Bitcoin Forum

International bitcoin scam costs investor big

An Eau Claire man has reported losing more than $150,000 in an international Internet scam using a different kind of money.

Jamie Russell, a 34-year-old software engineer who lives in Eau Claire, first invested in bitcoin — digital currency exchanged through a peer-to-peer network — in August 2012. He purchased hundreds of bitcoins in their infancy for $5 per coin. Since then the currency has increased in value to more than $800 apiece.

Concerned about the security of his digital bitcoins, Russell agreed to digitally submit 201.7 bitcoins to a man in the United Kingdom for 190 physical bitcoins, or tokens with a bitcoin digital key hidden behind a tamper-proof strip. (Russell actually has some of the physical currency, which he keeps in a safe place outside his home.)

Between Dec. 9 and 11, Russell transmitted digital bitcoins worth $151,275 to the digital wallet of a man who identified himself as David Williamson, according to an Eau Claire police report. The men met through the website bitcointalk.org and had been in contact for more than a year, and Russell came to trust Williamson.

http://www.leadertelegram.com/news/front_page/article_1aa3067a-8d5e-11e3-b8d8-001a4bcf887a.html

Wow, we have "publicity".

Seriously though, contacting someone anonymous for a $150k investment and not even using an escrow? Somehow I'm not surprised he got scammed.

I guess there will be some logs somewhere over here...

Buying physical bitcoins is not a bad idea.... but he should have bought them from a reputed seller. Anyway I don't think there are many, after Casascius shut down his shop.

Anybody smart enough to invest in bitcoin should have been smart enough not to fall for a scam and do his homework. Sorry but a fool and his money are parted. He should have put his services in me. I would have made him all the paper wallets he wanted and only charged him 1 or 2 BTC for the service (I wouldn't insure however because nothing is certain in life.)

I'm in the wrong industry.

I wonder. ... If it was 150k cash would he have still givin it to a stranger ?

Maybe I'm crazy but if bitcoin has value like that and I wouldn't give cash to a complete stranger why would I do it with bitcoin ? It amazes me sometimes when I see scams like this or the others around here who expect you to send cash ( real cash ) up front and hope they send me bitcoins ... I know people here in DC who would rob you for pocket change let alone 100k

That's just stupid.

is this based on the same story?

https://bitcointalk.org/index.php?topic=393593.msg4922396#msg4922396

Agreed.  No offense Mr. Russel, I know you're really livid from this loss and everything...but why on earth WOULD YOU EVER NOT CONSIDER ESCROW FOR A TRANSACTION THAT IS GREATER THAN 500 DOLLARS?!?

I mean HFS wow, I understand how folks with 2fa could get hacked because they were silly and left their wallet dump on an open dropbox account...but your situation was 100% preventable, I'll leave you alone now, I'm very sorry to hear of this news, I hope on everything that this is an FUD hoax.

Correct, the scammer is Projects, a once "trusted" member here on this forum. He would regularly carry out trades worth $10k+ btw.

The article relates to just one of the victims. Projects managed to scam ~$500,000 during November/December from a whole bunch of people based entirely on his history and trusted status here on this forum.

A lesson for everyone.

Escrow Escrow Escrow...if the amount carries sufficient counterparty risk such that there is more than $120,000 USD at stake, then you need to do multiple escrows or deal with them person to person, preferably with armed guards and during the business hours of YOUR bank in a downtown area in a first world nation...

Escrow with who? A trusted member here?

(I agree, and I'm sure all the victims feel a bit daft, but hindsight is a wonderful thing. Projects really was a trusted member.)

And next thing we hear - "People investing in bitcoin lose their money! This man lost a lot of money after he decided to buy  digital currency and so have others, we advise you to stay away".

For an amount that size, I would take the week off work, fly down to the buyer and make the transaction in person. Do some site seeing, hookers and blow, then fly back home.

Or just use escrow.

Can't wait for those Nigerian emailers to start using Bitcoin:

"Dear Precious One,

"I am Ella Fungibility, widow of the late ambassador to Tunisia, Doctor David Fungibility. My late husband left $50,000,000 worth of bitcoins in a special computer Bitcoin Wallet that he double encrypted. And I am the only one who has the encryption keys.

"I am looking for a way to become an American citizen. If you want to hitch up with me, I'll share the bitcoins with you. Blah, blah, blah, blah, blah, ..."

:)

he should have printed out his own numbers on gold coloured card, he could have even cut it to a circle

I would meet up with him as its a sum that is nothing compaired to a plane ticket

Odd that someone would do something so risky to keep their bitcoins safe.

Over and beyond risky, I would say given Projects' post history:


Toward the end of Projects' thread...


Yet, after all that, somehow a salary worker of an unknown location, who's unable to control his own finances, is able to become a trusted member of the Bitcoin community, whereupon fellow bitcoiners handed over their hard-earned bitcoins to this... this... this... Fuck me! Great-great-uncle Roget has yet to index a word describing this dude.

This is NOT a pour-salt-in-the-open-wounds post. I'm just simply amazed--AGAIN!

~TMIBTCITW

Definitely not a smart move on his part.  No different then the kind of scams you see with real money these days either.  There's a sucker born everyone minute as they say!

@Phinnaeus Gage You forgot to mention TF bro.
Unknown guy from a unknown place who bought master donator and became trustworthy and scammed more than 10x of the amount Project stole from these peoples.

It's amazing how many people will say, "That's stupid" and "Will never happen to me."  Go read the scam accusations forum, it's littered with, "I was stupid..." and "This never happens to me..." 

Read the article again, clearly he is still a proponent of BTC, and seems to have gone out of his way to make sure the article wasn't a negative piece on BTC. He's also keenly aware of the mistake: “My mistake was paying money (in the form of the digital bitcoins) first, which exposed me to more risk,” he said.

Given the sensational nature of media, this could have been written with BTC in a much poorer light.

Vetted trusted members don't count!  ::)

Yes, it is based on the same story. The person in the article was me.

The press reached out to me after seeing the police report filed. 
The reason I spoke with them was precisely so that the article would not be yet another cautionary tale against the perils and dangers of Bitcoin.

I wanted to be clear that the scamming occurred because of a trust-based error on my part, not because Bitcoin itself is inherently evil.

These characters are screwing it up for the rest of us.  There ought to be a filter to help keep it honest.

Not our David Williamson, but wanted to share to lighten the tone for a sec or two--enjoy: http://www.youtube.com/watch?v=gCzTYrnOg-8

Chainsaw, that sux.  >:(

Here's a question to everyone:
What kind of escrow would you trust?

I have seen this over and over in the Bitcoin community. I'd like to pioneer some type of escrow service, but what will get you to trust the escrow?

M-of-N escrow. No single party. Even heavily trusted members, escrowers (https://bitcointalk.org/index.php?topic=322809.0) can drop the ball with single party escrow.

Multiple trusted parties with a majority vote allowing release of funds.

And now, for my final trick. Watch as I make 201.7 Bitcoins...disappear!   :o :o :o

I like the idea of physical BTC, but they are far easier to counterfeit/scam.  :'(

I'm glad I'm not that guy from Wisconsin.

So, technically, he only lost about $1k...
$150k was unrealized profit, since he didn't convert those 200BTC to fiat.
Rather than saying he lost $150k, it should say that he didn't make $150k.

Is that the same Rassah that admitted to knowingly accepting stolen coins?  That doesn't meet my definition of trustworthy.

https://bitcointalk.org/index.php?topic=447668.0