Recent ICO Scams and The People Behind Them

Initial coin offerings or ICO’s have been all the rage recently in the cryptocurrency world. ICOs enable companies to raise money by issuing cryptocurrency tokens that users can buy and trade at a later date on the cryptocurrency exchanges.

Basically, an ICO works just like an IPO – but rather than sell shares, companies use tokens with a promise from other companies to buy the tokens back when the product becomes successful and the value of the tokens increase.

Sounds like simple business sense right? Unfortunately, ICO scams like Cryptojacking, ransomware and ICO exit scams have become very popular in recent times tainting the industry and hurting many investors.

“4 out of 5 ICOs that took place in the last one year were ICO scams”

 

Recent ICO Scams and The People Behind Them!

Only 8% of ICO tokens end up in the exchanges revealed a recent research carried out by an ICO advisory firm called Satis Group. The result of this research is not good news for many investors…

  • 80% of ICOs are scams.
  • 8% ICO tokens end up in the exchanges.
  • 10% ICO funds are lost or stolen by cyber attacks.
  • 5% were dead deals.
  • 6% were classified as failed coins.

Some of these scams were made successful because of hackers, ransomware and even celebrities. Yes, celebrities!

Centra Tech ICO and Celebrity Endorsements – $32 million loss

Central tech was an ICO that paid for endorsements from prominent celebrities like DJ Khaled and Floyd Mayweather. In the first place, who takes ICO investment advice from a celebrity? Apparently, a lot of people trusted the face of these superstars and Centra Tech took advantage of this.

The company was incorporated in Delaware with headquarters in Miami Beach Florida by co-founders Robert Farkas and Sohrab “Sam” Sharma. They offered blockchain products like prepaid cards and wallet to store digital assets.

From July of 2017, $32 million was raised by selling Centra tokens called CTR tokens. These tokens were unregistered and the company went a step further to claim that it had an existing collaboration with Visa and Mastercard.

Centra Tech massively promoted the CTR tokens by making what is now known as “material misstatements” which deceived investors.

Unfortunately, the Centra ICO was illegal with no actual registration made with the commission so when the crackdown came, it came hard.

On April 2nd, 2018, the Centra ICO was flagged as fraudulent by the United States Securities and Exchange Commission (SEC). The founders were arrested for breaking federal laws and both men will be forced to return the ill-gotten gains including interest.

Steven Seagal is another celebrity that was caught in the crossfire of promoting an ICO that didn’t pan out. He publicly endorsed a cryptocurrency startup called “Bitcoiin”. Don’t confuse that with our beloved Bitcoin.

Seagal is the worldwide brand ambassador for the brand and took to his social handles to promote the product as well as keep fans updated on the progress of the ICO. However, on March 7th The New Jersey Bureau of Securities issued a cease-and-desist order to Bitcoiin ICO citing its unregistered securities.

The lesson to learn here is that celebrities and cryptocurrency do not mix. There are other ICO scams in recent times that are worth mentioning. Like the Pincoin token in Vietnam which was not endorsed by a celebrity but took the form of an ICO exit scam.

 

PINCOIN tokens – $660 million loss

Modern Tech is a Vietnamese cryptocurrency company that launched an ICO for their Pincoin token and raised $660m from about 32,000 people.

When the company first launched its token, they promised constant returns to investors. Afterward, they launched another token called iFan. The second token was meant for celebrities and was viewed as a social networking token.

At first, investors received cash until January 2018 when the company started paying out iFan tokens as rewards.

In no time, the people behind Pincoin disappeared like smoke. The team of 7 Vietnamese went from zero to multi-millionaires in a few months.

Savedroid “Over and out” – $50 million loss

Another recent ICO scam is Savedroid. It is owned by a German company that raised $50 million from direct funding and ICO.

The founder is known as Dr. Yassin Hankir who ended this ICO scam with a tweet saying “over and out”.

Savedroid came on the cryptocurrency scene with a unique perspective. Hankir and his team promised to use artificial intelligence to manage users investments and promised a crypto-backed credit card.

Savedroid ran smoothly for a few months and even had the appearance of legitimacy. The team opened an office and appeared in several events. However, their Twitter feed seemed to be constantly asking for investments. They wanted investors to participate in a #Airdrop program, unfortunately, some people fell for the scam. Despite all the warning signs, investors lost a lot of money.

Scam ICO Developers And Launching Services

Along the same lines as scam ICO’s, there have been documented complaints and investigations regarding ICO developers and launching services. Most of the scam ICO developers and launching services seem to be coming out of Sofia, Bulgaria.

