A financial crime journalist argues why cryptocurrency was always doomed to fail

Bored Apes came in April 2021. It was a set of 10,000 cartoons of apes, which all looked quite similar to Fallon’s or Hilton’s. Some smoked pipes and others wore Hawaiian shirts. “Aping in” had become slang for betting big without doing research, and the idea was that the Bored Ape Yacht Club’s members were the crypto millionaires of the future, too rich to care about anything but hanging out. There was no big marketing push for Bored Apes at first, and its four creators weren’t well known. In fact, they went by pseudonyms and kept their real names secret.

One went by “Gordon Goner,” and another by “Gargamel.” They commissioned the cartoons from a few previously unknown artists. “Come ape with us,” its creators wrote on Twitter to announce the sale, adding a skull-and-crossbones emoji, a monkey emoji, and a sailboat emoji. But by the low standards of NFT collections at the time, Bored Apes was well designed. The 10,000 apes sold out for $220 each. Within a month, the cheapest went for $1,000. Prices skyrocketed from there. Their success spurred a series of simian imitators.

Solana Monkey Business, the collection that turned me away from its Bahamas pool party, was one of those. The creators of Bored Apes started pumping out more NFT collections too. There was the Bored Ape Kennel Club – dogs to keep the apes company – and then the Mutant Ape Yacht Club, gross-looking apes that seemed like they had been melted by nuclear fallout. By September, five months after their release, Bored Apes were selling at Sotheby’s. The auction house sold a lot of 101 Bored Apes for $24.4 million to an anonymous buyer, suspected to be Sam BankmanFried. The next month, Sotheby’s auctioned a Bored Ape with gold-coloured fur. “Less than one per cent of all Bored Apes have the gold fur trait, making it an NFT with historical significance,” Sotheby’s wrote. It went for $3.4 million.

It was all so easy to laugh at. But the people who were buying NFTs took it seriously, extolling the benefits of the NFT community. They would post pictures from wild parties, where strangers with nothing more in common than owning similar JPEGs would dance and hug each other. They said it was like owning a piece of the next Star Wars or Mickey Mouse, and playing a role in creating an epic narrative. That sounded kind of fun.

Biking to Manhattan one day, I saw the side of a building in Williamsburg spray-painted with a giant orange ape skull. no sleep til apefest, the ad read. Apparently, the company behind the Bored Ape Yacht Club NFT collection was planning a festival at a pier on the East River. Its website promised “four wild nights of music, merch, and art, plus treats and beats from your fellow apes.” It seemed to be aimed at my ageing millennial demographic: the previous year’s performers included The Strokes and Beck. Like the Solana Monkey Business pool party, it was only open to owners of Bored Ape NFTs.

I decided to buy one. The friends I told about the idea said it was terrible. “Dude, don’t buy one,” my friend Sam said. “You’re not going to buy one, are you? The price could collapse instantly. Won’t they just give you a press pass?” Another friend suggested just showing a screenshot of an ape and sneaking in. But I didn’t want a free ticket. To me, the foolhardiness of the idea was the point. I wanted to know what it felt like to be a degen.

And so, one night in June, I waited until my kids were asleep before I told my wife, Nikki, that I had to talk with her about something. Not being a natural degen, I wanted her approval before I gambled with our money. By then, she was used to talking with me about my weird crypto investigations. She’d always encouraged me to follow the story wherever it led, even if that meant me leaving her alone in Brooklyn with our one-year-old daughter and four-year-old twins while I jetted to Miami or the Bahamas, or Miami again, or the Bahamas again. (It would ultimately prove necessary to visit the beautiful white- sand beaches of the Bahamas four times.)

I told her there was a big crypto party coming up and that if I wanted to go, I’d have to buy a Bored Ape NFT. She asked how much, and when I asked her to guess, she said that she figured since I was asking, it must be at least a couple thousand dollars. I explained that Bored Apes cost hundreds of thousands of dollars, but that I could attend by purchasing a Mutant Ape. Those went for more like $40,000. “Zeke, that’s like a year of college,” she said, her face contorting into a look of horror. I explained that I planned to sell it after the party, and if all went well we wouldn’t lose much. The odds were low, I figured, that the price of Bored Apes would collapse the week I happened to buy one.

As far as crypto investments went, I told her, it was pretty much blue chip. “Are you making fun of me?” she said. As we talked, Nikki came around to the idea. We even daydreamed a bit together about getting lucky like our neighbours who’d invested in crypto. We could upgrade our minivan to a Tesla with gull-wing doors, or even buy a lake house and a boat to go with it. She agreed that going to the party would be worth the risk. “I feel anxious,” she said. “Thank you for telling me, but I wish you hadn’t.” I tried not to let on, but I felt anxious too. I’d seen many people become the butt of internet jokes after losing their Bored Apes. One owner made a typo while listing an ape for sale and lost $391,000. “This was my kid’s college. My mortgage. Just absolute shit that some of you out there think it’s okay that I got ripped off,” an ape-theft victim tweeted.

The actor Seth Green, who was developing a TV show around his Bored Ape, which he named Fred Simian, had it stolen by hackers and appeared to spend $297,000 buying it back. (In the show, a Who Framed Roger Rabbit mix of live action and animation called White Horse Tavern, Simian was to be a friendly neighbourhood bartender.) In December, a Chelsea art gallery owner named Todd Kramer had lost $2.2 million of apes. “I been hacked,” he tweeted plaintively, “all my apes gone.” These events were amusing as long as they were happening to someone else.

But then I pictured myself, 20 years in the future, telling my son that we might have had enough money to send him to Wesleyan if I hadn’t spent $40,000 on a picture of an ape. By the time I got around to buying a Mutant Ape, the price had crashed to around $20,000. While I was happy the price had dropped from a brand-new Honda Odyssey to a used Dodge Caravan, it wasn’t exactly reassuring that they had lost half their value in two weeks. The process of buying the ape didn’t make me feel any better. It could only be purchased on an NFT marketplace using the cryptocurrency Ether. (That’s what the Ethereum blockchain’s coins are called.)

First, I had to acquire $20,000 of Ether. I decided to use Coinbase, the most popular US exchange. To get my money onto Coinbase, I had to send a wire transfer from my account at Bank of America. A bank wire costs $40 in fees – $30 to Bank of America and $10 for Coinbase. But I’d never sent tens of thousands of dollars electronically before, and I was nervous. I sent two small transfers as tests. Once they went through, I clicked to send $20,000. Ten minutes later, a Bank of America representative called me. Apparently sending that much to a crypto exchange had raised some alarms. The friendly representative, Oyet, warned me that I might be defrauded. “We’re making sure this is your account and you’re not a victim of fraud,” Oyet said. “Since this transaction was initiated by you, it may be difficult to recover your money. If something happens with that investment, we will not be able to recover the funds. Do you want to continue with this transaction?”

I felt like Oyet was probably right. But I told her to go ahead. Once my money was on Coinbase, I had to trade it for Ether, which was easy enough. Coinbase works just like E-Trade, except that instead of Apple stock, you’re buying and selling cryptocurrencies. It’s not exactly what Satoshi Nakamoto had in mind when he invented the first peer-to-peer electronic cash system – Coinbase is simply taking the place of your online trading site. But exchanges like Coinbase are the way nearly everybody buys Bitcoin, Ether, or any other coins. Buying Ether on Coinbase was just the first step.

Excerpted with permission from Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall, Zeke Faux, W&N.