How One Token Sale Failed to Question Its Own Questionable Credentials
There’s no shortage of fraud in crypto. Token sales, in particular, are fertile ground where scammers can take root and thrive, thanks to a number of factors — not least being a marketing playbook that relies on FOMO. When investors get greedy, they’re willing to overlook, even ignore, red flags that wouldn’t be tolerated by traditional financiers.
In the defense of crypto investors, though, the warning signs aren’t always easy to spot. Not every scammer is a criminal and not every falsehood is a crime. Plenty of scams are predicated on simple lies of omission, others can be blamed on garden-variety incompetence — a veritable hallmark of more than a few crypto founders.
Perhaps the most pernicious problem in token sales is the unreliable chain of authority, where a project’s credibility is built on a series of nested credentials. Like a stack of turtles reaching ever further down, each claim, accomplishment and qualification relies on an earlier authority; in turn, that authority is itself dependent on another previous claim. And so on.
In a cleverly constructed chain of authority, it can be difficult, even impossible, to trace credentials back to their original sources. Even the most diligent investors can grow weary of this hunt.
Such is the case with Wise Network, the company behind the $WSE token sale. While it’s not accurate to say they intentionally obscured their project’s credentials, they allowed an unreliable chain of authority to sit beneath their token sale.
Wise Network, headquartered in Costa Rica, is owned by Genesis Blockchain Technologies (GBT), a holding company with several other subsidiaries. (They are not to be confused with Genesis Block.) In September 2018, GBT entered into an exclusive licensing deal with Gopher Protocol (OTCQB:GOPH), a publicly traded, U.S.-based company. Gopher describes itself as “a revolutionary new platform with products that will change the way people interact with technology and each other.”
The licensing deal gives Wise Network a non-exclusive right to build their Ansuz microchip using one of Gopher’s patents. The Ansuz chip, they say, is “an advanced development of analog-mixed-signal microchip-based system (AMS-SoC). Powered by a 13 nanometer IC integrated circuit for IoT and Mobile networks, it introduces a new concept: radio based IoT Mesh Networking.”
Sometime in 2018, Wise Network decided to launch their own ERC20 token, $WSE; on January 21, 2019, they asked ICO Ranker to review and list it.
Whither the Wise White Paper
Whenever a new token sale is submitted to ICO Ranker, we follow a thorough process of due diligence in an effort to protect investors. Most of the time, our research doesn’t uncover any issues, and we’re free to endorse well-meaning, legitimate ICOs and STOs. Sometimes, we uncover outright frauds, as in the case of the Box of Data ICO.
Digging into the $WSE ICO, the red flags popped up almost immediately.
Like everyone else launching a token sale, Wise Network’s management team wrote an in-depth white paper that outlines the case for $WSE. Starting sometime in 2018, a PDF of this white paper was readily available at the Wise website, wise.cr, and a number of ICO review websites.
At a quick glance, the document is nothing remarkable. Like so many white papers, it’s both highly technical and frustratingly vague. On the cover page, the paper’s author, Dr. Danny Rittman, is identified as Wise Network’s CTO; he’s also credited with holding a Ph.D. from “LaSalle University.” (The PDF can still be found on Wise’s website, here. We also found it hosted independently, here.)
A bit of quick research reveals that Danny Rittman is also Gopher Protocol’s CTO and chairman of that company’s supervisory board. He’s also the inventor of several patents held by Gopher Protocol, including the patent being licensed to Wise Network.
Here’s where the problems begin.
Upon closer examination, we discovered that a great deal of the Wise white paper was copied directly from Skynet’s white paper. Danny Rittman hadn’t just lifted technical language about blockchain, Ethereum, tokens and so forth — this kind of boilerplate text is often harmlessly copied from one source to the next. Rittman’s plagiarism was more widespread, and much more alarming.
For starters, Wise’s foreword is a nearly word-for-word copy of Skynet’s abstract, as illustrated below.
Using CopyLeaks to analyze the entire white paper, we found that up to 40 percent of Danny Rittman’s white paper was an exact copy of Skynet’s original work.
When presented with these facts, Wise’s COO, Salomon Ocon, was unable to explain how it happened. He was also unable to satisfactorily explain how the white paper itself was produced. At one time, there was talk of a third-party vendor who was hired from the company’s Telegram channel. At other times, blame was placed squarely on Danny Rittman.
