We look at the 10 top bitcoin fiascos, related to money laundering, funding criminals, extortion, Ponzi and MLM, drug dealing, kidnapping, dodgy banks and the fall of Mt.Gox. They have helped shape bitcoin into what it is today: well regulated, accessible and safer than ever. As Bitcoin marches on to becoming more publicly accessible, regulated, and acceptable to the general public, it is sometimes good to look back on how we got to where we are today. Throughout it's rather short but storied history, Bitcoin has managed to attract a lot of attention. Not only from people looking at the potential applications for decentralized currency, but likewise those looking to make a quick buck.

Author: Topic: [FAQ] Is BitCoin a Ponzi or pyramid scheme? (Newbie-Friendly) (Read 55290 times).

In this article we examine what we believe to be the 10 biggest fails in Crypto. #10: Money laundering and funding criminals with illegal Bitcoin exchanges Money laundering is a large problem in the modern era. It cuts tax revenue and it helps facilitate the growth of large-scale illegal enterprises. It's precisely for these reasons that the operators of the Bitcoin exchange Coin.MX, Anthony R. Murgio and Yuri Lebedev, are facing charges of operating an illegal exchange while the former of the two is also being hit with money laundering charges.

As the FBI claims, Murgio knowingly exchanged Bitcoins for individuals he knew to be involved in illegal activities. Murgio faces up to 35 years in prison, while Lebedev faces up to ten years. Writes: ”Federal authorities contend that Mr. Murgio’s company,, allowed online criminals to illegally exchange the digital currency bitcoin for cash as part of a money-laundering scheme.” #9: Extortion demands in Bitcoin ISIS in recent years has pervaded media, the radical terrorist organization has become a major international threat. Supporters of the regime of Bashar Al-Assad, which is currently fighting the ISIS calling themselves the Syrian Electronic Army (SEA), has been reported sending threatening emails containing personal information of the recipient, demanding a ransom in Bitcoin to be paid, or else one of the recipients family members will be murdered. However, according to reports, it seems likely that this is all an elaborate scam, basing itself in social engineering and the fear that the media has instilled. According to a press release of the Justice Department of the United States of America, two of the members of the SEA have been added to the most wanted list of the FBI.

In a dated March 22, 2016, Assistant Attorney General Carlin says that some of the activity of the SEA seeks to harm the economic and national security of the US and that members of SEA have used extortion to extract money from “law-abiding people all over the world”. #8: Ponzi and MLM schemes Cryptocurrencies have hurdles to climb over - thanks to previous scams, and companies like OneCoin do not help. The purported cryptocurrency based out of Bulgaria has been revealed by an insider source as a massive Ponzi scheme operated by an individual with ties to local criminal circles. Supported by a web of paper companies, created to add legitimacy to OneCoin, the pyramid scheme seeks to entice unaware and gullible individuals.

The Financial Supervision Commission has issued a warning in regards to the company which broadly states that the FSC informs investors and consumers that acquisition, trading and payment of OneCoin are not governed by existing EU and national laws on capital markets. Eric Grill, CEO of Coinoutlet, says to CoinTelegraph: “OneCoin doesn't need a blockchain since it is closed source and the only place to buy and sell it is via their own internal exchange the OneCoin exchange. While they like to claim they are similar to Bitcoin this is not true in almost every sense.” #7: Kidnappers and hardcore criminals It seems terrorists are not the only hardline criminals utilizing Cryptocurrencies for their own ends. The family of billionaire Pearl Oriental Oil chairman Wong Yuk-Kwan were asked to pay his Taiwanese kidnappers ransom in Bitcoin after they threatened to “dig out the eyeballs or chop off the legs” of Yuk-Kwan, The Standard HK reports. Reports that the kidnappers demanded HK$ 70 million and the wife of Mr. Yuk-Kwan originally ordered to pay the money in mid-october through a Bitcoin account. #6: Drug dealing online As the popular saying about Bitcoin goes 'It's only used to buy drugs over the internet!'

, it would be an oversight not to mention drugs in this article. Following the closure of the Silk Road and Ross Ulbricht's incarceration, a string of wannabe virtual Scarfaces have cropped up. One such individual, Maximilian S. Went by the name Shiny Flakes as he sold around 4 million British Pounds worth of tablets, hashish, and LSD from his mother's flat. Although, there is no clear consensus regarding the Bitcoin Community’s stance over drugs bought via the cryptocurrency, this man’s sentencing is one of a plethora of reasons where drug use advocates support legalizing drug sales on the deep web in order to protect drug users who maybe then able to access safer and of higher quality “merchandise” than having to trade with street dealers. #5: Dodgy next generation “banks” NextBank's press release might be one of the most fanciful tales ever spun.

