The Tasmanian founder of Nugget’s News has released a statement blaming his loss of millions of dollars in investor money on his drug addiction and poor mental health.
An Australian cryptocurrency social media influencer who allegedly squandered millions of dollars in investor funds has blamed his addiction to opiates and poor mental health for his actions.
In a post to Twitter on Friday, founder and Chief Executive Officer of digital media platform Nugget’s News Alex Saunders claimed that a back injury that he suffered in 2016 forced him to abuse a high-dose of opiates to such an extent that it “altered [his] decision-making”.
What is Nugget’s News and who is Alex Saunders?
In 2017, Launceston-based Alex Saunders – who was a pharmacist turned cryptocurrency trader – founded Nugget’s News.
Nugget’s News is a digital media platform which delivers “unfiltered coverage of the latest developments in cryptocurrency, housing, precious metals, commodities, stocks and other financial markets” to its subscribers, according to the company’s website.
The company boasts 142,000 subscribers on YouTube and also delivers a paid member platform.
Mr Saunders was previously on the board of Blockchain Australia and has sold himself as a “trusted voice” on Australian cryptocurrency.
When the trouble began
Mr Saunders made a pitch to the Nugget’s News Facebook Group for members to invest in an upcoming stablecoin project called decentral bank in April last year.
The role of stablecoins in the cryptocurrency arena is to maintain a steady value as they are attached to a more stable asset like the US dollar or a commodity like gold.
They provide a substitute for conservative investors who have a distaste for how volatile the cryptocurrency market can be.
According to an investigation undertaken by The Australian Financial Review, Mr Saunders promoted the decentral bank to potential investors on Facebook as a “hybrid” system.
It was supposed to use parts of decentralised finance technology already on the market to remove “the middle man” from a financial transaction (in other words, banks, brokers and exchanges) so that investors can conduct these transactions through technology.
Even though Mr Saunders provided retail investors and his friends and acquaintances with little detail about the project, many transferred funds adding up to an estimated USD $11 million (AUD $15 million) into a range of cryptocurrency wallets linked to Mr Saunders.
The Australian Financial Review’s enquiries of exchanges suggested that most of the money deposited into wallets associated with Mr Saunders was quickly transferred to the FTX platform – a cryptocurrency derivatives exchange based in the United States of America.
It was only after investors finding out that their money had not been used by Mr Saunders to establish the decentral bank that Mr Saunders was hit with numerous lawsuits from disgruntled investors.
One of these lawsuits included New Zealand man Ziv Himmelfarb who filed a statement of claim in the Victorian Supreme Court last August which requested that Mr Saunders repay $479,270.16 in losses and damages for funds that Mr Himmelfarb had allegedly invested in the decentral bank project.
Mr Saunders did not respond to Mr Himmelfarb’s statement of claim so in October last year, he received a default judgment for $491,961.41 which was for losses, interest and costs.
Mr Saunders’ statement on 22 April
After a long hiatus, Mr Saunders issued a statement to Twitter on Friday claiming that he had compensated or was in the process of compensating investors for the funds that they had tipped into the project.
“Everyone I had any kind of dealings within the crypto space has now been contacted and either repaid, or in the process of being repaid.”
Despite Mr Saunders’ claim, one user was not convinced and replied: “I haven’t been contacted about receiving refunds for the ICOs and other projects I invested in, that you shilled for self-gain. RFOX, Blockgrain/AgriChain… so on. But then again, I hardly doubt anyone else who invested in these projects has heard from you either.”
“You made the whole nuggets news community exit liquidy for yourself.. this will never be forgiven and forgotten. I want to be paid back”, another wrote.
In his Twitter post, Mr Saunders also said “I did my best to push on with my business ventures, work, social & home lifebut my mental & physical health began a downward spiral I didn’t want to acknowledge. As a pharmacist I knew the warning signs but opiates had altered my decision-making to the point I thought I knew better. I was not thinking clearly & handled things poorly”.
One Twitter user took umbridge with this line and wrote: “While I feel for anyone with mental health issues, this is just a cop out. You knew very well what you were doing to your trusting followers and their funds. Second last paragraph, straight back to shilling… things never change”.
Mr Saunders also alluded to providing “further details” about what he has been working on being provided in the future to which some users were confident that he could redeem himself.
“Give the guy a second chance, he has apologised, started paying his debts and he is regretful. Don’t cause anymore damage to his bad situation. Everybody makes mistakes but those who come back acknowledging their mistakes should be gives a second chance in life”, one wrote.
“It takes a lot to own up to things; well done. Hope you’re doing better every day. Know that there are people around the world thinking of you and hoping you’re ok”, a second user commented.
Did Mr Saunders break any laws?
Strictly speaking, no.
In Australia, many cryptocurrency and other digital assets are generally not deemed to be “financial products”. This means if you choose to buy and sell cryptocurrency on a platform, it could not be regulated by the Australian Securities and Investments Commission, and you will not be protected if you lose your money or if the platform is hacked.
The chairman of the Australian Securities and Investments Commission, Joe Longo, told The Australian Financial Review in January that his personal warning to people is “to be careful and don’t put all your money into crypto”.