After several unproductive calls and emails with Ocon and Rittman himself, Wise’s chief legal counsel, Mauricio Lara, stepped in with an official statement. The white paper, he said, was authored by Danny Rittman or perhaps “someone from his staff.”
“I cannot say for sure that he wrote it all himself,” Lara told ICO Ranker.
When informed by ICO Ranker of the potential plagiarism, Lara had the white paper pulled from the Wise website. As he explained, “as soon as I learned of such similarities, I requested the company to remove the white-paper and work on this document to provide the proper citation for third party work and eliminate any original work that was not properly cited.”
In our opinion, this level of plagiarism goes far beyond the idea of harmless borrowing without citation; arguably, it’s theft of intellectual property.
What’s more troubling, this isn’t the first time Danny Rittman has failed to cite (at best) or steal from (at worst) other sources. In fact, this seems to be a well-established pattern of behavior that has gone unchecked for years.
But first, let’s talk about the “Dr.” in Dr. Danny Rittman’s title.
If, as they say, imitation is the sincerest form of flattery, Dr. Carl Shi should be honored by Dr. Danny Rittman’s intense adoration. As the director of Skynet, Dr. Shi has hundreds of patents in his field going back to 2009. Skynet itself is backed by an equally impressive and rock-solid team that stands up to intense scrutiny. It’s little wonder that Rittman (or “someone from his staff”) looked to Skynet for inspiration.
Rittman’s own history is a bit murkier. According to countless profiles across several websites (see here, here and here), Danny Rittman graduated in 1998 with a PhD in computer science from LaSalle University. LaSalle, of course, is a 150-year-old university based in Philadelphia. Whatever you think of LaSalle’s quality as an educational institution, there’s no denying it’s a household name.
The problem is, LaSalle University in Pennsylvania did not offer a doctorate program in computer science in 1998, according to both the University’s own computer science program chair and its director of graduate studies. Given the chance to explain this inconsistency, Rittman told ICO Ranker that he attended the “Louisiana branch” of LaSalle University.
ICO Ranker has seen these diplomas. The issuer was, indeed, LaSalle University — headquartered in Mandeville, Louisiana. Not only was this “university” not affiliated with the Philadelphia LaSalle, it was shut down by the FBI for “issuing degrees to government employees seeking to pad their resumes and qualify for pay raises hinged to educational advancement.”
In other words, Rittman’s much-ballyhooed alma mater was once a diploma mill.
According to The Union Democrat, reporting on a related matter in 2012, Louisiana’s LaSalle University was run by a self-professed religious leader named Thomas Kirk. Between its founding in 1989 and an FBI raid in 1996, Kirk’s LaSalle was “a dubious educational institution issuing supposedly advanced academic degrees via mail for the bargain price of $2,000 to $3,700.”
Rittman’s diplomas were issued in 1998 — two years after the FBI raid. In those intervening years, according to Mauricio Lara, the Louisiana-based LaSalle operated as a legitimate educational institution. This may, in fact, be true; but it’s proven impossible to determine either way, based on reporting at the time and since.
Whatever the case, there’s no denying that Rittman was a star pupil: He was awarded both his Master’s degree and PhD in 1998, having completed both programs, simultaneously, in less than two years. For the record, his Bachelor’s degree from the University of Bridgeport holds up to cursory examination, even if the university was allegedly run by Moonies when Rittman’s diploma was issued.
LaSalle University in Mandeville, LA, was closed down for good in the early 2000s. To this day, stories continue to surface of elected officials, government workers and others touting LaSalle degrees to boost their credibility.
A Pattern of Possible Plagiarism
Tracing the Wise chain of authority back even further, we find earlier instances of Rittman publishing what Lara describes as “original work that was not properly cited.”
In 2011, more than a decade after his “graduation” from “LaSalle University,” Rittman published a scientific research paper titled “Nanometer Physical Verification”. This paper bears a striking resemblance to a paper published in 2002 by researchers Ping Chao and Lavi Lev, “Down to the Wire: Requirements for Nanometer Design Implementation”.
An analysis of the two texts on CopyLeaks revealed that they are nearly 29% identical. At no time does Rittman cite Chao or Lev.
Asked about the similarities between these two papers, Rittman explained that this sort of collaboration is “very common [in the] nanometer arena.” Furthermore, Rittman said he either worked directly with the authors whose work he borrowed or he led a team that included them.
