Bitcoin mining and crypto trading: fraudulent offers are multiplying… but not for very long

Bitcoin mining represents a lucrative business in the world of cryptocurrencies. Unfortunately, not all companies are as honest as they should be, but soon they will have to pay the price.

A highly profitable activity: the example of MCC

Following the meteoric rise of Bitcoin last month and the success of DOGE thanks to Elon Musk, trading and investment offers of all kinds are flourishing on the web. Most of them are far from honest, but their business may not last long.

While the various governments of the world are beginning to take an interest in cryptocurrencies, the noose is tightening around the companies which have made their livelihood fraudulently. The company Mining Capital Coin, which offered its services worldwide, recently paid the price after the SEC decided to look into its case. Indeed, their two founders had sold fake mining packages to tens of thousands of customers around the world, with very advantageous daily returns. Unfortunately, the money invested by those concerned was then embezzled.

The case does not end there: in order to justify the promised returns, Mining Capital Coin was promoting trading robots, which were also just as fraudulent.

The indictment further alleges that Capuci fraudulently touted and marketed MCC’s so-called “Trading Bots” as an additional investment mechanism for investors to invest in the cryptocurrency market. Capuci claimed that MCC has partnered with “top software developers in Asia, Russia and the United States to create an enhanced version of trading bots that have been tested with technology never seen before”. Capuci further indicated that MCC’s trading bots operate at “very high frequency, being capable of performing thousands of transactions per second” and that each of MCC’s bots would generate daily returns for investors. However, as he did with the mining packages, Capuci allegedly operated an investment fraud scheme with the trading bots and was not, as he promised, using the MCC trading bots to generate income for investors.

Excerpt from the US Department of Justice press release

Trading bots driving crypto scams

Mining Capital Coin is unfortunately not the only company making its living from such activities. The Bitcoin mining or trading scam represents a large part of the fraud plaguing the crypto sphere. Lured by the promises of very advantageous returns, some beginners in the world of crypto may be tempted to invest in fraudulent programs that are very easy to find on the internet.

Most of them, like MCC, emphasize the advantages of the trading robot. Operating on an algorithm system and operating 24 hours a day, the robot would be just as intelligent as a human and would know how to detect the right times to sell and buy back cryptocurrency. It would also be able to generate thousands of actions per second and therefore bring big gains. Unfortunately for the interested parties, these miraculous robots do not generally exist within these fraudulent companies and the customers who were able to recover their money see their return made on the backs of other investors.

Indeed, most trading companies are based on a Ponzi system in which daily returns are sourced from the investment of new customers. A fragile and illegal system which generally collapses very quickly but which is enough to make the French shiver, who are very fond of Bitcoin trading.

The cloud mining scam is also widespread

For mining enthusiasts who would like to pool and grow their efforts, the cloud mining method is different again. At first glance, the latter seems like a good idea, as the mining equipment and the energy required are expensive. However, far from asking for a first investment as with a trading bot, fraudulent companies create a fake application capable of harvesting information from its users. After entering their information, interested parties see their crypto wallet stripped without delay.

It can even happen that, to put on a good face, fake Bitcoin mining companies put forward big companies. Thus, last year, the famous BBC television channel saw its logo usurped to promote mining programs that were in fact scams. After visiting a mining farm in Russia as part of a report for the channel, journalist James Clayton had the unpleasant surprise of seeing his report hijacked.

The Telegram channel called B2C Mining claimed to be part of a company that owned and operated a Bitcoin mine in Russia. At the top of the group, pinned to the chain, was my report…only, it wasn’t quite my report. It had been edited, removing everything about climate change and suggesting that the mine I was talking about was actually the chain’s.

Excerpt from an article by James Clayton about cloud mining scams

To avoid scams, turn to regulators

Although singled out by the crypto sphere, it would seem that regulators are a key element in the fight against crypto crime. Indeed, by setting a framework, it could be that scams are limited, provided that the population adopts the right gestures. In other words: to find out whether a company is fraudulent or not, don’t ask yourself any questions and go immediately to check the sites of organizations such as the AMF.

To be able to offer you to buy/sell crypto-currencies, or for crypto-asset custody services, your intermediary must be registered with the AMF. You will be able to consult the whitelist of digital asset service providers authorized to offer these services.

Excerpt from an AMF article regarding crypto scams

Lists of honest providers should grow as regulations are put in place. The company that appeals to you is not listed? There is no hesitation: there is a good chance that it is actually fraudulent. Already strangled by the renewed interest of governments, scams could well have a hard time in the years to come… if indeed they do not falsify AMF documents to achieve their ends.


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