That is exactly what did to unsuspecting bitcoin investors.Īccording 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. Nothing catches the eye of the naïve quite like the promise of gold - bitcoin gold, of course. 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. "A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws."Īnother 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. "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. 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. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens!" Khaled wrote. "I just received my titanium centra debit card. The famous DJ wrote his support in a caption on Instagram back in 2017. The company was sued for misleading investors and lying about products, among other fraudulent activities. 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. 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. Still other scammers have used ICO's - initial coin offerings - to dupe users out of their money. ICO Scam - Bitcoin Savings and Trust and Centra Tech Those sued included Randall Carter, Mark Gillespie and the My Big Coin Pay, Inc. 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."Īmong 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. Commodity Futures Trading Commission, according to a CFTC case filed in late January. In early 2018, My Big Coin, a cryptocurrency scam that lured investors into sinking an alleged $6 million, was sued by the U.S.