While Some Ponzi Schemes Implode, Other Fraudsters Double Down

As this year draws to a close, so too have a few of the ponzi operators masquerading as cloud miners in the Bitcoin and altcoin space. Given the concept of cloud mining lends itself to being an ideal means for scammers to conduct fractional reserve mining or straight up ponzi schemes involving no mining at all, you can expect to see such shenanigans continue in 2015. Three 'cloud miners' which appear to have gone belly up this past week are Hashie.co, LTC Gear and Hash Profit.

Hashie.co launched in October of this year, claimed over 40,000 users and allegedly sold hashing power from AMHash1 while other products such as their FireHashers were allegedly backed by Havelock's Bitcoin Difficulty Derivative. Hashie.co has now had its website replaced with an alternative reality game otherwise known as an ARG. An administrator by the name of Queen Elsa posted on the Hashie.co forums that users must complete the ARG in order to find out what has happened to Hashie.co, saying:

We're working on resolving this issue through the appropriate channels and are in contact with law enforcement – this will take time.

To find out what happened with Hashie, you'll need to complete the ARG (use this forum).

Take care,
-Queen Elsa

Queen Esla also included an image of a NSW Police Fraud Report Form2 although the image is nothing more than a privacy and confidentiality notice and not one of a completed form. The Hashie.co WHOIS information has also been updated from previously being WhoisGuard Protected to:

Registrant Contact Information:
Name: Queen Elsa
Address 1: let it go
City: let it go
State: CA
Zip: 10000
Country: US
Phone: +1.111222333
Email: Email Masking Image@hashie.co

In addition to the Hashie.co drama, another 'cloud mining' service named LTC Gear is reported to have ceased payments. LTC Gear posted a now removed update to their website which stated that payments would cease until January 3rd 2015 due to a database alteration, saying:

It was found that unauthorised modifications were performed on old servers database. Modifications were performed in such manner to make them undistinguishable from legitimate operations.
Alterations are present in recent database backups too.

In order analyse and clean the database, initiate procedures to identify the sources of alterations and to migrate service from weekly payouts to balance per user and pay on demand, payout, multiplication or other operations will be delayed for a week.

No support via e-mail will be available before analysys is finished.
A support form to report missing payouts shares or orders will be available tomorrow.

Much like LTC Gear, Hash Profit was another altcoin cloud miner which went offline this week. Hash Profit, which launched in May of this year, claimed to use a strategy which they called SmartMining but the website now reports that the site will remain suspended until the January 5th 2015. A statement posted on the website says:

Attention! There is highly coordinated and massive DDoS attack on Hash Profit service taking place right now.

Site and infrastructure of Hash Profit is under unprecedented massive DDoS attack right now.

Attackers spreading the word of panic about collapse of our service and other nonsense with only one main target – to provoke mass panic.

Many users neglecting common safety or being inaccurate has compromised their accounts and that has led to availability of malefactors to sell 15% of their hashrate for PFC and sell these coins via the exchange service, which in turn led to downgrade of PFC exchange rate.

All this is happening right now because lead companies of this market has understood the threat from HP service for their place in the market and they're doing everything possible to drown the company.

Right now HP team is working hard to reflect all the types of threats and the most important is defending of keeping and payout system – that's the main target of attackers.

Also our email is overcrowded with spam and rubbish from hacked users' mails, and that makes fast responses to real users questions very hard.

Main help from our service's users in solution of this difficult problem:

Don't panic.
Do everything possible to defend your own accounts – mails, BTC-wallets and computers.

Our service was under the most severe attack ever. Due to most specialists' holidays we've decided for a reliable safety of users' funds to suspend site's work until the first Monday of 2015 (5th of January). Everybody will return to standard work then and we'll continue our work in a usual way. Please be calm. Thank you for understanding.

To keep contact with our users and to separate priority mail from spam, we've developed mail accepting via BTC payments. For guaranteed processing of your message you'll have to pay small amount through an interface below.

We've successfully deflected serious threats and attacks on our service earlier and we're sure that together we can do this even in a situation this hard.

Despite the inevitable failure of these ponzi schemes, other scammers such as Homero Joshua Garza of GAW Miners have recently doubled down in an attempt to keep their schemes afloat. Garza is reported to have made an investment of an undisclosed amount with GoCoin, something which was paraded about by CoinDesk as a "Strategic Investment" despite the fact that any drop kick from the streets can 'invest' in that bucket shop via Crowdfunder. In addition to that investment, PayCoin – Garza's scam coin – is scheduled to be added to GoCoin's merchant gateway. GoCoin CEO Steve Beauregard confirmed his eagerness to work with scammers such as Garza in a tweet, saying:

Congrats @gawceo on the successful launch of #paycoin … the @GoCoin and I look forward to working with you! cc: @GAWMiners @BitTreasury

Garza has also allegedly purchased the altcoin exchange coin-swap.net for an undisclosed sum and in recent days has once again convinced coinmarketcap.com to relist his Peercoin copy/pasta PayCoin.

As we move into 2015, all of this serves as a good reminder that one must be mindful of the continued attempts by fraudsters to part you from your bitcoins and their continued attempts to seek legitimacy through relationships with companies, that at first glance may appear legitimate, in order to empty your wallet.

  1. AMHash is a cloud mining service operated by ASIC Miner and RockMiner. 

  2. That would be NSW, Australia. 

One thought on “While Some Ponzi Schemes Implode, Other Fraudsters Double Down

  1. Believe it or not, but while I’m writing this, hashie.co is up and running!

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