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Bitcoin Scams and How to Avoid Them

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Bitcoin Scams and How to Avoid Them


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Bitcoin has taken the world by storm, and since its introduction in 2008, it has inevitably faced several controversies. Scammers found a gold mine in the digital currency for many reasons. One of them is the fact that only a few people understand it, which makes it easier to make them believe false promises. Another reason is anonymity – cryptocurrency gives scammers relative ease to cover their tracks. Lastly, a major reason is that it is largely unregulated. Bitcoin chiefly operates outside of the conventions of a financial system; and this worries regulators as it has the potential to be linked to money laundering, tax evasion, fraud, and terrorist funding.

What are the most common bitcoin scams and how do you spot them?

Fake Bitcoin Exchanges. One popular example for these would be South Korea's BitKRX, which posed to be a branch of the country's Korean Exchange (KRX) and claimed to be a platform to exchange and trade bitcoin. Ultimately, it turned out to be fraudulent. There are also those that pretend to be connected with well-known exchanges using apps or fake websites; users are scammed when they log in and their account details are given away. When you are directed to a website, make sure that the URL has “HTTPS” rather than just “HTTP.” Without the letter S, it means that the web traffic has no security and encryption.

Ponzi Scams. Someone promises an incredible return of investment using bitcoin and a lot of people buy in it. Before you know it, someone runs off with all of your money. That's basically how Ponzi schemes work. At first, victims will be made to believe that it actually works – say, the digits in their bank account are increasing. This will also make them talk about its “success” and convince others to join in. Eventually, calls to the customer service are unanswered, there are technical problems with the website, or the money will be remitted late – among several excuses while your money disappears for good. If you see ads that sound like, “double your bitcoin overnight,” they're probably scams. How it usually works is you have to send them your money first before they can double it.

Pyramid Schemes. Scammers use bitcoin as a product in pyramid scams. In these schemes, your low initial investment will be multiplied if you invite more people to sign up. After a lot of people have invested their money, the original scammer walks away with all the money.

Malware. Hackers have long been using malware in order to get a hold of other people's login credentials and account details. Now, it's being used to drain Bitcoin wallets that are connected to the Internet.

How do you avoid falling into these scams?

  • If the offer is too good to be true, stay away from it.
  • Be vigilant on social media – legitimate bitcoin traders and brokers can be victims of poser accounts or impersonators.
  • Never conduct financial transactions via direct messages on social media platforms.
  • Do your homework and research on services you encounter and the best trading platforms; verify their claims and check their legitimacy or whether they are a registered corporation or not.

Contact us at Hogan Injury for expert legal advice.

None of the content on Hoganinjury.com is legal advice nor is it a replacement for advice from a certified lawyer. Please consult a legal professional for further information.

Original article posted on Hogan Injury website

Syndicated article, by permission, posted on Markethive, by Jeffrey Sloe

There’s A Giant White Sewer Rat In Wall Street And It’s Preaching Bitcoin

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There’s A Giant White Sewer Rat In Wall Street And It’s Preaching Bitcoin

There’s a really interesting piece of art down in Wall Street that has captured the people’s attention for some time now. It’s a rat, and a really huge one for that matter.

Nelson Saiers And The Rat

This new phenomenon sits across the street right opposite the Federal Reserve building. However, it’s not the giant white inflatable rat that’s been stirring up Wall Street, but rather what it actually represents. The man responsible for the huge rat’s existence on America’s most popular street is one Nelson Saiers. Nelson spent the better part of his life as a hedge fund manager in Wall Street until he stopped trading in 2014. Since then, Nelson has dedicated his time to revealing the ills of the traditional financial system that he believes is way too broken to survive in the long run.

To better put his point across, this man has opted to use art. In fact, he’s not alone in this line of thinking. There have been numerous cases of people using art to speak to the public about the broken system. Often, they leave spectacular pieces of art or paintings on buildings all across cities. Such art has been spotted in a number of the world’s most popular cities – including France’s Paris.

The Federal Reserve Vs Bitcoin

In precise terms, the huge inflatable sewer rat bearing down on the US Federal Reserve building has its body covered with art depicting Bitcoin code, a spectacle that symbolizes Nelson’s perception of a better financial system as opposed to the mainstream centralized system. In his view, a decentralized crypto ecosystem would do much better than the current system that operates under the tight grip of the authorities.

Indeed, the last two decades have seen various artists come out to use their talents to depict the apparent financial inequalities in the current system. One of the most prominent artists in this school of thought is Banksy. In Banksy’s opinion, a rat is a symbol of resilience and freedom, saying that rats exist without permission and have zero attachment to conservative societal standards. Back in 2016, Andreas Antonopoulous referred to Bitcoin as the “sewer rat of currencies.” Andreas is computer scientist. He went on to give the imagery of an injured but dynamic and robust financial system represented by the sewer rat.

