February 2020 was a big month for Ormeus Global. The cryptocurrency company was worth millions of
dollars, and they wanted the world to know it. That same month, the company posted a photo of
a glitzy Times Square ad on Twitter. Ormeus investors were ecstatic,
and anyone who saw the ad most likely had no clue about how Ormeus worked.
In truth, only two people knew the answer: John Barksdale and his sister
Tina Barksdale. Ormeus was a giant scam and not worth anywhere near $250 million.
The Barksdale siblings loved traveling. Their Facebook and Instagram pages are filled with
selfies in London, the Maldives, Singapore, and China. As the photos show, they typically
traveled together or with another sibling. These trips were long and often cost the siblings
thousands of dollars. A 7-day trip to Singapore costs a little over $3,000. And a week-long trip
to London costs around $3,500 for two people. China costs around $2,000 a week. And that's
IF you google "cheapest trip to X." We can safely assume the Barksdales were spending way more.
A post on John's Facebook profile claims he'd been to 61 countries in three years.
His ultimate goal was to touch down in 100 countries before the five-year mark.
But traveling expenses weren't that big a deal to a couple of successful crypto programmers.
Social media posts showed the Barksdale's were smart, cultured people who supposedly
created the most brilliant crypto mining operation the world had ever seen.
John Barksdale started selling Ormeus coins in 2017. Cryptocurrencies like
Bitcoin reached new all-time highs, while smaller coins gained traction. Society,
or those tech-savvy enough to understand, accepted crypto into mainstream investing.
They heard stories about a few lucky investors making fortunes after entering
the crypto market. And, of those not-so-tech-savvy individuals, the boldest risk-takers were drawn to
crypto like prospectors to the gold rush. John was aware of this new reality. He founded
Ormeus Global alongside the mining operation to serve as the marketing entity. Due to its purpose,
Ormeus Global was arguably more important than the actual mining operation. Good marketing was
more beneficial in the grand scheme of things than making a sustainable crypto mining system.
The Barksdale siblings wanted to create a hype around Ormeus coin,
the likes of which the world had never seen. In the investing world, hype is a massive driver
of capital. New, excited investors buy assets like stocks or crypto
because early investors bought in first. It's the same social force that leads to trends
and viral videos. However, in crypto's case, large amounts of money are usually involved.
And if the hype suddenly disappears, so does the money. That's why John needed a
gimmick to catch people's attention and get them excited while also sounding safe.
He decided to advertise Ormeus as a "new digital money system." The system
would run on a "fully audited industrial crypto mining operation," that's also a
stable coin tethered to a fiat currency. If you're a conservative crypto enthusiast,
all this sounds great. If you're not an enthusiast, then you may be a bit confused.
Crypto mining is pretty simple to grasp once you shed the lingo. The process of mining
crypto varies from currency to currency. But generally, the gist is the same.
Crypto can't be printed like paper money. There's no government, CEO, or team of programmers
creating new coins on a digital printer. Take Bitcoin, for example. Bitcoin is a currency
everyone is familiar with, even those who don't know anything about crypto. Bitcoin is
generated by miners, who use high-powered computers to verify transactions on the
server. In exchange for their computational power, miners receive Bitcoin if they're
the first to verify the transaction. These transactions are essentially complex
digital puzzles that pop up every time other Bitcoins already in circulation are bought or
spent. Put another way, Bitcoin miners serve as auditors who help mint new coins. No one would be
able to buy or sell Bitcoin without them. There are some downsides to mining Bitcoin,
though. Miners get Bitcoin when their computers solve the puzzle first, but the computational
power required to mine even a single coin is barely worth it for some people.
For example, Bitcoin takes 53 days worth of power for the average American household to mine.
It also takes a lot of time to mine crypto, especially Bitcoin, which can take months to mine.
You also have to really know your computers and be willing to spend money on expensive equipment.
These downsides and barriers keep many people from mining Bitcoin. John wanted to remove those
deterrents. He wanted to offer investors a better, more lucrative mining system that
didn't require much coding to make money. Ormeus, in a nutshell, is a building full of
giant high-powered computers designed to mine the most valuable cryptocurrencies using an
industrial mining system. If you're unfamiliar, an industrial mining system is basically a facility
that mines crypto on a massive scale. Think of industrial mining as a 100-acre crypto farm.
Industrial mining isn't exactly innovative, however. For example, China has enough mining
farms to produce 65% of the world's Bitcoin. John didn't want to compete with China,
though. He wanted to create a superior mining operation that benefited consumers,
or at least appeared to do so. He and Tina put on roadshows to explain
how Ormeus worked and how easily their coin could make money. John also advertised on social media,
claiming that Ormeus was going to be one of the most extensive mining operations in the world.
John and Tina backed up their fantastical claims with more specific claims about
how their state-of-the-art system worked. They particularly loved talking about their
subscription offers and referral services. Ormeus had two primary subscription packages,
one for not-so-serious investors and another for serious investors. Both were expensive.
The bronze package, for not-so-serious investors, was $999. The Platinum Founders
package, the most prestigious subscription deal, cost a much heftier $250,000.
