Duy, Author at SynQ • Page 2 of 2

Author: duy

Corruption, Crypto and Cartels, Part I

For the next few weeks we will be releasing the first investigative piece from SynQ I/O. We will be detailing this story with all of what we know in multiple releases with public sources included.  Given the nature of this story, we will be adding our own opinions, conjecture, and potential implications along the way in separate releases so we can keep the facts and opinions clearly separated.

Part I

Nobody would be surprised if cryptocurrencies has been used for nefarious means, the same could be said for any measure of currency that exists. But what if you found out the industry has been systematically exploited to blatantly launder cartel cocaine money right underneath our noses (pun intended)?

After all, the Devil’s greatest trick is convincing the populace he doesn’t exist.

CryptoCapital – A Shady History

Mathias Grønnebæk, an early ETH developer, was one of the earliest people who noticed that a number of crypto companies are connected to a remote company. CryptoCapital, a fiat banking platform, is responsible as the banking/payment processor for a number of platforms, namely Decentralized Capital, Bitfinex, QuadrigaCX, CEX.io, etc.

Yet they are relatively anonymous, with only a few known details of significance; such as the fact that they are a Switzerland-based company and headquartered out of Panama.

Anonymity is not a crime, but for a company with smudgy associations, it’s a huge red flag, especially when a number of associated companies shares similar sketchy traits. Where there is smoke, there is usually fire. [1]

CryptoCapital’s conception can be traced back to Reddit user /u/Bitfan2013, who has divulged a few key details throughout his post history. It is known that the user is from a family of bankers, and were involved with the Panamanian acquisition of Havelock 5 years ago as well.

Havelock Investments, was the investment platform used to IPO Crypto Financial, the original name of CryptoCapital. Once a popular choice for users to invest in crypto projects, it has since gained a reputation for associations to security fraudulent projects. It is rather curious that a company has to circle around and buy out it’s originating platform, perhaps as an attempt to control sensitive information.

[2] The trail goes further, as CryptoCapital is also linked to a Polish company, Crypto Sp. Z.O.O. This company secured and provided a banking account for both Bitfinex and CEX.io with a Polish bank, Bank Spółdzielczy w Skierniewicach, which translates to Cooperative Bank in Skierniewice.

For scale reference, this smaller sized bank only had assets of around $13 million in 2011, making estimated profits of ~$5 million. Coincidentally, it’s also the equivalent of what Bitfinex handles in around one hour.

Crypto Sp. Z.O.O’s ownership can be traced back to CryptoCapital , and the director of both Crypto Sp. Z.O.O and CryptoCapital is one Ivan Manuel Molina Lee, who is thought to be an accountant, or a consultant. This individual is thought to be a “shell” CEO for hire, a scapegoat for those who would want to mask their identity.

While the working the history of the company goes further, details are surfacing as evidence of money laundering and nefarious activities have been coordinated by the individuals behind CryptoCapital.

Some of our questions

  • Why would a Swiss based company be headquarter in Panama?,
  • Why the need for multiple ‘shell’ corporations
  • Why so anonymous?

Over the next couple of weeks, we’ll be publishing our findings when looking into the answers of these questions, and what we’ve found.


Pirate Chain (ARRR)

Komodo was undoubtedly one of the most underrated cryptocurrencies of 2018, even though fundamentally it was one of the soundest projects. The security, privacy advantages and impressive 10k tx/s offered by the KMD platform went largely unnoticed by the market. However, Komodo wasn’t entirely ignored. Within the community and discussions present on the KMD platform were a handful of capable individuals that eventually conceptualized a new and better cryptocurrency, ARRR.


ARRR, or also known as Pirate, is an independent blockchain built as an asset chain to the KMD platform. Designed as a combination of ZEC and XMR, Pirate looks to improve the privacy and security features of XMR whilst fixing the fungibility problem of ZEC through the enforcement of forced shield-transactions.

The issue is that transactions from shielded balances to transparent balances are often the cause of decreased fungibility, as it is possible to identify coin mixing patterns. Concerns are also had about coins being “tainted” by affiliations to past transactions. The solution is to completely prevent this from happening.

This means that Pirate is a forced shield-transactions (z-transactions) only blockchain, making transparent transactions impossible on the Pirate blockchain. The ultimate objective of the project is to be the next-gen privacy cryptocurrency with completely anonymous transactions, except for mining rewards and notary node logs.

As an asset chain of the KMD ecosystem, Pirate also inherits much of Komodo’s features such as Zero Knowledge Privacy and delayed Proof-of-Work (dPoW). Also included, is the ability to backup asset chain records into the Komodo main chain and record them on as a hash on Bitcoin. This effectively enables the asset chain’s records to be then included in the backup that is pushed into the protective hash rate of the main Proof-of-Work (PoW) blockchain, Bitcoin.

This is made possible due to KMD being a fork of ZEC, which was a fork of BTC. In this way, the asset chain records can be protected by the largest hash-rate available on one blockchain. To compromise an asset chain that is employing Komodo’s dPoW protocol, the attacker would have to destroy all existing copies of the asset chain, all copies of the KMD main chain, and the accompanying PoW network (Bitcoin) into which the dPoW backups are inserted.

A visualized schematic of dPoW protocol.

Komodo’s security service is performed by notary nodes, chosen through a stake-weighted vote. These notary nodes have the option to switch notarization to another PoW network besides BTC if needed. For an example, in the event where worldwide miners’ hashing power changes to that of another PoW network, or the cost of notarization becomes unsustainable.
In addition, since KMD derive from ZEC and BTC, all features included in the Bitcoin protocol and Zcash parameters are also available on ARRR. This includes Zk-SNARKS, the top-tier standard for blockchain privacy at this time.

Even for individuals with the utmost priority for privacy will require the need for receipts to verify transactions, therefore Pirate will utilize view keys for this purpose. With view keys, one can prove they paid a certain amount of coins to a certain address. A node processing an incoming viewing key for a z-address can view all past transactions received by that address, as well as all future transactions sent to it. The viewing party cannot spend any funds from the address.


According to information included in the Pirate whitepaper, current block-time is 60 seconds, using the Equihash Proof-of-Work mining algorithm. The maximum supply is approximately 200 million ARRR, with a speed of 6-26 TPS and a transaction fee of 0.0001 ARRR. 

The emission schedule for ARRR coin.

Included is also an emission schedule of the Pirate cryptocurrency, halving in block rewards every 388885 blocks, equating to an estimated 270 days per reward period.


Though early in its infancy, the Pirate team has been able to facilitate the use of z-address deposits and withdrawals with the exchange DigitalPrice and successfully launched coin trading at the end of October 2018. And because it is an KMD integration, Sapling is planned for mid-December 2018, enabling future development of Point-of-Sale (PoS) integration, hardware wallet, Web Shop Plugins, and mobile wallets through Simple Payment Verification (zSPV). The development of a Pirate Foundation is also planned for Q1 2019, with hardware wallet integrations being estimated for Q3 2019.

The Pirate team has already set themselves apart from the existing competitors due to it’s open-sourced, community approach and the progress they’ve achieved thus far. For a market with a waning trust in the current cryptocurrency teams, Pirate may be the fresh breath of air private-centric consumers are looking for. The pioneers of ARRR are enthusiastic and looking to continue to contribute and/or improve the project at a pace not seen by very many other altcoin projects.