Inequalities.top Review Inequalities is a Scam Bitcoin Exchange (BEWARE)

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Pay Attention to These 7 Bitcoin Scams

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. Bitcoin’s price has fluctuated throughout its history, falling and rising, currently hovering near $10,000. Perhaps you’ve found bitcoin while it looks to be on the rebound and find yourself interested in it as an investment.

However, there have been several legitimate bitcoin scams that have become infamous, and you need to know about them – 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, and cryptocurrency in general, 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 2020).

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.

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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 2020.

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-2020, and had a binary compensation structure. The fraudulent crypto-currency scam was reported by affiliates, resulting in 14 arrests in Korea in December of 2020.

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 2020 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 2020, 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 2020, 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 2020.

“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 2020 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 2020. “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 2020 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 2020 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. As more people become interested in Bitcoin, more people are also likely to try and pull off a scam.

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. Cryptocurrency can be a confusing topic even for the experienced Bitcoin enthusiast, so the more you read up on the world of Bitcoin, the more prepared you can be. After all, knowledge is power.

Bitcoin Exchange Igot Challenges Scam Allegations

Yessi Bello Perez

Bitcoin Exchange Igot Challenges Scam Allegations

UPDATE (30th July 16:54 BST): This article has been updated with additional comment from igot users.

The founder of Australia-based bitcoin exchange igot has refuted claims his business is a scam.

Igot recently came under fire, with many of its users complaining about delays to their withdrawals, branding the company “untrustworthy” and claiming they’d been robbed.

Rick Day, igot’s founder told CoinDesk the delays particularly affected fiat withdrawals, attributing them to a number of factors.

“They [the issues] are as not as big as they appear from the outside … one of the biggest issues that we have with delays is banking relationships.”

Strained banking relations

Day said the exchange had received a few incoming fraudulent transactions into one of its bank accounts in Australia.

“The person sending the funds basically used stolen bank accounts to fund igot wallets and withdraw bitcoin and [then] disappeared,” he explained.

This particular igot user, Day added, had a verified account, which raises questions around the company’s verification procedure. Day explained:

“Their account got verified by providing legitimate documents. Problem is, it was not that person’s ID. We’ve seen this many times and enforce video calls for many of our users to prove they are who they say they are. By the time we got to that point with this account, it was too late. The bank had already restricted the account and funds frozen.”

To overcome this issue, Day said, igot will require users making deposits over a certain amount to engage in mandatory video calls in the future.

The founder said progress had been made and he expected account restrictions to be removed by mid-August. “We’re certain that we will be able to resolve all the withdrawal issues in the next one to two weeks. Banks have so far been very cooperative and we’ve assisted them with their investigations.”

In order to prevent these kind of issues from happening again, Day noted his company was looking to procure additional banking partners.

“We’ve established a more solid relationship with other banks internationally … We’ve opened multiple accounts in multiple countries so we do not depend on any one bank and be in this situation again.”

Although, CoinDesk has not seen evidence of these relationships.

DDoS attacks

In addition to its strained banking relationship, Day claimed igot had also been subjected to a series of “very sophisticated” DDoS attacks in the past weeks.

The attacks, Day said, were not targeting the site itself, but the wallet addresses by sending ‘dust’ transactions.

This, he said, has been mostly contained. “We have started rerouting such transactions, removing such addresses and suspending such accounts. We’ve made some good progress here and are going to resume normal services soon.”

One Reddit user, who goes by the name of fernetbreakfast, voiced his dissatisfaction with the company:

“Excuse after excuse, now 30 days missing $12,000USD. DDOS excuse for last tw weeks – these guys are about go under. Buyer beware.[sic]”

Others took to Twitter to note the inconvenience caused by the ongoing delays:

@iGotcom Very very worst service I have ever seen my life. Small businessman like me can’t afford this type of delay.

Damage control

Day sympathised with users, but calling igot untrustworthy or feeling that they have been robbed was not, he said, a fair assessment.

“Were withdrawals delayed? Absolutely. At the same time, we were able to make many payments.”

The intention of the business was not to rob people, he said. “Our business model works great. We have some really big potential and are not one bit interested in robbing users.”

One user, who is owed $400, told CoinDesk: “I am not sure it is a scam, however, what is ridiculous is the support shown to every customer who is as nervous as I am about the status of my money.”

Previous issues

The recent events aren’t the first to cause people to criticise igot’s services. In May this year, users also complained of delayed withdrawals. At the time, igot assured its customers the issues were due to a “major upgrade” to its system.

Nevertheless, Day said people should not “write off” his company, stating that it has been running for 18 months and has many satisfied customers.

“We provided great customer service to our customers and will continue to do so,” he concluded.

In the meantime, many igot customers are still awaiting access to their funds. A user who is owed over $15,000 told CoinDesk:

“Rick … constantly promises payment ‘shortly’, but never delivers. I have learnt the painful lesson of never trusting him with my money. He uses convenient but difficult to verify excuses such as bank issues, upgrades and external attacks.”

This article should not be viewed as an endorsement by CoinDesk. Users should do their own research before trusting their funds to any company.

Read more about.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Beware this ‘celebrity’ bitcoin scam

Losses of up to £200,000 are being reported by victims of a sophisticated global investment fraud

Criminals are exploiting trusted global websites to post fake celebrity endorsements for cryptocurrency, in one of the most prolific internet scams Which? has seen.

Victims of a prolific bitcoin scam are reporting individual losses of up to £200,000 after following links on AOL, MSN, Yahoo and Facebook.

Which? has spoken to dozens of people who’ve encountered the scam – which falsely claims celebrities have backed a bitcoin investment scheme – while browsing legitimate sites.

