NiceHash stops paying back -- scam or not?

[GazetaBitcoin]

Many of you heard about the NiceHash hack from December 2017, when almost 5000BTC were stolen.

Many things happened since then:
- the CEO Marko Kobal resigned from his position soon after the hack, contributing to the rumors that the hack was an inside job
- NH states that all the customers will be reimbursed in full at the beginning of 2018, after a group of investors would help the company; with this move, nobody could sue them since stolen funds were (supposed to be) paid back
- NH states that a police investigation started
- the CTO Matjaz Skorjanec leaves the company to his father
- the CTO Matjaz Skorjanec, a well-known hacker (developer of Mariposa botnet), got arrested in autumn of 2019
- instead of paying back all stolen money at the beginning of 2018, NH paid a monthly percentage to the clients, starting with 5-10% monthly and lowering the percentage in a few months to 1%
- they kept paying 1%/month until December 2019, reaching a total of 82% paid back in what they called the "repayment program"; although the percentage paid back monthly was very low (1%), at least there was a hope
- since January 2018 nothing was heared anymore about the police investigation, nor about the investors.

However, in December 2019, a shocking announcement was made: NiceHash, the largest hash-power broker marketplace is forced to pause the Repayment program at 82%.

The reason for stopping paying back is the following: "Unfortunately, NiceHash will not be able to fulfill its promise to fully reimburse all users and achieve the 100% reimbursement status or the Repayment program in the foreseeable future. We have been repaying the old balance to our users through our fees and thus cutting our income. Our income and thus Repayment program assets are subject to taxation. The current state of the Repayment program is at 100,04% of the original loss value in our accounting books".

Could this be the final of the alleged scam from December 2017? Many said it was no hack, but an internal job. The managers resignation might also be linked. Many suspected that although NH stated they are paying back cutting their profits, they were actually paying back from customers' earnings, which earned less and less money from selling their hash power (for example, 1xNvidia 1080Ti would produce per day in summer of 2017 about 9$ and today it produces only 45 cents). After all, if it was a scam, they kept 18% of the "stolen" funds, which mean about 850BTC.

However, even if it was not a scam, they are now responsible in front of the law. If until now they could not be sued since they were paying back, not the situation changed. Although they say that the taxes for paying back 82% took to a total amount paid by them to 100.04% of the stolen funds, they have to convince a court of law that they can stop paying back the remaining 18%.

I'm curious of other opinions about this case.

[1715320714]

1715320714

[stompix]

Many suspected that although NH stated they are paying back cutting their profits, they were actually paying back from customers' earnings, which earned less and less money from selling their hash power (for example, 1xNvidia 1080Ti would produce per day in summer of 2017 about 9$ and today it produces only 45 cents). After all, if it was a scam, they kept 18% of the "stolen" funds, which mean about 850BTC.

One thing....
Let's take ETH mining for example
In summer 2017 the price was going between 200-300 on average, now it's  150$
The hash rate went from 30Th to 90Th during that period but it's double right now at 165th.
The reward per blocked dropped from 3eth to 2 eth.

So, there is no point in comparing what you could get two years ago and what now.
The mining profitability went down almost 20x times compared to the peark in 2017.

Not defending nicehash here but it's not their fault mining is not that productive anymore.
Maybe they are cutting the earning a bit but not by 20x times.

[GazetaBitcoin]

I agree with you. However, the main problem is that they stopped paying back the stolen funds, this being their second lie. First was that at beginning of 2018 every client will be fully reimbursed by that time. After, they said they will pay each month a small part, instead of paying back everything in a single installment.

[audaciousbeing]

I agree with you. However, the main problem is that they stopped paying back the stolen funds, this being their second lie. First was that at beginning of 2018 every client will be fully reimbursed by that time. After, they said they will pay each month a small part, instead of paying back everything in a single installment.

A company that suffered the kind of losses that NiceHash suffered, would say anything to ensure that they were able to fend off as much as possible attacks they can at the moment which is what they have done. The point is the funds stolen does not only involve investors funds but also their own working capital which would drastically affects their operation and also responsible for them not to be able to meet up with their liabilities. Now that its seemingly impossible for them to pay, they would not come out to make the announcement because it would only open them to series of liabilities and they surely don't have money to hire lawyers especially if its a class action. So, aside from the tough operating conditions, they would still continue to struggle into the future.

[crairezx20]

I agree with you. However, the main problem is that they stopped paying back the stolen funds, this being their second lie. First was that at beginning of 2018 every client will be fully reimbursed by that time. After, they said they will pay each month a small part, instead of paying back everything in a single installment.

