List of Bitcoin Scams, Cryptocurrency Scams, and How to Avoid Them

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On January 17, 2018, news broke that the controversial platform Bitconnect has closed its doors. Before doing so, it refunded its users with BCC (Bitconnect Coins) with the value equivalent to around $300 per BCC. This they did instead of giving the users $300 (as in real USD) or Bitcoins worth $300.

Mere hours later 1 BCC became equivalent to just $25. BCC lost 95% of its value. What Bitconnect did is run away with its users’ Bitcoins and give them worthless BCC. And it’s going worthless by the minute.

This article is updated with the list of companies flagged by the Philippines Securities and Exchange Commission (SEC) for illegal sale of  unregistered securities.

Bitconnect has been tagged as a pyramid scam. Users invest money. The more money they invest, the more they get back, or so they are told. Bitconnect claims to have a trading algorithm that allows users to get 1% interest per day because of bitcoin’s volatility. There’s no risk. Naturally, a lot are enticed.

In reality, much of the payouts are coming from referral fees. People earn money mostly from such referrals. Just like in a typical multi-level marketing scheme, the money from the “downlines” supports the “uplines”. By January, the scam was in its late stages. Perhaps their trading algorithm was true, but since bitcoin’s value was going down, it was possible that it couldn’t profit from trading. Or maybe the number of new downlines could no longer support the ones on top. On January 17, 2018, Bitconnect shuts down, just like all the classic Ponzi schemes in history.

Bitcoin Scams

Bitcoin has gone a long way since its inception. From $1 in 2009 to $20,000 in December 2017. Like every successful innovation, someone will naturally try to take advantage of it by taking advantage of people. It’s human nature. There are good people. There are bad people.

But how do you know that something is a scam? How do you know that a certain Initial Coin Offering is fake? There are many articles out there that teach you how to avoid scams. This time around, let’s find out how to avoid bitcoin scams, ICO scams, cryptocurrency scams, etc

Types of Bitcoin Scams and how to avoid them

Unsurprisingly, scammers operate differently. It can be technical, such as someone enticing you to download a free movie, which in turn installs an illegal mining software on your computer – to classic Ponzi schemes. Let’s check them out one by one.

Malware and Phishing Scams

We have discussed this in detail in Bitpinas in the past. In this kind of scheme, you will (with or without your knowledge) download a mining software. The software will use your computer’s power to mine coins, which the gets sent to the culprit’s wallet. Here are articles we have written about it:

How to avoid Malware Scams

Simply put, just don’t download anything that doesn’t come from legitimate sources. Do that, especially, on the computer that you use to do bitcoin transactions; whether it’s the computer where you keep your desktop wallet or the one you use to access cryptocurrency exchanges.

Fake Wallets and Exchanges

In this type of scam, the wallet you use to keep your coins steal your coins. Or maybe, the exchange site you use shuts down with your money.

How too Avoid

Only download wallets that are recommended by the cryptocurrency platform. For example, NEM only recommends its official NEM wallet. If you prefer hot wallets, look for something is trusted by many people. Look for install base and reviews on the App and Play Stores.

Note that there are different types of wallets. In the Philippines, we have companies that provide hot wallets, or wallets that can be accessed online and pay bills – Coins.ph and Bitbit. Both are licensed to operate by the Philippine Central Bank.

Also, stay away from unknown exchanges. Only use reputable ones, or atleast the ones widely reported by the media.

Ponzi Schemes

Now this is the real deal. The hundred-year-old scam that Charles Ponzi once did in the 1920s, fashioned for the modern era of cryptocurrency.

Time and time again, we have said that there are risks associated with any investment on any cryptocurrency. This is also true on traditional investment instrument, such as stocks, etc.

But in Ponzi schemes, the company (or the person) will say that there are no risks! Just like in Bitconnect, you are promised 1% returns. Or maybe you will be promised with “double your money” offers.

Of course, with bitcoin in the equation, the website (or a person) will ask you to give it money so that they will invest it in bitcoin. They will say that the value will go up or down depending on the value of bitcoin against Pesos or Dollars.