In many cases, the fake advertorials are convincingly designed to look like pages from the BBC or Mirror websites.

Read on to find out how the scam works, how to avoid falling for it, and why Which? is calling time on legitimate sites hosting dodgy links.

Celebrity ‘endorsements’ used to ensnare investors

Celebrities used in these fake advertorials include Deborah Meaden and Peter Jones from Dragon’s Den, Ant McPartlin of presenting duo Ant and Dec, billionaire businessmen Lord Sugar, Sir Philip Green and Sir James Dyson, presenters Simon Cowell and Holly Willoughby, and former Love Island contestant Charlie Brake.

To be clear, none of these celebrities are responsible for the fraud, but their images and reputations are being ruthlessly abused by organised scammers.

We’ve found countless variations of the scam still live at least three years after it first surfaced, but most of them proceed in a similar way.

How the scam unfolds

Imagine you’re browsing AOL.co.uk. On the sidebar you spot a picture of Dragons’ Den star Deborah Meaden, with a black eye.

There’s nothing obvious to suggest it’s an advert – it looks like an image from a legitimate news story.

Clicking on it takes you to a news story on a third-party page, which seems like a respectable news site for investors. It describes how Meaden and her fellow dragons were impressed with a bitcoin investment scheme on an episode of the show.

The strange photo of Meaden’s black eye is forgotten as you read how the dragons chose to invest and reaped the financial rewards. At the bottom of the page is a web form where you can express interest in joining the investment scheme.

Heeding the warnings that the scheme will soon close to new investors, you submit your name, email address and phone number.

The buy-in

A short while later, you receive a phone call from your ‘investment manager’. She or he encourages you to make a surprisingly modest initial investment to purchase £250 worth of bitcoin.

By email you receive a link and login details to the ‘trading platform’ where your bitcoins are being held. Over the coming weeks the value of your bitcoin holdings appears to increase, and your investment manager calls you frequently, encouraging you to buy more.

When you refuse to pay anything further and mention that you’re thinking of cashing out, your investment manager releases £40 to your bank account so you can ‘enjoy the profits’. Reassured, you carry on investing.

Months later, you’ve sunk £5,000 into the scheme – although your bitcoins are valued at £50,000 on the trading platform.

Now you decide it’s time to enjoy your returns, so your manager directs you to deposit their commission – a further £5,000 – into a bank account and await a phone call releasing your funds.

That call never comes.

This was the appalling experience of one Which? reader, who has asked to remain anonymous.

The scale of the problem

We’ve obtained exclusive data from police fraud reporting centre Action Fraud, which shows the huge scale of the problem.

There were 1,560 cases of cryptocurrency investment frauds reported in the first six months of 2020 alone. In the same period, there were 212 reports of investment fraud where celebrity endorsement was specifically cited by the victim as an enabler of the scam.

Action Fraud is a self-reporting tool now no longer used in Scotland, so it’s likely that these alarming figures are in fact underrepresenting the scale of the problem.

What is bitcoin?

Bitcoin is a cryptocurrency – a form of digital money which can be bought with other currencies, traded for them and (where retailers accept it) used to buy goods and services. Cryptocurrencies such as bitcoin run on a technology called blockchain – essentially a huge online database of transactions.

Blockchain’s great strength is that it’s considered unhackable. This is because rather than transactions being recorded on a traditional centralised database which someone could manipulate, they’re recorded and updated in many locations simultaneously.

Bitcoin is far from the only cryptocurrency to be targeted by scammers. In July 2020, we explored the sometimes murky world of ‘initial coin offerings’. Unlike bitcoin, which has achieved some respectability and is accepted by some retailers, there is no guarantee that investors will be able to spend these newly established cryptocurrencies anywhere.

How to stay safe

This scam proceeds along classic psychological principles – appealing to authority (using celebrities and trusted sites), starting out with small demands (£250) before gradually escalating and releasing a nominal sum to trick you into thinking you can get the rest.

All the traditional investment advice applies. Be extremely sceptical of grandiose claims, and seek advice from a financial adviser registered by the Financial Conduct Authority if you’re not sure about something.

Novice investors should consider traditional investments first and aim to build wealth gradually through a diversified portfolio.

The websites respond

We’re extremely concerned to hear reports of legitimate websites serving up scam adverts – some of them in recent weeks – and we put our allegations to them.

A Facebook spokesperson said: ‘We don’t tolerate fraud on our platform, which is why we’re taking action to stop scams wherever they appear. We have donated £3m to Citizens Advice to deliver a new UK Scam Action Programme, and we have created a new scam ads reporting tool on Facebook in the UK, supported by a dedicated internal operations team.

‘If people see something on Facebook they think is a scam, we urge them to report it by clicking on the top right of any ad they see.’

A Microsoft spokesperson explained that ‘the issue of “ad cloaking” is a challenge across the online advertising industry’ and that Microsoft is ‘working…to address the techniques scammers use and detect, block and remove advertisements more effectively.

In the meantime, we urge customers to remain vigilant and only engage with brands they trust and recognise.’

A spokesperson for Verizon Media, the parent company of AOL and Yahoo, told us: ‘Deceptive and misleading ads are not acceptable, and we expect our partners to comply with all laws, regulations and our policies.

‘We will take action to block ads in violation of our policies, as well as bad actors who work to circumvent our human and automated controls.

‘We have a new, simplified AdFeedback reporting tool for our users to identify anything they believe to be “misleading or a scam” through a simple thumbs up, thumbs-down icon on ads served through our platforms that is rolling out now. Our teams will remove any ads identified and confirmed as such.’

  • The full investigation appeared in the December issue of Which? Money magazine. You can try Which? Money today for just £1 to have our impartial, jargon-free insight delivered to your door every month.
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