Cryptocurrencies such as Bitcoin has increased in popularity over the years. It has emerged as an alternative form of payment. Over the years, it has attracted a lot of attention among industry pundits and market watchers.
Because of the huge money involved in Bitcoins, it has also become the subject of fraudulent practices. It has been targeted by cybercriminals. In 2019 alone, fraudulent practices were able to siphon away $4.26 billion from cryptocurrency transactions and exchanges.
Cmtcorporation.net gives us a glimpse of 3 Bitcoin scams you need to watch out for:
OneCoin was founded by Dr. Ruja “Cryptoqueen” Ignatova who joined the Bitcoin wagon in 2014 scamming people with millions. The amount of money involved was estimated at around $4 billion but internal sources claimed that around $19.4 billion was stolen.
Dr. Ruja spoke several languages, had a Ph.D. degree from Oxford University and appeared on several magazines such as Bulgarian Forbes, Financial It and was incredibly charismatic.
In OneCoin, people had an option to choose from several education packages ranging from €110 and €188,000. Each package comes with “tokens” that can be used for mining OneCoins. The selling of tokens was only possible if the member bought more than a starter package.
OneCoin was promoted as a revolution, one that can compete with banks and the Bitcoin killer. However, no cryptocurrency was involved. There was neither a private nor a public blockchain. There was only a centralized database of people.
In 2017, Dr. Ruja mysteriously disappeared. FBI records showed that she booked a flight from Sofia to Athens and since then vanished. After her disappearance, Ruja’s brother Konstantin took over. After being CEO of OneCoin for 2 years, he was arrested and pleaded guilty to several charges such as money laundering and fraud. Dr. Ruja also had multiple charges but is still missing to this very day,
The Bitclub Network was founded by Joby Weeks. He envisioned the company as a venture that promised to make cryptocurrency available to the masses. For a membership fee of $100 and an investment as low as $500, members would become stockholders and could buy shares in the Bitcoin mining pool. The money was going to be used for acquiring and operating stacks of high-speed computing equipment designed for carving out a series of transactions in the Blockchain.
The week was a care-free adventure-loving individual. He had visited various places such as St. Kitts, Machu Picchu, Reykjavik, Tokyo, the Cook Islands, and others. In 2018, Weeks and his wife Stephanie have taken their newborn daughter, Liberty, to all 50 states of the US in 42 days. By the time she was thirteen months old, Liberty had been to 45 countries on 4 continents.
Weeks compared BCN to “buying the goose that lays the golden eggs.” IN 2017, he described it as selling machines that print money. Whatever was printed in the data center was paid out to investors daily. A tempting pitch especially at the height of the Bitcoin frenzy. It was a dream come true at least for some of the investors.
But all that remained a dream after the arrest of Weeks and his co-conspirators. As it turned out, BCN was not the mining company Weeks envisioned it to be. In fact, messages from the company’s leaders revealed that their intention was to mislead customers from the beginning. One of the messages from Matthew Goettsche revealed this intention by the company. He, together with Silviu Balaci, Jobadiah Weeks, and Joseph Frank Abel were arrested for wire fraud.
BCN was a sophisticated scam that robbed customers of at least $722 million in a span of five years.
MMM will go down in history as one of the world’s largest Ponzi schemes of all time. The Russian company was launched in 1989 by Sergei Mavrodi, his brother Vyacheslav, and Olga Meinikova (hence MMM). The Ponzi scheme was launched in 1994 when it promised members annual returns of up to 3000%.
In the first 10 years of the company, as many as 10 million Russians were members as Russia was transitioning to a market economy. A lot of people endorsed it as an extraordinary way of making money quickly. While some of its members already knew that it was a scam, they still hope that they would get some profit that they can withdraw.
MMM was so busy with customers that employees were not able to monitor all the cash coming in. They even created their own paper currency which eventually became digital currency. It was successful in attracting investors that it created similar companies.
On July 22, 1994, thousands of investors protested in front of the company headquarters. By the next day, the company already ceased its operations. It tried to continue the scheme for a few more days by issuing new shares. MMM owed investors between the US $50 million to $1.5 billion. Since there were no laws against Ponzi schemes in Russia, the government sought tax evasion charges.