Bitcoin Forum

First, I lose 50+ BTC to Labcoin
Then, 250+ coins to Bitfunder/ukyo.loan
Finally, 100+coins to Neo&Bee

Labcoin definitely was a scam. There isn't even enough information about the other two to make a determination as to what happened!

Bitcoin securities are just faaar too risky and there is no regulation and no protection. You might as well just throw your bitcoins away.

The SEC is investigating all of the above (well, I'm not sure about Labcoin), but by the time they get around to going after them, that money will probably be long gone.

btw, bitcoin mining is also a scam. BFL, Avalon, HashFast, etc... pretty much every company has cheated their customers and there is NO RECOURSE.

This simulator may be a joke, but it is actually pretty accurate: http://www.beepboopbitcoin.com/

All of these scams are very bad for bitcoin and from now on, I'm just going to sit and hold my coins.

It is unfortunate that you have had such bad luck.  You should research and keep an eye on your funds a little better though.  Labcoin & Neo seemed like easily spottable scams and the writing was on the wall about ukyo.loan.  I was personally buying up ukyo.loan like crazy, but once it was obvious that they would never be repaid there was plenty of opportunity to sell at near the purchase price before BitFunder closed shop.

If you would like to see an organization that is transparent and not run by a scammer, check out some of the things I've been up to with NastyFans (https://bitcointalk.org/index.php?topic=86854.0).  We aren't all bad.

For a short time I ran an insured deposit program.  Nearly everyone who participated (over 90%) got out with significant gains, but the few who stayed in through the collapse were paid their insured amounts and were quite satisfied, as most of them were already in the green at that point as well.  I would say I ran the only one that didn't burn anyone and I was 100% open about the entire thing.  There was nothing dishonest about what I did and I'm surprised you would insinuate as much.

... not good statistics but do not worry :)
Just try to avoid scam next time :P

Sorry for your lost.

I'm curious how you were able to get out of ukyo.loan in time. Even if I had sold I would have never seen a single bitcoin as weexchange was "broken" and did not process bitcoin withdrawals for a couple of months before Bitfunder actually shut down. And there never was enough liquidity for me to sell, really. I owned 25,000 shares which was 1/8 of the total outstanding shares. I requested a redemption as soon as it looked like bitfunder was having problems. I never got any redeemed. I haven't given up on ukyo, but really, only because I have no other choice. I've been talking to my lawyer but I'm looking for a resolution that doesn't involve suing ukyo, forcing him into personal bankruptcy, and picking up whatever scraps remain.

The funny thing is that I invested in ukyo.loan and xbond because they looked like far safer investments than all the bitcoin securities out there. I figured as long as bitfunder still existed, they both would be paying dividends. I should have bailed once I saw the BTCT was being shut down and realized that Bitfunder was going to follow soon after.

With Labcoin, I originally had planned on getting in on the IPO and selling right away. I would have tripled my 50 coin investment and made 100 coins in a couple of hours. But BTCT was bugged and I couldn't actually purchase anything. Yes, I know. I was one of those horrible speculators that wanted to get in early. ride the wave up, and get out. Even though that did not work out for me, I bought after the IPO anyways and fell for the hype. And held and held until the shares were worthless.

Neo&Bee looked risky, but legitimate to me. I don't think it was an obvious scam. Maybe extremely poorly run, but not on outright scam. With no accountability in bitcoin, *everything* might as well be a scam. I bought my shares directly with my xbond shares which gave me a discount. At the time, 100 BTC I spent were only worth about $10k so it didn't seem like that huge of an investment.

It wasn't all a loss for me though. ASICMiner was a HUGE win for me. And I was able to get out of XBOND before the bonds were recalled. Everything since those two had been a bust.

Looking back, I was very naive and I'd be a fool to continue to invest in bitcoin securities.

AM was a mining operation that wasn't a scam.

And, if I may ask, what makes you think the SEC is investigating Bitfunder and/or Neo?