Nicknamed “The Warhol of Wall Street,” Nelson’s ambition doesn’t start or end with the giant white inflatable sewer rat bearing down on the Federal Reserve building. This isn’t his first such project. In fact, he plans to remove the rat once its point is home. With such things happening, Bitcoin seems to be gaining more traction in terms of popularity and credibility as the valid alternative to the restrictive traditional financial system. Could such acts cause a Bitcoin bull run?

Article written by Nick James

Article posted on Ethereum World News

Jeffrey Sloe

From Crimefighter to ‘Crypto’: Meet the Woman in Charge of Venture Capital’s Biggest Gamble

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From Crimefighter to 'Crypto': Meet the Woman in Charge of Venture Capital’s Biggest Gamble

Kathryn Haun was the Justice Department's go-to prosecutor for Bitcoin-related felonies. Now she's one of cryptocurrency's most important investors. Here's why her career change is a watershed moment.

Debate

“Let’s settle this!” an announcer rumbles over loudspeakers.

The “this” in question is one of the more important business disputes of the moment: Are alternative currencies like Bitcoin the future of financial services or a 21st-century Ponzi scheme? To get resolution, a Mexican data center company called KIO Networks is hosting a debate in a smoke-filled arena in the graffiti-coated Hipódromo Condesa neighborhood of Mexico City. The atmosphere screams lucha libre, the stylized form of Mexican wrestling that features acrobatic moves and dramatic masks.

On this late-September evening, the main event features two intellectual heavyweights from the United States, both highly credentialed, neither wearing disguises. In one corner is Paul Krugman, the New York Times columnist and Nobel laureate in economics. In the other is Kathryn Haun, an accomplished federal prosecutor recently turned venture capitalist.

Krugman’s position is predictable. He sees the rise of cryptocurrency networks—decentralized digital services that run on computerized money like Bitcoin—as an unnecessary throwback to a distant era, when precious metals made up the money supply. “I don’t believe we’re at the dawn of a new age,” he says. He delivers a smackdown on an investment craze that the likes of Jamie Dimon and Warren Buffett have repeatedly pooh-poohed: “I think 15 years from now, it will look a lot like Pets.com.”

Haun sees things differently. To her, virtual currencies and the technologies that underpin them are society’s saviors: a last great hope at reclaiming power gobbled up by greedy banks and Internet monopolists. “Facebook, Amazon, Netflix, Google, they control all the rules,” she says. “They have all the users. They have all the power.” The new technology, Haun argues, allows eager, entrepreneurial developers to compete. She throws her weight behind the democratizing dream of the new technology’s acolytes.

Photo by Christie Hemm Klok for Fortune

Cryptocurrency is “in the dial-up days,” says Haun, “and the critics are confusing the current state of innovation with the end state of innovation.”

Haun largely wins over the crowd, a collection of the megalopolis’s tech elite. And they like her visuals too. At the outset of her talk, five giant screens project the mug shots of corrupt U.S. law-enforcement officials she convicted in her previous career. But the audience isn’t enamored of Haun merely because she once was the sheriff in the Wild West of “crypto.” She excites them because now she’s joined their side. As one of the newest partners of the estimable Silicon Valley venture capital firm Andreessen Horowitz, Haun’s job is to find the next big thing in cryptocurrencies—and to help their founders succeed while staying on the right side of the law.

Haun is making her career shift at a precarious time. Cryptocurrency markets have been in free fall all year. A global speculative mania for virtual coins that sent valuations above $800 billion in January has dwindled to $200 billion. Bitcoin has lost two-thirds of its value, and Ethereum, the second-biggest cryptocurrency, is down 90%.

Haun and her new partners are undaunted. Investment crazes often spawn bubbles. But what’s left after they pop, if the true believers are right, are new industries. Firm cofounder Marc Andreessen, after all, parlayed his work developing the first commercial browser into Netscape, the flawed startup that helped beget the World Wide Web—and many billions of dollars in investment returns for the Internet industry. Haun also is unfazed by her lack of professional investing experience. “For entrepreneurs to want to work with you, they need to think you have some strategic vision, some hustle, and an ability to get the job done,” she says. These are the same skills, she posits, that a prosecutor needs to persuade FBI agents and others to work with them.

Bridging worlds, then, is one of Haun’s chief attributes. “She has this rare blend of having been in government and having a business-centric mind,” says David Marcus, a senior Facebook executive who sat on a corporate board with Haun. Adds Anthony Kennedy, the newly retired associate justice of the U.S. Supreme Court, for whom Haun clerked: “I’m quite reassured that someone with her talents and background would go into this new area.” Her involvement “is a tremendously important link between the law and the cyber age. And she recognizes that.”

A version of this article appears in the Oct. 1, 2018 issue of Fortune with the headline “Jumping The Fence.”

This is just an excerpt; the complete article can be read on Fortune.com. 

ARTICLE written by Robert Hackett 

Posted by: Jeffrey Sloe

Colorado State Cracks Down on Unregulated Cryptocurrency Businesses

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Colorado State Cracks Down on Unregulated Cryptocurrency Businesses

Colorado's state Division of Securities issued a cessation order to four cryptocurrency firms for issuing unregistered securities through Initial Coin Offerings (ICO). So far, the state's Securities Commissioner has issued cease and desist orders to twelve ICOs for the same offense.