Just before an ICO is about to go live, these scam launching services lock their clients out of their own backend, and try to extort money from them, or threaten them that their ICO won’t get launched. At this point if the client doesn’t pay the extortion, they lose everything!

TokenGet an ICO launching service out of Sofia Bulgaria, is under investigation for these exact allegations. The TokenGet Launching service was developed by BlockchainMob. The CEO of TokenGet and BlockchainMob Viktor Petrov, is also under investigation for threatening Mobilink-Coin with the same tactics as described above.

What Are The Newest Crackdowns on ICO Scams?

Regulatory bodies are beginning to take more notice of cryptocurrency scams and even though it is an unregulated industry, certain guidelines are being put in place to ensure that investors and crypto-enthusiasts are safe.

The Security Exchange Commission (SEC) has been involved in many recent crackdowns and issued cease and desist notices to suspected ICO fraud companies. This has come as a shock to many who believe that they don’t have the jurisdiction but let’s not forget that all ICOs are security offerings placing them under the purview of SEC.

Last month, SEC issued a large number of subpoenas to ICO issuers and gatekeepers who may be involved in transactions that do not comply with the federal securities laws.

What this means for past ICOs is simple: Fix the problem before the SEC finds you. Companies that have traded tokens to unaccredited investors or broken any securities law violations need to take action now.

Conclusion

ICOs are one of the easiest investments to make that is why many people want to be a part of it. However, not everyone understands the risks involved in ICO investment so before you plunge in to take up an ICO offer make sure to do your background investigation.

Find out who’s behind the company and the background of the offer. To avoid ICO scams, remember that all cryptocurrencies are risky and even though they offer huge returns in a short time, they also come with risks for investors.

TokenGet Under Investigation

TokenGet Under Investigation
TokenGet Under Investigation

TokenGet, and its sister company Blockchain Mob are currently under investigation for alleged theft, fraud, and extortion.

Recently an ICO called Mobilink-Coin made allegations against TokenGet, a company they contracted with to develop the backend of their system, and to facilitate the launch of their ICO. The allegations look credible, especially if you are aware of the fraud that has been taking place within the ICO, and ICO developer side of the cryptocurrency phenomena.

In January of this year, ONECOIN was raided in Sophia Bulgaria as a ponzi scheme, and its servers were shut down, though the fraudulent coin remains operational.

Along with fraudulent ICO’s there have been complaints regarding ICO developers that provide services to ICO’s worldwide. They are based in Sofia, Bulgaria and they build out back offices for upcoming ICO’s, and they structure token systems.

At the point an ICO is about to go live, they lock the clients out of their back office, and try to extort cash, or tokens from them. Many new ICO’s who do not have the funds to start all over again end up paying the extortion.

Something very similar seems to be happening right now to Mobilink Coin. TokenGet is a developer from Sofia Bulgaria contracted by Mobilink Coin to build out their back office for their upcoming ICO. Mobilink Coin alleges that they requested a 3 week extension of their ICO launch, and that Viktor Petrov CEO of TokenGet and Blockchain Mob, threatened to take quote “drastic measures”.

This is very concerning behavior considering Mobilink had already paid TokenGet thousands of dollars in Bitcoin, and was simply requesting an additional 3 weeks before they launch their ICO, and full payment would be made.

Over the next week as stated by Mobilink-Coin:

Somebody with permissions signed into MOBILINK-COIN’s Google-cloud and changed passwords and locked Mobilink out of their back office. Then they stole the company’s payment data, and the mobilink database.

Someone then misappropriated tokens to four separate wallets without the authorization or knowledge of Mobilink. There was a theft or at a minimum, misappropriation of at least 900 million tokens.

These transfers all took place while Mobilink was locked out of the dashboard, and was not able to conduct transfers during this period.

Screenshot of unauthorized transfers

Transaction links:

https://etherscan.io/tx/0xf45bf5369a24a2ce1efcecbe713bed213a66e2210af96a678243abde08b76a04

https://etherscan.io/tx/0x4583e3b362cd808a8a210745bc5722af30d52de384d3bacacb4311069ac713b9

https://etherscan.io/tx/0x4892478f85b5a8b00d2e78f915e31ddf41dfb8e4cd90671b57f47d0fc506a627

https://etherscan.io/tx/0x078324d3046393e0cf971f2c549cebc3e4783eba8f39863be9504ec9d13c9503

Is it safe to assume that a reasonable person may think that the contractor TokenGet, and its sister company Blockchain Mob, conducted the theft and fraud that are being alleged?

