Bitcoin - the possible Pandora's Box of the currency world - has never been short of controversy. Whether it be aiding the black market or scamming users out of millions, bitcoin is no stranger to the front page.
Still, the jury is out on the legality and usefulness of bitcoin - leaving it in a proverbial grey area. Bitcoin's price has fluctuated throughout 2019, falling and rising, currently hovering near $10,000. Perhaps you've found bitcoin while it looks to be on the rebound and find yourself interested in it as an investment.
However, there have been several legitimate bitcoin scams that have become infamous, and you need to know about them - but, what are the top 7 bitcoin scams? And how can you avoid them?
What Is a Bitcoin Scam?
For most cases, it may be pretty obvious what a scam is - but with bitcoin, and cryptocurrency in general, things become murkier. Bitcoin itself is an unregulated form of currency that essentially is a mere number that is only given value because of an agreement. It's basically like a moneybag with a lock on it - the code of which is given to the recipient of the bitcoin (an analogy drawn by Forbes in 2017).
Bitcoin scams have been famously criminal and public in nature. With no bank as a middleman in exchange, things become more complicated; so hackers and con men have had a heyday.
Top 7 Bitcoin Scams
There have been (and undoubtedly will be) nearly countless bitcoin scams, but these frauds make the list of the top 7 worst bitcoin scams to date. Take note.
1. Malware Scams
Malware has long been the hallmark of many online scams. But with cryptocurrency, it poses an increased threat given the nature of the currency in and of itself.
Recently, a tech support site called Bleeping Computer issued a warning about cryptocurrency-targeting malware in hopes of saving customers from sending cryptocoins via transactions, reported Yahoo Finance.
"This type of malware, called CryptoCurrency Clipboard Hijackers, works by monitoring the Windows clipboard for cryptocurrency addresses, and if one is detected, will swap it out with an address that they control," wrote Lawrence Abrahams, computer forensics and creator of Bleeping Computer.
“这类恶意软件被称为加密货币剪贴板劫持者，其工作原理是监控Windows剪贴板上的加密货币地址，如果发现一个，就用他们控制的地址替换掉它，”电脑取证专家、哔哔作响电脑(Bleeping computer)的创始人劳伦斯·亚伯拉罕斯(Lawrence Abrahams)写道。
The malware, CryptoCurrency Clipboard Hijackers (which reportedly manages 2.3 million bitcoin addresses) switches addresses used to transfer cryptocoin with ones the malware controls - thus transferring the coins to the scammers instead. And, according to Asia Times, even MacOS malware has been connected to malware scams involving cryptocurrency investors using trusted sites like Slack and Discord chats - coined "OSX.Dummy."
该恶意软件名为CryptoCurrency Clipboard Hijackers(据报道管理着230万个比特币地址)，它将用来传输加密币的地址与恶意软件控制的地址交换，从而将这些比特币转移给骗子。据《亚洲时报》报道，甚至连MacOS恶意软件也被与恶意软件诈骗联系在一起。恶意软件诈骗涉及使用Slack和不和聊天等可信网站的加密货币投资者。
2. Fake Bitcoin Exchanges - BitKRX
Surely one of the easiest ways to scam investors is to pose as an affiliate branch of a respectable and legitimate organization. Well, that's exactly what scammers in the bitcoin field are doing.
South Korean scam BitKRX presented itself as a place to exchange and trade bitcoin, but was ultimately fraudulent. The fake exchange took on part of the name of the real Korean Exchange (KRX), and scammed people out of their money by posing as a respectable and legitimate cryptocurrency exchange.
BitKRX claimed to be a branch of the KRX, a creation of KOSDAQ, South Korean Futures Exchange, and South Korean Stock Exchange, according to Coin Telegraph.
据《硬币电讯报》报道，比特币自称是韩国证券交易所(KOSDAQ)、韩国期货交易所(South korea Futures Exchange)和韩国证券交易所(South korea Stock Exchange)的一个分支。
BitKRX used this faux-affiliation to ensnare people to use their system. The scam was exposed in 2017.
3. Ponzi Scheme - MiningMax
"Ponzi bitcoin scam" has got to be the worst combination of words imaginable for financial gurus. And, the reality is just as bad.