I agree that this industry is filled with scams, but many have said that a problem like this is really an opportunity in disguise.  The trick is to figure out how to provide protection for investors and provide an open market for valid securities.  Maybe a rating agency or escrow or insurance? 

AM was not a scam at all, I agree. But several other mining companies were scams. There are more horrible investments than good ones and it seems to be shifting more and more in that direction.

They've called me on the phone, primarily regarding Bitfunder but they read these forums and they are aware of everything that is going on here.

Yes, a rating agency or insurance or something would be a good start. But probably not enough.

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The SEC called you on the phone and said they were investigating BF and Neo?  How did they get your number?

maybe not, but it might be better.  If you had it tied with an exchange that only listed credible operations, then it might help to reduce the number of scams.  Maybe.  There's certainly a need for something better, which means to me that there is a business opportunity, just have to figure out how to make it work.

Both rolled into one --  PatrickHarnett! :)

They googled me. It's not too hard to get someone's number unless that person is intentionally trying to hide.

The problem is that there is no accountability. Maybe some of these scams aren't scams at first. Maybe Labcoin actually was trying to develop hardware and then they realized it was too difficult/expensive to do and they just said "screw it, let's take the money and run".

the SEC is using google?  oh damn, MP is screwed.

yeah, unfortunately, you're right.  Accountability is difficult.  We all know who Mark Karpeles is, and yet he still gets away with fraud. I'm not sure how you handle that side of it, without just holding the raised funds in escrow and only releasing small amounts at a time, based on agreed milestone completitions.

When I saw ukyo.loan suddenly go from trading at a 6% premium to a 5% discount, I knew something was up.  I immediately asked ukyo for a redemption and when I saw he had logged in but wouldn't answer my questions or redeem my shares, I started selling any time it hit the redemption price (same with graet.loan).  This was weeks before weexchange was broken.  I only had ~2,000 shares, so it wasn't too difficult for me to get out, but the writing was most definitely on the wall for days/weeks before the funds became lost.

I invested in ukyo.loan for the same reasons.  It seemed like an obvious choice for the safest bet on the exchange.  I have since avoided any centralized exchange as they will remain SEC targets as long as they keep pretending to be legitimate exchanges with contracts and act as banks holding user funds.  I believe any website that takes deposits of your funds and holds them online as if they were a bank but are unlicensed to transmit money will be shut down eventually.  I think that will just leave AsicMiner, NastyFans, & gigamining...  If there are others that have broken free of centralized exchanges that I have missed, please feel free to mention them.

Wow! That is a lot of money to lose. I'm really sorry for your loss man, that sucks.  I know the feeling (on a much smaller scale anyways).

Losing money in bitcoin has turned me off of the bitcoin economy.  Now I'm only going to buy and hold and do a few minor trades for other new coins I like.  But what, 75%+ or more of exchanges have gone under taking everyone's money, and most of the securities have been a wash.  It's one thing to lose money investing in a product or service that loses value, but it hurts 100x more to lose money to scamming thieves, such as Bitfunder/WeExchange Jon Monroll, who I hope dies soon.

Until we have decentralized exchanges with open source software I think anyone is better off just buying  or mining bitcoins and holding them. There are just too many people who see Bitcoin as a way to personally enrich themselves by stealing from others, such as Jon Montroll.

FYI: https://bitcointalk.org/index.php?topic=325431.msg5035462#msg5035462 ("The criminal complaint against Labcoin was filed on Friday to the Polizia Postale")

damn took them long enough, didn't it?

edit: oh wait, just saw that was posted in Feb.  Still, took much longer than it should have.

I do not blame you one bit. Those suggesting that NEO-BEE was an obvious scam either are insiders that are in on it, or they are just spouting off rubbish. This does however highlight a problem with Bitcoin Securities in that there is little recourse once these come to light. All the due diligence in the world cannot protect you from a clever liar. This is why we need the heavy hand of government to start regulating these Bitcoin securities.