There are 2 problems with this setup

First, you don’t need someone to invest your money into bitcoins for you. You youself can put money into bitcoin. The simplest way is by putting your money into Coins.ph and then converting that into bitcoin.

Second, in reality, the scheme is not supported by the profits earned because of bitcoin’s increasing value. You are not profiting from bitcoin, but from the money being put up by new investors.

How to avoid these types of scams

  1. Don’t believe anyone who will say that they will invest your bitcoins for you. You can and you must do it yourself.
  2. If something or someone promises “guaranteed returns”, then it is a fraud and virtually impossible.
  3. If much of the money is earned through referral links and not on legitimate operations/products, then it is a scam
  4. If it seems to good to be true, it is a scam.

List of Bitcoin Scams, Crypto Scams, or Investment Scams Flagged by the SEC

(Updated May 2020) The following are companies, groups, or persons flagged by the Philippine Securities and Exchange Commission (SEC) for violating securities laws in the Philippines through the selling of unregistered securities. (Source)

2020

  • Aquitek Food Trading (Aquitek)
  • World of Captcha (WOC)
  • Friend$hip/Friend$hip Philippines
  • My Gold Rev/My Gold Rev Philippines
  • Bayanihan Program of Billy Ford Andrada
  • Facebook Account named “Fil-Invest”
  • Won Project, Won Network, Won Foundation
  • Crypto Invest With Us (CIWU)
  • Xtreme House of Beauty Trading Corporation
  • Captcha Philippines Incorporated
  • Raisedherbs Zion Marketing
  • Rising Era Dynasty (Red) Inc
  • Newmont Philippines
  • Ielev8 Network and ielev8 Health and Wellness Co
  • Aiza Mercado as promoter of My Profit Robot
  • Winners Ecommerce International Network aka Wincorp
  • Sharebiz Ads/Sharebiz Advertising/Sharebiz Online Advertising Services
  • Crowd1 Asia Pacific Inc (Crowd1)
  • Accelerare Main PH/Accelerare PH/Accelerare/Accelerare Car Trading/Accelerare Forex Trading
  • Viceem Help Worldwide/Viceem Help
  • Nexus P Capital
  • My Profit Robot
  • Norway International OPC
  • Cashcowrobot
  • TBCMMP Masa Mart inc
  • Invexpert/Invexpert Ltd
  • Delta Crypt Limited
  • Jocal S688 Beauty and Wellness Products Trading Inc
  • CryptoPeso
  • V2R Trades
  • Cryptec by Point Place Ltd
  • Lao Razon Trading and/or Lao Razon Marketing
  • Sakto Online Advertising
  • Azenzo Online
  • Mag Invest Ka Online (MIKO)
  • President: Rodrigo Duterte Charity Foundation
  • Bitrade/Bitrade Bitcoin Trading Ltd/Bitrade Limited PH
  • Bitcoin Revolution
  • E-Commerce, House of Entrepreneurs Inc
  • Fast Track WorldWidem Inc. (“FTW”)
  • Narcfund/NarcsFund
  • Munics Nation Inc and Munics Bank (Munics)
  • NextGen Global Alliance Corporation (NextGen) and NextGen Organic Farmers Cooperative (NoFaco)
  • Fast Five System-United Phoenix Team
  • Non-Stock Corporations, Associations, and Foundations in Zamboanga City
  • Big500PH
  • International VIP Financing/International VIP Financing PH
  • Elite Entrep Blue Print/Elite Entrepreneur Blue Print/EEBP
  • Kapiboma Networking/Kapiboma Global Marketing Inc (“Kapiboma”)
  • Champion International Corporation/Madenu Champion Marketing International
  • Inochi/Inochi Rewards
  • Eco Hatchery/Eco Hatchery and Trading Corporation
  • “The Program” and “Financial and Entrepreneurial Development (FEED) Program”
  • Bitthroughcash / Bit2Cash Trading Inc
  • AVP88 Coturnix Egg Farm and AVP88 Trading Inc
  • 727-Tycoon/1Tycoon
  • Billford Trading Company and Bill Ford VIP Trading Inc
  • Teachers Financial Coaching Program (TFCP)/Teachers Financial Freedom Program (TFFP)/Elite Teachers Financial Program (ETFP)/Teachers Financial Program (TFP)