The allegations are;

Theft of tokens, theft of financial records, data, and extortion.

This is just the first in a series of reports that will be following this investigation very closely, stay tuned.

And by all means if you’re considering contracting any of these developers in Bulgaria, you may want to wait until this investigation concludes before risking any funds.

To read more about this investigation visit – The Official Ted Blog

Did TokenGet Steal Tokens From Mobilink Coin?

TokenGet
Did TokenGet Steal Coins From Mobilink?

Late last night an ICO called Mobilink-Coin made allegations against TokenGet, a company they contracted with to develop the backend of their system and facilitate the launch of their ICO. The allegations look credible especially if you understand the potential motivation that would support the allegations.

The ICO industry is actually quite horrible which is why the SEC’s of many countries are having to step in to protect the consumer. Most of the ICO’s in play right now will never make it. Many are frauds and ponzi schemes. While I was focused on individual ICO’s, I learned there was a whole new circus in town that I had never considered. The developer companies behind the scenes who either intentionally rip off their ICO clients or the ones that seek to destroy their clients if they don’t get their way. We saw that with Shehar Yar and Blocksims. Proven beyond a reasonable doubt.

So back to this case. Very simple timeline. April 15th was the original launch date for Mobilink-Coin. Mobi needed to extend until May 10th. TokenGet wanted all of their money before doing the extension. Both parties were not able to negotiate and Mobi received communication both in chat and via e mail from Viktor Petrove and Nashwan Khatib threatening to take drastic measures. The last communication was on April 19th.

What does it mean to “take drastic measures”? In a civil business world that might mean legal action.  Even with the threat, Mobi was still wanting to move forward with TokenGet which is why Mobi did not lock them out of the system. The events that followed had to have been the drastic measures.

Over a period of a week, as stated by Mobilink-Coin:

Somebody with permissions signed into MOBILINK-COIN’s Google-cloud and changed passwords and all credentials, which, in addition to other information, stole the company’s payment data.

Somebody moved the back end platform from their Google-cloud account and stole the mobi investor database.

Somebody misappropriated tokens to four separate wallets without  the authorization or knowledge of Mobilink. There was a possible theft, or at a minimum, misappropriation of at least 900 million tokens. Those four transactions occurred just days before the extended ICO end date which equates to 15 times more than the entire ICO sold.

tokenget blockchainmob

Even though somebody went in to cover their tracks, it is interesting to note the transfers took place while Mobilink was locked out of the dashboard and the dashboard was not able to conduct transfers during this period.

And somebody has gone in and deleted the transactions in question but I have the original transaction links:

https://etherscan.io/tx/0xf45bf5369a24a2ce1efcecbe713bed213a66e2210af96a678243abde08b76a04

https://etherscan.io/tx/0x4583e3b362cd808a8a210745bc5722af30d52de384d3bacacb4311069ac713b9

https://etherscan.io/tx/0x4892478f85b5a8b00d2e78f915e31ddf41dfb8e4cd90671b57f47d0fc506a627

https://etherscan.io/tx/0x078324d3046393e0cf971f2c549cebc3e4783eba8f39863be9504ec9d13c9503

TokenGet attempted to extort MOBILINK-COIN by refusing to give back Mobi’s database and platform in which the company already paid all fees in advance of TokenGet doing any work.

So I have to ask the reasonable reader of this post….is it a safe assumption to think that the contractor, TokenGet and it’s sister company Blockchain Mob conducted the fraudulent actions listed above? Stealing tokens? Stealing client’s financial records? Stealing a client’s investor database? All of which is the property of Mobilink. Who does that? Who locks somebody out of their own cloud? Who transfers proprietary and confidential data off of a client’s cloud. What is the intent? Revenge? Extortion? Secretly seizing assets? Or just to be assholes and harm a company.

No matter the events that led up to this moment. I am focused on the “drastic measures” that were taken by the contractor. Seems to have crossed the line and no matter the relationship between the two, should serve as a warning to other ICO’s when doing business with any ICO developers.

And full disclosure…I do not work for Mobi. Mobi does not own this blog, as they stated in their counter. Mobi does not compensate me. I came upon Mobi late last year. I saw the potential of this ICO. I met the principals of the company. I saw proof of concept of their product and I became a fan. Then when I see companies and individuals trying to rip off companies I am a fan of, as a former investigator, i sort through the details and express my opinion of allegations I investigate.

