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Some of the Most Important Bitcoin Scammers You Should Be Aware Of

Bitcoin scam

Bitcoin’s spectacular ascent in prices throughout the last year has stirred considerable interest for the first digital money. With costs looking bullish lately, investing resources into bitcoin has never been as famous, to say more the attention, more the consequences.

One of the drawbacks of new financial specialists entering the market is the expansion in the number of scams, deceptions and fake accounts of retail speculators who lose their coins to suspicious endeavors. From ICO scandals to wallet robbery and cheating, standard customers can fall prey to crime effectively.

These following scam pages in Instagram are known mostly because of capturing assets and never showing back or even refraining from return back their clients profits:

Of course because of no specified regulations over the crypto structure, most of these scammers have legaly binding with their BROKER LICENSEs but never be afraid of ripping off people with their advertisements and promises.

The most effective method to Avoid Bitcoin Scams

With the unavoidable ascent of bitcoin in the present and coming years, it is becoming progressively essential to comprehend and be vigilant for bitcoin scams that could cost you thousands. There is no one particular method to abstain from being defrauded, yet reading the most recent bitcoin warnings, keeping data private, and double checking sources before investing resources into anything are great standard techniques that may help spare you from being cheated. Succinctly put, Knowledge is power.

Wrap up

Even though there are more risks in the market, the open doors might be overpowering for a few. Moreover, being cautious is dependably an absolute necessity, and there are clear indications of scams that financial specialists can search for. By staying away from these traps, clients can better their odds for progress and secure their investments. These are probably the most widely recognized scams, and how they can be evaded.

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Crazy Crowdfund Scammer Pitched a Backpack, Stole $800,000 to Buy Bitcoin

iBackPack, Bitcoin

A prolific crowdfunder is being sued by the FTC after duping investors to use their money for himself. | Source: Kickstarter

Douglas Monahan promised consumers a ‘high-tech’ backpack known as the iBackPack, but failed to deliver the product after raising over $800,000. After allegedly scamming Indiegogo users of $720,000, Monahan staged three more crowdfund campaigns to take his total bounty to $0.8 million.

IBACKPACK ‘CREATOR’ SHUT DOWN BY FEDERAL TRADE COMMISSION

The investigation against Monahan was inadvertently revealed last year when an FTC agent’s private email exchange was made public. On May 6th, the FTC took action and levelled a Complaint for Permanent Injunction and Other Equitable Relief against the Texas man.

According to the FTC, rather than use $800,000 to create the iBackPack, Monahan used the funds for ‘personal purposes’ – among them, buying Bitcoin. From the complaint filed in the Southern District of Texas, May 6th:

“Defendants have used a large share of contributions for Defendant Monahan’ s own personal purposes, such as making bitcoin purchases and ATM withdrawals and paying off personal credit cards; for marketing efforts to raise additional funds from consumers; and for other business ventures.”

Monahan’s victims also claim that their personal data was sold, owing to the unexpected marketing communications they all received soon afterwards. This is only the second time in history that the FTC has gone after a crowdfunder. In 2015, Erik Chevalier raised $120,000 for a board game, and then sold off contributors’ personal data after failing to deliver the product.

CROWDFUND HOPPING: INDIEGOGO TO KICKSTARTER AND BACK AGAIN

After failing to produce anything from the $720,000 he raised on Indiegogo, Monahan jumped over to Kickstarter and started marketing the iBackPack 2.0. From this campaign, he raised a further $76,000, all while his original backers were still awaiting their products.

He then launched another two campaigns back on Indiegogo and siphoned a further $11,000 from gullible investors.

The Indiegogo page for the iBackPack still exists, and has been inundated with nearly 4,000 comments from disgruntled patrons. One recent comment notes:

“I love that the FTC is suing you, and I hope they make Indiegogo just as guilty for letting this continue without protecting their customers.”

GULLIBLE VICTIMS? A PARALLEL BETWEEN BITCOIN AND CROWDFUND INVESTING?

Not a week goes by where the Bitcoin isn’t lambasted by critics in one way or another. This week it was Warren Buffet who dismissed Bitcoin as nothing more than a gambling device.

