What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency designed to work as a medium of trading. It uses cryptography to secure and verify transactions. Also, to control new units of a cryptocurrency.
Bitcoin and Ethereum is the examples.
5 Biggest Cryptocurrency SCAMS
- Pincoin and iFan
iFan is advanced social network application which is specific for artist is a technology platform, which is designed specifically for the Showbiz communities. It is used to connect with fan communities around the world and stored the artists creative products.
Pincoin Project is about building an online collaborative consumption platform for global community, based on principles of Sharing Economy, Blockchain Technology, and Crypto Currency. Members of the PIN community can perform collaborative investment as well as collaborative consumption to get full benefits from sharing economy model.
SCAM: A Modern Tech, Vietnamese company conned 32000 people out of $660 million by holding fake Initial Coin Offerings(ICO). Company started with an ICO for its digital token, Pincoin promising the investors about a constant return of 48% per month. Modern Tech then launched another token called iFan, social network token for celebrities.
Initially, Pincoin investors were paid in fiat for their investment and everything was going fine until January, when company started rewarding investors in iFan, that wasn’t even redeemable for cash. After providing a few iFan tokens, the company just disappeared. The Seven people behind Modern Tech known as the Masterminds have headed to an unknown location leaving behind the Pincoin project.
Scammed investors gather outside Modern Tech’s office in Ho Chi Minh to demand compensation from the company. They quickly turned to protests with dozens of investors holding banners in front of the company including a message: Cryptocurrency – the biggest multi-level scams, more than 15 trillion dongs. While the team of seven Vietnamese nationalists behind the scheme secretly left the country. According to their website there is some traditional ICO related details which does not contain any information regarding the founders and advisors of the project. Even the Whitepaper provided by the company where no mention about the team or any founder.
A report came up from local publication said the company had already left and declare invalid their contracts and no one knows where they are moving on. A statement has been circulated from Vietnam’s Prime Minister ordering the State Bank of Vietnam, the Ministry of Public Securities and other authorities to quickly consider and take down the scam.
OneCoin
What is OneCoin?
OneCoin is a platform started by Dr. Ruja Ignatova, in which providing instant access to financial services people worldwide. By providing the educational tools they simplify and demystify digital currency and help individuals and merchants to understand and use the OneCoin cryptocurrency.
OneCoin providing global access to cross-border and low-cost financial transactions, recorded in the OneCoin blockchain in a consistent and unbroken sequences.
SCAM: The Navi Mumbai Police have filed a chargesheet against the promoters of crypto-currency OneCoin, accusing them of duping thousands of investors to amass Rs. 75 crore. The police have also booked two Bulgarian nationals in its chargesheet, including Ruja Ignatova, the founder of the Ponzi scheme. So far, it has arrested 23 people, all residents of Thane, Navi Mumbai and Mumbai, while three others have moved court for anticipatory bail. In April, Navi Mumbai Police Commissioner Hemant Nagrale and other officers had attended an investor seminar at Jui Nagar undercover and later arrested 15 people who organised it.
The process had been luring in individuals with promises of huge returns on a one-time investment of Rs. 11,900. Investors would then be given passwords to access their profiles on the OneCoin website and could see how many coins they had been able to purchase with their money. The accused had told investors that the value of the coins would fluctuate according to the value of the Euro, said the police.
Investigations have led the police to 35 bank accounts operated by the accused in Maharashtra, Gujarat, Rajasthan and Delhi registered in names of varied private firms, which saw transactions of over Rs. 75 crore. A police officer said that the police had been able to seize Rs. 25 crores, as the accused moved away the rest of the money as soon as the arrests were made.
29 May 2017 International Financial Services Commission of Belize (IFSC) issued a warning about OneLife Network Ltd conducting trading business without license or permission from IFSC or any other authority. OneLife Network Ltd was directed to cease and desist from carrying on with the illegal trading business. On January, Bulgaria police raided Onecoin’s office in Sofia, German police and Europole took part in the bust and investigation. Onecoin’s servers and other material evidence were seized.BitConnect
What is BitConnect?
BitConnect Coin is a decentralized digital currency, an open-source and peer-to-peer protocol that allows people to invest their possession in a non-government related currency and stores it and even earn from these investments. Hence, BitConnect helps someone by having investment interest while they also help on the system security.
SCAM: BitConnect is a website which is heavily advertised throughout social media platforms such as Facebook, Youtube and Twitter to catch and attract the users. In their website mention that people allow to put their money into a trading robot which in promising they are providing returns of 1% daily. By seeing this friends of those who invested already into this BitConnect also started investing in it under the impression that the bot will make the money.
