Update (12/16): Thank you for the overwhelming positive feedback on this article – we here at Coinhako are glad we could help inform readers on the dangers of ponzi schemes such as OneCoin and BitKingdom! Keep spreading the word; it will really help to take these scam companies down!
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Recently, there are many scams that have targeted Singaporeans and Malaysians. We want to educate our users so they do not become victims of scams.
According to a survey done by Telenor, a global telecommunications company, 46% of Malaysians have fallen for at least one scam. Of those 46%, 6 in 10 have lost money from the scam. In Singapore, online-commerce scams are the only type of crime still on the rise. We should educate ourselves and take the necessary precautions to avoid being scammed.
This time, we breakdown 3 recent scams in Singapore and Malaysia: BitKingdom, OneCoin, and DHL scams.
Pyramid schemes involving Cryptocurrencies
If you have been following this blog, then you would have seen our previous scam alert post on MMM. Since that Ponzi scheme has collapsed, many have taken its place. I will introduce and dissect the OneCoin and BitKingdom scams.
The BitKingdom Scam –Your bitcoins are doomed!
What is it?
BitKingdom claims that you can “help people” by giving bitcoins. For this, you will get an amazing 30% return per month. It is actually a pyramid scheme and you are taking money from new users. BitKingdom has targeted users in Malaysia and Vietnam.
Why is it a scam?
You give BitKingdom bitcoins to “help” people. In return, when you need money, people will give you bitcoin with no obligation to repay.
For “providing help”, your bitcoins will grow 30% every month. When you need money, you can “get help” by withdrawing money that you have put in. Every time you deposit and withdraw money, you have to purchase and use tokens issued by BitKingdom.
Consider that when you “get help”, you are not paying back more money than you took out. Where does the extra 30% per month come from?
The business model behind this is is simple – it is a Pyramid scheme. When more people join and “provide help”, the more they can “promise” to pay existing users. These newer users are also called downlinks. The continuation of such a scam is entirely dependent on getting more downlinks, so that the scammers can promise money from the new users to the old ones.
Still don’t believe me?
Why don’t you read their terms and conditions for yourself? Click “TOS” from their website and scroll down…
Don’t say we didn’t warn you!
The OneCoin Scam – One Con
What is it?
OneCoin is a “cryptocurrency” that does not really**exist, selling “educational materials” that only works on their currency, based on bogus “mining”. The team is made up of career scammers who have effectively manipulated people into giving up their money.
Around the region, we noticed a large number of people from Vietnam, Thailand and Malaysia interested in OneCoin, and we think that this is a dangerous trend for real cryptocurrencies in Southeast Asia.
The website looks nice. How can this be a scam?
OneCoin claims to be a cryptocurrency. But there is no proof that it is valued on the market or used as a currency. The only places online which claims OneCoin is real are OneCoin-affiliated websites. The only exchange that lists OneCoin, xcoinx.com, is owned by OneCoin. Creation of new OneCoins are completely centralized by the company.
After spreading misinformation and tricking people into parting with their money, OneCoin will disappear one day along with all of the investors’ money.
How does the scam work?
The attraction to potential users is the high yield offered by OneCoin. First, you pay $30 to become a OneCoin affiliate. You can then buy one of their packages, which allows you to earn commissions from downlinks. These packages give you “tokens” to start “mining” OneCoins.
By promoting their products to your friends, you get to earn a percentage of revenue from each product bought by your friends. When your friends start promoting the packages to their friends, you then get a percentage of revenue from sales downline from you. The reality is that these packages do not add value to your money or your knowledge. This is purely a pyramid scheme.
The price of OneCoin is set by the company, and only increases over time. This does not make any economic sense! All market-traded cryptocurrencies fluctuate in price throughout the day.
OneCoin users have also found difficulty withdrawing their money from their accounts, as they are restricted to withdrawing small amounts at a time and pay withdrawal fees each time.
OneCoin is not a cryptocurrency. If you are looking for a cryptocurrency to trade/ invest in, you can buy Bitcoins (with us!), Litecoins, Ethereum, NEM etc.
