Bitcoin Ponzi scheme

Kenyans Lose Millions of Dollars to yet Another Cryptocurrency Scam: Bitstream Circle

20/03/2022 by Idelto Editor

The masterminds behind the alleged cryptocurrency Ponzi scheme called Bitstream Circle are believed to have stolen more than $10 million in investor funds. The alleged theft became apparent on March 13, 2022, when some of the scheme’s investors encountered problems making withdrawals.

Withdrawals Blocked

Reports from Kenya have said investors in an alleged crypto Ponzi scheme, Bitstream Circle, are now unable to withdraw funds following the scheme’s collapse. The reports add that the scheme’s masterminds may have made off with investors’ digital assets that are worth over $10 million.

According to one report, the alleged Ponzi scheme was registered in the U.K. in November 2021 as Bitstream Circle Limited, and Chinese national Quin Yang is listed as the director. The report adds that the scheme had amassed over 11,000 members from across seven countries in less than four months. Most victims were apparently lured by the promise of a daily return on investment of between 5% and 8%, the report suggested.

Fresh reports that Kenyans may have lost millions to yet another cryptocurrency scheme come shortly after a Kenyan government official claimed $120 million had been lost to similar scams in the past financial year. While many of the scheme’s investors now see Bitstream Circle as a scam, the platform’s early investors initially dismissed these allegations.

However, as a report published by Kimani Capital on Linkedin explains, many investors, in fact, began experiencing problems withdrawing funds on March 13, 2022. A message from the administrator of Bitstream Circle’s telegram channel initially suggested that a network upgrade was the source of the problem. Yet after the so-called five-hour network upgrade was completed, investors could still not withdraw their funds.

The Lure of Sizeable, Quick Returns

Meanwhile, in a bid to back claims scammers may have stolen millions from unsuspecting investors, authors of a report published by Kimani Capital point to the more than 10 million USDT stablecoins that were received by an address allegedly controlled by the scammers.

On Twitter, users have been sharing a screenshot purporting to show one of the masterminds mocking the victims. Other users lamented how young investors in particular continue to be duped by the promise of very high returns in a very short space of time.

What are your thoughts on this story? Tell us what you think in the comments section below.

Report: Mirror Trading International Said to Be Owed Over $129 Million by Previously Unaccounted for Debtors

07/12/2021 by Idelto Editor

Mirror Trading International, the now-defunct fraudulent bitcoin investment platform, is said to be owed more than $129 million by debtors that had not been declared previously.

Unaccounted for Debtors

Liquidators of the collapsed South African bitcoin Ponzi scheme, Mirror Trading International (MTI), recently released a statement that suggested the scheme is owed as much as $129.6 million (2.07 billion rands) by previously unaccounted for debtors.

According to a report by Moneyweb, preliminary investigations by liquidators also show that MTI had assets valued at over $190 million. However, the report said liquidators conceded they still needed to carry out more investigations.

These reports of fresh claims against MTI follow the confirmation by liquidators that they had successfully applied for the liquidation of JNX Online, a firm that is allegedly controlled by Johann Steynberg, the scheme’s former CEO.

As explained in the report, Steynberg and his wife, Nerina, had allegedly used JNX Online to buy and sell bitcoins. The same company was also used to make payments to MTI’s creditors and to Nerina.

Legal Action Option

The liquidators, according to the report, believe that legal action — which enables them to investigate fraudulent claims against MTI — might be required. Besides the mooted legal action, the report said “crypto specialists” have since been appointed to assist in quantifying and identifying claims that were obtained from MTI’s back-office platform.

Before running into legal and regulatory troubles, MTI projected itself as a legitimate bitcoin investment platform with some 300,000+ investors. Yet as the findings of an investigation by liquidators show, the number of investors is in fact well below that.

Meanwhile, the Moneyweb report said liquidators will continue to investigate the circumstances leading to the collapse of MTI “by way of Section 417 and 418 enquiries in terms of the Companies Act.”

What are your thoughts about this story? Tell us what you think in the comments section below.

Kenyan Insurance Executive Calls Cryptocurrencies Ponzi Schemes, Warns Users This Will ‘End in Tears’

02/08/2021 by Idelto Editor

A Kenyan insurance executive, Julius Kipng’etich has compared cryptocurrencies like bitcoin to Ponzi schemes and has urged his countrymen not “touch this.” In addition, Kipng’etich warned those already involved in crypto trading to be prepared for the consequences as this always “ends in tears.”

Bitcoin as a Medium of Exchange

Interestingly, when addressing attendees of a business seminar, Kipng’etich does acknowledge that bitcoin already meets one of the conditions for it to be treated as currency. He said:

Currency represents two primary things; it is a medium of exchange and a store of value. So any currency is medium, I give you so that you give something.

Kipng’etich’s view of cryptocurrencies appears to be consistent with that of some central banks. For instance, in its 2019 consultation paper on crypto assets, the South African Reserve Bank (SARB) similarly acknowledges that “crypto-assets have the ability to be used for payments (exchange of such value) and for investment purposes by crypto-asset users.”

Cryptocurrency Not a Store of Value

However, in terms of bitcoin being a store of value, Kipng’etich argues that since this is not backed by governments it, therefore, cannot be seen as a true store of value. According to the executive, only governments are mandated to issue currency by virtue of their positions. The executive explained:

Government is the custodian to regulate how much value has been given. That’s why they issue currency because it represents an output…Then the central bank represents that output in currency.

Therefore, when measured against this standard, cryptocurrencies like bitcoin are valueless or “hot air” as Kipng’etich puts it.