After the market capitalization reached around $3 Billion US worth of capital than suddenly their website went down, they announced that they were shutting down their lending platform and any balances on the website would be refunded in a currency called BitConnect tokens. But BitConnect has been shut down then there are no value matters to their bot which trading BitConnect tokens as refund to the investors. People started realizing this, so they sold off their shares resulting in the value of BitConnect tokens dropping 90% in less than an hour.
The problem arises where they said they are providing returns 1% daily. A ponzi scheme is a process where a website can appear to be profitable by paying old investors with money paid by new investors. The term pyramid scheme, where early investors get some sort of benefit by inviting new people to the scheme. In BitConnect’s case there is both a lack of information on who owns the system. Platform says they’re refunding all outstanding loans at a rate of $363.62 USD. The platform was powered by a token called BCC which is essentially useless now that trading platform has shut down. The platform got two ceased and desist letters from Texas and North Carolina Securities board and several users launched a class action lawsuit against Bitconnect to recover lost funds amounting $700,000 USD.Plexcoin
PlexCoin is an entirely decentralized open source worldwide currency, without any central authority. This means that your transactions will not be managed or verified by any traditional banking institution. Users can now control their own finances privately.
Plexcoin's mission is to make cryptocurrency accessible to everyone by being easy to use and to understand, safer than standard currency and much more private.
SCAM: Starting in August 2017, Quebecer Dominic Lacroix collected funds from investors buying into an ICO which is basically a fundraising round wherein people buy digital tokens from a startup – for a token called Plexcoin. The company is believed to have raised $15 million, of which $810,000 remains deposited at the payment processor stripe, according to SEC, an unknown amount in crypto-wallets controlled by the company.
Many token sales are outright securities fraud that differ little from a typical pyramid or Ponzi scheme which has been at the forefront of contending with how the technology interacts with existing legal frameworks. According to Coindesk, the amount of money raised in ICOs in 2017 is about $3.5 billion, compared to $295 million in all previous years combined. SEC shut down operation and froze stolen funds and Plexcoin scam Founder sentenced to jail and fined $10k.Centra Tech
Centra Card allows users to spend their cryptocurrency assets in real time anywhere that accepts Visa or Mastercard. All made possible with our Currency Conversion Engine (CCE) Module users can convert their 8+ cryptocurrencies to a spendable fiat.
SCAM: The US Securities and Exchange Commission (SEC) and the Justice Department have levelled criminal charges against the founders of Centra Tech. Centra Tech is a company that sold $32 million of cryptocurrency in an initial coin offering (ICO) in 2017. The reason behind they reached $32 million in a short time because of endorsing celebrities like Floyd Mayweather and DJ Khaled. Two founders of the company, Sam Sharma and Robert Farkas, were arrested on Sunday, April 1, 2018 with federal charges including securities fraud, conspiracy to commit securities fraud, wire fraud and conspiracy to commit wire fraud.
In a complaint filed in a federal court in the Southern District of New York, the authorities allege that the project co-founders misled investors by claiming to have a partnership with card providers MasterCard and Visa. The duo is also accused of planning to sell digital tokens without confirmation with federal securities laws.
According to the SEC, they convinced their investors to buy their CTR token, telling them that the funds raised through the ICO would be used to launch a suite of financial products. In addition, Farkas and Sharma, created fictional executives with impressive biographies to promote the ICO and posted false and misleading marketing materials on the company’s website. They even paid celebrities to endorse the ICO on social media. They both are now in police custody.
Verdict
To avoid cryptocurrency investment scams, I would research investment opportunities carefully – what the company is providing and what are the benefits we are getting from their services. I would be investing a lesser amount which means that I can afford to lose but not every time.
We must keep in mind about due diligence in which we have to take reasonable steps to avoid these scams. They are:
- Check website – Check the company’s website whether it is official or fake one.
- Check official social platform pages – Check their social media platforms such as Facebook, Twitter – that how many likes and followers are there on their page.
- Telegram – Chat with them on their official telegram group about the projects regarding the prototypes, token matrix, team members and offer sale etc.
- Whitepaper – Check their Whitepaper which is available on their official website, go through the whitepaper and ask as many as questions comes into your mind about the projects to them on telegram group and about the prototypes available or not.
Now let’s talk about individually scams happened into the market of cryptocurrency – Be aware about Phishing attacks, where the process going as Phishers purchase domains and Google ads imitating popular exchanges. The fact is that the fake website looks alike with the real one, once you enter the credentials or keyword, the fake site directs you toward the correct platform, where you get stolen and your account get hacked and empty.
To not be a part of this scam, make sure you always type the exact URL of the website. More importantly DO Your Own Research properly.