Bitcoin: A Hotbed For Scams?

Investment and Investment Advice: Thieves and Fraudsters At Work

  • To profit from stupid and desperate investors, there are countless financial scams, in particular recently in Ukraine.

We live on a planet where investing is extremely hard. Example.

  • Just before the current financial crisis of 2020, the Economist shows that Buffet, the guru and Pope of stock picking, has done very poorly. This has little to do witht he fact that recently Buffet is withholding some 122 G$ in cash, due to lack of decent stock investment perspectives, or simply anticipating a recession, so do not judge him at this very moment. It is a long game and we need to look at a long term picture. Buffet was proven badly wrong for decades: Not only that Berkshire has achieved in 2019  only 1/3 of gains of S+P 500, see graph. The really important message is is that in the last 10 years Buffet has NEVER EVER outperformed S+P 500.
    • Bitcoin does a lot better than Warren Buffet, no doubt about it! But this was easy. A monkey buying stocks from S+P 500 ate random will of course do better than Berkshire for the whole period of the last 10 years.

Why investing is so hard?

One interpretation of this is the super perverse nature of the devilish invention of open (lit) financial markets. No one makes money on these markets, except some very strong big-data-driven predatory forces which dominate this space with asymmetry of information. It is not just about cheating due to mass surveillance abilities (a passive attacker side). We also have an active and interactive side of it. It is not only about high frequency trading. There is a broader problem of poorly placed trust and prevalent investor stupidity. We have a substantial and well organised propaganda industry, which is about confusing the investors with noisy totally irrelevant financial information (pure short-term random number series), fake science and fake news, such as fake market trends, fake market sentiment analysis, and other investor resources of very dubious merits and quality.

On Crypto Theft and Malicious Actors

  • Simple scams such as fake QR codes do work well to get moderated amounts in tens of thousands of dollars, and will always work: some people will always fall for it. It was observed in September 2019 that Google would most likely help criminals to steal your bitcoins. Or Google have done nothing to filter out criminal fake QR services: see here.
  • Mobile phone operators will also most likely help criminals to steal tens of millions of dollars, see here. The same happened to me: my mobile phone was stolen, and an SFR store in Paris have issued me a new SIM card … without asking for my ID. Any criminal can steal your identity and mobile phone operators do not care! and then rest your passwords, steal your bitcoins etc etc.
  • Crypto currency is where loads of money gets stolen:
    • It was 1 billion in 2018, see here.
    • Then 1.2 billion in just Q1 od 2019!! See here.
  • In many cases criminals will never go to jail, see here.
  • At least 325 millions of dollars were earned by creators of CryptoWall malware.
    Bitcoin is disruptive technology for ransoms and though a small minority of about 1.4% of victims pay, criminals are still earning a lot. An ransom payments have exploded in 2016. And in 2017 it became even worse.
  • A lot of fraud is done openly, many people know. There is a sentiment of impunity and lies are scattered all over the place.
    • Smart people will tell you: it is unregulated Wild West there and you should be warned.
    • But this does NOT excuse the shocking lack of public discussion about all the wrong things which are going on here. Cynical attitudes dominate.
  • The world champion of telling lies on a regular basis and not caring at all about his reputation is Craig Wright:
    • previously caught in act trying to cheat the UK journalists,
    • now he is facing charges for forging a signature of a deceased friend in order to steal billions of dollars in bitcoins.
    • then further he is associated in some shameful attempts to further cheat naive people by calling Bitcoin Association something which in the eyes of the whole planet is closer to a scam than to bitcoin even though anybody and go and “fork themseleves”. Yes it is allowed to clone bitcoin and called it “bitcoin XYZT”. What is not legal is to call one self “bitcoin Satoshi” = we are THE main and only bitcoin or the only one which is true.
    • then we have seen more lies and fraud on the same topic, see here and here.

Older stories

  • There were plenty of ICO scams masquerading to sell Telegram ICO tokens.
  • More about thefts in relation to the last big explosion of ICOs, see here.
  • Old: UFO is back: yes, UFOMiners are clearly a criminal scam, yet Yahoo Finance and CryptoCoinsNews and CoinTelegraph have fallen for it! (again) and kept presenting them as a genuine company for many many weeks/months since Oct 2016. What is also amazing that nobody reports these scams so that they are VERY LIKELY to succeed (some people will just send them money trusting theses reports). Journalists who work at other news outlets such as Coindesk are also guilty for NOT writing a word about these scams.
  • Old old: 11 millions dollars were already lost in bitcoin scams, source: coindesk. An old paper about bitcoin scams.

On Crypto Exchanges

  • Price manipulation is kind of allowed. Let’s admit it is OK to pay an exchange to list your coin.
  • Now there is muc worse.
    • Karpeles admitted in a Japanese court that he is responsible for the bot Willy fraudulent trading. However if bitcoin went up a lot it made things worse for Gox and made eventually Gox collapse.
    • Now stable coins could be a source of instability. Researches also claim that stable coins can help to pump the price of bitcoin. Wicked.
  • Several exchanges, primarily Chinese ones, faked trading volume.
  • Recent paper on crypto currrency exchanges.
  • In general, bitcoin exchanges are weak links and naive customers think that their money is safe there, while in fact it isn’t. They all have a huge pile of deposits growing every month, more deposits than withdrawals. How do you know the money is still there? The typical scenario is that money will be missing for years, and most people will not notice (Karpeles had this problem).  It is crucial not to trust crypto currency exchanges. They will fail you. Instead we recommend LEDGER Nano S wallet and some multi-sig capable wallets.

Few more posts in this category.


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