Crypto whistleblower says industry is ‘rotten’ as pseudonymous tell-all hits shelves

When Jake Donoghue called from the din of a London café on Monday, his camera was off.

A pixelated headshot of a man wearing a sports jacket and a light blue button-down stood unmoving on the screen.

“So, just to get it out of the way,” he told DL News right when the call started, “Jake Donoghue is a pseudonym.”

Pseudonymity has long been a facet of crypto. The crypto faithful often have a libertarian, right-to-privacy streak.

But Donoghue’s decision to use a made-up name — granted, it isn’t nearly as ridiculous as, say, “13yr old with a credit card” — doesn’t stem from a cypherpunk love of privacy.

He’s a self-fashioned whistleblower whose crypto tell-all hit the shelves on Thursday.

The memoir, titled “Crypto Confidential” and published by Flint Books, is similarly replete with pseudonyms.

“Most of the projects I worked with directly, their names had to be changed on advice of legal counsel,” he said.

A former crypto insider, Donoghue wants to speak out about what he says is the industry’s pattern of rampant fraud.

Crypto critics are a dime a dozen. Everyone from journalists to Hollywood B-listers have taken swings at the industry, but it’s not often one of crypto’s own does such an abrupt about-face.

Donoghue’s book comes as the industry is going from strength to strength. The market has recovered from its 2022 funk, investments have poured into new projects, and crypto even made an appearance on the Republican Party’s policy platform for the 2024 US elections.

Still, Donoghue argues that the recovery has hidden a fundamental truth: Crypto is done for — it just doesn’t know it yet.

“The industry has died,” he stated matter-of-factly.

‘Vast sums’

In August 2020, at a dinner party hosted by a friend from university, Donoghue met Miles.

Miles was what Donoghue called an “early Bitcoin evangelist,” and he was working on a project that let users bet on the future price of Bitcoin.

Donoghue, who then worked in public relations, was intrigued, and eventually he teamed up with Miles and Archie, Miles’ cousin, on what they called Portent Protocol.

What made Donoghue make the jump into decentralised finance? Well, the money, for one.

“There was obviously the greed aspect,” he told DL News. “We were dealing with a lot of money. We were dealing with vast sums.”

Also, Donoghue had bought into a brand of idealism pervasive in the industry. “There was a feeling that we were working on the front lines of a kind of financial revolution,” he said.

DL News cross-referenced passages in Donoghue’s book with select screenshots he provided to corroborate that his memoir’s assertions were backed up with evidence.

‘Whole space is rotten’

While Portent Protocol itself wasn’t a rousing success, its launch caught the eyes of other founders and investors.

Soon, Donoghue, Miles, and Archie were advising projects on token launches, crafting marketing campaigns, and designing NFT collections — in addition to a grab bag of other responsibilities.

At its height, their company expanded to about 80 people, Donoghue said.

“It was a lot of responsibility for people that age and it was cool,” he added. “We had guys who had very illustrious and long careers working for us.”

This was all during the crypto bull run of 2021 and 2022. The cash came quick, the crypto parties were raucous, and Donoghue eventually grew queasy with his role in the industry.

“Especially as time passed, projects weren’t delivering on their roadmaps, they weren’t delivering on their white papers,” he said. “It became more and more clear that a lot of that was just bluster.”

So, he decided to quit.

“If I could go back and never get in bed with the crypto bros, I would,” he writes near the end of his memoir. “After so long in the industry, I was left with one fundamental and inalienable truth: The whole space is rotten.”

Naming names

In his tell-all, Donoghue doesn’t name names. He doesn’t say who he is, what the scammiest project he worked on was, or disclose the names of projects’ investors.

Donoghue wants to call out the industry, but if everyone he has the goods on has a pseudonym, whom is he actually calling out?

“What I was really trying to do with the book was to show how the mechanics of some of these scams operate and the logistics behind it,” he said.

He later said in an email that pseudonymity was one of the main criticisms he received as he worked on the memoir.

“I find a lot of irony in that, as not only are pseudonyms incredibly common in the industry, but anonymity itself is supposedly a core tenet and founding principle of blockchain tech,” he wrote.

It’s a double standard, he said. Crypto loves “anons” when they shill tokens on social media. The industry condemns them when their criticism threatens a project’s financial viability, he argued.

Regulators, law enforcement

In private, though, Donoghue said he is naming names.

He’s speaking with advocacy groups like Americans for Financial Reform, and the Transparency Task Force; Representative Ben Waxman, a Democrat in Pennsylvania; and Tulip Siddiq, a member of the UK parliament and economic secretary to the Treasury.

He also said he was in contact with law enforcement agencies but wasn’t able to disclose which ones at the time of publication.

Americans for Financial Reform confirmed that it was in touch with Donoghue. None of the other organisations or legislators responded to requests for comment from DL News.

Death to crypto

If Donoghue’s willingness to say that the crypto industry is “rotten” hasn’t inflamed crypto diehards, then perhaps his pronouncement that crypto is dead will.

Yes, the price of Bitcoin is up more than 130% since last year, and venture capitalists seem ready to pour $12 billion into new crypto projects this year. However, Donoghue expects to see the industry move sideways, not forward.

“It’s a more subtle, more surreptitious death than just a complete implosion,” he said.

He said he believes that crypto had a chance to go mainstream in 2021 and 2022 but blew it.

“It really does feel that the industry has had its heyday, that the last cycle was its big chance at this term, ‘mass adoption,’ which keeps on getting thrown around,” he added.

For the moment, while founders continue to attend lavish conferences, VCs continue to throw tens of millions of dollars at startups, and lobbyists make crypto an election campaign issue in the US, Donoghue will continue to speak out.

And perhaps, one day, he’ll reveal his actual name.

“I’m very keen to remove the veil, as it were,” he said. “At some point.”

This story has been updated to include that the Transparency Task Force confirmed that it is in touch with Donoghue. It confirmed that after the initial publication of this story.

Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.