The Shady Side of the Crypto Industry

Cryptocurrencies, blockchain technology, and all around it sounds exciting at first. Making money out of thin air (or better said electricity) by mining digital coins. It all sounds great at first, but a lot of things are happening in the shadows of this new industry.

The more I got involved with bitcoin and such, the more it started to irritate me at moments as it’s an absurd scammy industry, probably the worst that ever existed. That’s also the reason I set up this site, to give some counter weight against all the positivity, [when moon], and to tell what’s really going on in this world so let’s kick it off and start with the most obvious scam of all.

Tether [Bitfinex] – biggest money heist ever!

You all heard about it, unless you’ve never been interested in crypto in the first place and randomly ran into this site.

Tether is a product from Bitfinex, yeah that exchange that had $150 million worth of bitcoin stolen due to a hack, if it was a hack in the first place and not just another inside job to steal a lot of money, perhaps that’s something for another article.

What happened is that Bitfinex started to print money, in the form of Tether which was paired against the US dollar. So 1 Tether = $1.

Most crypto currency exchanges don’t allow FIAT trading, but sometimes its useful to trade your bitcoin back against a dollar, or in this case something that represents the dollar, especially if you are swing trader. In this volatile market, to be able to make money you must be a swing trader really, otherwise it just goes up and down, and each time a little deeper down.

Bitfinex was successful in getting their Tether (USDT) token adapted by all the other big exchanges like Binance and so forth.

What I think what happened is this:

  • Bitcoin got pumped to $20,000 with the help of unbacked Tethers.
  • Tether/Bitfinex refused to do an audit, in fact they fired their auditor.
  • A year later they have a law firm come up with proof that those Tethers are actually backed by real money.

Yeah I bet they are backed today, if you pump bitcoin with worthless Tethers you get a lot of bitcoins for your money, and if you sell them later on during the dump you get REAL dollars back for it. No surprise there, and now a year later they do actually have billions of dollars.

This must literally be the biggest scam that has been pulled off in history.

The US subpoena’d them but that didn’t result in anything, as they are probably hidden in some far away offshore tax haven.

Credible sources:

https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc

http://uk.businessinsider.com/cryptocurrency-tether-splits-with-its-auditors-friedman-llp-2018-1

https://www.nytimes.com/2018/06/13/technology/bitcoin-price-manipulation.html

Let’s move on to the next topic:

CoinTelegraph – The Fake News Cartel

Let me say it’s not just Cointelegraph, CCN also definitely has a hand in this.

Every time when those sites start to publish bullish / positive articles about bitcoin, it’s price is about to crash.

You can literally put your watch on it.

Now I know that most news sites sell sponsored posts, paid press releases and what not, but I can’t stop wondering how complicit they are in this game.

It should be clear that bitcoin is an unregulated market, with > 10% of the coins in the hands of just a few dozen people.

A wild guess would say that 70% of the coins are in the hands of so-called “HODL’ers”, and then we have another 1 million bitcoins that are simply lost.

There are only 17 million bitcoins in circulation, so when 11.9 million never get traded, and lets make it 1.1 million bitcoins that are lost we are already down to 13 million bitcoins that never get touched, add to that another million that the mysterious founder Satoshi owns and we talk about 14 million untraded bitcoins.

That leaves us with 4 million bitcoins that do get traded * $7000 = $28 billion.

There is about $3 billion worth of Tether by now so you can see how much of an impact that can have.

Let’s not forget about those 10% of all bitcoins, that makes another 1.7 million bitcoins that are in the hands of the s0-called whales, or in dollars that’s almost another $12 billion, + $3 billion = $15 billion out of a total of $28 billion that gets traded.

That’s more than HALF, I mean seriously.

This s0-called bitcoin cartel might hold one third up to a half of all the tradeable bitcoins, which makes it incredibly easy to manipulate the prices.

With so much money flowing around it would be rather easy to have a site like CoinTelegraph in your pocket, or simply pay them to spread your news.

There’s no need to worry, it’s not like CoinTelegraph does any fact checking (hard to fact check the future price of bitcoin of course).

But Cointelegraph is on a regular base in the news.

Take this article for example:

https://cointelegraph.com/news/report-cboe-to-launch-ethereum-futures-trading-later-this-year

The headline says it all, but when you dig a little deeper it turns out the CTFC hasn’t even approved futures trading for Ethereu,, still they claim it will happen later this year.

How so presenting rumors as fact!

Another interesting page that I found is this one:

https://cointelegraph.com/advertise-with-bitcoins

They combine the pageviews of the top 10 or so sites in the crypto industry, even include the logos under the label Cointelegraph Media Group.

At first I was impressed to see that they supposedly own sites like CoinMarketCap, WhatToMine, Investopedia, VentureBeat, Coingecko, and a handful of others.

Then I contacted the main moderator at Hackernoon which is also listed under the Cointelegraph Media Group, and he knew nothing about it.

I mean seriously? Not only do they spread fake news, but now they also lie about the sites they control on their advertise page?

That’s quite something, no surprise that they aren’t shy of publishing some fake news articles.

I haven’t contacted any of those other sites to see if they fall under the Cointelegraph Media Group but you can imagine my surprise.

I want to keep it short today as you probably have other things to do but there’s one more obvious scam that I can’t leave untouched.

The ICO scam

Step 1: Get an awesome looking website produced.

Step 2: Buy 100k Telegram users, and ten thousands of Facebook likes (just Google it, plenty of providers), for social proof.

Step 3: Start an announcement thread at Bitcointalk and hire a bumping service for dozens or hundreds of pages.

Step 4: Buy sponsored posts at CoinTelegraph, CCN, CoinDesk, CNBC, Business Insider, NewsBTC etc.

Step 5: Set up a media campaign to show your banners at a bunch of crypto sites to make it look like the real deal.

Step 6: Get your ICO listed on a few dozen ICO sites.

Step 7: Optional: Attend a few conferences and simply pay your way in.

This will cost a few good bucks of course, but now the fun part comes.

Every sane person has lost faith in ICOs, just take a look at this study that finds 80% of ICOs are scams:

https://mashable.com/article/majority-ico-scams/

Why do all those 7 magical steps to promote your ICO when no one is interested in just another coin?

Here come the bonus steps:

Step 8: Pretend you raised let’s say $30 million dollar worth of Ethereum or Bitcoin.

Step 9: Buy yourself a listing for a few million dollar at an exchange like Binance

You’ve probably lost about $4-5 million at this point, I didn’t say this is an easy scam for starters, but it would be ideal for some of these boiler room guys that used to sell dubious life insurances, and what not. They would literally be the perfect candidate to pull this off.

Final step:

As you own 99.9% of your coin supply you can start to pump this coin to whatever price you want it to be, wash trade it to a daily volume of 5000+ BTC to top the list at Binance, and get seen by hundreds of thousands of traders!!!

There are even services out there that will help you with just that, they pretend to be market makers but in reality they are market manipulators.

Now you can finally start selling your tokens, at a much higher price then what they were offered for during this ICO campaign, that you purely set up to serve as a cover.

End result: All the traders are doomed as the price will probably never reach those heights again.

Sure they would repeat their trick after drastically decreasing the price, causing everyone to panic sell, so that they have the majority of the coins in hands again, and wait a few weeks or a few months till the next pump.

Easy money!

I hope you liked this article, and feel free to share of course!

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