Why Crypto Makers Want to Stay Anonymous

Paris (AFP)- The two lifelong friends from Florida never sought to be noticed, but then they built a multi-million dollar empire selling digital art and people wanted to know who they were.

Under the pseudonyms “Gargamel” and “Gordon Goner”, they created the “Bored Ape Yacht Club”, a collection of 10,000 cartoon monkeys with various hairstyles and outfits.

They sell these images as digital tokens (NFTs), and it’s now hard to get one for less than $280,000, thanks in part to endorsements from celebrities like Paris Hilton to Serena Williams.

American outlet BuzzFeed did some research earlier this month and uncovered their true identities, sparking anger among fans on social media.

“Doxing is crazy, it puts people at risk,” wrote one Twitter user, using internet slang to identify someone against their will.

The story has refocused attention on anonymity in the world of cryptocurrencies.

While the creators of the “Bored Apes” may like to hide in the world of crypto, they own a company called Yuga Labs, so they must follow all the usual rules for corporate filings, including providing named beneficiaries.

“Using a pseudonym does not make you anonymous,” says Alexander Stachtenko, cryptocurrency expert for KPMG.

Risk of theft

It’s unclear why the founders of Bored Apes wanted to remain anonymous – they had given several interviews under their pseudonyms.

Critics say anyone making money from NFTs would be wise to seek anonymity, because what they’re selling isn’t worth anything.

Fans, however, rejoice to be part of a community where NFT ownership is often a gateway to games and other perks.

Either way, anyone who gets seriously rich in this field has obvious reasons to stay under the radar.

“I don’t need the crypto audience to know who I am, what I look like, where I come from,” says one creator who calls himself “Owl of Moistness.”

“I don’t want to run the risk of people stealing from me or hurting my family.”

He co-founded Yield Guild Games, a startup focused on NFT video games in the Philippines, where the NFT craze has spread among the people.

He points out that the technology that underpins cryptocurrencies and NFTs – the blockchain – is a ledger where anyone can track transactions.

Thus, linking his cryptographic and real identities would allow anyone to discover his wealth.

But the bigger a project gets, the more complicated it is to remain unknown.

“It gets harder if you expand your team,” says Soona Amhaz of Volt Capital, a cryptocurrency-focused fund.

“The Fairest Way”

One of the preferred ways to stay anonymous in the crypto world is to form a DAO (decentralized autonomous organization).

DAOs allow people to collaborate and act like a business would, essentially acting as shareholders, but without formal legal status or named owners.

Anyone extracting profits would still have to pay taxes, but linking real-world individuals to these entities is a much trickier task than, say, searching public records to reveal the founders of Bored Apes.

This model has served anonymous entrepreneurs well, from “Zeus”, the creator of the Olympus cryptocurrency, to “Code Monkey” who set up the Port Finance cryptocurrency.

However, many people use the expectation of anonymity for nefarious purposes.

DAOs and other decentralized entities are particularly vulnerable to fraud, according to analyst firm Chainalysis.

AnubisDAO was one such entity, created by pseudonymous programmers last October with little more than a Twitter account and logo.

It disappeared less than a day after its launch, taking away nearly $60 million in investor money, according to Chainalysis.

And it seems the tide is turning against anonymity in the crypto world.

Most major cryptocurrency exchanges now require identity checks to combat this type of fraud.

But Soona Amhaz thinks there are still positives to the DAO idea, arguing that they are controlled by the blockchain.

Anyone can trace the transactions of a particular DAO and know if they are legitimate or suspicious.

There is also another major benefit, she says.

“If you’re pseudonymous, it doesn’t matter if you didn’t go to the right school,” she says.

“It’s just your work that gets evaluated and your reputation. And that’s really one of the fairest ways to evaluate someone.”

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