However, the value you received in return for your subscription was well worth the fee,
at least according to John and Tina. Much of that value was centered around the trading bot.
The bot was designed to do what every investor wants: maximize profits. John's bot would,
in theory, pick the most valuable currencies that day, which would—you guessed it—maximize
profits. The bot, they claimed, could also trade currencies on crypto exchanges for a 160%
return, a mammoth-sized profit, even by crypto standards.
Over their 4-year run, John constantly announced updates on the operation's monthly revenue.
He threw around some extraordinarily high sums, like $5 million per month.
At its peak, John claimed Ormeus was bringing in $8 million per month in revenue.
To show the investors how successful the mining operation was, John developed the
Ormeus reserve. The reserve was the total sum of crypto that Ormeus had mined so
far. Investors, and potential investors, could see how the mine was growing.
The reserve was designed to create a sense of satisfaction in the current investor and FOMO
in the potential investor. It was designed to stabilize the cryptocurrencies collected
inside the reserve. The stabilizer was dubbed "the vault" on Ormeus's white paper. John was
a big advocate for stable coins, whose value is matched to a government-regulated currency,
like the U.S Dollar, for example. Conservative crypto investors like
stable coins because they provide the benefits of crypto with the innate stability of the dollar.
Ormeus was that and more. They claimed that 40% of the reserve revenue was reinvested back into the
company. The reinvestment money would go towards buying more mining equipment, which, in turn,
would help increase the size of the reserve. Everything about the reserve sounded too good
to be true by design. And that design worked perfectly.
John and Tina used this marketing strategy to lure in thousands of investors and subscribers
to Ormeus and claimed the funds of nearly 20,000 investors. Of course,
none of these investors knew until they'd been scammed until John and Tina were arrested.
2019 was a rough year for John. Ormeus had been mining for two years now and didn't have much to
show for it. John's operation had only generated $3 million that year, not even half of the
monthly revenue they claimed to be producing. According to prosecutors, John and Tina eventually
decided their groundbreaking mining system wasn't working and abandoned it. Instead,
they turned their full attention to recruiting more investors.
There was one problem, though: None of the investors or potential investors knew the mining
system wasn't operational. John never told anyone and continued marketing Ormeus as usual.
A Times Square ad, which claimed the reserve had just reached the $250 million mark, circulated
on their website and social media pages. From the outside, all seemed well with Ormeus.
After 2019, the reserve became much more than a marketing ploy; it was a mask. John wanted to hide
the failure of his revolutionary mining operation while maintaining their lavish lifestyle, which
was getting boujee-r and boujee-r every month. To keep up, the savvy siblings had another gimmick
in their arsenal: multi-level marketing, aka "let's run a pyramid scheme." They offered
existing subscribers a 7-20% commission on the subscription fees of any new investor,
giving existing subscribers a big incentive to find more Ormeus customers.
Offerings like the new subscriber commission helped pay for John and Tina's traveling expenses.
By 2019, they were taking more trips than ever. The indictment filed against them
estimates that they'd spent millions going to 20 different countries per year for three years.
They'd also bought expensive homes. Tina owned houses in New York, Washington DC, and Ohio. John,
meanwhile, lived in a nice house in Thailand. These expenses relied on the $124 million the
siblings stole from their subscribers, who, in 2021, still believed Ormeus was worth $250 mil.
In reality, it was worth $52 million. The $250 million sum that graced Times Square
in 2020 was fake. The reserve was actually an image of someone else's Bitcoin wallet.
Investigators eventually figured it out and arrested John and Tina. They found Tina in
Hong Kong, which housed Ormeus's headquarters. Then they caught up with John in Thailand.
Authorities sent John to New York, where he's currently facing up to 65 years in prison for
his many criminal charges, including one count of securities fraud, one count of wire fraud, and one
count of conspiracy to commit wire fraud. As of May, 2022, John is 40-years-old. If he
gets the maximum sentence, he may never get to travel again. As for Tina, we'll have to wait
and see where her legal road takes her. The Barksdale scam, while bizarre, is just
another crypto scheme in the eyes of the world's governments. In 2021 alone, victims lost an
estimated whopping $14 billion dollars to crypto scams like Ormeus. The enormous figure has finally
caught the attention of western politicians. In March of 2022, President Biden signed an
executive order that ensures order and responsibilities for the development of
digital assets. In other words, the order is a set of guidelines for how crypto should be regulated.
The goal, of course, is to protect investors. Legal experts from Shearman & Sterling say the
order won't solve all the intricacies of a clever crypto scam. Still, it's a big step
in the regulatory direction. However, crypto's deregulated state is what attracts so many to the
currency. As governments try to step in, will they be met with backlash from the crypto community?
It's a tricky catch-22. On the one hand, you have regulations aiming to protect investors
from crypto scams, the same way the SEC protects them from financial scams. On the other hand,
you lose the very core of cryptocurrency. Click to watch one of these next videos!
Let us know in the comment section whether crypto is the future of money or is it something else?