The company, which claims to be a next-generation bank, offers you the ability to store value in 135 currencies, precious metals and, of course, cryptocurrencies. NextBank claims to offer a wide variety of services like international debit cards and escrow service, in reality, it claims that it will offer ALL the services you can think a bank can offer.

On top of this, it will also have a help desk in 50 and more languages. On closer investigation however, it turns out that NextBank is only out to scam gullible investors and does not in fact have the infrastructure, staff, or know-how to to deliver on its grandiose promises. Yet another in a long-line of companies that only serve to damage Cryptocurrencies’ reputation. John Biggs,, in his piece about NextBank concludes, “Unfortunately this is a scam. Even if it wasn’t, it would be a piss-poor investment since it fails before it begins and will never exist.

It is, however, a good way to make your money not exist.” Techcrunch reports having been at the receiving end of legal threats after the coverage went online. #4: Unlicensed Online Gambling Dens Gambling has always been in a legal grey area, and online platforms for the activity are no exception. Bryan Micon, operator of the closed down bitcoin-fueled poker site Seals With Clubs, has been charged by the Nevada Attorney General with operating an unlicensed gambling enterprise, and faces up to ten years in prison and a US$50,000 fine. Interestingly enough it seems he is willing to try an unconventional and as-of-yet untested defense strategy, arguing that Bitcoin is not the same as Currency in the context of gambling law. According to information available from Nevada’s Attorney General’s website, the investigation into Micon is unique as it is believed to be the first state-level criminal prosecution of an illegal poker website operating with Bitcoin. In a statement released on the Attorney General’s, AG Burnett, Chairman of the Nevada State Gaming Control Board said that his organisation was “pleased to work” with the office of the Attorney General to stop an interactive gaming website operating without a gaming license. #3: Bitcoin high priests who fell hard Charlie Shrem was originally charged with a range of offenses including money laundering conspiracy, operating unlicensed money transmitting business and failing to file suspicious activity reports.

The case was based off Shrem and his co-defendant, Robert Faiella allegedly attempting to sell over US$1 Mln. In Bitcoin on the Silk Road. Shrem is well known in the cryptocurrency community. He was CEO of BitInstant, a Bitcoin exchange company, before taking a position with the Bitcoin Foundation, a Bitcoin advocacy and trade group. After being charged for money laundering in the Silk Road scandal however Shrem decided to resign his post with the Bitcoin Foundation. In the end, he opted to take a plea deal, feeling that due to previous rulings in similar cases he was out of luck. “I screwed up,” Shrem told U.S.

District Judge Jed Rakoff in his guilty plea according to. #2: The Silk Road Fiasco The seizure of Silk Road, the trial of Ross Ulbricht, and the revelation that a former DEA Agent stole over 700,000 during the case has become somewhat of a phenomenon. As one of the few cases from Crypto to have broken major headlines several times, it comes as no surprise that it is so high on our list. More has been said on this than can ever be condensed in a single article, but it is worth pointing out that unsurprisingly shutting down a single platform does little to stop the ever flowing river of drugs pouring into people's lives. Adding onto this a trial that in it's absurdity would make Kafka laugh hysterically simply adds to the absurdity. #1: The Mother of All Bitcoin Exchange Frauds As a singular event, nothing has done more to damage Crypto than the fall of Mt.Gox. Not only did the fraud committed by former Mt.

Gox CEO Mark Karpeles lead to Japan turning it's back on Bitcoin for quite awhile, it led to increased regulation and growing difficulty of operation for any company involved in the industry. While originally masquerading as simply internal mismanagement and attacks by hackers, it has since been revealed that it is likely a fraud masterminded by Karpeles that caused the company to go belly-up. Aleksandar Matanovic, CEO of Serbian Bitcoin exchange, ecd.rs, says to CoinTelegraph: “Short term, it made bitcoin look bad and damaged its image in the public. Long term, maybe it was even a good thing. We needed something like that to become aware of all the risks associated with keeping bitcoins on an online exchanges.

In 2013 we learned that one can earn a lot with bitcoin, then, at the beginning of 2014, we learned that one can lose just as much. While MtGox collapse might have slowed bitcoin adoption a bit, it has opened our eyes and made us more cautious.” At its peak, more than two-thirds of all Bitcoin transactions ran through Mt. Gox’s exchange, the fail of the exchange truly reverberated throughout cryptospace and will forever serve as both a reminder and a black-stain on the industry's record. In a article　Yoshimitsu Homma, head of Japan Digital Money Association, called Mr Karpeles' arrest a “good news'.

