Showing posts with label scams. Show all posts
Showing posts with label scams. Show all posts

December 21, 2017

Warning: Crypto whales selling to the little guy

By Stephen Alpher - December 21, 2017 (

In keeping up with acceptable crypto-community behavior, many of the large crypto holders cashing out are portraying the move as noble act, writes Lionel Laurent.

The fact remains, however, that the Emil Oldenburg's and Charlie Lee's of the industry are selling after massive moves higher. The buyers are the little guys: Since the start of 2017, there's been an explosion of accounts holding tiny amounts of Bitcoin (0.1 or less), and a corresponding tumble in accounts holding sizable amounts.

Laurent: "It will be hard to ignore the niggling feeling that the latecomers piling into Bitcoin at the end of 2017 aren't quite as astute as the early birds who are getting out."

November 27, 2017

Regulation Round-up - Kenya, Ghana and Algeria Fudding and Fighting Bitcoin

By Samuel Haig - November 27, 2017 (

Governments across Africa are striking a firm tone regarding bitcoin and cryptocurrencies, with Algeria’s congress expected to ban all cryptocurrencies, and Kenya’s central bank warning against the risks of cryptocurrency, and an advisor to Ghana’s ministry of communications describing “fear of the unknown” as the principal barrier to greater adoption of virtual currencies. In other news, a Kenyan man has negotiated to pay the ‘goat portion’ of his dowry using bitcoin.

Kenyan Central Bank Fears Bitcoin May Comprise “Ponzi Scheme”

The Governor of the Central Bank of Kenya (CBK), Dr. Patrick Njoroge has warned Kenyans against the risks and lack of protections afforded to cryptocurrency traders. Referring to a previous warning issued in 2015, Dr. Njoroge stated that the CBK “warned everybody that this was a risky venture and the consumer is not protected. It could very well be a Ponzi scheme of a kind, I think you have seen how the prices have gone up and down in various places. Our point is that there is risk and it is important that everybody knows that those risks can come back to haunt us and could have financial stability concerns.”

Despite the warning, Dr. Njoroge recently expressed his hesitance to rush to regulate cryptocurrencies, describing the CBK as being “open” to innovations in financial technology. Speaking at the recent Global Financial Forum in Dubai, Dr. Njoroge stated: “If you’re the regulator, you have to be careful that all risks are taken care of, including in cryptocurrencies, but we’re very open to innovation.”

Kenyan Citizen Arranges to Partially Pay Dowry Using Bitcoin Rather Than Goats

The topic of bitcoin has been in Kenya’s news cycle recently, following Kenyan citizen, Anthony Mburu’s decision to pay a portion of his dowry using bitcoin. The young bitcoin miner negotiated to pay the ‘goats portion’ of his dowry using bitcoins – and has so far paid the equivalent of 25 of the 100 required goats.

The 26-year-old Mr. Mburu quit university in 2010 only one semester into an engineering course. Mr. Mburu recently discussed his decision with Kenyan media, stating “Formal education is good. It will give you an average life. You’ll eat, have your mortgage, car loan and all that — live an average life; struggle through life to the end.” Since discovering the cryptocurrency, Mr. Mburu states that his entire life has come to revolve around bitcoin. “Everything is bitcoin. Where I live, bitcoin; what I drive, bitcoin; investment, bitcoin. It will be a bitcoin wedding,” he said.

“Fear of the Unknown” Hinders Ghanan Bitcoin Adoption

Ghana’s cybersecurity advisor to the ministry of communications, Albert Antwi Boasiako, has described “fear of the unknown” as the principal barrier to greater cryptocurrency adoption throughout the African nation. Speaking at the recent Ghana Blockchain Conference, Mr. Boasiako stated “We have our fears about cryptocurrency but discussions are still going on. Our country is still hesitant to adopt Bitcoin as a legal tender is the fear of the unknown.”

Mr. Boasiako emphasized the need for Ghana’s tech community to mobilize in order to demystify cryptocurrencies, stating “We are battling fear, the state doesn’t want to move forward because it doesn’t know what’s there. To demystify cryptocurrency, we need a community-driven agenda. We need to strategically demystify the misconceptions around cryptocurrency and get it integrated into the government digitization agenda.” Mr. Boasiako suggested the establishment of a “working group on cryptocurrency that has members from stakeholders like the Bank of Ghana,” recommending that such a body should closely monitor developments in the sphere of cryptocurrency regulation in other jurisdictions.

