Posts Tagged ‘Bitcoin Trader


Back in march we have discussed the service BTC Arbs warning users that it is a Ponzi scheme as it offers way too high return of investment in very short period of time. This is the way hat Ponzi schemes work – attract people to invest money (or coins) promising them to have high profit in no time, but in the end most if not all of the investors end up losing money. Aside from BTC Arbs back then we have warned you about a few more websites that are most likely Ponzi schemes as well and to be careful with them, one of these sites was Bitcoin Trader. It is interesting to note that out of 9 websites in total we listed back then currently just 1 is still operational, but who knows for how long this will continue. There are however many more new ones trying to get away with your money giving you promises for high profit, so as we repeating our warning to be careful with websites that offer you something that is just too good to be true, as most of the times it actually is.

Here is what was sent to the users of Bitcoin Trader a few days ago:

Dear Clients

Regrettably I have to announce the failure and closure of Bitcoin Trader.

While preparing for the final audit results, a task we were working on for weeks now, our bitcoin wallet has been hacked and emptied, just after exchanging our fiat holdings within the exchanges to bitcoin and transferring our entire holdings to our wallet, in order to proof our solvency.

It is a known fact that I personally opposed any proof of solvency, but agreed to conduct it for the sake of a few dozen small and medium investors.

The hacker contacted me shortly after he took advantage of our holdings and demanded a ransom in order to transfer the coins back. I have agreed to a 25% ransom of the entire sum, but haven’t heard back from him for several days now.

My aim was to create something based on trust, just as bitcoin itself is based on distributed trust. Unfortunately I must admit today, I have failed. All left to do now is to declare bankruptcy with the Panamanian authorities and to hand over all relevant files and information for further investigation.

John Carley

At the moment the website is no longer available, so we can clearly confirm that this was a Ponzi scheme as well. The excuse of getting hacked and all of their Bitcoins stolen we’ve seen a lot already, even MtGox went this way, though they were not originally an investment type of scam, but a crypto currency exchange. The interesting thing we have observed as a result of our warnings was that even though we have pointed out that some websites are most likely a Ponzi scheme there were people still registering and using them despite reading our warnings. It is true that with some Ponzi schemes or high-yield investment program (HYIP) you can make some money if you are fast to get in and then get out as they usually pay out initially to attract more users, however it is very risky and you will be making money at the expense of other investors in the end. A word of warning, if an investment service of any kind offers you to make more than 10% on a yearly basis then you should normally consider it a risky investment. If a service offers you something like 5-10% return on a monthly basis, not to mention when they promise you such high daily returns, then you should be aware that it is most likely a Ponzi scheme, so be very careful with these as in the end you will most likely lose money than make profit.

In short – if something looks too good to be true, then it probably is and you should be wise and best avoid it.

To follow the current situation with Bitcoin Trader at the bitcointalk forum…


We have been asked by a reader about our opinion and to to check out a website called BTC Arbs that supposedly offers daily returns of invested money or Bitcoins of 0.1% to 10%. What the website claims to do in order to provide so high daily returns on invested money or BTC is arbitrage of Bitcoins between different exchanges. The website seems to be well designed and looks very convincing in terms of information available on it. The minimum investment is $50 or 0.05 Bitcoins and the site accepts direct Bitcoin transfers as well as money deposits from investors with no maximum investment amount. The website even has a Results page a daily return rate on your investment, so everything seems really legit, especially if you do not look into things in detail and are captured by the high profit you are promised. The problem however is that the website is most likely just a scam and another well made Ponzi Scheme that is there to make some quick money at users’ expense!

What should raise a warning in this websites and other sites at first is the very high return rate or the so called high-yield investment program (HYIP) that you are being promised on a daily basis, this is the most common thing for Ponzi Schemes that attracts user’s attention and fuels their greed a lot. Up to 10 percent per day means you can get rich very fast for doing nothing, yeah, right… in reality just the opposite. The next thing you should look into is who is behind the website, and the only thing about that you can find on the website is that it is based in Switzerland, however there is not info about the company or address or event at least mail or phone to contact them on the Contact page. Furthermore the website claims to be created in November of 2013, but a quick whois returns different data – Creation Date: 2014-01-04 20:13:00, anonymous registration and hosted in a web server in Malaysia. It all seems less an less legit and clearly the website claims things that are far from true…

You can see that some people have already tested the BTC Arbs service and report making some money already on top of their investment and withdrawing their earnings successfully. This is a normal way of operation – the first “investors” in a Ponzi Scheme do get paid in order to convince them that everything is working as promised and to encourage them to invest more and more into the service and to bring other people too. In reality however the “earnings” the earlier “investors” are getting do come from money that new users brought to the service are investing into it. And as soon as the authors of the Ponzi Scheme decide to get away with the all the money everything will fall down and some people will actually loose money. But even in this scenario if you are one of the “early investors” and use the service for just a few days with small amount of Bitcoins (never invest real cash into such Ponzi Schemes!!!) you might actually end up making some cash. Never, never and NEVER invest long term in a Ponzi Scheme or HYIP website, but what is even better thing to do is to stay away from such websites! We would not recommend to use services such as this one, even if there is some small chance to actually profit from using them, because this will be at the expense of somebody else just like you!

In short – if something looks too good to be true, then it probably is and you should be wise and best avoid it.

High-yield investment program (HYIP)
A high-yield investment program (HYIP) is a type of Ponzi scheme, an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors. Most of these scams work from anonymous offshore bases which make them hard to track down. Operators generally set up a website offering an “investment program” which promises very high returns, such as 1% per day or even more, disclosing little or no detail about the underlying management, location, or other aspects of how money is to be invested. Or giving you a nice story about the whole thing such as BTC arbitrage, that may sound believable to newbies or people that are generally not very experienced and haven’t suffered yet from such a fraudulent scheme.

Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme. The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920, even though he did not invent the scheme, but his operation took in so much money that it was the first to become known throughout the United States. Ponzi’s original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors’ money to make payments to earlier investors and himself.

Other similar websites to be careful with:
Bitcoin Trader
My Daily Coin
Fin Mutual
Bitco Financial
Laxo Trade
Rockwel Partners
Hex Fund

The above list contains a few more websites that do rise some concerns as well, though we are not saying that they are all scams for sure, still we recommend to be careful should you decide to try them out. If you still want to try them out do so with the minimum investment amount and do not be in a hurry to invest a lot of coins! Do note that usually if somebody promises you a 2-5-10% or more daily return of investment or even more you should really be careful and that applies not only to crypto currencies.