对于金融大师来说，“庞氏比特币骗局”(Ponzi bitcoin scam)肯定是他们能想到的最糟糕的词汇组合。而现实也同样糟糕。
Several organizations have scammed people out of millions with Ponzi schemes using bitcoins, including South Korean website MiningMax. The site, which was not registered with the U.S. Securities and Exchange Commission, promised to provide investors with daily ROI's in exchange for an original investment and commission from getting others to invest (basically, a Ponzi scheme). Apparently, the site was asking people to invest $3,200 for daily ROI's over two years, and a $200 referral commission for every personally recruited investor, reports claim.
MiningMax's domain was privately registered in mid-2016, and had a binary compensation structure. The fraudulent crypto-currency scam was reported by affiliates, resulting in 14 arrests in Korea in December of 2017.
Korea has long been a leader in technological developments - bitcoin is no exception. However, after recent controversy, it seems as though this is changing.
"But a lot of governments are looking at this very carefully," Yoo Byung-joon, business administration professor at Seoul National University and co-author of the 2015 research paper "Is Bitcoin a Viable E-Business?: Empirical Analysis of the Digital Currency's Speculative Nature," told South China Morning Post in January. "Some are even considering putting their currencies on the blockchain system. The biggest challenge facing bitcoin now is the potential for misuse, but that's true of any new technology."
首尔国立大学(Seoul National University)工商管理学教授、2015年研究论文《比特币是可行的电子商务吗?:数字货币投机性质的实证分析。“一些国家甚至在考虑将本国货币纳入区块链体系。比特币目前面临的最大挑战是可能被滥用，但任何新技术都是如此。”
4. Fake Bitcoin Scam - My Big Coin
A classic (but no less dubious) scam involving bitcoin and cryptocurrency is simply, well, fake currency. One such arbiter of this faux bitcoin was My Big Coin. Essentially, the site sold fake bitcoin. Plain and simple.
In early 2018, My Big Coin, a cryptocurrency scam that lured investors into sinking an alleged $6 million, was sued by the U.S. Commodity Futures Trading Commission, according to a CFTC case filed in late January.
CFTC今年1月底提交的一份案件显示，2018年初，美国商品期货交易委员会(CFTC)对My Big Coin提起了诉讼。My Big Coin是一种加密货币骗局，诱使投资者投入据称600万美元的资金。
The CFTC case further details that the suit was due to "commodity fraud and misappropriation related to the ongoing solicitation of customers for a virtual currency known as My Big Coin (MBC)," further charging the scam with "misappropriating over $6 million from customers by, among other things, transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods."
Among other things, the site fraudulently claimed that the coin was being actively traded on several platforms, and even mislead investors by claiming it was also partnered with MasterCard, according to the CFTC case.
Those sued included Randall Carter, Mark Gillespie and the My Big Coin Pay, Inc.
被起诉的公司包括兰德尔·卡特、马克·吉莱斯皮和My Big Coin Pay, Inc。
5. ICO Scam - Bitcoin Savings and Trust and Centra Tech
Still other scammers have used ICO's - initial coin offerings - to dupe users out of their money.
Along with the rise in blockchain-backed companies, fake ICOs became popular as a way to back these new companies. However, given the unregulated nature of bitcoin itself, the door has been wide open for fraud.
Most ICO frauds have taken place through getting investors to invest in or through fake ICO websites using faulty wallets, or by posing as real cryptocurrency-based companies.
Notably, $32 million Centra Tech garnered celebrity support (most famously from DJ Khaled), but was exposed for ICO fraud back in April of 2018, according to Fortune. The company was sued for misleading investors and lying about products, among other fraudulent activities.
The famous DJ wrote his support in a caption on Instagram back in 2017.
"I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens!" Khaled wrote.
“我刚刚收到了我的钛centra借记卡。Centra Card & Centra Wallet应用程序是基于CTR令牌的加密货币借记卡的最终赢家!”哈立德写道。
The U.S. Securities and Exchange Commission even issued a warning in 2017 about ICO scams and faux investment opportunities, brought on by a slew of celebrities who promoted certain ICOs (like Paris Hilton and Floyd Mayweather Jr. to name a few).
