolai Li + Block.One essentially suckered the entire crypto space into giving them billions upon billions of dollars for $EOS.
In the later acts, we’ll dissect the other projects in question that are tied to Xiaolai Li where scammers have already been outed.
Some of these projects are still active today with market capitalization that places them in the T100 on CMC.
This research is deep and what has been posted here still doesn’t even cover a fraction of the material.
Looking forward to dropping off more research in the very very near future!