Cryptocurrency Scams Are Just Straight-Up Trolling at This Point

Facebook announced in a blog post Tuesday that it was banning cryptocurrency advertising from the platform entirely. The company said that many ads for cryptocurrency investment opportunities, like initial coin offerings, were “not currently operating in good faith.” Facebook has a point. Take Prodeum for example, a Lithuanian cryptocurrency startup that appeared online Thursday. By Monday, it was gone.

Prodeum's 12-page white paper outlined plans to build a database of fruits and vegetables on the Ethereum blockchain. That idea might sound strange, but it’s not the first of its kind. Prodeum asked investors to help raise as much as 5,400 ether—roughly $6.5 million—in an ICO. But after collecting what looks like less than the price of two Chipotle burritos, Prodeum disappeared. The company’s sparkly, professional-looking website was replaced with a single, trolling word: penis.

A press release on both an NBC affiliate and a New Jersey local news site vanished, along with Prodeum’s website, Twitter account, and Telegram channel. Emails to the startup’s customer support address bounce back. It seems like Prodeum—which sounds suspiciously like the urinary-tract infection medication Prodium—was yet another cryptocurrency scam.

'It’s easier to dupe someone into investing in your ICO in 2018 than your fake real estate business.'

It joins a long line. In April of last year, there was Mumbai-based OneCoin, a once-lauded blockchain startup that was discovered to be a Ponzi scheme—but not before its founders allegedly funneled at least $350 million through Germany. Then there was Confido, which disappeared after raising over $370,000. Don’t forget BitConnect, an anonymous cryptocurrency exchange that was accused of being a Ponzi scheme numerous times before it finally shut down.

Not every ICO is a scam, and many cryptocurrency startups are legitimate. But the shady, largely unregulated cryptocurrency investment landscape is littered with dozens of fraudulent ventures. (They're also susceptible to hackers; more than 10 percent of the $3.7 billion raised through ICOs has been lost or stolen, according to a recent analysis from the accounting firm Ernst & Young.)

Easy Money

The cryptocurrency market is ripe for scammers because it’s relatively new, backed by tons of hype, and involves complicated technology. It’s easier to dupe someone into investing in your ICO in 2018 than your fake real estate business—and plenty of people have. A cryptocurrency startup only needs a swanky website and an official-looking white paper. There are also plenty of services to help streamline the process: You can automate your token sale, or have someone write fake news articles hyping up your venture.

Confusion around blockchain technology also makes much of the public a potentially easy mark. Blockchains are encrypted, distributed ledgers that operate without a central authority like a bank. The ledger itself is securely stored on many computers, so it can’t be altered or hacked. The Ethereum blockchain—on which Prodeum relied—allows for more complicated applications to be built on top of it. Eth-Tweet, for example, is a decentralized microblogging service built on the Ethereum blockchain.

Here’s where the ICO comes in. An initial coin offering allows you to buy some of the tokens that power a specific application. If there were a WIRED Blockchain Application for instance, users might pay one WIRED Reader Token in order to view an article. The WIRED Blockchain Application ICO would allow investors to get in on the tokens at a lower price. The idea is that later on, as demand for the application rises (and people read more articles) the price of the tokens would go up, allowing early investors to make a profit.

To complicate matters further, blockchain startup founders frequently tell investors that they’re not putting their money in something akin to a traditional security, but actually into the technology itself. (It’s often unclear what that means in practice.) And some startups, like block.one—which raised over $700 million—claim the opposite, arguing that their tokens can’t actually be used for anything at all.

Detecting Fool’s Gold

The exact terms of an ICO are usually laid out in an accompanying white paper, which is often the only documentation that investors have to decipher whether a new startup is a solid opportunity. Plenty of ICOs raise millions of dollars in cryptocurrency without even having a working prototype of their software. Even when a demonstration is available, only savvy investors can really evaluate whether an application will be feasible. Many startups don't even write their white papers themselves: The task is outsourced to services that write the papers for them.

Prodeum’s white paper, now offline, described a system involving two different types of tokens. On the surface, it looks more legitimate than many genuine ICOs, even listing four blockchain experts supposedly involved in the project. But one of the individuals listed, Petar Jandric, said on LinkedIn that he was a “victim of identity theft,” and wasn’t actually involved in Prodeum. Vytautas Kašėta‏, another expert listed, tells WIRED his name was also stolen for the project.

Even genuine ICOs are subject to other kinds of scams, like those involving market manipulation. There are numerous “pump and dump” schemes for example, where groups of investors on platforms like Telegram and Discord artificially inflate a cryptocurrency’s value. If you can’t manage to manipulate the market, there’s also always hacking. The Decentralized Autonomous Organization, for example, famously raised $150 million in an ICO and then was hacked, resulting in the loss of over $50 million. Plenty of other startups have faced similar fates.

The Wild West

Despite walking and talking like traditional stocks, ICOs have so far largely avoided serious scrutiny from the Securities and Exchange Commission, the federal agency that regulates investment markets. Many blockchain startups are international and anonymous—which can place them out of the SEC's purview. That lack of oversight is another reason so many scams proliferate.

The SEC appears to have started clamping down on cryptocurrencies, however. In December, the agency’s new cyber unit announced it had filed its first ever complaint, against the Canadian couple behind the cryptocurrency startup PlexCorps. The agency alleges that the couple swindled customers out of $15 million by unrealistically telling them they could make up to 1,354 percent returns on their investment.

'Fraudulent ICOs can be used to repackage old frauds in a new wrapper.'

Todd Kornfeld, Securities Attorney

On Tuesday, the SEC announced it had halted one of the largest ICOs ever, for the Dallas-based startup AriseBank. The celebrity-endorsed company, which claimed to be a “decentralized bank,” falsely advertised that it could offer customers FDIC-insured banking accounts. The same day, Bloomberg reported that the US Commodity Futures sent a subpoena to Bitfinex and Tether, one of the world’s largest cryptocurrency exchanges. Facebook's ad ban, then, is just one of a series of efforts to clean up an unruly, scam-riddled system.

Ultimately, blockchain scams aren’t much different from other types of investment fraud. Whether you dress it up as an ICO or a hedge fund, the grift generally works the same: Convince unassuming individuals that you can make them rich, then steal their money. While the SEC has yet to aggressively go after much of the cryptocurrency market, it does regularly file complaints against hundreds of other scams designed to rip people off. Humans have been trying to swindle each other out of money for thousands of years. The cryptocurrency is just the latest opportunity to do so.

“Fraudulent scams like Ponzi schemes and sponsors who pocket investor’s money have been around for a long time. Fraudulent ICOs can be used to repackage old frauds in a new wrapper,” says Todd Kornfeld, a securities attorney at the firm Pepper Hamilton.

That’s not to say that the cryptocurrencies aren’t a particularly volatile and shady thing to invest in now. A recent hoax claimed that some guy scammed his way into over $1 million by convincing people Chuck E. Cheese tokens were bitcoins. The story wasn’t true, but you can see now why it was so easily believed—the cryptocurrency marketplace is full of plenty of crazier scams.

Tales From the Cryptocurrency

More From this publisher : HERE ; This post was curated using : TrendingTraffic

 


RELATED PRODUCTS
  • Teaches you how to buy, store and profit from cryptocurrency investing.
  • Here Is The Best Female Body Building Contest Diet And Training Tips, Techniques.
  • Discover The Horse Racing Tips From The Pro That The Professionals Use
  • Have floods of cash straight into your bank account, quickly and easily, without selling anything.
  • Tap Into The Unlimited Quantum Powers Of Intention, Visualization and Mind-Body Awareness
  • Destroy workout plateaus and trash boring and outdated interval workout with 51 news
  • Schedule your cardio sessions with series of workouts to maximize effectiveness of your workouts.
  • Change Your Mind, Change Your Life Influence Your Mind and Others.
  • Easily And Quickly Persuade Anyone To Do Anything You Want
  • Clickbank Ads
     

    If you like our content help us with a share… or two …  

    Also -  I have some free stuff for you .......

    Nr 1. In This FREE Report you can Discover:

    Secrets to acquiring the freshest, hottest leads via YouTube In-Stream ads quickly and easily! Best secret tips for the most effective targeting for your ads! Totally legal, but little-known method for literally stealing traffic from your competitors! Get more traffic to your videos and landing pages without spending a fortune! And much more - all within this special FREE report!

     

    Nr 2. Did you know you can Absolutely EXPLODE YOUR EMAIL LIST FOR FREE with UNTOUCHED offline sources?

     

    Nr 3. The #1 secret to becoming an affiliate superstar - Earn your first $100 online – without a dime to invest.

    If you’re still looking to “make it online – I have just the thing for you. It’s a video series that shows how to make your first $100 online – even if you don’t have a dime to invest. Yes – nothing.  Free.  Nada. Is this possible? You bet. It’s the most powerful system used by those “in the know”. Good things don’t have to be difficult. And they don’t only come to those who wait. Have A Look

     

    Nr 4. Top 10 Email Marketing Mistakes. Which of these mistakes do you make?

     

    Nr 5.  You can learn about : The hottest social networking site that will send an unlimited stampede of traffic to your site - for FREE! How to quickly locate a swarm of hungry buyers using "information portals"! The fast and easy way to use simple images to siphon targeted traffic, on command! Learn how to get the most possible traffic from Instagram, and make sure that traffic converts! And much more ...

