Paycoin's implosion stands without parallel in crypto. I don't say that lightly—Mt. Gox, Silk Road, Sheep Marketplace, each involved sums that dwarf what vanished from Paycoin. But Paycoin is somethin
Paycoin's implosion stands without parallel in crypto. I don't say that lightly—Mt. Gox, Silk Road, Sheep Marketplace, each involved sums that dwarf what vanished from Paycoin. But Paycoin is something else.
Josh Garza, Homero Joshua Garza, CEO of GAWminers and Paycoin's creator, did what nobody else has pulled off. He built a name for himself. He destroyed it in the same motion.
The collapse of the past few days is total. Part of that comes from Garza. He's lost control of Paycoin and appears willing to watch it burn. But there's more. He spoke openly about arrangements with Russian mobsters without seeming to care about his legal standing. That carelessness suggests something deeper than failure. We're watching a psychological breakdown.
Garza built a cult around himself so strong that some followers didn't abandon ship until the final second. You could blame fake accounts—the leaked emails show Garza paid for those—but plenty spent real money on real conviction. Someone dropped $20 million into Paycoin at one point. Malfeasance runs through everything Paycoin touched, so the figure might be inflated, but that money came from somewhere.
Crypto veterans spotted the con fast. Anyone promising twenty dollars for four is stealing. Others jumped in anyway. Posts in the Wall Street Journal and New York Times fed the dream. People threw their life savings at something they didn't understand, hoping insiders would shepherd them toward the next digital boom.
When that didn't pan out, any rational actor would have sold. At one dollar, fifty cents, twenty cents. Selling now at eight or eleven cents beats watching it trade in satoshis instead of pennies. But a chunk of followers convinced themselves that the whole internet had it out for Garza. Who sells when the price hits bottom?
What happened last week set this apart. After the broken promises, after the leaked emails exposing corruption, after news of the SEC investigation, after rumors Garza had fled the country, it was his meltdown that mattered. He'd snapped. That's not speculation—it's what occurred.
With almost every follower gone and his coin collapsing, Paycoin's leadership turned on him. Then they fought each other over the wreckage. That broke Garza. He posted a Skype chat with Phil Vadala, aka FastXPY. Vadala had been the face of FastXPY, a Paycoin exchange service, but leaked emails showed Garza funded the whole operation. Vadala grabbed some Prime Controllers. Garza's response was posting a Skype conversation tying himself to organized crime elements and violence.
He later claimed it was a warning to Vadala. Anyone reading it sees the threats underneath.
I thought his account got hacked. His Twitter had been breached after the email leak. So I asked him directly: did you post this?
He didn't deny it. He owned it. And he answered some of my questions.
Once I started throwing his own contradictions back at him, he shut down. He said he'd have to consult legal and authorities. When I asked for his lawyer's number, he refused. When I asked which authorities, he said nothing.
Garza claims he gets death threats. Maybe. But he earned them. No one steals twenty million dollars without expecting blowback. If the threats are real, they should be condemned. But Garza had to see this coming.
Here is the interview. I cleaned up his spelling and grammar, the same treatment I give other subjects.
The format is unusual. We covered multiple subjects across emails. I've reorganized by topic so each thread runs start to finish.
My opening question was straightforward: did you post that Skype chat?
Ian DeMartino: I just want to confirm that you are still in control of your Hashtalk.ch account? Anything you want to tell me about the Prime Controller re: Ownership and Phill and everything else? Thanks.
Josh Garza: If you want to chat in the morning, that's fine.
Ian DeMartino: I just want to confirm that the conversation posted by GAWCEO was indeed you and that the contents of the conversation were factual?
[Unanswered]
Ian DeMartino: Also, I need you to confirm or deny the accusations made in this post: https://hashtalk.ch/topic/37457/prime-controller-scraping-to-cryptsy-addresses
Josh Garza: They are not accurate.
Josh Garza: Nice reporting btw, good job keeping it balanced, leaving out all the threats made against me, etc. I can tell you will go far in your line of work!
