Jerry Ji Guo has worn a lot of hats for a 31-year-old. In 2008 he was a freelance journalist with a regular gig at Newsweek and bylines in The New York Times and The Washington Post.
His journalism career was cut short two years later when he was caught using his credentials to scam free merchandise and international travel from ersatz reporting subjects. He bounced right into New York’s “Silicon Alley” tech startup community, scoring YCombinator seed funding for a group-dating service called Grouper that lasted eight months.
In the years since, according to his LinkedIn profile, the Chinese-American Yale graduate has been owner and head chef of a burger bar in Beijing and founded a “growth hacking” marketing firm in Atlanta. Last year he finally landed in the field he seemed born to occupy, cryptocurrency, launching a $2 million ICO for a content-sharing platform he claimed had deals in place with American Idol and The Voice.
Now Guo is on a new adventure, potentially his last for the next 63 to 78 months. On Nov. 9, FBI agents in Puerto Rico arrested the self-described “serial blockchain entrepreneur” on wire-fraud charges for allegedly stealing over $3.5 million worth of cryptocurrency from startups that hired him as a consultant.
On Friday a federal judge in San Juan ordered Guo’s transfer to San Jose, California, to face the eight-count indictment, which carries a sentence of up to 20 years in prison by statute, and at least five years, three months under federal sentencing guidelines.
At the center of the case is Guo’s career in the fast money world of initial coin offerings. An ICO is a blockchain-based fundraising strategy in which a company drums up capital by minting and selling digital tokens directly to the public. The ICO market is wild and unpoliced, but it’s also lucrative and growing. ICOs in the first five months of 2018 alone raised more than $13.7 billion for 537 companies, according to PWC.
Lots of startups would love a piece of that action, and last year Guo incorporated as pressICO and began promoting himself as an expert with an impressive history of cryptocoin rainmaking. He asked new clients to deposit a retainer for his services in an escrowed Bitcoin or Ethereum wallet at Palo Alto-based BitGo.
At the same time he was promoting an ICO of his own called ICST, or Individual Content and Skill Token, a would-be content sharing platform that would help undiscovered musicians achieve fame and fortune with blockchain technology. A slick video promoting the investment stars Guo, wearing a rakish suit and with bleach-blond hair, sitting on the deck of a yacht moored in Singapore. “Imagine a future where anyone could be a content creator and be able to monetize their content,” he urged.
Guo claimed ICST had partnerships with The Voice and American Idol (the video is titled “Creators of American Idol’s crypto platform tour Asia”), and he further stoked interest with an online talent contest called ICST Idol that ran before and during the ICO in June. The contest offered 100,000 ICST tokens—“worth $5,000”—to the winner. About 25 people entered. It’s not clear who won the talent show, but Guo won the day. When the ICO closed it had pulled in $2.5 million worth of Ethereum in 17 days.
The Daily Beast reached out to Fremantle, the producers of American Idol, and ABC, which airs the show. Neither responded.
ICST went silent after the ICO, and The Daily Beast was unable to reach other principals in the venture except for one. Vaibhav Namburi was listed as ICST’s CTO. “Ah weird,” said Namburi. “I helped them in their technical direction, as a technical adviser, for a few weeks and that was about it.” Namburi said he’s had no contact with ICST in six months.
On August 19 Guo transferred about $300,000 worth of Ethereum from the ICST BitGo fund into his personal wallet, according to prosecutors. And that wasn’t his only transfer that day.
Over the course of a few hours Guo systematically looted the supposedly escrowed BitGo wallets he’d set up with his clients, according to an affidavit filed by Mark Matulich, a supervisory special agent in the FBI’s Complex Financial Crimes Unit.
The transfers came as a surprise to Guo’s clients, who’d believed “based upon Guo's representations that he would not be able to transfer the cryptocurrency without their knowledge and consent because of BitGo's multi-signature solution to ensure security of funds,” wrote Matulich.
Guo allegedly circumvented the two-signature restriction by using backup keys BitGo provided when he opened the wallets.
The victims included Penta Global and Rate3, and the alleged haul in Bitcoin and Ethereum amounted to at least $3.5 million. “GUO provided little to none of the services promised to clients within the contract period,” Matulich wrote.
When the Bureau investigated Guo’s resume they found that it was packed with putative clients who’d never heard of Guo, much less hired him. The crown jewel of his bio was a company called Polymath, where he claimed to have overseen an impressive $100 million ICO. This too was a lie, according to Matulich.
“Polymath ended its relationship with Guo after about a month and a half because Guo did not actually do anything,” he wrote. Co-founder Chris Housser told the agent that Guo was also suspected of “generating what they believed were fake Facebook likes for Polymath, thus defrauding Polymath out of approximately $50,000 in up-front fees.”
“Polymath attempted to contact Guo to ask him to remove any and all references to Polymath from the pressICO website, but Guo did not respond,” wrote Matulich.
Rip-offs and cons are the rule, not the exception, in ICOs, said Austin Hill, a venture capitalist and angel investor at Brudder Ventures.
“When it comes to ICOs and retail investors, I’d say close to 98 percent of it I would consider scams,” said Hill in an interview with The Daily Beast. “Some of it is out-and-out illegal and the people know it, but an equal amount are well-intentioned people who believe in what they are doing, but like some of the crazy dotcom excesses—Pets.Com—failed on delivery due to incompetence and greed.”
“In most cases you don’t have equity, have no shareholder rights. There have been a bunch of take-the-money-and-run cases,” said Hill, a blockchain expert. “There is next to no governance or control.”
That anarchism is apparent in Guo’s case. Guo apparently went unchallenged in the ICO world, despite receiving no small amount of attention for his earlier scams as a journalist.
Guo started writing for Newsweek in 2008 after reportedly getting the attention of then-editor Fareed Zakaria with his earlier work. He had a knack for turning routine travel reporting into works of gonzo genius, such as his dispatch from North Korea in which he detailed his “partying in the worst-dressed state in the Axis of Evil.”
At Newsweek, Guo wrote for a travel section called The Good Life, and he was still filing stories during Newsweek’s merger with The Daily Beast. Shortly after the new Beast management let him go, a flood of complaints reportedly poured in from companies who’d given him free travel junkets to places like Thailand, or merchandise like fancy Gore-Tex gloves and an expensive watch.
After his departure from Newsweek, Guo went on to pose as a journalist for The Atlantic to score an interview with an executive at an online dating site. He later admitted he was gathering intelligence for his first startup, Grouper.
When stories about Guo’s misadventures began to appear, his former editor at an AOL travel site, Grant Martin, came forward to recount his own experience with Guo. In 2008, AOL discovered the young freelancer was gaming the company’s content management system to get double-paid for his old blog posts. Martin fired him.
"That same week we found out that he was trying to farm out blog posts for our site for $5 each on ELance," Martin later wrote.