I'm one of the miner mine using nicehash before but I didn't receive any notification that they are going to pay the affected wallets including mine.
But I heard many news and even the video on youtube that they officially trying to recover all funds and slowly paying back users but honestly, I didn't receive any cents from nicehash. During that time I'm regretting mining directly in nicehash their miner is easy to use and easy to configure that is why I use their service to mine and earn BTC as payment I just holding them in Nicehash wallet because I thought they are safe but in the end, it's nightmare.

Now, I learn a lot about mining altcoin so I decided to mine directly to mining pools. Every 2 to 3 hours you will receive the mined coins directly to your wallet which is safe compared on using nicehash. 

[buwaytress]

I'm kinda with stompix here. When "managed mining" worked out before, it wasn't that miners were managing well, it was simply that market forces were ensuring they could sell for profit and pay back "investors". And then when the market flopped, mining profitability did, and it all fell apart. Even the so-called breakthrough players who wanted to do things more professionally eventually flopped (talking about Gigawatts and Hydrominer for example).

The model's simply not feasible as it relies too much on the market, and promises ROI on a dollar value, not actual bitcoin returns.

Buy bitcoin. Or mine yourself.

[GazetaBitcoin]

I'm one of the miner mine using nicehash before but I didn't receive any notification that they are going to pay the affected wallets including mine.

They announced the repayment program on their website and on Fb as well (maybe on other social media too). This was the initial statement: https://www.nicehash.com/blog/post/nicehash-will-fully-reimburse-its-users.

If you had an external wallet in the moment of the hack, in order to receive the funds paid monthly by them, you had to check that address that was affected during the hack. And in order to actually receive the funds in your external wallet, there should be at least 100.000 satoshis in order to make the payment (this is their minimum treshold for paying to external wallets). So if you had a small amount which never got to reach 100.000 satoshis, you have to mine on the old address to reach up to 100.000 satoshis (what you mine + what they paid) in order to actually receive your payment.

For internal wallets users things should have been way easier, as for internal wallets the minimum treshold is way lower. But, again, you must check the address you had during the hack.

It is all explained in the above link.

And if your 82% of the stolen funds (this is how much they paid back) is above the minimum treshold (100.000 satoshis for external wallet) and you still did not receive them, you can contact them on Fb. They respond usually in 1-3 days.

I hope this helps

[DaveF]

Well I would have lost this bet.
They are paying back the last 18%

So it's 30 days from now more or less and YOU MUST GO TO THE SITE AND CLICK THROUGH SOME THINGS TO GET PAID.

LET AS MANY PEOPLE WHO YOU KNOW WHO USED THE SITE TO APPLY FOR THE REPAYMENT.

https://www.nicehash.com/blog/post/nicehash-keeps-the-promise-and-will-fully-reimburse-its-users

Lets see what happens over the next month and if they really follow though and pay everyone.

-Dave

[stompix]

Well I would have lost this bet.
They are paying back the last 18%

Wow, this is really amazing, probably the bet would have been at 1:100 odds especially since I assume they will keep their promise and they will reimburse in BTC not convert anything in fiat value. With the price knocking at the 20k ATH's doors, this is really impressive, that's about 20 million $ assuming that everyone will still be able to claim what was left. Of course, it's not funny when money that you might have needed in RL to buy stuff was taken from you but in the end, it might work out as the ultimate hodl program.

I'm judging just from the announcement so I don't know either if all this will go as smooth as it should ut still, compared to other things that happen around here, I have to take my hat off to nicehash.

[GazetaBitcoin]

This is great news but let's see if it really happens. As of now their site is down lol. That's a good start

However, I'm curious to see how they commented the possibility to pay back. When they halted payments at 82% they said they stopped because they had to pay taxes for the returned money. And the taxes for the 82% paid back represented for them a total amount of 101% of what they had to return to the customers. If I remember well, they said also it was a sort of accounting problem and they were unable to keep paying since in their balance it showed they already paid the total amount of 100% (and even a bit more - 101%). Did the law change now in Slovenia? Suddenly, when BTC is close to ATH again? Lol.

I think it's obvious they collected the funds from customers' profits (and they did it in the past as well). So practically every customer paid himself back, it's not like NH really cut their profits to pay back. I saw so many saying how much their pay rates dropped after the hack and after NH started to "pay back". Yes, those rates dropped also due to a bear market, but I don't think that was the only reason. Most likely, NH slipped a bit of the pay rates to be able to "pay back" to the customers, but from customers' own pockets.

And now they pay the rest. So the law didn't allow them to keep paying in December 2019, but it allows them now. Curiously, when BTC is so high /s

Oh well, it's good after all, but the deception remains. Not many companies paid back after a hack, but in their case I am almost sure that most of the repayment was made practically from customers earnings, not from their profits. Unfortunately, I can't prove that so it is a speculation.