Ian DeMartino: Josh, I think you misunderstand what happened last night. You didn't blow the whistle on anyone but yourself. You had a breakdown online in front of the world. It was worse than Stephon Marbury eating Vaseline on camera. And you convinced yourself people would back you. When you're posting that you need Prime Controllers to make criminal investors whole while everyone else is staring at coins below ten cents, no one sympathizes. You are the villain here, and nearly everyone sees it. You got involved with organized crime elements. That you're being threatened after scamming millions is no surprise. It would be a bigger shock if you weren't being threatened. So the story isn't about threats against you or Vadala. The story is about you having this breakdown, admitting to crimes, then committing more. I never thought you'd be dumb enough to post something like that. What made you think it would help XPY, GAW, or yourself in any way? That's what I want to know. Along with: How much did the Russian involved in organized crime invest, and how much do you and Vadala owe him? Are you prioritizing these criminal early investors over regular Paycoin investors? How often have you promised Prime Controllers to investors to make them whole? You can say what you want about my career, but at least I won't be stuck in an 8x12 cement room anytime soon. If you have something that proves your innocence, post it. Thanks, -Ian
Josh Garza: I get random calls, texts and emails making threats all the time. I am not involved in any organization, have spoken to, or been reached out to. The best I can do is a reverse lookup on the texts. I started getting anonymous threatening messages. I felt it was important I warn Phil. He asked me to speak to them on his behalf. I told him I was not comfortable doing that. Innocence? I have already spoken to the authorities, there is nothing wrong with warning others if threats have been made against them. Anything else?
Ian DeMartino: Same questions, Josh. You didn't answer any of them: How much did the Russian involved in organized crime invest, and how much do you and Vadala owe him? Are you prioritizing these criminal early investors over regular Paycoin investors? How often have you promised Prime Controllers to investors to make them whole? I'll add two more: Are the Middle Eastern investor and Russian investor actually real, or did you fabricate them? How many other investors are you directly involved with that you know to be involved in organized crime?
How Involved Are Organized Crime Elements?
Ian DeMartino: How much did the Russian involved in organized crime invest, and how much do you and Vadala owe him?
Josh Garza: I can't tell you. I just know the threats I have gotten.
Ian DeMartino: So you never had contact with them until threats came in? What about the so-called "Brian" in the conversation? I didn't ask about threats. I asked what is owed to what you called an early investor.
Josh Garza: Since the majority of the threats I received were from people pooling money into one person and that was the person we dealt with—no, I had never heard from them before.
Ian DeMartino: I don't understand. You stated you worked with "Brian" and that Vadala worked with Brian. Were you working with them or not?
[Unanswered]
Ian DeMartino: Are you prioritizing these criminal early investors over regular Paycoin investors?
Josh Garza: Nope, these arrangements were done a while ago.
Ian DeMartino: How often have you promised Prime Controllers to investors to make them whole?
Josh Garza: No one has ever gotten anything for free. We have certainly looked to use XPY to promote business investors are looking to back paycoin companies. That is one of the purposes of the primes.
Ian DeMartino: How many other investors are you directly involved with that you know to be involved in organized crime?
Josh Garza: I don't think I ever said I knew anyone that was involved in organized crime. So the answer is none. It's based on the communication I have gotten and continue to get. Should I receive another threat I will document it, warn the person if I have to, and report it as always.
Ian DeMartino: Well, you stated that "one is the head of a huge Russian family." What did you mean by that? Do you not see how that would be construed by most reasonable people to imply involvement in organized crime?
Josh Garza: One of the anonymous threats I got stated you better do X as I am the head of bla bla.
Ian DeMartino: You state "I was saving those coins to make some very large investors whole and you took that from them." If you were saving coins for very large investors, how would you know they were needed without previous contact with them? You then state that you gave them Vadala's information and tell him to "keep his family close." So, when did you realize that these people were a threat to Vadala's family and how long after that did you continue to communicate with them? You also state that "after I told them I would give them my coins, they told me what they are going to do" to Vadala. That doesn't seem possible without you having significant contact with them. Surely you didn't give up all of your remaining coins because of an anonymous threat? Wouldn't you check to make sure they were real investors?
[Declined to answer]
Ian DeMartino: Now that you know they have people who are willing to use violence, are you still planning to give them Prime Controllers?
Josh Garza: Since I can not tie a particular person to a particular threat, they were all anonymous. So I would not have a way of knowing.