Cryptocurrency adherents are often characterized as gullible victims of an obvious bubble, but if $800,000 is being thrown away on the ‘iBackPack’ then we clearly have other problems to worry about. The ‘high-tech’ iBackPack appears to be nothing more than a bag with a charger and some USB ports inside it.

The parallels between Kickstarter promises and ICO pitches are obvious here. Just like with ICOs, crowdfunders do not have to guarantee that their project will even materialize. As Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, said:

“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work. But you do have to use the money to work on your idea—or expect to hear from the FTC.”

 

Source: Crazy Crowdfund Scammer Pitched a Backpack, Stole $800,000 to Buy Bitcoin

Pay Attention to These 7 Bitcoin Scams in 2018 – Anne Sraders

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Bitcoin the possible Pandora’s Box of the currency world – has never been short of controversy. Whether it be aiding the black market or scamming users out of millions, bitcoin is no stranger to the front page.

Still, the jury is out on the legality and usefulness of bitcoin – leaving it in a proverbial grey area. However, there have been several legitimate bitcoin scams that have become infamous – but, what are the top 7 bitcoin scams? And how can you avoid them?

What Is a Bitcoin Scam?

For most cases, it may be pretty obvious what a scam is – but with bitcoin, things become murkier. Bitcoin itself is an unregulated form of currency that essentially is a mere number that is only given value because of an agreement. It’s basically like a moneybag with a lock on it – the code of which is given to the recipient of the bitcoin (an analogy drawn by Forbes in 2017).

Bitcoin scams have been famously criminal and public in nature. With no bank as a middleman in exchange, things become more complicated; so hackers and con men have had a heyday.

Top 7 Bitcoin Scams

There have been (and undoubtedly will be) nearly countless bitcoin scams, but these frauds make the list of the top 7 worst bitcoin scams to date. Take note.

1. Malware Scams

Malware has long been the hallmark of many online scams. But with cryptocurrency, it poses an increased threat given the nature of the currency in and of itself.

Recently, a tech support site called Bleeping Computer issued a warning about cryptocurrency-targeting malware in hopes of saving customers from sending cryptocoins via transactions, reported Yahoo Finance.

“This type of malware, called CryptoCurrency Clipboard Hijackers, works by monitoring the Windows clipboard for cryptocurrency addresses, and if one is detected, will swap it out with an address that they control,” wrote Lawrence Abrahams, computer forensics and creator of Bleeping Computer.

The malware, CryptoCurrency Clipboard Hijackers (which reportedly manages 2.3 million bitcoin addresses) switches addresses used to transfer cryptocoin with ones the malware controls – thus transferring the coins to the scammers instead. And, according to Asia Times, even MacOS malware has been connected to malware scams involving cryptocurrency investors using trusted sites like Slack and Discord chats – coined “OSX.Dummy.”

2. Fake Bitcoin Exchanges – BitKRX

Surely one of the easiest ways to scam investors is to pose as an affiliate branch of a respectable and legitimate organization. Well, that’s exactly what scammers in the bitcoin field are doing.

South Korean scam BitKRX presented itself as a place to exchange and trade bitcoin, but was ultimately fraudulent. The fake exchange took on part of the name of the real Korean Exchange (KRX), and scammed people out of their money by posing as a respectable and legitimate cryptocurrency exchange.

BitKRX claimed to be a branch of the KRX, a creation of KOSDAQ, South Korean Futures Exchange, and South Korean Stock Exchange, according to Coin Telegraph.

BitKRX used this faux-affiliation to ensnare people to use their system. The scam was exposed in 2017.

3. Ponzi Scheme – MiningMax

“Ponzi bitcoin scam” has got to be the worst combination of words imaginable for financial gurus. And, the reality is just as bad.

Several organizations have scammed people out of millions with Ponzi schemes using bitcoins, including South Korean website MiningMax. The site, which was not registered with the U.S. Securities and Exchange Commission, promised to provide investors with daily ROI’s in exchange for an original investment and commission from getting others to invest (basically, a Ponzi scheme). Apparently, the site was asking people to invest $3,200 for daily ROI’s over two years, and a $200 referral commission for every personally recruited investor, reports claim.