[stompix]

Oh well, it's good after all, but the deception remains. Not many companies paid back after a hack, but in their case I am almost sure that most of the repayment was made practically from customers earnings, not from their profits. Unfortunately, I can't prove that so it is a speculation.

What would be the difference and where did you expect the money would come?
If I pay you for your work 100$ a day and charge you 20$ for transport is it different than paying you 80$ and giving you a free ride?
I'm pretty sure you're not expecting the people behind nicehash to start working at McDonald's to pay back the lost money, where do you think Bitstamp come up with 20k coins back then?

If I were a client waiting for the money I wouldn't give a damn where the money comes from, do they fleece the one's mining with them, not my problem, and nobody is forcing you to keep mining at nicehash if the rates are that bad.  It's like getting a 50% discount on the opening of a new store and arguing that they will make that money back from rising prices for the next clients, is that illegal? I don't find it even immoral!

This is great news but let's see if it really happens. As of now their site is down lol. That's a good start

At least it seems it's not their fault this time:
https://domainnamewire.com/2020/11/17/godaddy-is-down/

[DaveF]

Well I would have lost this bet.
They are paying back the last 18%

...that's about 20 million $ assuming that everyone will still be able to claim what was left....

I'm assuming that is part of it.
Some people will not claim in time. So they don't have to pay that back,

Some people will not have enough to get a payout and will not bother mining to get it.
If you were mining to an external wallet minimum payout is 0.001
If BTC is at $20K then that's $40. If I am at .0009 then I might run a CPU miner for a couple of weeks to get a payout.
If I am at .0005 and I am out of the mining game and don't even have a GPU that I can run for a bit to get the last .0005 I'll probably just take it as a $10 loss and move on.

Different people will have different amounts they care about but in the end there is probably going to be a nice amount that they will never wind up paying back.

-Dave

[GazetaBitcoin]

What would be the difference and where did you expect the money would come?
If I pay you for your work 100$ a day and charge you 20$ for transport is it different than paying you 80$ and giving you a free ride?
I'm pretty sure you're not expecting the people behind nicehash to start working at McDonald's to pay back the lost money, where do you think Bitstamp come up with 20k coins back then?

NiceHash works as a market between buyers of hash power and owners of equipment willing to rent their hash power. For acting as a middleman, NH takes money from both parties. If you want to list on the NH market your wish of buying hash power, you have to pay a fee to NH. Those renting the hash power also pay a fee to NH. This is how the market works and this is how NH earns money.

OK, now that we know how NH earns money, this is what they stated:

We have been repaying the old balance to our users through our fees and thus cutting our income.

From the above mentioned quote, if it was true (but it isn't), it would mean that repayment would not affect the users - both miners and buyers of hash power - in any possible way. The ones renting hash power were supposed to receive same payments - but they didn't (and I'm not talking about the bear market reason for that) and those buying hash power were supposed to receive the same hash power as before for XXX amount of money paid - but that did not happen as well. And that's because NH did not pay back (only) from its incomes, but also from users involved, no matter if they were renting or buying hash power. And this is called hypocrisy.

If I were a client waiting for the money I wouldn't give a damn where the money comes from

You should, because it is a huge difference if someone owing you money pays you back from his funds or if pays you back from your own pocket

At least it seems it's not their fault this time:
https://domainnamewire.com/2020/11/17/godaddy-is-down/

Yes, I noticed that.

[stompix]

OK, now that we know how NH earns money,

That's some third rate cheap home-brewed sarcasm, has it worked with anybody till now?

You should, because it is a huge difference if someone owing you money pays you back from his funds or if pays you back from your own pocket

How the hell can they pay me back from my pocket when nobody is forcing me to keep working with them?
Seriously, how about rather than focusing on making this a Dumas (the father) novel that goes nowhere for 200 pages focus on one point: If I stop doing business with them, selling or buying how can they take money from my pocket to pay me back?

[GazetaBitcoin]

That's some third rate cheap home-brewed sarcasm, has it worked with anybody till now?

Sometimes it did; sometimes it didn't. However, it was no sarcasm in that sentence of mine. Some people reading the topic don't know how NH work, how they make money; some don't even know that you don't mine with NH, but instead you rent your hash power (such as the case of BlackHatCoiner, which thanked me for explaining to him how NH actually works). So it wasn't the case to jump to such conclusions.

How the hell can they pay me back from my pocket when nobody is forcing me to keep working with them? [...] If I stop doing business with them, selling or buying how can they take money from my pocket to pay me back?

