House of Frauds

House of Frauds

Over the course of the last two weeks, YouTube personalities @coffeebreak_YT and @OrdinaryGamers have begun unravelling the twists and turns of unregulated offshore casinos that transact in various cryptocurrencies. While the story is still developing (the sleuths are about halfway through their investigation), enough has been revealed to understand how at least some YouTube influencers fund their lavish lifestyles—or at least, used to, now that their sponsor-financier relationships are falling apart. Just like the generation of early Web users learned the hard way that the Internet “doesn’t forget,” influencers and their affiliates are discovering that no one can hide from the immutability of the blockchain. 

A series of investigative journalism YouTube videos have been released so far (anyone that is even mildly interested in blockchain research should take a look). In sum, @coffeebreak_YT was puzzled about how @stevewilldoit, of YouTube and NELK Boys fame, could afford to spend hundreds of thousands of dollars (and sometimes more) in many of his videos, given that he freely admitted that his various public businesses did not generate enough income to do so. After conducting research on a number of his videos, it was discovered that @stevewilldoit receives affiliate commissions from “the mathematical house edge” on referral wagers of the online cryptocurrency casino Roobet. In other words, the more his fans lose money gambling, the more money he makes (this is, admittedly, an oversimplification, but it’s more or less how it works). 

Online gambling has been prevalent since almost the first days of the Internet. Much of it can be done anonymously through the use of virtual private networks (VPNs) and, since the advent of cryptocurrency, through wallets that are designed to provide a layer of anonymity if interacted with correctly. But people make mistakes and sometimes reveal their wallet addresses and other identifiable information, which is how this entire story has developed. Roobet and its affiliate Wizza, a raffle giveaway company, have been paying influencers to gamble with house money and promote services without such influencers disclosing that they are playing with the house’s money or that such raffles might not result in any winners. 

Although the story revolves around the mistakes that @stevewilldoit and his close affiliates made that led to this investigation, several other high profile YouTube personalities like FaZe @Banks have been implicated. FaZe Banks was, notably, found to have partly acquired his CryptoPunk with funds transferred into his wallet by a wallet controlled by Roobet

The relationship between Roobet, Wizza and the NELK Boys has broken down, with @stevewilldoit going so far as asking how he can “make this, like, right.” In addition to the potential legal implications of lying about the source of funds used in gambling streams, encouraging fans to purchase tickets for fraudulent raffles and promoting unregulated gambling organizations to U.S. citizens and minors (neither group is legally permitted to use unregulated gambling websites), questions arise regarding those behind these websites and whether such individuals and businesses are compliant with U.S. and European anti-money laundering regulations. In addition, governments around the world take gambling licensing issues seriously and they will be particularly interested in investigating criminal activity that preys on the unsuspecting. Our full analysis will be released at the conclusion of the investigation, stay tuned. 

Did you enjoy this article?

Subscribe to Redlion Gazette

Gazette time units are weeks so our subscriptions follow that pattern. You are always getting your Gazette & ArtDrop plus saving 30% of the minting price! There are 2 tiers of subscription.

        Never miss a thing!

        Find your weekly guilty pleasure in a mailbox.