     

    Nr 6. It’s no secret… Facebook is an incredible place to get tons of free, viral traffic. But… most people are going about it all wrong.  How many of these mistakes are you making? Download the free report to find out.

       

    Nr 7.  Special free report .  It's called "Operation Midas Touch" and you can download it here...

    The report features a surefire method for generating at least $1000 per week online,without a website or product of your own!

    Nr 8.  Instagram is still one of the hottest ways to get a LOT of traffic fast. All by sharing images. Sounds easy enough, yeah? Well, yes and no. If you want to really start driving a lot of  traffic and making sales using Instagram then you should download this report.

    Nr 9.  When it comes to creating a product online there are so many ways to approach it. Wouldn’t it be great to just get the meat of it all so you can get started faster? Well, the good news is, today you can download a guide called the Product Creation Formula Quickstart Guide. It’s as the title suggests - a Quickstart guide. You’ll get a list of action steps to take right away. Download your copy today !

    Nr 10. Would you like to finally USE all of that dusty PLR you have sitting around on your harddrive? Or maybe find the resources for the best PLR available - at the best prices? What about how to use that PLR to make you money with just a few minutes of work. Well, you’re not going to want to miss this!

      Nr 11. Buzzfeed’s top post has more than 21 million views. Think about that for a sec… ONE of their articles has had over 21 million people who have read it! And they have thousands of articles... what would you do with that kind of traffic? A friend of mine hacked their method and was able to use it to get 11,592 targeted new subscribers in 2 weeks on their very first attempt!

    Nr 12. Push notifications are one of today's hottest trends in website traffic and conversions, and for good reason. Studies have shown that as many as 40% of people will opt-in for push notifications, which is about TEN TIMES the rate of people who opt-in for emails! That’s huge! Not only that, but they're also highly effective at pulling clicks, as well. Some studies have shown CTR at an average of around 40%, with highs of as much as 80%! Again, that’s huge!

    Nr 13. Would you like to know how to get more money from the exact same number of website visitors you’re currently getting? Even if you’re website is getting as few as 1-2 visitors a day, this report will show you how to increase your profits using these few handy hacks.

    Nr 14. People have now realised that it's not the size of the list which matters, it's the quality. ... and the only way to create a quality list is by launching your own products. Let it be $7 ebooks, $17 info products, $27 video training product or software's... all of these work. My good friend Kevin Fahey has is revealing how he's launched over 20 products in the past 4 years, many of them top sellers. Needless to say he's banked a handsome amount in this time.

    Nr 15. Do you ever feel that the man you like or even love, just doesn't see you or desire you in way you want him to? Or... maybe you're able to get a man's attention though not the right kind of attention? Or... maybe you're still single because you wait and wait for men to approach you first? What you may not know is that the way we flirt will either attract the "wrong" man for us or the "right" man.

    Nr 16. When it comes to getting sales and leads online, there is ONE thing that 95% of marketers use... it's called a LIST. My friend Jimmy just released a free book that explains WHY a list is important and how YOU can build your own list. It's available right here (and it won't cost you a penny)

    Nr 17. If you have tried everything, and still aren't able to get your Ex back, then you need to pay attention.

    Nr 18. What if I told you that you could make ANY woman WANT to do ANYTHING for you? Would you think I'm crazy? Well... what If I told you that you could also make her LOVE every minute of it and come back for more?

       

    Nr 19. I have a special free plugin for you today. It's called "Covert Hover Mini"

    This plugin will triple your blog traffic by compelling your visitors to share your images on social media. This is some really clever stuff and it works like a charm. After you grab your free plugin, don't  forget to read the free bonus report as it will show exactly how and why this strategy works like crazy.

    Nr 20. The days of being able to get away with a basic WP theme and a pic or two are gone, your site needs to look good. Even Google are looking for you to have engaging graphics on your site. But getting good quality graphics made for your site is a pain, AND it will cost you both time and money (if you outsource it). But I have a special free download for you today. A virtual treasure chest of over 21K profit pulling graphics you can start sing today to generate more traffic & sales!

    Nr 21. 20 professional full HD background videos. These background videos are perfect for giving your videos that extra kick they need to stand out from the crowd Oh yeah they are in full 1080p HD too, I hope you'll enjoy them.

    Nr 22. If you've ever failed to create a WordPress site of your own or typically waste hours & even weeks trying to figure it all out on your own....

    Nr 23. No doubt, you've seen all of the video launches lately! There is a reason for it... Video marketing is a GREAT way to make money, and with the recent creation tools making it super accessable for anyone to get started... It's no surprise that more people are making videos. However... there is a missing element to most video marketing products...

    Nr 24. For the first time ever... You can get the straight scoop on how someone is selling over $1,000,000/year of t-shirts on Facebook!

    Use them  .... and have fun !