Algeria Expected to Ban All Cryptocurrencies

Last month, it was reported that Algeria’s congress had begun to consider new financial legislation that would see all cryptocurrencies banned throughout the country. The ‘2018 Finance Bill’ states that “The purchase, sale, use, and holding of the so-called virtual currency is prohibited. The virtual currency is the one used by Internet users through the web. It is characterized by the absence of physical support such as coins, banknotes, payments by check or bank cards,” specifying that “Any violation of this provision is punished in accordance with the laws and regulations in force.”

An accompanying memorandum emphasizes the concerns that bitcoin’s potential anonymity sparks among Algerian lawmakers, stating “Algeria hopes to establish a stricter control over this kind of digital transaction, which can be used for drug trafficking, tax evasion, and money laundering thanks to the guaranteed anonymity of its users.” The document asserts that despite cryptocurrencies having “long been the prerogative of illegal transaction,” they are able to “get rid of their bad reputation in democratizing and attracting a wider audience.”

Images courtesy of Shutterstock, Wikipedia

Samuel Haig

Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012. Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary neoliberal capitalism.

November 23, 2017

Scammed Bitcoin Gold wallet named ‘MyBTGWallet’ stole $3M from users

By Bhushan Akolkar - November 23, 2017 (

An alleged Fraudulent Wallet appearing on the Bitcoin Wallet is said to have stolen $3.3 million worth of cryptocurrency holdings of users.

After being initialized through the second hard fork in the Bitcoin network, Bitcoin Gold (BTG) the second derivative of Bitcoin had to go through a bumpy ride initially with its website being a victim of DDoS attacks. The Bitcoin derivate is yet again in news for an alleged scam that is suspected to have stolen $3.3 million from Bitcoin users. The theft is said to have been done by the operators of while falsely asking users to claim the bitcoin gold and traping them in a malicious scheme.

The scheme asked users to submit their private keys as a requirement to generate bitcoin gold wallets. All the users who agreed to this proposal soon became victims of the fraud as all the cryptocurrency holdings in their wallet were sent to a different address. The development team has said that they are investigating the matter and are working with different security experts.

The BTG team explained “When we receive verifiable reports that a website or app is a problem, we removed it from our site. Preliminary investigations indicated that at least some of the claims of theft by the mybtgwallet site are reliable — Like all third-party sites, that site was not in our control, but we immediately removed it from our pages and the team is working with security experts to get to the bottom of this issue — It appears the mybtgwallet online wallet site was modified by unknown parties long after it was originally published.”

In addition to this, Bitcoin Gold has been through an interesting recovery in the past week. Last week, Satoshi Labs – a cryptocurrency hardware wallet manufacturer and the maker of Trezor, announced that Trezor will integrate BTG into its wallet. Following this news, there has been a fresh cash flow and increase in market liquidity as the BTG prices have increased by 100% from $150 to above $300. According to CoinMarketCap, BTG is currently trading at $279.47.

This sudden and huge surge in the price of BTG is said to be coming in the wake of the announcement by Satoshi Labs that Trezor’s beta wallet will allow its customer to retrieve BTG coins. A step-by-step process to claim BTG is listed in a blog post by Satoshi Labs. Users are requested to upgrade their firmware to 1.6.0 and to use the company’s beta wallet. The company explained: “For the time being, your Bitcoin Gold wallet will only be accessible from the Trezor beta Wallet. Bitcoin Gold is not Bitcoin — It merely uses bitcoin’s history similarly to the case of Bitcoin Cash — This process will not affect your Bitcoin wallet at all.”

Just after Bitcoin Gold went live on November 12 earlier this month, there are many cryptocurrency wallet-players who have extended support for BTG after realizing that there is a lot of community interest for the latest Bitcoin derivative. One such cryptocurrency mobile wallet ‘Freewallet’ has launched its first dedicated wallet for BTG. The Android version of the wallet is already available on Google Play Store where the iOS version on AppStore is awaiting approval and is expected to launch next week.