The answer is simple and a part of it was already explained above by DafeF: if you stop working with them, you don't receive anything back from the repayment program, if your stolen funds do not meet the minimum paying threshold. If your stolen funds meet the minimum threshold but if you don't rent your hash power anymore, you would have to wait since the beginning of the repayment program with no payment until their monthly repayments of 1% would reach in your account an amount bigger or equal with the minimum threshold (that is 0.001 BTC). Example: someone who had 0.0015 BTC stolen received from NH 1% back per month (excepting the first months of the repayment program, when that percentage was a bit bigger). 1% of 0.0015 represent 15,000 sats. You would have to wait many months, in order to see your money back, because each month they added 15,000 sats to your account. You would have seen the money back (a first part of the money, not all of them) after 7 months, when you would have 105,000 sats in your balance.

And they paid until the total repayment reached 82%, yes? OK, based on the same example of 0.0015 BTC, let's suppose that you got paid already 0.00123 BTC, representing 82%. That means you have to collect 0.00027 BTC more. In order to receive those remaining funds, you have to rent your hash power again, in order to reach a minimum threshold of 0.001. But by renting your hash power again it means to work with NH again. And working with NH again means to pay yourself back (in part) from your own money, as NH cuts your payment rate in order to not pay you from its profits.

Indeed, if you never worked with NH after the hack, they didn't pay you anything from your own pocket. But they did it with all the other miners which kept working with them. If you are a particular exception, that doesn't make that the truth changes for all the others with kept working with NH and were paid back practically from their own pockets.

OK, you weren't cheated, let's say. So what? If other 50,000 individuals are cheated, but 1 is not, what's that suppose to mean? That NH is honest? Lol.

Seriously, how about rather than focusing on making this a Dumas (the father) novel that goes nowhere for 200 pages focus on one point

That's some third rate cheap home-brewed sarcasm, has it worked with anybody till now?

And yes, the above sentence is expressing my sarcasm now.

[stompix]

The answer is simple and a part of it was already explained above by DafeF: if you stop working with them, you don't receive anything back from the repayment program, if your stolen funds do not meet the minimum paying threshold.

So again, if my balance is over the minimum requirement which is...$40, how is forcing nicehash me to work for them to fleece me to pay me back from my own pocket?

And they paid until the total repayment reached 82%, yes? OK, based on the same example of 0.0015 BTC, let's suppose that you got paid already 0.00123 BTC, representing 82%. That means you have to collect 0.00027 BTC more.

You realize we're talking about 5$, right?
So, nicehash is fleecing you 1$ to pay you back 5$, and fleecing each user 1$ to pay back 20 millions.
Common...

Indeed, if you never worked with NH after the hack, they didn't pay you anything from your own pocket.

My point exactly! You could have said that from the start but seems like you're trying to prove that zero is not zero anymore when you add two but it doesn't become three. Well, good luck with that!

[GazetaBitcoin]

So again, if my balance is over the minimum requirement which is...$40, how is forcing nicehash me to work for them to fleece me to pay me back from my own pocket?

You realize that you're not the center of the universe only user of NH, right?

The discussion was not about you, nor about the users which stopped completely working with NH after the hack. The discussion was about all the users which kept working with NH after the hack and which were tricked by NH, paying them less than they were supposed to earn, in order for NH to collect more money and pretend they are paying back the stolen funds from they own profits - which did not happen.

Did you feel from any point of this topic or from my posts that I wrote them specifically about you? If yes, please read it again. The topic and my posts were not about you.

[DaveF]

Well they are sending out payments to the external wallets.

https://www.blockchain.com/btc/tx/7445dd402741ad13d59219b49db4f17a7b95455d894d03997a03ae2fb79f0525

It's still pending because they sent it with a bit of a low fee at the moment, but when they did send it yesterday it was only 1 or 2 blocks from the tip.

From what I have heard if you had an account / internal wallet with them you already got your BTC

Anyone here still owed and above the .001 but didn't get paid?

-Dave

[GazetaBitcoin]

I confirm that I received my payments, on two different external wallets. It was not a big amount (187.742 sats on one wallet and ~73.000 sats on the second wallet), but it's good to have my money back, although most of them were actually from my pocket and from other miners' pockets. But let's live with the illusion that NiceHash paid from their profits For the second wallet I had to mine a bit in order to reach their minimum threshold of 0.00! BTC, but it's OK. Better late than never...

[Phoenix_PROG]

I've also received my payment completely from nicehash this december 2020, I wouldn't have know that they paid if not for the news that I read online two days ago saying that nicehash have successfully completed the reimbursement of the 2017 hack, go and check your wallet address I'm sure you will see your BTC