Numerous arrests were conducted in India after a big bitcoin scam in the mining industry was discovered. The cryptocurrency and blockchain technologies are spreading throughout the country although a law to regulate this sector hasn’t been approved yet. The use of cryptocurrencies is speedily increasing in everyday transactions aswell as on trading platforms.
Despite the technological growth, scams are hitting both cryptocurrency and ICO industries. Forbes is warning millennials against potential risks. Thousands of dollars have been stolen on Twitter and even Steve Wozniak being robbed for $70,000 worth of bitcoin. Even a public listed company made a huge stock manipulation by only changing its name into Blockchain We all know that bitcoin fluctuates a lot and a safe return on any cryptocurrency investment cannot be granted.
A company put up by two scammers (Amit and Vivek Bhardway) promised costumers a 10% yearly interest on bitcoin investments. They cheated more than 8,000 people in their area. The arrest followed a careful investigation made by the Pune City police which took a closer look into three companies: GB21, Gain Bitcoin, GB Minors. It definitely looked like a bitcoin scam based on a Ponzi scheme: somebody promotes his own fund and promises performances that he cannot reach. The only way to pay the people investing in the fund, is to use the money given to his new costumers. Most of these frauds don’t last more than a decade but the most notorious Ponzi scheme was made by Bernie Madoff. What made Madoff’s fortune for a long time with his fraudulent firm is his credibility: He had been the chairman of NASDAQ. An average investor could recognize Madoff fund as fraudulent because he always reported the same performances despite market fluctuations.
The bitcoin scam in India is just one of the many scams related to cryptocurrencies or ICOs. To protect yourself from these frauds remember that if something looks too nice to be true, it probably isn’t.