Freewallet co-founder, Alvin Hagg, while announcing this on his website, stated: “That’s the second Bitcoin chain split we’ve supported. And Freewallet managed to provide uninterrupted operations during both of them! When a new cryptocurrency is born and a new network is launched, it means there’s a great opportunity for our users to get free coins and instant profits. And Freewallet’s mission is to make sure they are happy because that’s what makes us happy, too.”

November 18, 2017

Pump and Dump - Know the signs when trading Altcoins

By Carter Graydon - September 07, 2014 (

Like penny stocks traded on the NYSE or those on pink sheets, cryptocurrency is a prime target for pump and dump scams. For those with buying power, it’s an easy way to get rich quick by inflating the price. For everyone else, nine out of ten times, you will lose. This is one of several reasons people are afraid to trust Bitcoin.

For those of you who don’t know how the pump and dump works, it’s fairly straight forward. They are also illegal in the market, though federal agencies do not actively protect Bitcoin users.

Pump and dump scams involve two groups of people. First there are the players who artificially increase the price of a coin by promoting or endorsing it. They’ve spent several minutes, hours or even days buying up cheap coins, and when they are ready to dump them, they build up the buzz.

As buzz around the coin gains momentum, trading volume increase and the coins value goes up. You are both the pump and dumper. Once the coin hits a desired price the players sell all their coins, and people begin to panic sell, dumping their coins on the market and sending the price plummeting.

It’s not too difficult to detect a coin that’s being primed for a pump and dump. You’ll often see buying patterns like the ones in this graph. The price is falling and rising just slightly each time the players buy, loading up on the cheap coins without drawing too much attention.

Once they’ve purchase the coins the players head to the forums and chat boxes to talk up their coin of choice. They’ll use several different accounts, and there can be many players involved helping make this look real. The  coin will be talked up until there is a buzz and people start buying – this is when the pumping happens. The chatter picks up on trading platforms, and people start purchasing the coin and pumping the price skyward. This fuels the buzz even further, and more people begin purchasing.

Once the coin hits a high point, the players will start selling off their coins, but not all of them at once – this signals the dumping process is about to begin. It can happen in a matter of seconds or be dragged out over hours. Players will sell small amounts of coins as fast as they can without dragging the price down until their out. Once the players are out, a panic sell begins, and this is when the dumping process happens. The price is no longer climbing the volume is down, and people start realizing their own sell orders aren’t getting filled. Panic sellers will sell below the market value just to get out, and this can send the coin’s value crashing to the floor.

The players are the ones getting rich, and they have the capital and knowledge to do so, but that doesn’t mean you have to lose out every time.

If you are able to spot a coin that’s being prepped for a pump and dump, you can purchase cheap coins yourself. If you were able to grab up some coins before the pump starts, you can make money if you’re not greedy. It shouldn’t be hard to make decent profit in five minutes if you’ve spotted the signs early.

If you come late to the party and the coin has already begun being pumped, but still in the early stages, you still can make a profit. Your risk will be greater and your profit smaller, but if your enter and exit fast the market fast you should be able to expect a modest return.

There are many people offering to “let you in” on the next coin to be pumped and dumped for a fee. Some people charge as little as .5 Bitcoins, but is it worth it?

Most of these are scams in order to get your Bitcoins. They will tell you what coin is going to be targeted but do nothing because they don’t need to. They have already made their profit. At .5 Bitcoins, with only five subscribers these people have already made over $2,000, which is about what you’d expect to make on pumping and dumping a coin, but now there is no risk.

Even if these offers for insider trading – that’s what it is – were real, and they did pump and dump the coin, you’d have to invest a significant amount of money to see a return of half a Bitcoin. Which means greater risk for you and a smaller return.

Always remember:

Buy the rumor.

Sell the news.

Information provided in this article is not intended to constitute an invitation or an inducement to engage in any investment activity. Featured image by Shutterstock. 

Posted by Carter Graydon
A UNC Chapel Hill graduate, blockchain enthusiast and analyst. I have a background in programming and IT, strong studies in econ, stats and game theory. Currently working as a Social Media Director and pursuing my MS in Online Marketing – busy!

November 02, 2017

Go-nowhere ICOs testing investor confidence

By Alex Lielacher - November 02, 2017 (

On January 1, 2017, the price of bitcoin exceeded the $1,000 mark for the first time in three years and continued to rally thereafter. This brought media attention back to bitcoin and also raised awareness about altcoins (Ether, Litecoin, and Ripple for example) as well as new coins that were being issued via token sales.