Libertarians are deluding themselves if they think a world with minimal government would function. Such a world would be very inefficient for investors and we all would be spending large amounts of time on due diligence for each of our funds only to find out we have been lied to anyway. Investors would soon all become leery due to high amounts of fraud and losses, and investment capital would dry up. Investors would retreat and progress would suffer.

Even with overseers fraud still occurs (Madoff), but on a much smaller percentage overall scale than with Bitcoin securities. I too will not be putting any further BTC into Bitcoin Securities until there is some better and proven vetting process in place. No process is 100% effective, but until Bitcoin Securities approach an acceptable level of trust through vetting by a commission it seems too risky to consider investing in them.

The "action" itself started at the beginning of Nov 2013. After then an appropriate lawyer was chosen, information from shareholders collected, the complaint written.. etc.

Well said. This is the point I was trying to make.

In the meantime, I'm sorry for implying Neo&Bee was a scam. Mismanaged, maybe, and definitely in bad shape right now, but I don't feel it was a straight-up scam like, say, Labcoin apparently was.

I'm shocked that even in hindsight people don't see the signs...  Reputations are earned through time and honest dealings, not with identifications and promises.

Doesnt guarantee a thing. Dont you remember the 'why I trust Patrick Harnett" threads,  Pirate had the top rating on OTC, and have you seen JohnK lately? If a contract isnt enforceable by legal means, you can bet on getting scammed sooner or later.  AM may be the proverbial exception that proves the rule. So far.

What can the state do to prevent these kinds of scams? Why can't that service be provided through voluntary interaction?

Why do you suppose you have a right to invest without "spending large amounts of time on due diligence?"

Somebody has to put the work in to do that "due diligence." If it isn't you, you'll have to pay a premium for that service. By suggesting that the state should be responsible for this, you are advocating the use of violence against your neighbor in order to force him to subsidize your investments..

I think it's worse to bake violence into the system for the purpose of protecting idiots from themselves.

I don't see how Neo was an 'obvious scam'. If i was going to cut and run I wouldn't waste a load of money on office space, employees and newspaper and TV advertising after the IPO was closed. A flawed business plan possibly but a scam from the start, I don't see it.

Well, common sense has to play a role as well.  Is there anyone who thought Patrick Harnett & Pirate were doing honest dealings?  I certainly hope not.  Pirate came out and said not to trust him several times as well as hinting that he was engaging in illegal activity.  Even TradeFortress' lending site didn't pass the sniff test.  I also suspected ukyo & graet were trying to get rich playing the spread between their loans and the ones TradeFortress was brokering and thus kept a close eye on them selling off my stake as soon as they became unresponsive.  



Perhaps scam is a bad description.  It was obvious that the operation was a money furnace and of course you would waste money on advertising after the IPO.  You don't think all those shares were sold to investors do you?  They needed to appear legit to continue dumping their own shares after the IPO.

If that's the case, why didn't they sell out?  They still had a ton of shares that didn't sold, and they certainly had enough coin to buy them all.

I only ever had one escrow deal with JohnK, and yes, he paid from the same address we sent to.  To be totally honest, I had no idea he was gone.  Is there a thread link somewhere? 

Maybe the demand wasn't there to sell out and they had better plans for those coins?



There are several threads about it.  His main thread (https://bitcointalk.org/index.php?topic=141672.0) is a good place to start.

no, what I mean is if they are buying their own shares, why didn't they buy all of their own shares?  why only buy a fraction?

Why would they buy them?  That would've been like Pirate investing his personal funds in his ponzi...  I think you misinterpreted what I meant.  I was insinuating that they had to continue spending money to keep people buying the shares.  Once outflows passed inflows, it was game over.