Four Cryptocurrency Companies Ordered to Stop Unregistered ICOs

According to a publication on the regulator's website, the State's Division of Regulatory Agencies (DORA) instituted an “ICO Task Force” in May to probe possible fraudulent projects aimed at cryptocurrency investors. These recent orders issued to Bitcoin Investments, Limited, Prisma, PinkDate, and Clear Shop Vision Limited are based on the findings of the ICO Task Force.

The four firms are allegedly offering unregistered securities to citizens of the state. In the publication, the securities regulator highlights the alleged fraudulent activities of the four companies.

The Division alleges that the companies offer an unrealistic return on investments ranging from 27% to 95%. Through their separate ICOs namely DB Token ICO (Bitcoin Investments, Ltd), PinkDate ICO, Prismacoin, and ORC Token (Clear Shop Vision Ltd), these companies solicited investment from Colorado citizens despite not being registered with the State's Division of Security.

Bitcoin Investments, Ltd allegedly offers 1% daily returns on investment. The company also claims that in 2017 investors received an average of 95% return on their registered investments.

PinkDate allegedly sought to raise $5 million through the sale of its cryptocurrency. The company did not disclose its business address or employees.

In the case of Prisma, the company purportedly operated an arbitrage and lending platform. Investors had to buy the company's virtual currency – PrismaCoin to use the platform. The firm promises investors returns of up to 27%.

For Clear Shop Vision, the division claims that the company has issued three unregistered ICOs since June.

On receipt of the orders, the cryptocurrency companies are to immediately stop all operations that violate the state's Securities Act, including fraud and issuing unregistered securities.

State Regulatory Agencies Tackle Fraudulent Cryptocurrency Activities

On the Federal level, the US SEC is not stepping down its enforcement efforts against illegal cryptocurrency schemes. State securities regulatory agencies are also making efforts to protect their citizens against fraudulent cryptocurrency investments.

Earlier in the week, the Texas State Securities Board filed a cease and desist order against AWS Mining company for allegedly selling unregistered securities. According to the regulator, the mining company promised investors a 200% return on funds invested in cryptocurrency mining power contracts.

In October, the Commissioner of North Dakota's Securities Department issued a cease and desist order against Crystal Token, Advertiza Holdings (Pty) Ltd, and Life Cross Coin. These three virtual currency firms allegedly offered fraudulent and unregistered securities through Initial Coin Offerings.

Image courtesy CBS Denver.

Original article posted on Ethereum World News and written by Osato-Avan-Nomayo

Posted on Markethive by Jeffrey Sloe

Paying with Bitcoin: What You Need to Know

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Paying with Bitcoin: What You Need to Know


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Cryptocurrency, especially Bitcoin, continues to rise in popularity despite its value’s volatility recently; and if you are looking to use bitcoin to pay for things, you have to take due diligence in knowing how to do it, where you can spend bitcoins, and what the risks and advantages are.

How do you pay with bitcoin?

First, you need a bitcoin wallet. There are free bitcoin wallets available for smartphones and all major operating systems. Just like with a physical wallet, you must always secure it – this means being careful with online services, putting backup and encryption, and putting just small amounts in it for everyday use.

What are the advantages?

  • Anonymity. Your purchases are discrete with bitcoin, which means they are never associated with your personal identity. In fact, the bitcoin address generated is different for every purchase you make.
  • Low Transaction Fees. Since there is still no government involvement in bitcoin transactions at this point, the costs of transacting are very low.
  • Mobile. Since paying with bitcoin can be done using an app on your mobile phone, you can pay for our purchases anywhere you are as long as you have internet access.
  • No interruptions. Since the bitcoin system is purely peer-to-peer, it is void of involvement of banks, financial institutions, and the government.
  • No Sales Taxes. One major advantage of paying with bitcoin is that no sales taxes are added in your purchases since there are no third parties identify or track them.

What are the risks?

One thing that you need to understand is that bitcoin, no matter how popular it has become at this point, is still experimental. Getting into bitcoin now can mean that you have to deal with the growing pains as it still at the stage in which it is still improving and such improvements may bring about new challenges.

Bitcoin price very volatile. You should look at bitcoin as a high risk asset and you must not keep your savings with bitcoin at this point.

You must adopt good practices in protecting your privacy as bitcoin is not entirely anonymous. Your identity behind the bitcoin address you’re using may be anonymous, but transactions and balances in your address can be seen by anyone.

Bitcoin payments cannot be reversed, so only transact with people you trust and business that have already established their reputation. Beware of scams, fake ICOS, and fraudulent activities.

Contact us at Hogan Injury for expert legal advice.

None of the content on Hoganinjury.com is legal advice nor is it a replacement for advice from a certified lawyer. Please consult a legal professional for further information.

Original article posted on Hogan Injury Website.

Syndicated article, by permission, posted on Markethive, by Jeffrey Sloe