Ilgamos launched a few years back and on their website claim to be a group of young, dynamic and innovative marketing companies established in the United Arab Emirates, Germany and Hong Kong. The Ilgamos website domain (“ilgamos.com”) was registered on the 28th of November 2012, with Geza Kapitany listed as the domain owner. An address belonging to “TK Mentor GmbH” in Germany is provided in the domain registration, suggesting that out of Germany, the UAE and Hong Kong, that Germany is primarily where Ilgamos is being operated from. Kapitany (right) meanwhile is credited as CEO of Ilgamos on their website. As per Kapitany’s Ilgamos corporate bio; Over the past 35 years, Geza has built up an invaluable international business experience in top management positions with several international corporations. He has successfully developed companies in various multi-billion dollar industries (oil and gas, telecommunications, renewable energies and, more recently, precious metals) in Russia, Germany and the Middle East. I wasn’t able to put together an MLM history on Kapitany, suggesting Ilgamos is likely his first MLM venture as an executive.

Read on for a full review of the Ilgamos MLM business opportunity. The Ilgamos Product Line Ilgamos has no retailable products or services, with affiliates only able to market Ilgamos affiliate membership itself. On the Ilgamos website, Ilgamos affiliate membership is marketed as ‘different gold accumulation programs carrying a money back guarantee’. This is more of a side-component of the income opportunity however, with the real drawcard the Ilcoin cryptocurrency. Ilcoins are marketed by Ilgamos as a competitor to BitCoin.

The Ilgamos Compensation Plan The Ilgamos compensation plan revolves around affiliates paying €45 to €5000 EUR to sign up, and then recruiting others who do the same. Commission Qualification In order to qualify for commissions, all Ilgamas affiliates are required to pay a €15 EUR fee every 28 days. Recruitment Commissions (direct) When a new Medium affiliate (€595) or higher is recruited, the affiliate who recruited them earns a 10% commission. Recruitment Commissions (cash gifting) Recruitment commissions are paid when new Ilgamos affiliates are recruited. When new Entry (€45) and Basic (€210) Ilgamos affiliates are recruited, 100% of their membership fees are paid to the affiliate who recruited them or their upline.

These commissions are paid out via a perpetual 1up compensation model, seeing an affiliate’s even-numbered recruitment commissions (the 2nd, 4th, 6th etc.) passed up to their upline. So it follows then that recruited affiliates, when they recruit new affiliates, also pass up their even-numbered recruitment commissions to the affiliate who recruited them. A 50% matching bonus is also paid out on pass-up commissions earned by all personally recruited affiliates.

Recruitment Commissions (binary) Every Ilgamos affiliate who signs up is placed in a binary compensation structure. A binary compensation structure places an affiliate at the top of two binary teams, split left and right: Positions in both teams split to form new levels, with each binary team extending down as far as there are affiliates recruited into both teams. Only affiliates who have bought in at the Medium affiliate level or higher can actually earn binary commissions in Ilgamos. Positions in both binary teams are filled via direct and indirect recruitment of new Ilgamos affiliates, with their affiliate membership fees generating sales volume across both sides. A commission is paid out on he sales volume generated on the weaker side of the binary each week, with sales volume on the stronger leg carried over. How much of a weekly commission is earned is determined by how much an Ilgamos affiliate spent on their own affiliate membership: • Medium affiliates (€595) earn 5% • Business affiliates (€1150) earn 10% • Smart affiliates (€5000) binary commissions are not disclosed A matching bonus is paid out on binary earnings of recruited affiliates, paid out down five levels of recruitment. Again, how much of a matching bonus is earned is determined by how much an Ilgamos affiliate spent on their own affiliate membership: • Medium affiliates earn a 5% matching bonus • Business affiliates earn a 10% matching bonus • the Smart affiliate matching bonus is not disclosed Ilcoin Mining The ultimate goal of Ilgamos affiliate membership, as represented in Ilgamos corporate marketing presentations, is to acquire Ilcoins.

When an Ilgamos affiliate signs up at the Basic or higher level, they are given a fixed number of Optional Purchase Rights (OPR) points: • Basic (€210) – 200 OPR points • Medium (€595) – 600 OPR points • Business (€1150) – 1500 OPR points • Smart (€5000) – 7500 OPR points Affiliates can acquire additional OPR points by trading with other Ilgamos affiliates. Ilgamos control the price of OPR points and claim they will never reduce selling price. Also note that 30% of all Ilgamos commissions paid out are awarded in OPR points, based on the current rate of exchange as set by Ilgamos.