Cryptocurrency & ICO Scams

Cryptocurrency and Initial Coin Offerings (ICOs) have become very popular investment opportunities for investors who want to make huge profits while investing in disruptive ideas by start-ups offering Blockchain-based products and services. According to icobench.com, over $4.5 billion has been invested in ICOs in the last 4 months.

ICOs present an innovative financing option that circumvents the traditional, highly-regulated funding process. Further, most investors do not fully understand the nascent blockchain technology. These two factors have provided a fertile ground for fraudulent scammers to thrive.

Crypto scams can be executed through hacks, thefts, Ponzi schemes, and Exit scams. In this article, we shall look at some of the exit scams that have been witnessed in the history of cryptocurrencies.

An exit scam refers to the deliberate and preplanned theft of investor funds. This happens whenever scammers collect funds from investors without the intentions of delivering the project. The scammers hype their ICOs in the market place, collect funds from unwitting investors, then disappear soon thereafter.

LOOPX

LoopX is the latest exit scam and was to be launched in February 2018. It promised to deliver a proprietary cryptocurrency trading platform. The team behind the scam claimed to have successfully developed and tested an algorithm that would enable
investors to make more money online and the payments would be made on a weekly basis.

The ICO whitepaper promised software that would have the capacity to process over  10,000 trades over 100 currencies per second ensuring enhanced profitability. At the end of the five separate token sales, the startup had pocked over $4.5 Million,deleted their website and social media profiles, and disappeared without a trace.

PlexCoin

PlexCoin promised an unrealistic return of 1,354% within one month. It was shrouded in mystery. The start-up behind the ICO advertised a non-existent development team, obscured the past financial crimes of its founder, Dominic Lacroix, and their whitepaper was not available until after the pre-purchase period was over.

The ICO was stopped by the US Securities and Exchange Commission (SEC) following official complaints about its founder. By the time this intervention by SEC, the startup had collected over $15 from unsuspecting investors.

Benebit

Benebit promised a novel blockchain technology to create a token for customer loyalty programs. The ICO was one the most hyped ever in the history of ICOs with an excellent PR team and heavy presence in the social media. For over one year, its Telegram channel had gained over 9000 followers. It was top-rated by multiple ICO review websites.

Two months to the launch date, the details of the development team turned out to be fake. It was discovered that they had used fake passports as proof of identity and the images had been stolen from a British boys’ school website. Soon thereafter, the ICO website and social media channels were closed leaving the investors counting their losses. ICO analysts estimate that between $2.7 million and $4 million was lost in the scam.

Opair and Ebitz

Opair.co and Ebitz.org scams were two separate scams which were executed by the same person. Ebitz presented itself as a variance of Zcash with an enhanced algorithm and new features but without the founder’s rewards. This would guarantee better returns to the investors. On its part, opair promised a system of decentralized debit cards built by combining the best of Bitcoin and Ethereum networks.

The scam was unearthed when it was discovered that the founders had used fake LinkedIn profiles. Additionally, although they had provided details of the development team including their photos, they refused to attend events or go on video calls for “privacy reasons.

The scammers used the same server DNS records for the two websites. As expected, as soon as the details of the scam went public, the ICO websites were taken offline, and the team went silent. By this time, investors had lost a combined sum of $2.9 million.

REcoin and DRC

 

These were two separate exit scams which were executed by the same person¸ Maksim Zaslavskiy, who claimed to create the first ever cryptocurrencies that were backed up by real estate and diamonds. The two projects were presented as fully-fledged and staffed companies.

However, according to Securities and Exchange Commission (SEC), the two schemes had no real operations. They had exaggerated their scale of investment and no investments were made on behalf of the investors. To make matters worse, SEC declared that REcoin and DRC were not ICOs but rather securities sales. In total investors lost $300,000.

Blocksims ICO

This is an ICO that was launched by a guy by the name of Shehar Yar. He stole data from a legitimate ICO, and tried to pass it off as his own. Like some of the other scams detailed in this article, Blocksims also created fake profiles on Linkedin for their founder, and fake team members.

Their fake profiles were easily discovered when it was found that one the photos they used for a supposed investor, was that of a Russian serial killer. Of course their scam failed miserably, but they are still out there trying to scam people.

Here is a full investigative report on the scam –https://medium.com/@janeandersonresearch/mobilink-blocksims-ico-what-happened-scam-report-e6121d128593

Conclusion

ICO exit scams are a reality and many investors have lost their hard-earned cash in these ventures. It is advisable that you carry out a thorough appraisal of the ICOs before investing. Additionally, consider consulting an expert for a professional due diligence.