Driven by the belief that these newly issued tokens might replicate bitcoin’s price evolution, the ICO market quickly captured investor attention, resulting in several blockchain ICO projects raising tens of millions. As the market boomed, however, there also came a wave of sub-par ICOs that still managed to raise substantial funds — as well as outright scams. Some leading bitcoin community figures even claimed that ICOs are only a way for developers to get rich while many others have voiced their concerns about the valuation of projects that do not even have a working minimum viable product during their fundraising stage.

As new record numbers of funds were raised in Q2/2017 and startup valuations were mimicking those of the DotCom bubble, regulators started to take notice. While most have simply issued guidance statements and alerted stakeholders to the potential application of securities laws to ICOs, China and South Korea took it a step further and banned ICOs outright. These bans dampened the Asian ICO market in early September as two major investor countries were now prohibited from participating.

Problems arise in major ICOs

Action by regulators hasn’t been the only thing cooling enthusiasm for ICOs, though, as problems have also surfaced with several multi-million dollar ICO projects after their token sales had completed.

The Bancor Network — one of the largest ICOs of 2017 — received negative press when Cornell professor and outspoken blockchain thought leader Emin Gun Sirer stated in a blog post that investors who took part in the ICO invested in untested code and highlighted several other issues with the Bancor project. Prominent bitcoin evangelist Andreas Antonopoulos and Augur co-founder Joey Krug also voiced their concerns over the project’s viability. The price of Bancor tokens (BNT) is currently trading around 50 percent below its issue price.

IOTA was forced to announce in September that there was a vulnerability in its cryptography after it was discovered by MIT researchers. While the vulnerability has since been patched and no exploit of the vulnerability took place, this revelation did not bode well for the reputation of a promising blockchain project with a market capitalization of over $1 billion.

Most recently, it has come to light that the leadership of Tezos, a blockchain project that raised over $232 million, has entered into a legal dispute with the head of its Swiss foundation that holds all of the funds that were raised during its crowdsale.

According to Reuters, Tezos founders, Arthur and Kathleen Breitman, “sent a 46-page letter on Sunday to the two other members of the foundation’s three-person board, calling for Johann Gevers’ prompt removal and seeking to give the couple a “substantial role” in a new structure that would limit the foundation’s responsibilities. The document accuses Gevers of “self-dealing, self-promotion and conflicts of interest.”

Gevers, however, told Reuters that he does not plan on stepping down and said that the Breitmans are trying to gain control of the foundation through character assassination. Gevers went on to tell Reuters that the foundation has begun selling the cryptocurrency the Tezos project raised during its ICO and plans to invest the proceeds into a diversified portfolio. These funds will then be used to operate the foundation and to ensure the future development of Tezos and its technology.

Until this dispute is resolved the Tezos platform will not be able to launch as the Breitmans are not able to access funds from the ICO to continue the development of the project. Needless to say, the price of Tezzies (XTZ) has dropped precipitously in pre-launch trading — down around 50 percent since the Reuters story broke. 

The cases of Bancor, IOTA, and Tezos act as reminders of how risky investing in initial coin offerings can be as there is little insight into most project’s work and stage of development.

Only 10 percent of ICO projects have built a product

More worryingly for the current state of the ICO market is a recent analysis by Token Report, which found that only ten percent of projects that have held an 

initial coin offering to fund themselves have actually developed a functional product.

 According to Bloomberg, only 20 of the 226 ICO tokens analyzed by Token Report are actually being used in the projects’ networks while others can only be traded on 

exchanges for speculative reasons. Token Report CEO Galen Moore stated TenX, Storj, and Augur as examples of the few startups that have actually delivered a product where its tokens are being used.  

The reality of the ICO market is that in most cases investors are simply betting on the startup team’s ability to turn their proposed ideas into reality. As it turns out, only a few have actually been able to do that.

Many high-profile ICO tokens are underperforming

While startups tend to measure ICO success by how much money they have raised, investors, on the other hand, care more about how well the newly issued token they 

bought performs in the secondary market — and for many the results so far have been disappointing.