MiningMax’s domain was privately registered in mid-2016, and had a binary compensation structure. The fraudulent crypto-currency scam was reported by affiliates, resulting in 14 arrests in Korea in December of 2017.

Korea has long been a leader in technological developments – bitcoin is no exception. However, after recent controversy, it seems as though this is changing.

“But a lot of governments are looking at this very carefully,” Yoo Byung-joon, business administration professor at Seoul National University and co-author of the 2015 research paper “Is Bitcoin a Viable E-Business?: Empirical Analysis of the Digital Currency’s Speculative Nature,” told South China Morning Post in January. “Some are even considering putting their currencies on the blockchain system. The biggest challenge facing bitcoin now is the potential for misuse, but that’s true of any new technology.”

4. Fake Bitcoin Scam – My Big Coin

A classic (but no less dubious) scam involving bitcoin and cryptocurrency is simply, well, fake currency. One such arbiter of this faux bitcoin was My Big Coin. Essentially, the site sold fake bitcoin. Plain and simple.

In early 2018, My Big Coin, a cryptocurrency scam that lured investors into sinking an alleged $6 million, was sued by the U.S. Commodity Futures Trading Commission, according to a CFTC case filed in late January.

The CFTC case further details that the suit was due to “commodity fraud and misappropriation related to the ongoing solicitation of customers for a virtual currency known as My Big Coin (MBC),” further charging the scam with “misappropriating over $6 million from customers by, among other things, transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods.”

Among other things, the site fraudulently claimed that the coin was being actively traded on several platforms, and even mislead investors by claiming it was also partnered with MasterCard, according to the CFTC case.

Those sued included Randall Carter, Mark Gillespie and the My Big Coin Pay, Inc.

5. ICO Scam – Bitcoin Savings and Trust and Centra Tech

Still other scammers have used ICO’s – initial coin offerings – to dupe users out of their money.

Along with the rise in blockchain-backed companies, fake ICOs became popular as a way to back these new companies. However, given the unregulated nature of bitcoin itself, the door has been wide open for fraud.

Most ICO frauds have taken place through getting investors to invest in or through fake ICO websites using faulty wallets, or by posing as real cryptocurrency-based companies.

Notably, $32 million Centra Tech garnered celebrity support (most famously from DJ Khaled), but was exposed for ICO fraud back in April of 2018, according to Fortune. The company was sued for misleading investors and lying about products, among other fraudulent activities.

The famous DJ wrote his support in a caption on Instagram back in 2017.

“I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens!” Khaled wrote.

The U.S. Securities and Exchange Commission even issued a warning in 2017 about ICO scams and faux investment opportunities, brought on by a slew of celebrities who promoted certain ICOs (like Paris Hilton and Floyd Mayweather Jr. to name a few).

“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion,” the SEC wrote in an Investor Alert in 2017. “A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.”

Another example is Bitcoin Savings and Trust, which was fined $40.7 million in 2014 by the SEC for creating fake investments and using a Ponzi scheme to scam investors. According to Coin Telegraph, Trenton Shavers, the organization’s leader, allegedly scammed investors into giving him 720,000 bitcoins promising a 7% weekly interest on investments – which he then used to pay back old investors and even fill his personal bank accounts.

6. Bitcoin Gold Scam – mybtgwallet.com

Nothing catches the eye of the naïve quite like the promise of gold – bitcoin gold, of course.

That is exactly what mybtgwallet.com did to unsuspecting bitcoin investors.

According to CNN, the bitcoin gold (BTG) wallet duped investors out of $3.2 million in 2017 by promising to allow them to claim their bitcoin gold. The website allegedly used links on a legitimate website (Bitcoin Gold) to get investors to share their private keys or seeds with the scam, as this old screenshot from the website shows.

Before the scam was done, the website managers (slash scammers) was able to get their hands on $107,000 worth of bitcoin gold, $72,000 of litecoin, $30,000 of ethereum, and $3 million of bitcoin, according to CNN.

