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Author Topic: [2018-04-18]Unpacking the 5 Biggest Cryptocurrency Scams  (Read 49 times)
Reatim
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April 19, 2018, 09:49:48 AM
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Unpacking the 5 Biggest Cryptocurrency Scams

Cryptocurrencies have revolutionized the way the world looks at transactions - but they’ve also facilitated some monumental scams over the past nine years.

The success of Bitcoin and a number of altcoins jumpstarted an industry that is incorporating Blockchain technology in a number of innovative ways.

While the smartest minds have created some game-changing companies backed by the power of Blockchain and cryptocurrencies, nefarious minds have also jumped on the bandwagon, fleecing unwitting investors in elaborate scams.

ICOs fever spawns massive scams


Since Bitcoin’s inception in 2009, people have become increasingly enamoured with the idea of Blockchain technology. Over time, developers and business minds began creating their own solutions with this decentralized ledger technology.

This led to the development of Ethereum and other virtual currencies, with the former in part responsible for a boom in initial coin offerings (ICO) in 2017.

As an ICO is essentially a round of public finding and is typically launched by a tech startup which sells inhouse cryptocurrency tokens to prospective investors, these investors buy tokens in the hopes that company will launch its product and the tokens will grow in value.

An ICO is not unlike an initial public offering, which is when a traditional company makes its share available for purchase to the general public. In fact, this is where the ICO moniker stems from.

Given that there are no promises that an ICO will make good on its future plans, investors take a leap of faith when they part ways with their money. This of course has led to a plethora of scams billed as ICOs, which have seen thousands of investors left out of pocket.

Here are five of the biggest ICO scams in history.

Pincoin and iFan


The most recent large-scale ICO scam grabbed headlines in April. Two ICOs, run by the same company operating out of Vietnam, are believed to have swindled around 32,000 investors of a combined $660 mln.

The company in question, Modern Tech, packed up its offices in Ho Chi Minh city last month, making off with investors money. The scam is believed to be the biggest in ICO history.

A number of investors protested outside the vacant offices in the city on April 8, after the company refused to process cash withdrawals. The city’s administration has ordered police to investigate the fraud.

Both ICOs have been classified as multi-level marketing scams. iFan was advertised a social media platform for celebrities to promote their content to fans. Meanwhile Pincoin was promising 40 percent monthly returns on investments made. The project claimed to be building an online platform encompassing an ad network, auction and investment portal and peer-to-peer marketplace built on Blockchain technology.

OneCoin

OneCoin has been the subject of a number of investigations over the past 18 months. Officially labelled as a ‘clear ponzi scheme’ in India in July 2017, it was fined €2.5 mln by Italian authorities two months later.

Cointelegraph has previously warned readers to stay clear of the operation, as OneCoin does not even operate a legitimate decentralized cryptocurrency. Furthermore it does not have a public ledger and its Bulgarian offices were raided in January with servers seized by authorities as international investigations and court cases continue against the company.

Scandals in countries around the world summed up the fact that OneCoin is indeed a massive scam.

In 2016, over $30 mln dollars were seized by Chinese authorities investigating the OneCoin operation in the country.

The company claimed to be officially licensed in Vietnam last year as well, but this was later refuted by the country’s government. More than five countries have warned investors of the risks involved for those choosing to invest in the company, including Thailand, Croatia, Bulgaria, Finland and Norway.

Bitconnect

Long accused of being a ponzi scheme, Bitconnect discontinued operations in January in the wake of a cease and desist order from two American financial regulators.

Users exchanged Bitcoin for Bitconnect Coin (BCC) on the Bitconnect platform, launched in Jan. 2017, and were promised astronomical returns on their investments.

Furthermore the company ran a lending program, where users lent BCC out to other users to make interest depending on how much BCC they’d lent on the platform. There was also a typical, ponzi scheme referral system.

Nevertheless, the wider cryptocurrency was hardly sympathetic when the operation shut down its lending scheme and exchange platform.

A number of users have since launched a class action lawsuit against Bitconnect to recoup lost funds - amounting to $700,000 for their particular claim.

Plexcoin
This particular ICO was nipped in the bud in Dec. 2017 after being labelled a typical return on investment ponzi scheme. Plexcorp was promising investors over 1300 percent return on investment per month before the US Securities and Exchange Commission (SEC) ordered the company to stop operations.

Over $15 mln had been raised during the Plexcoin ICO. Luckily all of the funds were frozen by the SEC and founder Dominic Lacroix was jailed.

