Setting Up a Crypto Exchange can Attract Unwanted Police AttentionBy Aug 08, 2019 8 Min Read
The men who crashed thought Pete Wood’s front door early one morning were convinced he was the head of a credit card fraud ring. He was cautioned and brought into the police station in central London where he was shown documents literally picturing him at the head of a vice ring.
Their caution was ringing in his ear – You do not have to say anything. However, it may harm your defence if you fail to mention when questioned anything you later rely on in court. Anything you say can be used in evidence.
But this was not on a TV crime progamme and this was in real life. Pete’s only crime, if such it was, was to have received payment from a man who was wanted by the police. How had this come about? How was it that Pete was associating with a known criminal and worse, receiving funds from him? Well, if you are reading this article in its original publication – Blockleaders.io – the answer will not surprise you. This was 2015 and Pete had set up a bitcoin exchange and was receiving money from many people in return for bitcoin. He did do KYC as best he could but it was impossible to police the purchasers.
The level of ignorance about bitcoin amongst the general public in 2015 was reflected in the police. Even as Pete tried to explain what bitcoin was he knew he was on a losing wicket. Eventually he was released but was still remanded on bail for a year. This cost him his job as when he tried to ask to call work to tell he would not be in, he was informed they knew already. What he found out afterwards was that a team of detectives had stormed his workplace and seized all computers and devices from his desk.
“This was 2015. I worked in an open plan office of a large company. I reckoned everyone thought I was some sort of criminal or worse. I did not return to work.”
As it happens work could not take him back while the case was open and he agreed to part company amicably. It is an ill wind that blows no good and the early morning arrest had catapulted him into his new full time career dealing in cryptocurrency. The case was dropped in a year and Pete was never charged. Instead he went onto to build a cryptocurrency exchange with a turnover of GBP 100 million.
Actually Pete has been seen by the police at least four times since. There were two more early morning visits and then latterly a number of invitations to come into the station.
“It has changed from arresting me to me advising the police. The information is still a bit spotty. You might have one detective up to speed in one station but then another station might have no knowledge. The joys of being involved in a nascent industry.”
Pete returns to his native Luton to give talks to his local school. “It was a tough area when I was growing up but I think it’s getting worse,” he says. “I’ve asked local businesses too and they think it is worse.
“I go back and give talks to my old school because I want to show them that they can be successful but sometimes they just had to think outside the box.”
I should point out at this point, Pete has never heard of the Luton airport song inspired by the unforgettable line uttered in the Campari TV ad by cockney actress Lorraine Chase. The song was performed by one-hit-wonder girl band Cats UK, while the music was inspired by the Squeeze hit from the same year, Cool for Cats. For old time’s sake you can watch the 1979 video here. (Ed note – Pete pointed out reasonably that he was not even born when the song was recorded).
Back to his talks in his old alma mater, Pete makes no secret of his inability to succeed academically once he hit secondary school. But he points out there are other ways to succeed – see the GDP 100 million company turnover above.
A self-confessed nerd he was taking computers apart when he was 11 and then doing the same for his friends by the time he turned 13.
“It was a puzzle I loved. It just made sense. I was also an avid gamer which proved handy in later life.”
Entering high school the signs were all very positive. Pete showed precocious ability especially in maths. He was ranked the third smartest kid out of a pool of 200. He also excelled in sports, playing at representative level for at last three different games. He regularly achieved As and A+s.
However, while he entered high school with great points, by the time he graduated his grades were all Cs: just enough to get him a place on an IT course. Asked to explain this regression, Pete shrugs on the phone. At least I imagine a resigned shrug down my end of the line. “Things were tough at home,” he says sparsely but without rancour.
Regardless of the cause of the loss of interest, academic excellence never returned. At the same time, Pete was working part time with a local hospital. He approached the head of IT looking for work in that department. Unexpectedly but fortunately a job on the IT help desk turned up the next day. Pete dropped out of college and went to work full time in the IT department.
For the next four years Pete was promoted year on year. He went from humble help desk assistant to second line technician to manager. However, the lack of a degree meant he could not progress any further.
“Despite my previous form, I applied for and got a foundation course in IT in Portsmouth. I had a great year, made lots of friends and spent all my money. But I hated the course itself. I am just not made for academia.”
Back to his old job but this time they suggested they would send him on an Open University degree course.
“I agreed. It was ludicrous really. I just did not enjoy study – but put something practical in front of me and I was happy. That was the third – and last – time I tried to study.”
Around this time, Pete moved company to get promoted and in his new workplace, a co-worker arrived in with a small black box.
“I was fascinated. It was an ASIC miner of course and so I went out and got one too. That was in 2014 and I earned GDP 600 in eight months.”
Despite not enjoying college, Pete would research any topic that interested him thoroughly. Soon he had read everything he could get his hands on related to bitcoin, Satoshi Nakamoto, blockchain, and cryptocurrencies. He also quickly realised that as the hashrate for bitcoin went up, he would need more powerful machines with graphics cards. Instead he looked into mining other alt coins and settled on Nova coin.
Where he was working, he was in charge of several thousand machines – all bog standard. He realised he could use the computing power to mine very successfully as long as it did not interfere with the user’s ability to use their machine. So he wrote a script that paused mining on the machines while there were in use. Once there was a 10 second period with no keyboard or mouse activity the software would kick in again and start mining.
He earned GDP 2000 in Nova and put that into bitcoin.
He also realised that it was possible to use arbitrage to make money out of buying and selling bitcoin. He went onto wholesale sites to purchaser bitcoin and then re-sold it on retail sites such as localbitcoins.
“It struck me forcibly that everyone was buying and selling but no one knew anyone else. The whole process lacked transparency. I wanted to bring the process out into the open and so I founded Bit Broker. Now you could see who you were trading with.
“We slowly become the dominant UK exchange and by 2018 we had a turnover of GDP 100 million. Not bad for a kid who could not finish a university course. This was the message I had to tell the kids back in Luton.”
Around the same time the unfortunately early morning arrest meant that Pete gave up the day job and moved full time in brokerage. Now he set his sights on making cryptocurrency available for everyone.
“Even on popular sites such as Coinbase, it is not intuitive for a newcomer to buy bitcoins or other alt coins. As a dominant site, there are also other issues such as poor service and high fees. I felt we could do a much better job and I believe we have in CoinBurp.”
CoinBurp – a name you won’t forget – was formally launched a couple of months ago. It is very slick and easy to use. It caters for the retail market and in particular seeks to attract a new crypto-curious audience. Already there are 1000 customers and a GDP million in deposits. Pete is finalising deals with banks and credit cards to more easily enable people to get onboard and he hopes to have Euro onboard within the month.
“We are going over to a charity football match in Dublin at the end of August. Our advisor and well known celebrity Calum Best is setting this up. It promises to be an exciting day out and also another way of getting ordinary people involved in crypto.”
Mass adoption of crypto is his goal. And if I were a betting woman I’d put some bitcoin on that – to win.
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