“We are a little bit careless in this field,” Rittman explained. “But you will not find me saying I invented something myself that was not mine.”
Given the benefit of the doubt, Rittman’s earlier missteps could be described as errors of omission. But at what point do we stop throwing yellow cards, and eject Rittman with a red card? At what point does a career’s worth of oopsies become cause for concern? When does Rittman cross the line between fabulism and fraud?
Never, if you ask Wise’s management. They’re simply not concerned with these problems. As Mauricio Lara told ICO Ranker, “We have little regard for” the accuracy of Rittman’s credentials or papers he’s written.
This is precisely how unreliable chains of authority are allowed to remain intact. According to Gopher Protocol’s website, Rittman “has had more than 150 technical papers published in EE Times, Frontier EE and other technical publications.” On its face, this is an impressive claim. But Wise’s management has declined to look further into Rittman’s credentials; they’re satisfied with his most recent claims, no matter how shaky the foundations that underpin them.
“If Dr. Rittman holds a PhD or not is not the focus,” Lara said. “Wise did not bring [Rittman] on board because of his papers… He is a well regarded futurist with great ideas for the IoT and AI technology development.”
Making the Connection
It must be noted that Danny Rittman is not Wise Network. He’s listed as their Chief Technology Officer, but Lara claims that Rittman does not draw a salary from Wise. He will be compensated in $WSE tokens, though documentation to support this arrangement could not be found in the white paper, as Lara claimed in an email to ICO Ranker.
Putting aside Rittman’s compensation, we believe it’s fair to say that $WSE’s value proposition is based largely on the value of Gopher Protocol’s patents. But even Gopher’s patent holdings aren’t straightforward. According to an April 2018 10-K filing:
“To date, the Company, has filed for 16 (sixteen) different patents with an additional three in process, as well as 6 (six) trademarks. The patents are owned by Dr. Rittman, our CTO, but the Company is the exclusive licensee of these patents and trademarks in perpetuity. These patents and trademarks, as well as various websites and social media platforms, comprise the Company’s intellectual properties. The Company and Dr. Rittman are in the process of consolidating some or all of these patents into a single comprehensive patent for the Guardian Patch. To date, none of the Company’s patents have been granted, but two trademarks been granted.”
The Guardian Patch is a consumer-grade tracking product that was announced in 2016 and promised to reach market in 2018; its website was seemingly last updated sometime in 2017. It’s unclear what Gopher has planned for their Guardian Patch, and it’s unknown how the company’s plan to “consolidate” its patents would affect its licensing deal with Wise Network.
For the record, Mauricio Lara disagrees that Wise’s worth depends on either Gopher Protocol or Danny Rittman. When pressed on the subject of ICOs that inflate team member credentials, he told ICO Ranker:
“I agree with you 100% that ICO’s use credentials that are inflated and obfuscated in the interest of building credibility. However, in that line of thought you could say that one of our advisors, Mr. Jose Maria Figueres, a former president of the country of Costa Rica and the father of the service-based economy in Costa Rica, could easily trump any credentials we have touted for Dr. Rittman.”
Lara added, he is still “honored by” Rittman’s participation in the project.
Breaking the Chain
In law, there’s a process called Shepardizing, named for 19th-century lawyer Frank Shepard. As described on University of Delaware’s website, “Shepardizing a case helps determine the precedential value of a legal authority. It is crucial to make sure the precedents are up-to-date.”
In very broad layman terms, Shepardizing is the process of going backward, down the chain of authority, to confirm that every assumption and precedent along the way is accurate and valid. If one link is found to be unreliable, the chain’s integrity must be questioned.
This is precisely what we’ve attempted to do here.
We don’t believe that Wise Network’s management set out to defraud investors and ICO participants. We have no reason to suspect that their intentions are anything but pure.
We are, however, convinced that the assumptions, authorities and qualifications that underpin the $WSE token sale should raise alarms. In our opinion, $WSE is irreconcilably connected to Danny Rittman’s research, reputation and expertise in his field. Because we’re not convinced that Danny Rittman has been entirely straightforward when disclosing his credentials, we cannot help but urge investors to steer clear of the $WSE token sale.
Update: After several weeks of communication with ICO Ranker, Wise Networks’ chief legal counsel, Mauricio Lara, advised the company to suspend its ICO due to market conditions and “very high token raise thresholds.” Starting on March 5, 2019, visitors to Wise’s website received the following message: