Although cryptocurrencies, such as Bitcoin, may seem to be new. I have been writing in Scamicide.com about cryptocurrency scams since 2014. Cryptocurrencies are legitimate, but scammers are increasingly taking advantage of the public’s fascination with cryptocurrencies to take old forms of scams and update them with a cryptocurrency twist. The perception of many in the public that cryptocurrencies offer an easy path to riches coupled with many people violating the cardinal rule of investing by investing in schemes that they do not understand creates a perfect storm for cryptocurrency scams.
A good example of what a cryptocurrency scam looks like can be found by going to this website touting HoweyCoins. https://www.howeycoins.com/index.html
The bad news is that while HoweyCoins may appear to provide a lucrative investment opportunity, there is no such thing as HoweyCoins. It is a scam. Fortunately, it is a scam website that was set up by the Securities and Exchange Commission to serve as a warning to unwary investors about the dangers of cryptocurrency scams.
Recently the Securities and Exchange Commission (SEC) sued the company BitConnect and its founder, Satish Kumbhani alleging they operated a 2 billion dollar fraud scheme. According to the SEC, BitConnect said it had an automated program that made huge profits by trading bitcoins that would be provided to BitConnect by its customers. The company proclaimed that it never had a negative day of trading and its annualized return was 3,700%. Unfortunately, according to the SEC BitConnect was nothing more than a glorified Ponzi scheme in which new investors were paid from the contributions of later investors with most investors losing their entire investments. Already. Glenn Arcaro, an American promotor of BItConnect which itself is based overseas has pleaded guilty and will be sentenced in November.
As I have mentioned many times previously, you should never invest in anything that you do not fully understand. You also should not invest in anything without investigating the people offering the investments. In addition, as always, if the investment sounds too good to be true, it usually is. Due to the fact that cryptocurrencies are totally unregulated by any government, they are a questionable investment. Add to that fact, their digital character and its susceptibility to hackers and fraud and you have a dangerous investment at best.
BitConnect and Kumhani are just the latest in a long line of Ponzi schemers who make promises that are too good to be true backed up by an incomprehensible formula for investment success. You should always remember the prime rule of investing which is to never invest in anything or any investment strategy that you do not totally understand. Some of the things to be on the lookout for in regard to cryptocurrency scams are promises of high, guaranteed returns on your investment, false claims of being SEC compliant, allowing you to invest using your credit card and pump and dump scams. For more information about pump and dump scams related to cryptocurrencies, check out the Scam of the day for April 11, 2018.
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