In June, Bancor raised a staggering $153 million and went down in history as one of the biggest ICOs to date. Great for its founders, certainly, but from an 

investor perspective the value of its cryptocurrency has dropped by around 50 percent since its token sale, making it one of the worst performing ICO tokens in the market.

EOS was another record-breaking ICO that has issued a token that has since underperformed the market and is trading below its issue price. EOS managed to raise $185 million for its decentralized blockchain network and, in an unconventional move, is actually still running its token sale until 2018. However, its token has already launched on exchanges where it is currently trading lower than its original issue price. Other ICO tokens that are trading below their issue prices include Wagerr (WGR), Tierion (TNT), and (CFI).  

Over 400 ICOs have been conducted since this new form of funding was first introduced in 2013. Today, anyone can launch an initial coin offering to fund their project and they don’t even require any technical knowledge to do so as there are now several ICO-as-a-Service platforms, and blockchain platforms such as Waves allow easy token creation for anyone.

Hence, we are now seeing dozens of ICOs hitting the market every week and for many, including the blockchain and a digital token into their project makes little to no sense. Too many startups and developers are simply jumping on the ICO bandwagon because they smell the money, a scenario that regrettably is taking funding away from many truly innovative value-adding blockchain projects.

However, with increased regulatory restrictions and scrutiny on token sales, and growing investor aversion to the bubble-like state of the ICO market, it seems that the heyday of easy money through token sales is over. New projects are finding it increasingly difficult to hit their funding targets while investors are seeing many of their tokens underperform comparative to bitcoin. 

In the future, the ICO market will probably be more tightly restrained by a regulatory framework. Although this could prevent many smaller startups from opting for this type of funding, it will at the same time make the ICO market a more investor-friendly place as regulators keep a closer eye on issuers.

Before that happens, though, for investors there will likely be a move back to quality as they deal with the reality that many of the bright ideas they invested in have never come to fruition — and the bulk of future investor funds will be channeled into primarily high-quality projects that actually make sense.   

Alex Lielacher

Alex Lielacher is a former bond trader who now works in blockchain media. He is the founder of Africa-focused bitcoin news publication and is a regular contributor to several global blockchain news outlets where he shares his insights on cryptocurrency investing and blockchain innovation. He has been following bitcoin since 2011.

October 25, 2017

Crypto Crime keeping pace with crypto rise

By Darryn Pollock - October 25, 2017 (

The rising value of cryptocurrencies is likely to push up corporate ransom and extortion demands, a UK cyber security company warns. With Bitcoin reaching over $6,000 this week and other more anonymous coins also jumping in value, it is becoming more lucrative for criminals.

There have been highly publicized cases where cybercriminals and hackers have taken corporations hostage with their ransom demanded in cryptocurrencies. Now, there is an even bigger incentive to make high demands as the payoffs are much larger.

Big payday

Demands for at least $25 mln are likely to increase because technological changes in virtual currencies are making it easier for criminals to move sums anonymously, says MWR InfoSecurity.

MRW, which tests cyber defenses for banks and governments, has made the risks known to several large city institutions in a report that focuses on the effects of the growing interest in trading cryptocurrencies.

A liquid market

It is not only the high price of these digital currencies that are making it attractive to criminals; it is because the surge in demand is slowly building the depth and liquidity of the market.

The growing liquidity makes it easier for buyers and sellers of assets to conduct transactions without dramatically moving the asset’s price and rising prices enable larger sums to change hands more easily.

“A single transaction that consumes much of the liquidity of a market is very likely to be noticed, whilst a proportionally smaller transaction on a larger marketplace will generate less attention. As such, increasing liquidity of cryptocurrencies will mean criminals can extract greater values,” the report said.

Good for crypto is good for criminals

In July, it emerged that British companies were stockpiling cryptocurrency in case of ransomware attacks. They were prepared to pay on average £136,000 to regain access to critical data and intellectual property.

However, since there has been an increase in value, as well as the Blockchain infrastructure with the implementation of SegWit, things have become smoother for everyone including criminals.

Collecting real-world cash that could be spent anonymously presented problems for criminals until earlier this year, the report added, in part because the Blockchain, the infrastructure underpinning Bitcoin, sometimes took minutes or hours to finalize payments. Until then, ransomware demands were limited to about $40,000, the report argued.

But in late July Bitcoin split into two currencies and transaction payment times have been speeded up.