CryptoGPT Made Headlines Yesterday Because… Errrr… Hmmm

If it looks like a duck and quacks like a duck… why DYOR is more than a hashtag

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When you’ve been around crypto for a while, you learn to be skeptical. Technology is neutral (despite the posturing of politicians), but people are not.

No matter how many tens of thousands of developers are out there building next-generation infrastructure layers and applications with positive intentions, some small minority will always find a way to put neutral technology to nefarious use. And others will simply be incompetent.

These things tend to come in waves, often driven by buzzword-abusing platforms masquerading as crowdfunding mechanisms. Crypto has been particularly susceptible to the machinations of the people behind these constructs: the Initial Coin Offering, the Initial Dex Offering, the DeFi rugpull, the NFT scams.

So when both CoinDesk and The Block ran a story yesterday on a project called ‘CryptoGPT,’ I was surprised. Like previous projects that have capitalized on trending terms (Squid Game Token, the innumerable and insufferable Doge clones) the project sounds scammy from its name alone.

And one look at the website for CryptoGPT reinforces that sense of deep skepticism.

Profiles of a team that appears to have no verifiable background in crypto? Check.

Lead investor is DWF Labs, which has gained a reputation in the industry for presenting over-the-counter trades as investments? Check.

Unverifiable claims about outrageous user growth that seem absurd (because, in all likelihood, they are)? Check.

Details on their “$10M raise” at a “$250 million valuation” continue to suggest that all is not what it seems at CryptoGPT. The Block reported that only $420,000 of DWF Labs’ commitment has actually been received by CryptoGPT. (Hey! A weed reference! That bodes well!)

And The Block added that the investor is also the market maker. Which suggests that industry sources are correct: DWF Labs is very likely paying for discounted unlocked tokens, rather than truly investing in a company. “DWF Labs follows the vesting schedule that’s outlined in our tokenomics. The investment is done over a 285-day period, aligning with the vesting of those tokens,” The Block quoted co-founder Dejan Erja as saying.

A prominent market maker who discussed the situation with Blockworks today said that over-the-counter trades don’t make headlines — investments do. Media interest lends legitimacy to projects that seem otherwise to be inconsequential…which is why, he believes, DWF Labs has presented these trades to crypto-focused publications as investments.

And the strategy has worked. DWF Labs has managed to get stories about itself or its investments into CoinDesk on March 20, March 21, March 23, March 29, April 2, April 5, April 10, and April 11.

Is that unusual? Not really. Unprecedented, maybe, but unusual doesn’t do the success of this strategy justice.

Back to CryptoGPT, and the website that should have tipped off anyone looking to cover their “raise.”

As Scott Melker put it in his newsletter, “The first article published failed to mention that CryptoGPT has no affiliation with ChatGPT.” Which, as he notes, may be obvious to seasoned investors, but isn’t necessarily so to newcomers to crypto.

Their app ecosystem lead is ‘Art Bagdonas’ who’s apparently led multiple European startups, despite having virtually no online presence and looking very much like an AI-generated avatar… oh, and ‘Bagdonas’ could even be a reference to the term ‘Joey Bag O’Donuts’, Italian-American slang for a gentleman carrying a few extra pounds.

The hits keep on comin’.

Liberally plastering the logos of reputable projects all over your website? Check.

Nonsense statements such as “CryptoGPT innovates the core business model of blockchains” and “Apps onboard due to new cashflow from monetizing user data upon user consent” and “CryptoGPT is the Ethereum layer-2 that is the dedicated blockchain for AI development.” Check.

CryptoGPT even includes the following sentence on its website, and if this doesn’t scare the bejeezus out of you, I don’t know what will: “All the upside, zero of the downside.”

I’m not going to spend more time on CryptoGPT because I’ve been around crypto for years, and 2017 was full of projects that looked like this, sounded like this, and included helpful charts like this.

Source: CryptoGPT website. (Yes, really.)

Blockworks doesn’t have the resources to deeply research every aspect of every project that appears in our inbox.

But we do apply a modicum of common sense to our coverage, attempting to filter out the more obvious red flags before we present a plethora of uncritical stories that culminate in covering a round that doesn’t look like a real round, led by an investor that doesn’t look like a real investor, for a project that doesn’t look like a real project.

Do your own research. It’s not just a catchphrase.

Updated 4/11/23 at 5:15pm ET to note that CoinDesk covered another DWF Labs story today.


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