Do you agree with Kipng’etich’s characterization of cryptocurrencies as Ponzi schemes? Tell us what you think in the comments section below.

South African Court Submissions Expose Lies and Deceptive Tactics Used to Perpetuate MTI Bitcoin Ponzi Scheme

10/06/2021 by Idelto Editor

New submissions by a South African regulator, the Financial Sector Conduct Authority (FSCA) and liquidators have exposed the web of lies and deceptive tactics that were used by Mirror Trading International (MTI) CEO Johann Steynberg and others to perpetuate the Ponzi scheme.

Undeclared Losses

In its report filed with the South African court, the regulator also exposes the true extent of losses that were incurred by the bitcoin investment company. For instance, in what the FSCA calls the “first period,” MTI had a “total of nearly 51 bitcoin (that) were deposited with Belize-based forex broker FXChoice, but 22 — or 43% — of these coins were lost by the traders.” However, at this point there was “no multi-level marketing involved.”

Nevertheless, this would change in the second period “when Steynberg purportedly introduced a computerized trading bot” that falsely guaranteed returns of 10% each day. The report explained:

FX Choice reported to the FSCA that 1,846 bitcoin were deposited with it between January and June 2020, but of this 566 bitcoin (about 30%) were lost. These trading results were completely at odds with the wild claims of success being promoted on social media by MTI. FX Choice subsequently froze the remaining 1,280 bitcoin.

In the last period, Steynberg claimed all investors’ bitcoin had been transferred to a new broker, Trade 300. Still, when the FSCA investigated this claim, “it concluded that Trade 300 was a fraudulent creation of Steynberg’s and does not exist as a bona fide brokerage,” according to a report by Moneyweb.

MTI Shareholding Structure

Meanwhile, MTI liquidators have similarly submitted “evidence” that exposes the bitcoin investment company’s actual shareholding structure. The liquidators’ position is paraphrased by the Moneyweb report: “Based on the evidence provided by the liquidators, MTI was owned 50-50 by Steynberg and Clynton Marks, who would divvy up 10% of the profits between them every Monday.”

However, the liquidators still concede that Steynberg seems to have been the only individual in MTI dealing with a broker in Belize and an India-based server team. “He would supply trading results from the broker to the server team for capture into the back-office system,” the report notes.

Nepotism Allegations

In the meantime, another director of MTI, Cheri Marks, is facing accusations of using her position in the organization to reward her associates. For instance, Marks is accused of appointing Monica Coetzee to the position of marketing director despite her lack of required qualifications. In addition, Marks is accused of bumping Coetzee’s salary from just over $1000 per month to one BTC per month.

Following these proceedings, a Western Cape High Court is now expected to hear arguments by those that want a final liquidation to be granted and those against it. According to a report, these proceedings are scheduled to be heard in the third week of June 2021.

What are your thoughts on the latest revelations about MTI’s huge losses and its shareholding structure? Tell us what you think in the comments section below.

Argentinean Prosecutor Investigates an Alleged Bitcoin Scam Ganancias Deportivas

16/02/2021 by Idelto Editor

Argentinean Prosecutor Launches Investigation on Alleged Bitcoin Scam Ganancias Deportivas

In Mendoza, Argentina, law enforcement launched an investigation against a sports-related investment site for presumably being a bitcoin scam. Among the inquiries, authorities are investigating if they’re involved in money laundering and tax evasion.

Platform Claims to Invest Customer’s Funds in Placing Soccer Bets

According to Clarin, Javier Giaroli, the prosecutor from the Public Ministry of San Rafael, leads the inquiries against Ganancias Deportivas. Local authorities have been interviewing several alleged victims to determine whether it’s a Ponzi scam or not.

Per the findings, Ganancias Deportivas attracted over 41,000 residents from the province of Mendoza, 30,000 of them living in the city of San Rafael.

Allegedly based in Costa Rica, the platform offers investment packages that promise high yield returns of 20% monthly and 240% yearly.

However, they ask for a one-time payment of 100 euros to join the site, and if each member can refer others to the platform, they can receive 20 euros per new customer signed up.

Investment packages are ranging from 60 euros to 10,000 euros. People can make deposits in bitcoin (BTC) to participate in the platform.

The site promotes itself as a “networking company” that invests in sports betting, specifically soccer. They claim to have “expert analysts with ten years of experience” who place bets on soccer matches from the “major international leagues and tournaments,” especially from Europe.

Local Promoter to Testify at the Prosecutor’s Request

One of the requirements asked by Ganancias Deportivas is that users cannot withdraw initial investment for six months. There are some users, however, who reject the claims that Ganancias Deportivas is a scam.

Still, investigators of the Economic Crimes Prosecutor’s Office have raised concerns about the “exorbitant” returns offered by Ganancias Deportivas. In addition, the prosecution sees it contradictory, the fact that a “networking company” is collecting funds to invest in alleged sports betting.

Prosecutor Giaroli told Clarin that they have sent requests for reports abroad because although the company is allegedly based in Costa Rica, it was created in Spain.

Moreover, he called a former cell phone seller in San Rafael, who is actively promoting the business in the city, to testify. The promoter claimed to have documents that support Ganancias Deportivas’ source of funds.

As of press time, there are no detainees, nor arrests, as the investigations keep underway. Also, the website is blocked in Colombia, as the local authorities blacklisted it as an illegal betting site.

What do you think about this case of an alleged sports betting-related bitcoin scam? Let us know in the comments section below.