The cryptocurrency mania has created a breeding ground for fraud in Asia, where most people are not very financially savvy, despite the economic growth, reports Nikkei Asian Review.
Scammers lure in inexperienced investors with promises of guaranteed big profits, but this is practically impossible. “There is no such thing as a perfectly safe investment,” said Hideto Fujino, president of investment advisory Rheos Capital Works. “Only fraudsters make such a promise. This has to become common knowledge, but it hasn’t.”
In Thailand, for example, the police is investigating a scam targeting Buddhist monks that promises them big profits and tells them that a senior monk has already invested and made a lot of money. According to reports in Thai media, over 800 people have already been scammed.
At the same time, in India the authorities are investigating various Ponzi schemes related to cryptocurrencies, including the infamous OneCoin MLM pyramid, and are warning of risks of hacks, malware attacks, loss of password, etc.
Meanwhile, South Koreans and Japanese fall for mining scams. According to a report of the Yonhap News Agency, the authorities in South Korea are investigating a scam with cryptocurrency mining rigs (the computer equipment necessary for “mining” cryptocurrencies). The scam involves 18 000 people in 54 countries, who had lost a total of $250 million. The alleged fraud was carried out by a California company – Mining Max – which claimed it has developed a machine for mining digital currency.
Most of the victims are South Koreans. They had to pay to become members and were compensated for recruiting new members.
In relation to the scam, the authorities charged 21 suspects with fraud. Three other people with ties to the company, including Korean singer Park Jung-Woon, were charged with embezzlement but were not held. The head of Mining Max – Daniel Park, senior management and high-level investors have been put on the Interpol wanted list.
In Japan, meanwhile, the National Consumer Affairs Center received 1500 cryptocurrency-related complaints from April to December last year. Many of them were related to mining. For example, a man paid $917 for a mobile app that was supposed to mine cryptocurrencies on his smartphone.
Anyone who is vaguely familiar with the blockchain technology, knows that the computations for “mining” a cryptocurrency are usually performed by powerful and expensive hardware configurations that require a lot of electricity and time.
Other Japanese complained that they were lured into buying said expensive computer equipment with sales pitches such as, “You’ll make money easily at home,” or “There is no risk of losing money”, but were not told this equipment consumes huge amounts of electricity and in some cases needs special cooling. Unless one has access to really cheap electricity, or steals it, it is almost impossible to make a big profit from mining cryptocurrencies at home. In the best case, the profits will cover the electricity bill.