Malcolm Turnbull helps Newcastle hacker bank $23m to fight NFT bots

Photograph of Sam Crowther Founder of Kasada
FEBRUARY 21 2022
Published in the Australian Financial Review

Former Australian Prime Minister Malcolm Turnbull is among those backing Sam Crowther, a Newcastle-born hacker who began his career “breaking things” for the Defence Signals Directorate, to fight the rampant rise of bot-related crime including in NFT markets.

Mr Crowther, who raised $23 million in a Series C round last December for his bot security business Kasada, has started tracking NFT fraud which has exploded alongside the frenzied activity in crypto markets.

Non-fungible tokens are pieces of tradeable code attached to a digital item. Brands across the world have been releasing limited edition NFTs that can act as exclusive tickets to events or are collectable items in themselves.

Mr Crowther’s technology acts as a gateway to ward off bots, which are notorious for buying up limited-edition sneakers, concert tickets and other hot items, which scalpers sell at an inflated price on third-party sites.

His customers include Hyatt Hotels, the Sydney Opera House, and large companies whose pricing websites can easily fall victim to thousands of bot attacks.

“The margins on NFT drops are just insane so the people who were using bots to chase money from sneakers have moved over to NFTs,” Mr Crowther said, adding successful purchases of limited edition NFTs could sometimes offer mark-ups between 30 per cent and 40 per cent when resold.

With brands from Gucci to Adidas releasing limited-edition NFTs, Mr Crowther said he planned to use his fresh investment to combat the sharp rise in malicious bot activity.

‘Unbelievably epic ad’

The funding round was led by new investor StepStone Group (which recently acquired venture capital platform Greenspring Associates), with participation from existing investors Ten Eleven Ventures, Main Sequence Ventures, Westpac’s venture capital arm Reinventure, Our Innovation Fund, and Malcolm Turnbull’s investment firm Turnbull & Partners.

Mr Crowther said he discovered his interest in “breaking systems” at high school in Newcastle, NSW, where he was on the verge of expulsion for hacking into sensitive school servers when he saw an advert from the Defence Signals Directorate before watching a Mission Impossible movie one afternoon.

“It was an unbelievably epic ad,” he said.

The rollout of the Defence Signals Directorate ads were pushed by then prime minister Mr Turnbull, who was keen to find young technical talent and bring them into government.

While Mr Crowther cannot talk about the work he did there, he soon discovered that his talent for “breaking things” was in hot demand outside the Australian government as well.

For a time, he worked for the head of security at Macquarie Bank.

“My remit was just break any system the bank had to find the weaknesses,” he said.

It was here that Crowther received $50,000 in angel investment to build a bot-related prototype that would form the basis of Kasada, which has since raised a total of $39 million from investors including In-Q-Tel, the venture capital firm backed by the FBI.

“It all comes down to the fact someone can write a piece of code that performs tasks over and over again and use it against us,” he says.