Scams, Frauds, and Hacks
One of the bad raps that Bitcoin has been getting is that it is used by criminals and money launderers. The truth is that although it can be, so is government issued money, and to a much greater degree. Bitcoin is only a tool, and like any tool it can be used or abused. This is space is dedicated to listing a summary of some of the more notable scams, frauds, and hacks of the Bitcoin community and, if possible, find a lesson to be learned from them. If you have information about a scam, fraud or hack that deserves to be listed on this page, please let us know.
|Bitcoin Economy is a website that is promoting itself as a MLM opportunity selling Bitcoin educational products. They have an affiliate sign-up fee of 199$ US and promise 100% commissions.They have three levels of educational products priced at 475$. This list of things to be learned at each level of the course are either things that can be learned for free on many sites or things that are intangible, like ‘personal development’ in the advanced course.They are banked in Hong Kong and incorporated in the Seychelles.When I reviewed their site, I couldn’t justify the prices for affiliates or customers that they are requesting, so I sent an email to them with my concerns. There has been no response.|
|Bitcoin is often referred to by its detractors as a ponzi scheme. Well, here is a ponzi scheme that has nothing to do with Bitcoin other than it’s the currency they are trying to steal.These folks offer a 6% monthly return, which means you could double your money in a year, as they state clearly on their site. This is clearly a case of ‘too good to be true.’A review of news sites and scam boards reveals a number of claims by people saying that they get their interest posted as expected, but when they go to withdraw their funds, they get a white screen. Some users have been able to withdraw once, but then not been able to withdraw after redepositing money.The owners of this site were also associated with EasyCoin.net, an online wallet and mixing service that is now off the web with many posts from angry users claiming that the site was a scam.For anyone intending to use Bitcoinera.net, please read their terms carefully. One of the clauses states that they reserve the right to take their site down for any reason — which would, of course, leave the depositors high and dry.
One of the more surprising features of this scam is that normally the forums will have some people popping up to defend the service. Almost all of the posts that I found are negative.
Coingrounds / Bit-U
|On November 5th, Bitcoin Warrior did a sponsored article with the not-yet active Coingrounds. We were in contact with Saif Altimimi, who impressed us as an entrepreneur trying something out in the Bitcoin economy. We were very happy to provide some publicity to the site and try to help the Bitcoin economy grow.Unfortunately, there was a falling out between the two main partners of this venture, Altimimi and a programmer who goes by the name Silfax. Coingrounds, the in beta, was switched completely to the control of Silfax and the name was changed to Bit-U.com. All Coinground accounts were transferred.On or about November 23, 2013, Bit-U was hacked and had 38 Bitcoin stolen from its wallet. Silfax shut the site down and was out of communication for about 24 hours. He then made an announcement of the situation on Bitsharestalk.org lettin people know the method of the hack. He claimed that after reviewing the situation, he would be able to re-up the site for 36 hours and allow depositors to withdraw 58% of their funds. Any funds left over after that period would be manually returned to the most seriously hit depositors.Unsubstantiated claims have been made that the hack was either Altimimi, a disgruntled Digital Ocean employee (the company that hosted Bit-U.com), or Silfax. The funds have been partially tracked through the blockchain, but there seems little hope of recovering the sums at present.|