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Scam Alert

May 15 2022

Reputation Laundering in Crypto

To say that Do Kwon — the man behind $LUNA and $UST and the precipitous drop of both this past week — is a bit of a pariah might be the understatement of the year. It’s time, then, to launder his reputation.

On the website Ordinary Times, Dave recently shared his “Own The Narrative” framework in the context of student loan forgiveness. We put together a list of 8 rules — guidelines? concepts? — for owning the narrative, and we showed how the plan could unfold. Other real world issues took precedent in the various news cycles, but we think the framework still makes sense.

We mention that because we’re watching Do Kwon’s Reputation Laundering take place in real time (Sunday Morning, CDT in the USA), and we’re going to see which of the rules he’s applying already.

We’ll have to re-order these rules for today’s Reputation Laundering, but we’ve found half of them already being employed.

Be The Name Dropper (Rule 5)

We think Laura Shin is one of the top journalists working in crypto today. She certainly has the industry bona fides and has a popular podcast with thousands of listeners. You could argue that there is no better choice to go live with than Laura.
This is exactly what Do Kwon is doing right now. It’s “Name Dropping,” but raised to the nth degree. I’ve been watching for 40 minutes already at 9 a.m. Central Time.

If you are in reputational trouble, you need to associate with someone like Laura, and you need to do so quickly.

Start at the Finish Line (Rule 1)

“UST will repeg and LUNA $1 per LUNA next Week.” That is a bullish “Finish Line” statement. It is not very believable right now — if your coins drop to the tune of the below graphic, telling us that you’re going to be on the medal stand isn’t something we can bank on.

This morning’s price also tells us how unrealistic this is.

This works hand in hand with another of the rules…

Make Hubris Your Friend (Rule 3)

To get to $1, $LUNA needs to go up not 5, not 50, but 5000 times from here. Meanwhile, Mr Kwon is on the podcast smiling while talking about things like Korean crypto crashes. (9:10 a.m. Chicago time.)

Use Malleable Definitions to Your Advantage (Rule 6)

The definition of “stablecoin” is probably the most malleable one in modern crypto. These coins — they started this whole mess — are supposed to be pegged to real US dollars (or another similar asset) that is then backed by a cryptocurrency equivalent. In other words, if I put the stablecoin up on a blockchain platform, and it’s worth $1, I should then use my Bitcoin to buy US Treasurys or another stable asset. Questions have come up for the last few years about just how much of the asset is parked somewhere with other coins; but where the Do Kwons of the world got into trouble was using their own algorithmic magic AND their own crypto asset as the “stable” asset backing the token.

1 UST equaled 1 USD until it really didn’t, because, instead of having $10,000 in US T-bills to back $10,000 in UST, they had $10,000 of their own coin. It was ready for an exploit, and, if you want a primer on how that went down, watch this video from two months ago.

March 17, 2022 is the date of this video.https://t.co/bJi3rygkb1

— Dave Van de Walle (@Area224) May 15, 2022

This Is the Most Egregious Crime

The worst Reputation Laundering crime is being committed, and it’s not any of the above rules, is this:

THIS IS A SCAM. Do not do this. Never send crypto to anyone with the hopes of getting more crypto back.

How NOT to Launder Your Reputation

Since it’s crypto, and it’s perceived to be the Wild West, and Mr Kwon is out in Singapore and is from Korea and has the perception of a world-traveling vagabond, his moves are not surprising.

And they are completely, totally, 100% awful.

He’s torching the reputation of his own coins, his own projects, and his own name in real time. The rest of the industry will have a ton of work to fix this.

Written by David Van de Walle · Categorized: CryptoCrash, Scam Alert · Tagged: do kwon, luna, terra, ust

Jan 17 2018

Bitconnect, Sadly, Crashes Down

This is a sad, sad tale, but one that’s all too real. Bitconnect – the lending platform that most called a Ponzi scheme – came crashing down yesterday.

Bitconnect Drop

This is nothing to celebrate. Nothing at all.

What Went Wrong?

Whether or not this was a Ponzi scheme is a question folks can debate: Ponzis rely on money from new investors to pay the old investors. Bitconnect certainly had elements of that. Ponzis also make it very tough for you to get out your original investments – and, since the “lending platform” locked down your funds for as many as 299 days, that’s also a pretty telling sign.

However, proponents of Bitconnect – and several remain – will tell you that the coin is in good shape (despite a perceived drop in value of upwards of 90 percent) and that the ICO for their new coin (which will do…what, exactly?) means that they’re poised for great things.

No “We Told You So”

On this site, we went through the “stages of grief” with Bitconnect – and you can visit our Passive Income page to see how that unfolded. First, we thought it was really really cool and continued our experiment. Then, we backed off a little, wondering if it was too good to be true. Finally, a few months back, we made it a point to get our money out (from “lending profits”) every chance we could.

Whether we did or didn’t get back everything we put into it is a question we’ll have to do the math in order to answer.

But, with all of these, we’ve done a “warts and all” experiment on passive income platforms such as these. Sadly, we’re now officially an “oh-fer,” 0-for-10?

Again, Those Caveats

We’re seeing awful stories on the darker corners of the internet: from folks who got in way over their heads, invested more than they could afford to lose, and are now left picking up the pieces.

The caveats in this space need to be repeated, in bold, which we’ll do now:

  • Don’t invest more than you can afford to lose
  • Don’t borrow to invest in cryptocurrency
  • Do your own research
  • Spread out your risk so that you’re not completely reliant on one investment
  • Get legal, tax, and accounting advice from professionals
  • You are responsible for your own success or failure.