Bitcoin Gold, the site’s wallet used in the scam, began investigating shortly after, but the site remains controversial. Still, firm released a warning to bitcoin investors.

“It’s worth reminding everyone that it will never be truly safe to enter your private key or mnemonic phrase for a pre-existing wallet into any online website,” Bitcoin Gold wrote. “When you want to sweep new coins from a pre-fork wallet address, best practice is the same as after other forks: Send your old coins to a new wallet first, before you expose the private keys of the original wallet. Following this basic rule of private key management greatly reduces your risk of theft.”

7. Pump and Dump Scam

While this type of scam is certainly not relegated to just bitcoin (thank you for the education, “The Wolf of Wall Street”), a pump-and-dump scam is especially dangerous in the internet space.

The basic idea is that investors hype up (or “pump up”) a certain bitcoin – that is usually an alternative coin that is very cheap but high risk – via investor’s websites, blogs, or even Reddit, according to The Daily Dot. Once the scammers pump up a certain bitcoin enough, skyrocketing its value, they cash out and “dump” their bitcoin onto the naïve investors who bought into the bitcoin thinking it was the next big thing.

Bittrex, a popular bitcoin exchange site, released a set of guidelines to avoid bitcoin pump-and-dump scams.

While “stackin’ penny stocks” may sound like an appealing way to earn an extra buck (thanks to its glamorization by Jordan Belfort), messing in bitcoin scams is nothing to smirk at.

How to Avoid Bitcoin Scams

With the inevitable rise of bitcoin in current and coming years, it is becoming increasingly important to understand and be on the lookout for bitcoin scams that could cost you thousands.

There is no one formula to avoiding being scammed, but reading up on the latest bitcoin red flags, keeping information private, and double checking sources before investing in anything are good standard procedures that may help save you from being duped. After all, knowledge is power.

Tokyo Police Shuts Down Cryptocurrency Pyramid Scam, Arrests 8 Men – Scott Jeffrey

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When investing in cryptocurrency it’s extremely important to be mindful of various scams that you could be targeted for. There are a number of individuals that are working to create scams that con people out of Bitcoins and other cryptocurrency. Because it’s quite easy to transfer crypto and because it could be difficult to receive a refund on cryptocurrency, it can be one of the perfect tools for the creation of financial scams.

A recent cryptocurrency pyramid scheme was highly successful in targeting around 6000 people internationally from a hub in Tokyo. Eight men were arrested and charged with stealing roughly $68.42 million in various cryptocurrencies.

The company that they were associated with was called Sener and they claimed to be an official United States investment firm. The company that they created was unregistered and they were collecting cryptocurrency from people to have it then reinvested at several levels of membership status. The group held a series of seminars and gatherings promising monthly returns of roughly 20% on any of the money invested through their system. Customers could receive a referral bonus for bringing in new investors to the system.

The company that they created was widely successful through their seminars as well as through a series of YouTube videos that were published on the subject of cyptocurrency investment with them. The group was able to work unimpeded over several months without for filling their promise and while operating illegally without registration.

Their practices would have continued if a lawsuit was not properly filed against them. A group of 73 of their members stepped forward to create a lawsuit in the Tokyo District Court. This group of individuals is seeking ¥370 million in damages for the funds that were taken from them in the illegal operation of this business.

There are a number of other members that bought into this company that have still yet to come forward or request any type of compensation for the scheme.

As news continues to spread about Sener, more of their victims are coming forward in an effort to seek damages. Because the company was not operating with a proper securities license it’s also quite possible that they will be unable to continue their operations in the United States as well as several other international locations.

When you are considering an investment in cryptocurrency or having your currency managed for investment is important to consider the validity of a company and its structure. If you are starting to see that there are levels of membership, ongoing referrals and an overall lack of publication on a company, this could represent a risky choice for your investment.

Asking the right questions such as whether a company is properly registered for the trade of securities can also help to make sure that they aren’t forcibly shut down in a hurry for operating illegally and that your money can remain safe in their hands.

 

 

 

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