Personal attacks aside, you have just proven my point. Investors will not each want to spend large amounts of time in order to personally vet each of the funds they are considering. This is when a trusted commission that carries out some basic vetting functions comes into play. Nobody is claiming investment is a right. What it comes down to though, is that people with the money or BTC to invest will stop doing so if they personally need to spend hours checking out the backgrounds of all that are involved in a new investment. A simple investor does not even have the power to get the required information to do so.

Even if you consider a running a simple criminal background check, your method implies that each investor should have to do this on their own. This is very inefficient as compared to having a central trusted commission do this vetting. You would have to be a f*cking moron to think otherwise. In the Libertarian world we would spend ALL our time doing trust checks on everyone else and nothing real would get done because everyone would be too busy with due diligence. This is when the big stick of the law comes in handy with a good smack across the arse of the scammers and anarchists!!

Actually in seeing how Libertarians operate I am beginning to think more and more that these anarchists simply want the ability to set up scams and go unpunished because they think there should be no law and that everyone should exercise due diligence on their own. From what has happened more and more in the Bitcoin world it is becoming apparent that:

LIBERTARIAN = SCAMMER!
ANARCHIST = SCAMMER!

As a C++ programmer, I still think that Bitcoin and the Blockchain are some of the greatest inventions in programming. I really hope that Bitcoin survives the filth that has been attracted to it from unsavory groups!!

yeah, I did misunderstand.  I thought you meant that they were buying their own shares to create buzz or something.

I have a hard time believing they spent 10K+ btc in a month.  The IPO ended the day before the branch opened.

Of course there is crap in traditional investments, but not to nearly the same percentage that there is in BTC Securities. I have dealt with plenty of both types of investments to know that most of the crap is in BTC Securities.

Perhaps we need to start getting all those that want to introduce a security to have to put up insurance that will protect investors. If we all were omniscient then we could exercise due diligence. We need some sort of system of trust that can be relied on. Regulations do prevent scams as we would have much more scams if we did not have the threat of sanctions. I am not certain what the perfect system would be, but letting it simply be a free-for-all is not the solution.

A criminal background check would not expose most scammers; a lot of the "scams" perpetrated on this site started off as idiocy by the newly rich who don't necessarily have a criminal history.

Why can't the "trusted commission" be a private organization that charges new ventures for a vetting process? It's a false assumption that such services can only exist through the use of violence against our neighbors.

You do not understand libertarianism; your criticisms are based on ludicrous parodies. You should be embarrassed for parroting these talking points -- or stick to what you know: programming; you surely don't know much about the law.

a background check would have prevented Labcon.  Those guys had scammed before.

I'm not in favor of govt regulation, but I'd like to think there is a way to improve the space here on our own (besides just due diligence, which doesn't stop all the scams, either).

The system is not yours to "let." It does not need your permission. You are hiding behind collectivist language: "we need to," as if one individual's conception of a greater good is justification for the use of violence against his neighbor. Take the initiative and do it yourself! It's disgusting that you would substitute hard work for laziness at the expense of others. You are worse than the accused scammers; at least their victims had a choice!


Some estimate that the ratio of scams in Bitcoin is not that far off from the ratio of scams in the traditional financial institutions:
http://trilema.com/2012/the-bitcoin-drama-timeline/ (http://trilema.com/2012/the-bitcoin-drama-timeline/)

The Banksters definitely need to be held accountable. Perhaps as dpb suggests a privately run or sponsored citizens/investors coalition could be formed that we could all trust to do the basic vetting for us.

dpb I did not mean to suggest that a simple criminal background check was all that was required for due diligence. My example was meant to point out that it would be crazy to expect 1000's of investors for a fund to have to each carry out the same process of vetting the funds. If you think of securities in general there are probably thousands if not millions of funds, and thousands if not hundreds of thousands of investors in each one. Without a central place, either public or private, where vetting can occur it would make it very wasteful for all these people to individually exercise due diligence on each one.