2019

  • Jethclick, Jethclick International, Jethclick by Jethrho, and Jetrhro Corp
  • WBA Development Corporation, WBA Advertising, Wealth Builder Advertising, Wealth Builder Accelerator, Wealth Builder-Accelerator-WBA Advertising Philippines
  • Technovanti Neteligence Inc (Technovanti)
  • Payasian Solutions Pte Limited/Payasian PTE Limited Corporation
  • Coindeoro Holdings Inc / Coin De Oro
  • Financing International-Casino and/or Casino VIP Financing by Cathlyne Papasin and/or Casino VIP Financing and/or Fortune Dragon Casino Financing
  • Give and Share E-Commerce Solutions Inc/GAS E-Commerce Solutions Inc
  • Free Training Seminars Promoting Foreign-Registered Electronic Investment Platforms
  • MyBitClaim Trading Corporation
  • Hybrid Gamefowl Holdings Inc
  • Lion City Finance Group Inc
  • Max4Unlimited Co. and Max4 Unli Corporation
  • Pigdeals International Holdings Inc under CEO Dwayne Ramos Walberg and President Rocky Gonzales Manalo and Pigdeals Agriventures Hog Farm Trading under Rocky Manalo Gonzalez (Proprietor)
  • Right Circle Trading
  • WhereToGo Travel Advertising Company/WhereToGo Advertising
  • Easy Play operated by Jenica Sarah Reganit
  • Better Adsource System Inc/Better Adsource Advertising Services
  • Pay Ups Online Marketing Business Inc and Pays-UpGen Marketing Business Unlimited Inc
  • WeeClick Club
  • Senior Citizen and Elderly Welfare Club of the Philippines Inc
  • Broilerpreneur Corporation and Super Livestock Holdings Inc
  • GM Pineda Construction and Development
  • JY Beauty and Fashion Marketing
  • Shantal
  • Brix Ventures Incorporated
  • Yellowdot Transport Terminal Inc
  • SGP Dragon Trading Corporation
  • Brendahl Cruz Holdings Inc and Scentkoworld Corporation
  • Japhet Table and Tabale Cacao Farms
  • Togachat Academy Philippines Inc
  • Paycheck AB Online Services Co
  • Requiza Agricultural Products Trading
  • Unlishop E-Commerce Advertising System Company Doing Business Under UnliShop E-Commerce Advertising System (Hereafter “Unlishop”)
  • The Philippines Good Samaritan Riders Association
  • Munificence Ministry
  • Broilerpreneur Corporation
  • Ada Farm Agri Ventures
  • Ever Arm Any Marketing
  • Global Dream Zion
  • Rigen Marketing
  • LDT Agro Industrial Hub Corporation/VCM-NW Corporation
  • DV Boer Farm Corporation
  • Almamico (Alabel-Maasim Small Scale Mining Cooperative)/Alamcco (Alabel-Maasim Credit Cooperative)
  • Kapa-Community Ministry International Inc (KAPA)
  • Unity Wealth Marketing (UWealth Premium and UnityWealth 100)
  • Paysbook E-Commerce System Co Ltd
  • Angel Investor Group Inc

2018

  • To be updated

2017

  • To be updated

Overall

We can’t stress this enough: Invest only in something you can afford to lose. Bitcoin and major cryptocurrencies have extremely high-value volatility and be prepared to gain or lose your money.

Also, please exhaust all research resources available to you before proceeding to invest or trade in cryptocurrency. Do not invest in bitcoin just because you know someone else who did. What is bitcoin? What is blockchain? If you are interested in an initial coin offering, understand first the value the team behind the ICO is giving in exchange for your money. Again, do your research and hopefully, you don’t fall to these types of scams.

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