Ian DeMartino: But you stated "I was giving them 65% and the other 35% to the Russians" and then right after stated "they were getting the coins and the controllers." That seems to contradict what you say above, doesn't it? If the threats were anonymous, how are you giving them particular amounts of Paycoin and how are you giving them Prime Controllers? Either you are sending them to the Paycoin or Bitcoin address they demand you send it to, or you aren't. Later, when Vadala asked you if you could call them off, you state "I already vouched for you and said you were a safe place to keep the coins." If you had no previous communication with them, how could you have vouched for Vadala?
[Unanswered]
On Whether Josh Was Warning or Threatening Phil Vadala
Ian DeMartino: You state in the conversation with Phil, and I quote, "I am providing these investors any info I can on you." That is present tense and seems to indicate that you were, at the time of the conversation, still assisting these men in finding Vadala.
Josh Garza: These were completely different people than the ones that made any threats. That comment was about customers that have asked for the information of the person holding the coins, so they can press legal charges.
Ian DeMartino: There appears to be nothing in the chat to indicate you have gone from talking about the investors who had threatened you and Vadala to other investors. In any case, you had stated earlier that you were giving 100% to the investors who made threats—65% to the "Middle Eastern" investor and 35% to the Russian investor—so the plan, according to your own words, was to give them the coins. So, given that, how would legitimate investors hope to get their coins back, when your intention was to give the coins to the Middle Eastern and Russian investors that had issued threats?
[No answer]
On Whether He Will Prove He Is Still in the United States
Ian DeMartino: Are you still in America? Will you prove it by taking a picture somewhere public with today's newspaper? Will you do anything at all to prove you are where you say you are?
Josh Garza: It's creepy.
Ian DeMartino: Considering that you had an estate sale before your vacation and you admitted in the conversation that you were in Dubai at some point—although you denied it on the forums previously—I do not think it is an unreasonable request for the people who entrusted you with millions of dollars and have so far seen their investment evaporate, to simply ask you prove you are in the country. You have hundreds of pictures of yourself online. One more that proves you are in the same legal jurisdiction as the one your company operates in would go a long way and would take virtually no work. Hell, if you want, I can look at the picture to verify it and simply not publish it.
[Refused to answer]
Garza Asks Why I Don't Report His Side
Josh Garza: While it does not surprise, I notice you have not asked one question about the actual theft. They have been reported and we are seeking out further legal guidance.
Ian DeMartino: Honestly, no one cares anymore about the inner bickering of the Paycoin top brass. Everyone in crypto knows the ship is sinking and the rats are eating each other. I don't honestly care and I don't think our readers care, who owns the right to these controllers, you or Vadala. The reason being: No reasonable cryptocurrency would have anything like a hyper staking wallet at 100% or 350%. The plan seems to be to give them to violent criminals anyway. Please correct me if I am wrong in that?
Josh Garza: The last few weeks was when I first got anonymous threats of this nature. So I would say that's incorrect.
Ian DeMartino: Again, you state that "they were getting the coins and the controllers." That seems to indicate that you want to give them these controllers once Vadala hands them over. How is that incorrect?
[Refused to answer]
Then Garza sent this:
Josh Garza: Since these questions are getting outside of my comfort zone, I am going to pass them along to legal and the authorities we are working with to see what they advise me to answer, as this is an open case.
I asked for his legal department's contact information. He said they work on their own time and wouldn't give me anything. Days went by. Nothing. I asked which authorities he was working with. No response. I sent emails to his other known addresses. They bounced.
I doubt anyone left believes Garza acted with honorable intentions. The honor program, the dozens of other failures—people discuss them only in anger. The remaining question is what to do with the people who followed him. Most have moved on. A few cling to Paycoin, cursing Garza's name. Their posts sound like the words of the desperate.
If everyone in the community wanted to help, they couldn't. They lack the technical skill or the will to compete with fourth-tier currencies. It's finished. The price can only drop.
Get out now. Short term, medium term, long term—all of it looks bleak. Even coins copying Paycoin are a better bet. Garza won't provide the smallest piece of proof that he's in the country. His supporters abandoned him. His coin approaches worthlessness. Almost every email account and contact point is shut down. The SEC is moving. If I were a man with a reason to vanish, and Garza seems like one, I'd be packing. The SEC should move fast. Paycoin is done. Let it be. Don't buy it when it gets cheap. Let Garza and the Foundation and everyone else counting on infinite money printing machines have it to themselves. Stop sending them money.