A simple credit rating check is often a better indicator of character than a criminal check, but even then there is no simple answer as a good man can become bad.

Most Bitcoin users are not investors; they are average folks who got lucky and now have access to more wealth than they know how to manage. Handing your money over to a stranger doesn't make you an investor; it makes you an idiot. How do you think individuals make a living out of investing if any nobody could do it from home on his iPad?

You are correct. It still however leaves us with the problem of trying to establish trust. I do not think the threat of violence is the solution, or that violence should be the punishment. Unfortunately some people are evil and will try and scam or hurt others. We need some way to keep these people in order. Perhaps with the internet, and the Block Chain itself or a variant, a trust based system could be created. Those that do business with you could assign a rating or leave feedback. Those with low ratings or proven scammers would not get business. Still however people can go bad. How do we deal with punishment in situations such as those? Do they simply get a negative rating so that people will never deal with them again? Do they pay higher insurance rates somewhat for like bad drivers etc.

It is an interesting problem and we definitely a Block Chain based hashing solution could solve the issue of establishing trust levels.

Most people would tell you only an idiot would but some nonexistent currency from some website in Japan that used to sell collectable nerd cards.

At least that's what people told me when I bought my first bitcoin a year and a half ago.

These days they are asking me why they I didn't tell them to buy any when I first bought in.

So I think you had to have been kind of an idiot to take a risk on Bitcoin to begin with.

Touché. At a certain point, it became blazingly clear that TradeFortress's operation did not have the capital to cover potential withdrawals; I alluded to this publicly when TF first floated the idea to start clearing out his "investment" fund via Inputs.io, only to be brushed off, naturally.

As for Ukyo.Loan, I had originally been an aggressive buyer on behalf of the BTC Growth fund, eventually holding nearly 12% of the entire thing; but once it became very clear that the operation was headed south, I took the fund out of that position swiftly and entirely.


Neo was not worth touching with a barge pole: regardless of whether it was actually intended as an outright scam, it was a transparently atrocious business plan. IMHO, no experienced investor would have gone near it in the fiat world, yet in Bitcoin land many folks seem willing to overlook all manner of flashing red lights that would otherwise be deal-killers.

I feel for you since I also played with those securities

Not really on Bitfunder since I never used that exchange Weexchange ate my free ripples so no real loss there
BTCT however was interesting since I did walk away from Labcoin and even Activemining fairly intact and got into Labcoins messed up IPO with my shares cut 1/3rd from the initial amount and sold early on that pump, even declared it publicly to the chargin of some who were arguing 10x the price not 5x was a good exit point lol, then played the speculators roulette after seeing that wave go up and down a few too many times all in all I pretty much started off where I was initially plus a little gain.
Neobee however I did lose a bit in but I sold most of my shares a bit too soon and then the rest on the March 17th News at the 0.003 and some range when it went to 0.006 and was buying a bit back on the drop to its IPO price only to find to my surprise a few days later that in the span of two weeks it went from being a super star to dead in the water, so quite the turn of fate.
Not really sure if it was a scam yet although it did get Mircea banned for swearing at the mod and writing off topic posts lol.

That said AM was the one that caught me ironically since I had an average weight at 2.5 BTC a share which after Gen 2 got delayed pretty much left me with a modest gain instead of a large one. That said unlike the other securities AM pays out honestly and is still a good company even if it dropped down in price so my own fault for speculating to high.

Playing the speculators roulette after an IPO is always a challenge.
https://docs.google.com/document/d/1khGADbJeu0efCNZ13lnz8BucG7PfS5Cl9lBZ1sncY-4/edit?pli=1

On non security things I always emptied my inputs.io balance in tradefortresses sig campaign and the reason I made an account was because of those double payments and I never used coinlenders myself I consider myself lucky not to have invested Bitcoins there.

With vircurrex my 10 bucks in litecoins are frozen lol but I call that a loss even though the site still runs for now.