美国证券交易委员会(sec)甚至在2017年就ICO欺诈和虚假投资机会发出了警告，这些欺诈和虚假投资机会是由许多名人促成的，他们推广了某些ICO(比如帕里斯•希尔顿(Paris Hilton)和小弗洛伊德•梅威瑟(Floyd Mayweather Jr.))。
"Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion," the SEC wrote in an Investor Alert in 2017. "A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws."
Another example is Bitcoin Savings and Trust, which was fined $40.7 million in 2014 by the SEC for creating fake investments and using a Ponzi scheme to scam investors. According to Coin Telegraph, Trenton Shavers, the organization's leader, allegedly scammed investors into giving him 720,000 bitcoins promising a 7% weekly interest on investments - which he then used to pay back old investors and even fill his personal bank accounts.
另一个例子是比特币储蓄信托公司(Bitcoin Savings and Trust)。2014年，该公司因制造虚假投资并利用庞氏骗局欺骗投资者，被SEC罚款4070万美元。据英国《硬币电讯报》报道，该组织负责人特伦顿·谢弗斯涉嫌诈骗投资者，向他提供72万比特币，承诺每周7%的投资利息——然后他用这些钱偿还老投资者，甚至填满他的个人银行账户。
6. Bitcoin Gold Scam - mybtgwallet.com
6. 比特币黄金骗局- mybtgwallet.com
Nothing catches the eye of the naïve quite like the promise of gold - bitcoin gold, of course.
That is exactly what mybtgwallet.com did to unsuspecting bitcoin investors.
According to CNN, the bitcoin gold (BTG) wallet duped investors out of $3.2 million in 2017 by promising to allow them to claim their bitcoin gold. The website allegedly used links on a legitimate website (Bitcoin Gold) to get investors to share their private keys or seeds with the scam, as this old screenshot from the website shows.
Before the scam was done, the website managers (slash scammers) was able to get their hands on $107,000 worth of bitcoin gold, $72,000 of litecoin, $30,000 of ethereum, and $3 million of bitcoin, according to CNN.
Bitcoin Gold, the site's wallet used in the scam, began investigating shortly after, but the site remains controversial. Still, firm released a warning to bitcoin investors.
"It's worth reminding everyone that it will never be truly safe to enter your private key or mnemonic phrase for a pre-existing wallet into any online website," Bitcoin Gold wrote. "When you want to sweep new coins from a pre-fork wallet address, best practice is the same as after other forks: Send your old coins to a new wallet first, before you expose the private keys of the original wallet. Following this basic rule of private key management greatly reduces your risk of theft."
7. Pump and Dump Scam
While this type of scam is certainly not relegated to just bitcoin (thank you for the education, "The Wolf of Wall Street"), a pump-and-dump scam is especially dangerous in the internet space.
The basic idea is that investors hype up (or "pump up") a certain bitcoin - that is usually an alternative coin that is very cheap but high risk - via investor's websites, blogs, or even Reddit, according to The Daily Dot. Once the scammers pump up a certain bitcoin enough, skyrocketing its value, they cash out and "dump" their bitcoin onto the naïve investors who bought into the bitcoin thinking it was the next big thing.
Bittrex, a popular bitcoin exchange site, released a set of guidelines to avoid bitcoin pump-and-dump scams.
While "stackin' penny stocks" may sound like an appealing way to earn an extra buck (thanks to its glamorization by Jordan Belfort), messing in bitcoin scams is nothing to smirk at.
How to Avoid Bitcoin Scams
With the inevitable rise of bitcoin in current and coming years, it is becoming increasingly important to understand and be on the lookout for bitcoin scams that could cost you thousands. As more people become interested in Bitcoin, more people are also likely to try and pull off a scam.
There is no one formula to avoiding being scammed, but reading up on the latest bitcoin red flags, keeping information private, and double checking sources before investing in anything are good standard procedures that may help save you from being duped. Cryptocurrency can be a confusing topic even for the experienced Bitcoin enthusiast, so the more you read up on the world of Bitcoin, the more prepared you can be. After all, knowledge is power.