Our Next Steps

On this site, we’ll update our own 2018 Crypto Investment Plan – we need to investigate more “Passive Income Programs,” but, to be honest, those will likely include only mining and staking opportunities; any “lending” or “high yield investment program” (HYIP) will likely be a scam and should be avoided.

We’ll also update the Passive Income page to reflect the fact that Bitconnect is a scam.

#DYOR is our favorite hashtag/acronym in crypto. Do Your Own Research. Don’t trust just one site for information about cryptocurrency, don’t rely on just one YouTuber or blogger, and investigate everything. If it looks fishy, it may well be fishy.

Written by David Van de Walle · Categorized: Bitconnect, Scam Alert

Dec 17 2017

Lots O’ Scams, So Be Careful…

We’re in the process of updating this site to reflect yet another SCAM in the Passive Income universe: Chain.group.

A couple Twitter folks alerted us to this fact, but we remained optimistic…until this morning, when we were unable to withdraw anything from our small investment account.

Why Chain.Group Is A Scam

Remember a couple of the mantras that we’re sharing here: “DYOR,” (“Do Your Own Research”) and also be vary wary of any site that doesn’t communicate very well. We saw these signs with past scams like Control Finance, Bithaul, Ambis, and Bitpetite.

Poor use of English is one bad sign; disappearing off of Twitter abruptly is another.

Also, be very careful of any site that promises exorbitant returns: even 1% a day sounds like a ton in the grand scheme, as you’ll double your initial stake (if it’s a “compounding” program) in no time flat.

Anyway, our most recent withdrawal was “processed” but nothing has happened. There’s no confirmation on the blockchain of anything taking place. They have our investment – only about $60, but they’ve got it and we’re not getting it back.

And Then There Were Two…

So we’re now left with just two of these programs that we think MIGHT be worth our time. One is USI-Tech and that’s our REFERRAL LINK over there; we are brand new to it and we’ll see where it takes us. (We give this one a decent chance of maybe making it – mostly because the technology grew up in trading around forex, and that means there’s at least a built-in user base that’s committed to keeping things alive.)

The other one is Bitconnect. We have a REFERRAL LINK and we do still recommend it; however, since we have been bitten by more of these programs than we’d like, we began the process a few weeks back of cashing out at every possible instance. Interest payments are first rolled over into the Bitconnect coin, then transferred into Bitcoin, then withdrawn into a wallet.

Transaction fees being what they are, we’re waiting until we’ve got bigger chunks to move over – $50 or $75 makes more sense than taking $10 each time and watching almost half of it get absorbed by transaction fees.

Risk Management Wins

We will keep managing our risks the best way we know how – through a whole bunch of diversification, and not having too much exposure to any one coin or token, or any one type of investment.

But, unfortunately, we have to add Chain.group to the SCAM list.

Written by David Van de Walle · Categorized: Scam Alert

Sep 14 2017

UPDATED Control Finance News: Site Down, It’s a Scam

Control Finance Scam

UPDATED SEPTEMBER 14, 2017

We’re going to officially call it: Control Finance is a scam.

After the below from earlier this week (we’ve left the text as is), we tried to visit the website yesterday several times. It’s down – and likely out.

Score one for the scammers.

**Original Text from Tuesday.**

Control Finance is today’s culprit and, as was the case with a couple other of these online investment platforms, we’re going to chalk this up as Metacoin “taking one for the team.”

What Happened?

Yesterday, Control Finance shut down its Facebook and Twitter presence. This occurred after sending rather cryptic notes about suspending withdrawals, system problems, etc.

Today, Control Finance sent an email to all of its investors, and here’s the unedited text:

We would like to inform you of the urgent news. Our lawyers received information about the conditions for unlocking all trading accounts of the company. One of them is getting the necessary package of documents and license. This will allow us to restore access to our accounts and conduct our trading activities on the crypto-currency markets completely legally.

Blocking of accounts at the moment and suspension of payments is considered to be a force majeure situation. In this connection, we are forced to fulfill our obligations to clients.

This will be organized in the form of, payment of the customer’s deposit (taking into account already previously paid applications for payment of profit on deposits), i.е. according to the formula:

The deposit minus the amount of all applications, for the payment of profits, is equal to the balance for payment. All payments will be made in 45 days and extend until the end of October.

The site will temporarily stop working, but all customer databases with their payment and contact details will be stored on a separate server of the company, this will make all payments to our customers.

Since November, our company will resume its work in a fully legal regime, when all necessary documents will be received and the frozen accounts of the company will be unblocked.

As general director of the company, I ask you to keep your peace of mind and wait for the payment. The first payments were already made on September 11 and will continue, until the end of October. I want to keep my honest name and the name of our company. I will prove that you can trust me and the company.

Puzzling…On a Couple Levels

First up, the email came from an address that was, simply, “admin.” No name attached.

Second, this looks confusing as heck – if you’re us, and you put in $100, but then “earned” $40 and change in profits, does that mean you’re only getting $60 back, since “the deposit, minus the amount of all applications, for the payment of profits, is equal to the balance for payment”?

We assume that the guy with the “honest name” that we can trust is “Benjamin Reynolds,” the gentleman whose name is attached to the Skype account we’re asked to reach out to. (We did reach out to Benjamin Reynolds via Skype, and have not received a response.)

Caveat Emptor

With any and all of these Passive Income Platforms we’re experimenting with here, you have to have a certain amount of faith that things will work out. And you have to assume that you’re going to say goodbye to your money – these are not regulated financial instruments, and it’s the Wild Wild West here.

We’ll keep you posted on any further developments – and what, if anything, we receive back from our investment in Control Finance.

Written by David Van de Walle · Categorized: Control Finance, Passive Income, Scam Alert

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