The scam highlighted to him just how dangerous the world of cryptocurrency could be for inexperienced investors, and the need for greater education.
Mr Smorgon said there was an opportunity for Collective Shift to become the most-trusted cryptocurrency resource in the world and potentially “another Australian unicorn” in a few years.
He said Collective Shift chief executive and founder Ben Simpson had worked hard to rebuild credibility after the company was linked to troubled crypto-influencer Alex Saunders in July last year.
Mr Saunders, who runs the popular Nugget’s News YouTube account and cryptocurrency website, faced questions then over concerns he was unable to repay significant amounts of money to investors who had invested in a speculative cryptocurrency project he was running.
Collective Shift launched under the same entity as Nugget’s News in October 2020 but split from it in June last year after Mr Simpson sold his shares in Nugget’s News and bought the remaining Collective Shift shares.
Mr Simpson said he had not spoken to Mr Saunders in 14 months, and while he worked with Mr Saunders in an employee-employer relationship, Collective Shift had “nothing” to do with Mr Saunders’ personal clients or projects.
In a statement posted to Twitter in April, Mr Saunders said an opioid addiction fostered after a 2016 back injury had “altered” his decision-making to the extent where he was not thinking clearly. He apologized for the “mess” he made and said all investors with him had been repaid, or were in the process of being repaid.
Mr Smorgon said every business faced a risk that people they worked with would not act with integrity, and he believed the problems were “well and truly behind now”.
“It’s just a remnant of some early learnings of a young start-up,” he said.
“[Collective Shift] you have done a tremendous job of building a really trusted platform that is completely free of some of the past dealings that a … rogue team member had.”
Mr Simpson described the Nugget’s News controversy as “probably one of the hardest periods of my life”.
“It was really difficult because everything that came out, I had absolutely no idea about what was going on. And I had a team and a business and thousands of members I was trying to look after and it was really tough.”
He said he would have “thrown in the towel” if he did not believe Collective Shift had an important educational role in a sector where “probably 90-95 per cent of the cryptocurrencies out there are worthless, and/or scams”.
“The ethos behind Collective Shift is being able to build a trusted platform where we can provide education,” Mr Simpson said.
“We’ve got big dreams. I really see us being one of the leaders in the world for crypto education.”
Mr Saunders did not respond to requests for comment.