Interestingly, it was the first time the SEC stepped in and charged an ICO through its Cyber Crime Unit. Plexcoin’s offerings was also classed as a security, hence the SEC’s decision to press charges.

[/b]Centratech[/b]
Having been endorsed by the likes of superstar boxer Floyd Mayweather and DJ Khaled, Centratech was thrust into the spotlight for its supposed Visa and MasterCard debit card service that would allow users to convert cryptocurrencies to fiat.

Two of the founders have since been arrested on fraud charges relating to the ICO, which raised around $32 mln, according to Ars Technica.

https://cointelegraph.com/news/unpacking-the-5-biggest-cryptocurrency-scams

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April 19, 2018, 05:42:33 PM
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Bitconnect lending platform scam should be made number one if ever a ranking for top cryptocurrency scam is made. It was glaring that the promise of massive R.O.I was never sustainable yet shills like Trevor James continued to promote the scam on YouTube till the scheme got busted.
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April 19, 2018, 07:38:22 PM
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Some of these top 5 scams were pretty obvious, like the Bitconnect one, but with ICO's and blockchain companies there are countless smaller but more elaborate scams - first fraudsters promise to develop some new platform, gather money from investors and than continue to simulate some activity for years, while reporting their "progress" and maybe even eventually delivering their platform, except it's totally not what was originally promised, buggy and maybe even just useless.

We keep hearing every week about some big companies announcing their ICO's, or some new ICO's gathering millions, but we still yet to hear about some really successful project that started as an ICO.

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April 20, 2018, 07:02:04 AM
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Does TBC (TheBillionCoin), a coin hyped to be more valuable than bitcoin, not also deserve a place in this unmeritorious clique of rogues? I bet there should be  a revised edition to your list.
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April 20, 2018, 07:34:07 AM
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Surely nefarious minds are a number in all types of businesses, and not limited nor confined to cryptocurrencies alone. Surely, even what you termed the 'smartest' minds can get duped by a group of scammers not because they are not really smart but because the scammers nowadays have attained a level of expertise in the field of deception. That is why in Bitcoin and other cryptocurrencies, the blockchain technology is really of help because the latter sustains all data and prevents undue interference from third or unknown parties. No wonder the world, in general, has gone crazy over the idea of blockchain technology because it is undeniably a game-changer in data collection processes.
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April 20, 2018, 10:12:07 AM
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Bitconnect lending platform scam should be made number one if ever a ranking for top cryptocurrency scam is made. It was glaring that the promise of massive R.O.I was never sustainable yet shills like Trevor James continued to promote the scam on YouTube till the scheme got busted.

Exactly, months after they exited, we have been calling it out that its a scam, I don't know why the public still trust and invested on them. Warning have been given, that's why its really sad for those investors who lost in this scam as they were advised. I really don't know what happened to Centratech though, it was endorsed by a lot of celebrities in the beginning, maybe they don't really understand how everything works that's why they try to promote (and paid handsomely) it but later on if was found that the co-founders was totally misleading. Specially claiming that they have partnership with MasterCard which turns out to be a total lie.

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April 20, 2018, 12:16:17 PM
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One of the red flags when it comes to investing is the rate of return. Yes it may be possible to have that rate of return of 40% or 30% monthly but it will not be consistent because not all the time the price of the coin is moving up. If they reason out that they are trading but cannot show to the public their earnings then it would be a warning that it is a potential scam.

Sometimes you just cannot blame the one who are organizing the scam but the investors as well because it is obvious in some of this scam especially bitconnect because just a simple google search and they would know there is something fishy about it. If they just did what they are supposed to do before parting with their money then they can avoid being scammed.

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April 20, 2018, 12:44:04 PM
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It doesn't really matter what scam it involves, it only points out that buying yourself directly into Bitcoin, or holding your existing coins instead of investing them in whatever junkyard site or service, is always the best way to get what you want, which is an increase of wealth. I always found it quite fascinating that people are so willing to expose themselves to such insane risks, while in most cases it only result in losses. It's yet another sign that people are too stupid to learn from anything. While this is a market where everything is possible to a certain hight, it still doesn't change the fact that money isn't out for the grabs here, and sites and services can't hand you over Golden mountains like it's nothing.

While I am browsing through Youtube looking for some interesting content, I am being flooded with ads having as tumbnail; turn $250 in $4000 or turn $250 in $11,000 in 1 week. I am doing my utter best to find 1 single legitimate ad, but none popped up. I am glad that these ads will no longer be present in the future.

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April 20, 2018, 02:44:19 PM
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Interesting and informative, thanks to author for letting me read it!
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