REPORTS: Enterprise Known As ‘BitcoinTrader’ Has Collapsed And Management Has Disappeared

EDITOR’S NOTE: Beginning in late August, some promoters of the Zeek Rewards Ponzi scheme said they were moving to a “program” known as BitClub Network, a purported “mining” venture that purportedly was selling “Founders'” positions for $3,599 and offering memberships at buy-in rates of $500, $1,000 and $2,000. By some accounts, the “program” would pay “passive” earnings of between 0.3 percent and 0.8 percent a day for 1,000 days, with “compounding” possible.

Regulators have issued repeated warnings about the volatility of Bitcoin values and about scams that seek to tie themselves to Bitcoin.

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UPDATED 5:44P.M. EDT U.S.A. There are reports on Bitcoin-themed websites and across Twitter that an enterprise known as “BitcoinTrader” has collapsed and that management has disappeared.

Activities at BitcoinTrader purportedly included a “mining” venture, according to the reports.

BitcoinTrader, according to the reports, used a domain name styled bitcoin-trader.biz that now is offline.

The reports suggest BitcoinTrader was operating as an HYIP and that at least one figure associated with the operation has claimed some sort of hacking or extortion plot occurred and that a bankruptcy filing in Panama is in the offing.

In what might be an exceptionally optimistic outlook, at least one report suggests that battering winds from Typhoon Vongfong might explain events at BitcoinTrader. Previous HYIPs have blamed the disappearance of websites or the absence of payouts on events such as hurricanes, the contraction of diseases such as Dengue Fever and the sudden need to travel to attend funerals in faraway places.

From a publication known as CryptocoinsNews (italics added):

Bitcoin-Trader.biz has disappeared overnight with the only communication being a letter sent out to all of their victims claiming that a hacker stole all of their funds and that they offered to comply with the hacker’s ransom notice. Bitcoin-Trader closed all of their social media accounts as well as their website almost overnight, while ducking under the cover of playing the victim of a hacker and claiming to file for bankruptcy.

From a Tweet:

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10 Responses to “REPORTS: Enterprise Known As ‘BitcoinTrader’ Has Collapsed And Management Has Disappeared”

  1. Wow, this is the first time any scheme has claimed to be the victim of a hacker.. Yes, that was sarcasm…

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  2. Most of these folks invested in Bitcoin trader are obviously newbies at getting HYIP scammed.. They are pretty motivated to find the scammer and recover what can be recovered. Being as how you cover these event every day, and this is there first rodeo, Any advice?

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  3. josh Reighley: Most of these folks invested in Bitcoin trader are obviously newbies at getting HYIP scammed.. They are pretty motivated to find the scammer and recover what can be recovered. Being as how you cover these event every day, and this is there first rodeo, Any advice?

    I don’t know enough about Bitcoin mechanics to have a feel for how this could be reverse-engineered. What I suspect is that the HYIP scammers who previously favored Liberty Reserve’s money-laudering services now will seek to use Bitcoin for criminal purposes and that various criminal enterprises will sprout up around Bitcoin, putting its reputation and marketplace confidence at risk.

    The SEC did catch “pirateat40,” author of the BTCST Ponzi scheme.

    http://patrickpretty.com/2013/07/23/bulletin-sec-now-a-bitcoin-ponzi-scheme-operated-by-trendon-t-shavers-aka-pirate-and-pirateat40/

    And the SEC published a warning:

    http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

    Like the BTCST scheme, BitcoinTrader reportedly was involved in “arbitrage.” That’s a term associated with preBitcoin-themed frauds such as Gold Nugget Invest:

    http://patrickpretty.com/2010/01/15/reports-gold-nugget-invest-gni-has-collapsed-belize-issued-warning-in-november-but-program-pitched-on-surfs-up-in-december/

    Patrick

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  4. I doubt that “Bitcoin” had much to do with the scam aside from being the primary payment processor and the legend of choice for the HYIP operator.. (They also accepted payments form the usual payment methods most HYIPs use) They claimed to do arbitrage between the different Bitcoin markets… This was a plausible legend as they do vary between one another by 10 dollars or more several times over the course of the day.. The cheif scientist behind bitcoin Gavin Andressen suggested that many of the “cloud mining” services in the Bitcoin world may also be ponzi..

    Anything cash can do bitcoin can do too — but without needing to physically trade bills. Bitcoin is slightly more traceable than cash (Every transaction is logged, but accounts are not tied to a user)

    All in all, I wouldn’t be scared off by the word Bitcoin in the name — This was a Typical textbook Shadowscripts HYIP likely doing the same thing as the rest of them to a new audience.

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  5. Quick note: Occurring simultaneously with events at BitcoinTrader are events affecting Bitcoin-themed operations known as MintPal, Moopay and Moolah.

    The International Business Times (UK) has a story about this:

    http://www.ibtimes.co.uk/mintpals-missing-bitcoin-essentially-new-mtgox-1470805

    It is hard to distill the essence of these schemes. The narratives surrounding them are so bizarre that they almost defy categorization.

    Gold Nugget Invest, for example, was trading around the same time a “program” known as “Cash Tanker” was trading. Among other things, Cash Tanker was notable not just for its highly curious name, but also for the fact it used images of Jesus Christ to lure in the masses.

    When GNI was going over the cliff, it announced that is mission moving forward was to seek “a crystal clear vision of our financial vortex.“

    In retrospect, that now sounds a lot like the purported “audit” BitcoinTrader was performing on itself just prior to the collapse. Our longtime readers will recall that “programs” such as AdSurfDaily and reload schemes such as AdViewGlobal announced internal audits to explain away payment delays.

    Patrick

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  6. Quick note: As we reported in August, the Consumer Financial Protection Bureau is accepting complaints from “consumers who encounter a problem with a virtual currency product or service.”

    Complaint form for matters involving virtual currencies:

    http://www.consumerfinance.gov/complaint/#money-transfer

    Link to Aug. 11, 2014, CFPB statement/notice:

    http://www.consumerfinance.gov/newsroom/cfpb-warns-consumers-about-bitcoin/

    More info:

    http://www.consumerfinance.gov/blog/consumer-advisory-virtual-currencies-and-what-you-should-know-about-them/

    Patrick

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  8. Let’s not forget PMX’s “Kingdom Coin”, eh?

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  9. Oh, and the Guardian has a bad title. Moolah apparently specialized in Dogecoin, a competitor to Bitcoin.

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