For the uninitiated bitcoin ‘mining’ is the process of authenticating transactions in the blockchain using complicated mathematical equations, a service that is then billed in bitcoins. However although bitcoin mining is totally legitimate, digital scammers have been quick to latch on to the potential. Fraudsters have started to offer their own mining services. The only difference is that after they’ve collected their fees, they don’t actually do any mining.
We are hoping that a recent decision will slow their progress.
Homero Joshua Garza, CEO of the fraudulent GAW Miners and Zenmining cloud-mining scams, has just been fined $12m. As far back as December 2015 the US Securities and Exchanges Commission accused Garza of creating a scam that netted him close to $20m.
The scam itself was simple. Garza offered investors a share of all profits generated by his “state-of-the art” and “custom-built” mining platform. He managed to sell more than 10,000 investors into the scheme before the complaints started to pour in.
Following the ruling Paule G. Levenson, director of SEC’s Boston Regional Office, told reporters:
“Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: they sold what they did not own, misrepresented what they were selling, and robbed one investor to pay another.”
Unfortunately while this is of course a victory for digital fraud victims everywhere, the scheme itself is by no means a one-off. Over the last 12 months we have seen reports of many similar scams run by companies like Gemcoin, CoinTerra, and HashFast.
And away from bitcoin mining we are continuing to see a whole range of digital fraud and cryptocurrency scams including Initial Coin Offerings (ICOs), binary option trading, fake bitcoin exchanges, bitcoin pyramid schemes and, somewhat cynically, fraudulent bitcoin charity donation sites.
As the price of bitcoin and the other cryptocurrency continues to soar we can only see these scams become better run, more varied and more sophisticated so if you have fallen victim to any form of bitcoin or cryptocurrency scam email us today at This email address is being protected from spambots. You need JavaScript enabled to view it. or call us on 020 7792 5649. Our team of specialist lawyers have the experience required to help you buy bitcoin safely or settle any dispute that may have arisen as a result of a digital, bitcoin or cryptocurrency scam.