Left a small balance in the Blockchain app wallet but learnt that cold storage is safest less the amount you leave in exchanges which are always at risk. Also made an instantwallet account to put faucet funds into but of course it closed operations a week later lol... So that was my 101 into downloading the QT client.

Bitfunder I got lucky since I did not like Weexchange it just was too bloody clunky for my tastes even though Ukyo and other users said it was designed to act as a seperate unit if the exchange went wonky on btct burnside closed his service professionally securities aside although it is worth noting that Labcoin and Activemining were Voted in, so the gamble now is in trusting havelock and for now they seem ok the only real exchange really to survive of the last three, (mpex living through it all but with scarcely a few securities lol) but hopefully I see the signs again if something changes, been fairly lucky overall but it only takes one mistake to lose a fair bit.

I lost only a few and in general I profited quite a lot but during the last 2-3 years I dodged so many bullets (Pirate, GLBSE, Ukyo, Cognitive, MtGox) that I definitely decided to keep away from these investments. I consider to be very lucky to always spot the right time when to get out. BTW, this market is so illiquid that investing 100+ BTC in anything is certain recipe for disaster.

I'm also worried about securities in bitcoin because we have a little information about any company's owner


I think that we should invest only a few cents or a little amount of coins in each security that we trust, so we can atomize risk in case it were scam


Unfortunately, in my case I found only a very few companies for invest in which I could expect a real profit in bitcoin (not in usd)




Sorry for my english

I too have lost alot (for me) due to my negligence. What I think could change the landscape significantly are rating agencies and decentralized exchanges.

Rating agencies are only as good as the people making the ratings. everyone needs to start doing their own due dilgence and start asking themselves the important questions.

The most important question is "how will this company make bitcoins?" If their plan relies on the price of bitcoin going to the moon, you should just hold onto your bitcoins because you will be in a better position and have much less risk by holding onto your coins instead of giving them to someone else.

100% agree

I think if we expect the price rise we should not invest our bitcoins in conventional companies like real states, casinos, etc  because their incomes are in usd and in the future it would be harder to pay dividends for them. In those case it's better hold btc

of course, that's a triviality

I smelled scam/incompetence early on and my displeasure with both the way TAT and Danny were managing NEO were posted here and on reddit.  In both cases I was basically down voted to non-existance.  

Both TAT and Danny are completely incapable of managing other peoples money at ALL.  I sold at a loss and moved on months ago before the launch.  The writing was on the wall early, no one wanted to listen.  I had a large stake in NEO.  TAT is a huge jerk, and should hardly be managing a McDonalds let alone millions of dollars and Danny is just completely naive.

Most Libertarian types are jerks. Unfortunately until BTC and BTC Securities are regulated, jerks will prey on those that want change and are willing to believe. Libertarians are either extremely naïve in thinking that men will not take advantage of each other, or they simply are evil and want anarchy so that they may take advantage of others without penalty.

They spout off that it is up to everyone to exercise due diligence, blah, blah, blah, but there is nothing to stop someone from lying or someone from simply becoming corrupted. Some sort of regulation and vetting is required either through a citizens committee or government regulatory body. Punishments are required for those that intentionally harm others. A well ordered and just society is not achieved through anarchy.

Yes. Blame the Libertarians. It's all their fault! Those filthy Libertarians. Down with all lovers of liberty!

FWIW, forthcoming exchanges are going to have a lot more involved with systemic DD than what we've seen before. The reality is that self-policing doesn't work. Exchanges can adapt the frame and structure as to how federal exchanges work for listing requirements without government oversight.

The problem is that you can't have amateurs with 2-3 members on staff (if that) doing it. Its not just about coding, but verification.

True enough.
It's not Libertarians like Proudhon, who believed private property (as in factories, "means of production") wrong, but the ignorant forum users who think "Libertarian" is a fancy word that somehow justifies rabid, sociopathic greed.
Thanks for bringing that up.

You are very rich