GAW was an obvious scam in its cloud mining days. Thats already collapsed but they still limp on with their scam coin. Thats just about finished too.
I completely disagree about it being obvious back then. In fact, I'm still not sure the cloud mining was a scam. He misrepresented what they were, at least in the case of Zen and Prime, but there's no evidence he was trying to cost his customers money. I don't think any fraud entered into it until he started making promises he had no intention of filling and lying about deals and resourses in place regarding his altcoin in an attempt to boost its value. That's when the scam started.
Remember, his whole idea from day one was to hook them in with cloud mining, take the loss over doing the mining himself so he would have a customer base for his new product. It totally worked, but the cloud mining was always supposed to make people money.
I will quote from the cloud mining 101 risk assessment thread
1+4+5+~7 4/7*= Possibly/partially legit based on criteria set forth. Based on wider context: more suspicious than a nun squatting in a cucumber field
Criteria to help you spot a cloud mining scam/ponzi.
1) No public mining address / no user selectable pool.
A cloud mining company that wont let you direct the hashrate to your pool of choosing and cant prove its actually mining bitcoins itself, is very likely a scam. There is no reason to hide mining address or not sign blocks. None.
2) No endorsement from any asic vendor
Asic vendors will gladly make a simple post to show the company in question is a significant customer of theirs. Its free advertisement for them and it helps their customer grow their business, so there is absolutely no reason they wouldnt. If a (cloud) mining company cant get any asic vendor to post such endorsement, you should assume they dont have any hardware to mine with.
3) No relevant pictures of their hardware and datacenter
There is no reason not to provide such pictures, except of course, if there is nothing to take pictures off. Mind you: pictures can be faked. Picture dont prove current ownership. So like all criteria listed here, by themselves they are by far insufficient proof.
4) Open ended IPO / fractional reverse mining risk
Unless the cloud mining is operated by the asic vendor himself, you can not sell an unlimited amount of hashrate. Hardware takes (usually a long) time to order, arrive and deploy. Any company that doesnt limit sales or make public how much hashrate they sold vs what they have (provably) deployed should be considered suspicious.
5) Referral programs and social networking
Referral programs, especially ones that pay almost 10%, are a huge red flag. The mining market is cut throat with razor thin margins. No real company can afford to pay 10% referrals on below market cloudmining prices. Referral programs almost always serve only to feed the ponzi and provide financial incentive to posters to lie about the true nature of the company. Never trust anyone with a referral link in their sig.
6) Anonymous operators
If the operators are hiding behind whoisguard, provide no provable identity and especially when, like in some cloudmining cases, they use demonstrably false ID or company registration information, you have to be nuts to trust them with your money.
7) No exit strategy
If you cant sell your position, you cant get your money out. Thats the ideal case for a ponzi and allows it to run for a long time.
8 ) Bonus point for "guaranteed profit"
So far, Ive only seen bitcoinmaker.ch do this. If anyone guarantees you a bitcoin denominated profit, and especially a 30+% one, you can be sure its a ponzi, all the other criteria become unimportant. There is no such thing as certain profit when it comes to mining, no one knows how the network will evolve, or what btc exchange rate will do. If anyone could somehow be certain of making a 30% profit, they wouldnt need your money (and they wouldnt give the profit to you).
1) Was the biggest red flag. Legit Cloud miners dont hide this. In fact the ones that collapsed have all hidden theirs probably because they dont have one!
2) They avoided only because of that 5PH purchase from bitmain. It sadly looks like these are the ones they are selling now and may have been their only miners.
3) They should have received a point for 3 to be honest. Most of their pics were obviously shopped or showed a fraction of the claimed mining power
4) Well obviously they never sold out of Haslets even when claims hit crazy amounts like 35PH/s. I wont even go into script mining power as a percentage of the network...
5) Referral programs.....
6) Wow one they legitimately deserved to get a pass on. We know whos behind this.
7) This one has changed back and forth a few times. At least an exit strategy exists again
Personally i would give them a bonus point for Always profitable and never obsolete
So personally i would give them a 6/7 or 7/7 depending on if the hashmarket is open at the time for an exit if needed.
People keep investing in companies with these obvious red flags and wonder why it turns out to be a scam. If i decided to get into cloud mining anyone failing point 1 wouldn't even get a look in. I mean FFS you could even rent GH/s yourself to produce that proof yet cloud mining ponzis refuse to even do this.