Gold Commitments The Ilgamos compensation plan materials and corporate presentation repeatedly mentions an affiliate’s “gold commitment”. This is marketed as the right to purchase physical gold for a total through (Ilgamos) any time at our special discount prices and have such gold home delivered immediately or stored at no cost. No further specifics are provided.

Joining Ilgamos Affiliate membership with Ilgamos costs between €45 and €5000 EUR: • Entry – €45 • Basic – €210 • Medium – €595 • Business – €1150 • Smart – €5000 Conclusion From what I’ve been able to piece together, Igamos initially launched as a straight-up recruitment scheme, hidden behind the ruse of affiliates purchasing gold. Back then Ilgamos also offered virtual shares in the company through wait for it, “Optional Purchase Rights”. Don’t believe me? Here’s an explanation of Ilgamos OPRs from an official compensation plan document dated November, 2012: Ilgamos offers the opportunity to all leaders to eventually become a part owner of the company. The harder Ilgamos partners work and the more commissions and bonuses they make, the more OPRs they receive and the greater the potential. Optional Purchase Rights (OPRs) are an extra bonus provided, as a free gift, by Ilgamos to its partners with a Business Pack. Each time a partner with a Business Pack earns a bonus from the trinary system (ie.

Referral Bonus, Trinary Bonus, Matching Bonus and Gold Bonus), Ilgamos credits OPRs to that partner’s OPR account. The amount credited is 25% of bonuses earned, calculated in € at the prevailing price of the OPRs.

Partners may accumulate their OPR holdings over the longer term and convert those OPRs into company shares, thus becoming a shareholder in Ilgamos. Naturally, the greater number of OPRs Partners have, the higher percentage of the company’s ownership they will receive. Partners have a choice at the time of their registration with Ilgamos whether to accept OPRs as a free gift from the company or refuse to take them. Back then it was virtual shares, with Ilgamos deciding to repurpose OPRs by attaching them to their Ilcoin cryptocurrency. Quite obviously the offering of Ilgamos shares flopped, and so now, riding on the coattails of BitCoin, Ilgamos are now trying to position themselves as yet another upcoming MLM cryptocurrency. On the compensation plan side of things, Ilgamos offer up a hybrid gifting pyramid scheme. Decred DCR Mining Desktop.

There are also strong elements of “pay to play” built into the Ilgamos compensation plan, with initial investment amounts dictating income potential through the binary component of the income opportunity. The lower tiers of Ilgamos affiliate membership are qualification to a €45 – €225 gifting scheme, with participation payment qualifying an affiliate to receive gifts from subsequent participants. The higher affiliate levels, through the binary compensation structure, merely pay affiliates to recruit new Ilgamos investors. And those investments bring us to Ilcoin. This is basically another rehash of the Zeek Rewards Ponzi points business model, with OPR points serving as the “collectible”. The idea is that Ilgamos affiliates invest in and collect OPR points, with more points awarding them more Ilcoins.

Ilcoins as it stands are completely worthless (ditto OPR points), but through heavy pushing of BitCoins short-lived rise to $1000+, Ilgamos claim the same thing will happen to Ilcoin. Putting aside the issue of unregistered securities (investment in OPR points and ultimately Ilcoins, on the expectation of a passive greater than 100% ROI), Ilcoin as a cryptocurrency is destined to fail. ILCoin is a global digital currency developed by Ilgamos exclusively for Ilgamos partners.

Furthermore Ilgamos corporate marketing presentations state that Ilgamos will not put Ilcoin up for public trade until “80-85% of Ilcoins have been mined”. The concept behind all of these closed-loop MLM cryptocurrencies is fundamentally flawed.

Think about it for a second. Let’s say Ilgamos go about soliciting investment in Ilcoin and a few years down the track and artificially peg a value to the coin (relative to how much has been invested by affiliates). First and foremost, what public exchange is going to buy into what is essentially a Ponzi scheme?

You’ve got all these virtual points issued (be it OPR points or Ilcoins themselves), pegged to nothing more than funds invested by those holding the points. And even if an exchange takes the bait (or Ilgamos give up and launch their own), then what? The public are going to pay whatever exorbitant price Ilgamos have convinced their investors Ilcoins are worth? What happens is the only people interested in Ilcoins are Ilgamos affiliates, and only because they’ve been lead to believe they’ve invested in the next BitCoin.