Other resources about the OneCoin scam:
“One Coin, Much Scam: OneCoin Exposed as Global MLM Ponzi Scheme” – CoinTelegraph
“Buyer Beware! The Definitive OneCoin Ponzi Exposé” – Bitcoin.com
Caution – Legality
Pyramid schemes are not sustainable businesses and will not last.
There will be a day when it collapses. It may be tomorrow, or it might be a few years from now. There will be a day, when people will start demanding their money back from the “investment fund”. When these people reach a critical mass, the scheme will collapse when everyone realizes that there isn’t enough money in the fund to get their money back.
Please note that promotion of Pyramid/Ponzi schemes are illegal in both Singapore and Malaysia.
How can I distinguish between a real cryptocurrency businesses and a scam?
**1. Real businesses will receive support on other independent websites.
**Pyramid schemes receive more negative attacks on discussion forums and reputable cryptocurrency news websites.
2. Real businesses do not advertise high returns.
Cryptocurrency prices can be very volatile and that is completely to be expected, and returns to investors and traders vary. Pyramid schemes attract attention with their boasting of a low-risk, high-return investment portfolio. In the real world, low-risk, high return does not exist, and you are taking more risk than you can stomach.
3. Real businesses do not need you to refer to remain viable.
Pyramid schemes, on the other hand, will not survive without them. That is why there is so much advertising and spreading of misinformation by these schemes. Legitimate businesses have high manpower costs making sure that they are providing a real service to people, and do not have such high marketing budgets as pyramid schemes.
4. Real businesses let you take your money out.
Pyramid schemes will collapse if people took their money out, so scammers either make it impossible, or extremely costly and troublesome to take money out after you have invested.
What you must do:
Do not invest in BitKingdom or OneCoin, and tell your friends and family not to invest. You may lose some from withdrawing, but losing some money is better than losing all your money. Learn about the legitimate cryptocurrencies out there. Understand how they work and what features they have. Consider the risks before giving your money.
And please, please do not promote such fraudulent schemes.
**DHL Scam (Parcel Scam) **
What is it?
This is a phishing and an impersonation scam. The scammer pretends to be a customer service representative from a courier company (such as DHL) to phish for your personal information. Then, they will impersonate a police officer to demand money from you for “breaking the law”.
How it works
There are a few variations of this scam. An example of a typical scam:
You will receive an automated call from a “courier”, who says you have a parcel stuck in China. Puzzled by the call, you dial “9” to talk to a customer service representative.
The “customer service representative” demands your personal identification information. By giving them your personal information, you would have fallen for their psychological trick to gain your trust. This makes it more likely that you will trust the scammers.
With your personal information, the caller would then transfer you to a “police officer”. This “police officer” will inform you that your parcel contained contraband. They will ask you for money to resolve the problem.
If you believe what they say, then you would have lost your money. They can also use the personal information you gave them to create fake IDs for another scam.
What you must do
Hang up! Do not give strangers any personal information, and definitely do not send them money. Educate your family members, especially the elderly, about this scam. Teach them not to pick up calls from unfamiliar numbers, and talk to you before sending large sums of money.
Final Note
Armed with this information, we hope that you will only accept information from trustworthy sources and exercise judgement before parting with your hard-earned money. If you have paid to these schemes, we wish you all the best in retrieving your money, and hope that you will not lose money to these scammers.
CoinHako is not affiliated with any of such schemes. Investors must do their own due diligence before committing their money.
We recommend that everyone stay away from BitKingdom, OneCoin and other so called “high-yield investment schemes” and Pyramid schemes. If you have noticed a new scam proliferating, notify us at hello@coinhako.com so we can warn our users.
Coinhako is a secure, simple and easy Bitcoin wallet in Southeast Asia, and has been backed by prominent Silicon Valley investors; which is why it is in our best interests to point out fradulent schemes which may damage the reputation of cryptocurrencies, an exciting new innovation in the world of financial technology.
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