There’s no external demand or need for Ilcoin, with it serving only as a vehicle for Ilgamos to solicit affiliate investment through (in the exact same manner they did when they offered virtual company shares prior to Ilcoin). That of course won’t stop them assigning imaginary value to Ilcoins, nor will it stop Ilcoin investors from hyping up the imaginary value of the coin in order to attract new Ilgamos affiliate investors. At the heart of Ilgamos in its current incarnation is the transfer of funds from new affiliates to those who have previously invested. This is achieved through cash gifting, recruitment commissions and the sale of OPR points and Ilcoins to new investors, in exchange for real cash. As with all schemes of this nature, once new affiliate investment dries up, Ilgamos will no doubt continue to permit affiliates to cash out through their inhouse trading system – but once whatever reserve’s they’re holding are exhausted, the scheme collapses.

Real money goes in, a bunch of comparisons to BitCoin are made and at the end of the day everyone is sitting on a bunch of completely worthless and functionally useless monopoly money points. The MLM cryptocurrency niche is starting to sound like a broken record. According to UK companieshouse.gov.uk, Ilgamos Global Ltd is DISSOLVED as of 16-JUN-2015 ILGAMOS GLOBAL LIMITED 122-126 TOOLEY STREET LONDON SE1 2TU Company No. 08506950 Address is mailbox: Companies Plus of London, corp registrar. An address in Germany is provided 27. ALTSTADT STW.

III LANDSHUT GERMANY 84028 Which does not appear to be a valid address. Altstadt 27 84028 Landshut, Germany is valid, and appears to be a regular mixed use building, and there’s a pharmacy at the street level. I don’t know if pharmacies in Germany provide mailbox service though. I’m hearing rumblings Ilgamos has collapsed or is on the verge of collapse.

Ilcoin withdrawal requests aren’t going through on the internal exchange (ala OneCoin) and binary matching bonuses have been reduced. Viktor Havasy is purportedly a co-owner of the company and hails from Hungary, as to Ilgamos’ other anonymous owners. They run the finance side of things through the shell company account “R&G Mentor GmbH” in Germany. Other Ilgamos shell companies have been registered in Dubai and Hong Kong. ILGAMOS ISN’T A SCAM More information below. Admin:Links are NOT affiliate links!

So please don’t remove them.These are only prove of ilgamos doing a honest business. Ilgamos has promised – and Ilgamos has delivered.

Now there can be no doubt in anyone’s head about the quality and legitimacy of ILCoin. A few weeks ago ILCoin was voted as the No. 1 digital currency among all coins listed on ther C-Cex platform. Now, after carefully analysing our tech base – blockchain, wallets and block explorer – C-Cex approved ILCoin for live trading on its trading platform. You can also find the official ILCoin web page link: ilcoincrypto.com on the C-Cex.com page.

And if this is not enough: just hours after ILC started trading on C-Cex, several other exchanges connected with C-Cex also started listing our digital currency! Check these links: bitinfocharts.com/ilcoin-exchange-charts.html and cryptrader.com/charts/ccex/ilc/btc and cryptonator.com/exchange/ccex/. This is nothing short of a sensation in the history of Ilgamos and ILCoin. C-Cex is the first digital currency exchange where ILCoin can now be traded, and there will be more to follow as we move forward. So having exhausted Ponzi points recruitment, Ilgamos have migrated to an altcoin pump and dump as an exit strategy. Be it points or publicly traded coins, Ilcoins are worthless (you can’t do anything with them).

After an initial pump by affiliate trading, watch the volume plummet. The admins will say “supply and demand!” and slink off with all the money they’ve accumulated selling points over the past two years. Ilgamos affiliates, as always, will be left holding yet another worthless altcoin. #RIP A few weeks ago ILCoin was voted as the No. 1 digital currency among all coins listed on ther C-Cex platform.

Getting desperate affiliates to rig a vote is hardly impressive. There is a risk in Ilgamos background. The background of Ilgamos is risky. ​Too many Hungarian people create too many international companies. Why?​ ​Most/all registered offices are only mailing addresses with rented P.O.Box, virtual offices.​ ​Does Ilgamos prefer a correct backround?

Obviously not.​ ​Mr Viktor Havasy is absolutely do scam, this is fact. More information can be found about Mr Havasy’s business behaviour: sunridercase.com. ​Mr Havasy is an incorrect man. He has a lot of HUngarian and English records.​ ​The words fairness, honesty reliability are unkownd for Mr Havasy.​ ​In his las business Scienet Mr Havasy suffered a huge loss.​ The entire company Ilgamos is escaping!

Escape as long as their Ponzi system goes down!